Sandy's death toll climbs; millions without power

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NEW YORK (AP) — Millions of people from Maine to the Carolinas awoke Tuesday without electricity, and an eerily quiet New York City was all but closed off by car, train and air as superstorm Sandy steamed inland, still delivering punishing wind and rain. The U.S. death toll climbed to 39, many of the victims killed by falling trees.

The full extent of the damage in New Jersey, where the storm roared ashore Monday night with hurricane-force winds of 80 mph, was unclear. Police and fire officials, some with their own departments flooded, fanned out to rescue hundreds.

"We are in the midst of urban search and rescue. Our teams are moving as fast as they can," Gov. Chris Christie said. "The devastation on the Jersey Shore is some of the worst we've ever seen. The cost of the storm is incalculable at this point."

More than 8.2 million people across the East were without power. Airlines canceled more than 15,000 flights around the world, and it could be days before the mess is untangled and passengers can get where they're going.

The storm also disrupted the presidential campaign with just a week to go before Election Day.

President Barack Obama canceled a third straight day of campaigning, scratching events scheduled for Wednesday in swing state Ohio. Republican Mitt Romney resumed his campaign, but with plans to turn a political rally in Ohio into a "storm relief event."

Sandy will end up causing about $20 billion in property damage and $10 billion to $30 billion more in lost business, making it one of the costliest natural disasters on record in the U.S., according to IHS Global Insight, a forecasting firm.

Lower Manhattan, which includes Wall Street, was among the hardest-hit areas after the storm sent a nearly 14-foot surge of seawater, a record, coursing over its seawalls and highways.

Water cascaded into the gaping, unfinished construction pit at the World Trade Center, and the New York Stock Exchange was closed for a second day, the first time that has happened because of weather since the Blizzard of 1888. The NYSE said it will reopen on Wednesday.

A huge fire destroyed as many as 100 houses in a flooded beachfront neighborhood in Queens on Tuesday, forcing firefighters to undertake daring rescues. Three people were injured.

New York University's Tisch Hospital evacuated 200 patients after its backup generator failed. About 20 babies from the neonatal intensive care unit were carried down staircases and were given battery-powered respirators.

A construction crane that collapsed in the high winds on Monday still dangled precariously 74 floors above the streets of midtown Manhattan, and hundreds of people were evacuated as a precaution. And on Staten Island, a tanker ship wound up beached on the shore.

Most major tunnels and bridges in New York were closed, as were schools, Broadway theaters and the metropolitan area's three main airports, LaGuardia, Kennedy and Newark.

With water standing in two major commuter tunnels and seven subway tunnels under the East River, Mayor Michael Bloomberg said it was unclear when the nation's largest transit system would be rolling again. It shut down Sunday night ahead of the storm.

Joseph Lhota, chairman of the Metropolitan Transportation Authority, said the damage was the worst in the 108-year history of the New York subway.

Similarly, Consolidated Edison said it could take at least a week to restore electricity to the last of the nearly 800,000 customers in and around New York City who lost power.

Millions of more fortunate New Yorkers surveyed the damage as dawn broke, their city brought to an extraordinary standstill.

"Oh, Jesus. Oh, no," Faye Schwartz said she looked over her neighborhood in Brooklyn, where cars were scattered like leaves.

Reggie Thomas, a maintenance supervisor at a prison near the overflowing Hudson River, emerged from an overnight shift, a toothbrush in his front pocket, to find his Honda with its windows down and a foot of water inside. The windows automatically go down when the car is submerged to free drivers.

"It's totaled," Thomas said with a shrug. "You would have needed a boat last night."

Around midday, Sandy was about 120 miles east of Pittsburgh, pushing westward with winds of 45 mph, and was expected to make a turn into New York State on Tuesday night. Although weakening as it goes, the storm will continue to bring heavy rain and flooding, said Daniel Brown of the National Hurricane Center in Miami.

In a measure of the storm's immense size and power, waves on southern Lake Michigan rose to a record-tying 20.3 feet. High winds spinning off Sandy's edges clobbered the Cleveland area early Tuesday, uprooting trees, cutting power to hundreds of thousands, closing schools and flooding major roads along Lake Erie.

In Portland, Maine, gusts topping 60 mph scared away several cruise ships and prompted officials to close the port.

Sandy also brought blizzard conditions to parts of West Virginia and neighboring Appalachian states, with more than 2 feet of snow expected in some places. A snowstorm in western Maryland caused a pileup of tractor-trailers that blocked part of Interstate 68 on slippery Big Savage Mountain.

"It's like a long-tailed cat in a room full of rocking chairs up here," said Bill Wiltson, a Maryland State Police dispatcher.

The death toll climbed rapidly, and included 17 victims in New York State — 10 of them in New York City — along with five dead in Pennsylvania and five in New Jersey. Sandy also killed 69 people in the Caribbean before making its way up the Eastern Seaboard.

In New Jersey, Sandy cut off barrier islands, swept houses from their foundations and washed amusement pier rides into the ocean. It also wrecked several boardwalks up and down the coast, tearing away a section of Atlantic City's world-famous promenade. Atlantic City's 12 waterfront casinos came through largely unscathed.

Jersey City was closed to cars because traffic lights were out, and Hoboken, just over the Hudson River from Manhattan, was hit with major flooding.

A huge swell of water swept over the small New Jersey town of Moonachie, near the Hackensack River, and authorities struggled to rescue about 800 people, some living in a trailer park. And in neighboring Little Ferry, water suddenly started gushing out of storm drains overnight, submerging a road under 4 feet of water and swamping houses.

Police and fire officials used boats and trucks to reach the stranded.

"I looked out and the next thing you know, the water just came up through the grates. It came up so quickly you couldn't do anything about it. If you wanted to move your car to higher ground you didn't have enough time," said Little Ferry resident Leo Quigley, who with his wife was taken to higher ground by boat.

___

Hays reported from New York and Breed reported from Raleigh, N.C.; AP Science Writer Seth Borenstein contributed to this report from Washington. Associated Press writers David Dishneau in Delaware City, Del., Katie Zezima in Atlantic City, Emery P. Dalesio in Elizabeth City, N.C., and Erika Niedowski in Cranston, R.I., also contributed.

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China wants to stop profiteering at temple sites

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BEIJING (AP) — China is telling tourist-favored Buddhist temples: Don't let money be your mantra.

Authorities announced a ban this week on temples selling shares to investors after leaders of several popular temples planned to pursue stock market listings for them as commercial entities. Even the Shaolin Temple of kung fu movie fame was once rumored to be planning a stock market debut — and critics have slammed such plans as a step too far in China's already unrestrained commercial culture.

"Everywhere in China now is about developing the economy," complained Beijing resident Fu Runxing, a 40-year-old accountant who said he recently went to a temple where incense was priced at 300 yuan ($50) a stick.

"It's too excessive. It's looting," she said.

Centuries-old Buddhist pilgrimage sites Mount Wutai in Shanxi province, Mount Putuo in Zhejiang and Mount Jiuhua in Anhui all were moving toward listing on stock markets in recent months to finance expansions, according to state media.

The government's religious affairs office called on local authorities to ban profiteering related to religious activity and told them not to allow religious venues to be run as business ventures or listed as corporate assets.

Companies that manage temple sites may be able to bypass the prohibition on listing shares simply by excluding the temples themselves from their lists of assets. A Buddhist site at Mount Emei in Sichuan already has been on the Shenzhen stock exchange since 1997 but its listed assets include a hotel, cable car company and ticket booths — not the temples, which date back several hundred years. Shanghai lawyer Wang Yun said the new prohibition wouldn't likely affect Emei, but might make additional companies think twice before listing.

Turning religious sites into profit-making enterprises is certainly not limited to China, but it illustrates just how commercialized this communist country has become in the past couple of decades, with entrepreneurs seizing on every opportunity to make money. One businessman has started selling canned "fresh air" in polluted Beijing.

No one could have anticipated that the poor and egalitarian China of Mao Zedong's time would become a "Wild West" of commercialism, said Mary Bergstrom, founder of The Bergstrom Group, a marketing consultancy in Shanghai.

"There aren't the established checks and balances in China that exist in other countries ,so people are more willing and able to test the boundaries of what is acceptable, especially if the end result of these tests is potential profit," she said.

The Chinese government has strict controls on religion, with temples, churches and mosques run by state-controlled groups. Even so, religion is booming, along with tourism, giving some places a chance to cash in.

The ban on profiteering from religious activity is "just a reflection of the terrible reality of the over-commercialization in recent years of temples and other places," the Southern Metropolis Daily said in an editorial Wednesday. "People who have been to famous religious places should be familiar with expensive ticket prices and donations for all kinds of things."

Chinese entities from nature parks to religious sites are increasingly turning to commercial activities to pay expenses as government support dwindles in a society with little charitable giving. Temples face heavy costs to maintain centuries-old buildings and gardens.

But the State Administration for Religious Affairs says some local governments, businesses and individuals have built religious sites for profit, hired fake monks and tricked visitors into handing over money.

A notice on its website Monday, issued jointly with the police ministry and other authorities, warned of serious punishment for officials found to be involved in religious profiteering.

The new rules leave open when commercialism crosses the line to profiteering. No matter where the line might be, entrepreneurial officials and religious groups may not heed it.

An employee of the Wutai Scenic District Administration's propaganda office confirmed Wednesday that the local government was planning to pursue a stock market listing but said he couldn't give details. The man, who would give only his surname, Bai, said he didn't know whether the latest notice would affect that plan.

The notion that some temples were becoming more about dollars than dharma first came to the fore in 2009 with reports that the legendary Shaolin monastery and martial arts center might sell shares to investors on a mainland or Hong Kong stock market.

The 1,500-year-old temple has become a lucrative business enterprise and holds registered trademarks, but its managers have denied rumors of floating shares and reiterated that denial Wednesday.

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Associated Press researcher Flora Ji contributed to this report.

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Superstorm causes major entertainment disruption

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David Letterman and Jimmy Fallon are doing their shows without audiences and Jimmy Kimmel, visiting from his home base in sunny Hollywood, canceled a taping in Brooklyn. "The Daily Show" and "The Colbert Report" are off the air completely. And all 40 of Broadway's theaters are dark because of the powerful storm bearing down on the East Coast.

Hurricane Sandy didn't just halt airline flights and the stock market on Monday, it also caused widespread cancelations across the entertainment industry.

Concerts planned for New York and New Jersey were canceled or postponed, including John Legend, Journey, and comedian Louis C.K. and the "Freedom to Love Now" show, which is now set for spring of 2013.

East Coast charity galas were also canceled, and fashion designer Prabal Gurung postponed the unveiling of his anticipated collection for Target until next week.

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China passes law to curb abuse of mental hospitals

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BEIJING (AP) — China's legislature on Friday passed a long-awaited mental health law that aims to prevent people from being involuntarily held and unnecessarily treated in psychiatric facilities — abuses that have been used against government critics and triggered public outrage.

The law standardizes mental health care services, requiring general hospitals to set up special outpatient clinics or provide counseling, and calls for the training of more doctors.

Debated for years, the law attempts to address an imbalance in Chinese society — a lack of mental health care services for a population that has grown more prosperous but also more aware of modern-day stresses and the need for treatment. Psychiatrists who helped draft and improve the legislation welcomed its passage.

"The law will protect the rights of mental patients and prevent those who don't need treatment from being forced to receive it," said Dr. Liu Xiehe, an 85-year-old psychiatrist based in the southwestern city of Chengdu, who drafted the first version of the law in 1985.

"Our mental health law is in line with international standards. This shows the government pays attention to the development of mental health and the protection of people's rights in this area," Liu told The Associated Press by phone.

Pressure has grown on the government in recent years after state media and rights activists reported cases of people forced into mental hospitals when they did not require treatment. Some were placed there by employers with whom they had wage disputes, some by their family members in fights over money, and others — usually people with grievances against officials — by police who wanted to silence them.

Yang Yamei, of the Inner Mongolian city of Hulunbuir, has been locked up at a local mental hospital for the last eight months in what her daughter says is retaliation for her attempts to seek compensation from the government for a court ruling that unfairly sentenced her to three years in a labor camp.

This is the third time in four years that she has been forcibly committed, her daughter Guo Dandan said by phone.

"It's because my mother has been petitioning for help, but the authorities don't want to solve her problems, so they put her in there," Guo said. "I have tried many times to persuade her doctors to release her, but they refuse."

Guo's claim could not be independently verified. Local government offices and the mental hospital could not immediately be reached for comment.

"I only hope that the law will be stricter," Guo said. "In the cases of petitioners, when the authorities can use their personal relationships with doctors to fake medical records, hospitals should not be allowed to accept such cases."

The law states for the first time that mental health examinations and treatment must be conducted on a voluntary basis, unless a person is considered a danger to himself or others. Only psychiatrists have the authority to commit people to hospitals for treatment, and treatment may be compulsory for patients diagnosed with a severe mental illness, according to the law.

Significantly, the law gives people who feel they have been unnecessarily admitted into mental health facilities the right to appeal.

But it will likely be a challenge for people to exercise that right once they are in the system, said Huang Xuetao, a lawyer who runs an organization in the southern city of Shenzhen that assists people who have been committed against their will.

Though questions remain over how the law will be enforced and whether sufficient government funding will be provided to enable the expansion of services, psychiatrists said the passage of the legislation marked a milestone.

"It's very exciting. I honestly believe this will start a new trajectory," said Dr. Michael Phillips, a Canadian psychiatrist who has worked in China for nearly three decades and now heads a suicide research center in Shanghai.

Phillips said the biggest change for the psychiatric system is the curb on involuntary admissions. At least 80 percent of hospital admissions are compulsory, he said.

___

Associated Press researcher Flora Ji contributed to this report.

Follow Gillian Wong on Twitter: http://twitter.com/gillianwong

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Hurricane Sandy begins battering the East Coast

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NEW YORK/REHOBOTH BEACH, Delaware (Reuters) - Hurricane Sandy, one of the biggest storms ever to hit the United States, battered the densely populated East Coast on Monday, shutting down transportation, forcing evacuations in flood-prone areas and interrupting the presidential election campaign.


Fierce winds and flooding were expected along hundreds of miles of Atlantic coast and heavy snows were forecast farther inland at higher elevations when the center of the storm moves ashore Monday evening near Atlantic City, New Jersey.


U.S. stock markets were closed for the first time since the attacks of September 11, 2001, and will remain shut on Tuesday. The government in Washington was closed and school was canceled up and down the East Coast.


Nearly 700,000 customers were without power by midday and millions more could lose electricity. One disaster forecasting company predicted economic losses could ultimately reach $20 billion, only half of it insured.


"This is going to be a big and powerful storm and all across the Eastern Seaboard I think everybody is taking the appropriate preparations," President Barack Obama said at the White House.


State governors from Virginia to Massachusetts warned of the acute danger from the storm for the 60 million residents in its path. Ten states have declared a state of emergency.


"There will undoubtedly be some deaths that are caused by the intensity of this storm, by the floods, by the tidal surge, by the waves. The more responsibly citizens act, the fewer people will die," Maryland Governor Martin O'Malley told reporters.


Forecasters said Sandy could be the largest storm to hit the mainland in U.S. history.


Off North Carolina, the U.S. Coast Guard rescued 14 of the 16 crew members who abandoned the replica tall ship HMS Bounty, using helicopters to lift them from life rafts. The Coast Guard continued to search for two missing crew members.


In New York, a crane atop a building on 57th Street in Manhattan had partially collapsed, leaving it dangling high above the street. Police said they were closing the area to pedestrians.


GAINING SPEED


The storm interrupted the presidential campaign with eight days to go before the election.


Obama canceled a campaign event in Florida on Monday so he could return to Washington and monitor the government response to the storm. Republican presidential candidate Mitt Romney canceled stops Monday night and Tuesday.


Sandy picked up speed as it raced northwest toward the U.S. coast at 28 miles per hour (45 km per hour) on Monday afternoon, with top sustained winds at 90 mph, the U.S. National Hurricane Center said.


At 2 p.m. (1800 GMT) the center of the storm was about 110 miles southeast of Atlantic City, New Jersey, or 175 miles south-southeast of New York City. Hurricane-force winds were already being recorded on the New Jersey coast.


"The center of Sandy is expected to make landfall along or just south of the southern New Jersey coast by early evening," NHC forecasters said, adding they expected little change in strength before then.


Forecasters said Sandy was a rare, hybrid "super storm" created by an Arctic jet stream wrapping itself around a tropical storm.

 

The combination of those two storms would have been bad enough, but meteorologists said there was a third storm at play - a system coming down from Canada that would effectively trap the hurricane-nor'easter combo and hold it in place.


Moreover, the storm was coming ashore at high tide, which was pulled even higher by a full moon.


While Sandy does not pack the punch of Hurricane Katrina, which devastated New Orleans in 2005, it has been gathering strength. It killed 66 people in the Caribbean last week before pounding U.S. coastal areas as it moved north.


'SOMETHING LIKE KATRINA'


In Fairfield, a Connecticut coastal town and major commuter point into Manhattan, police cruisers blocked the main road leading to the beaches and yellow police tape cordoned off side entrances. Beach pavilions were boarded up with plywood, and gusts of wind rocked parked cars.


"People are definitely not taking this seriously enough," police officer Tiffany Barrett, 38, said. "Our worst fear is something like Katrina and we can't get to people."


Further south, several feet of water flooded streets in Rehoboth Beach, Delaware. Police knocked on doors, reminding people there was a mandatory evacuation. While the police took names, they allowed residents to stay at their own risk.


Besides rain, the storms could cause up to 3 feet (1 meter) of snowfall in the Appalachian Mountains from West Virginia to Kentucky. Some people in that part of the country did not have to go to work because of the storm and used the time to vote.


At the Berkeley County Courthouse in Martinsburg, West Virginia, early voting for the November 6 elections was going ahead despite the bad weather, with some 600 people casting ballots by about 1:45 p.m. (1745 GMT)


"More (people) came out today than what I anticipated but a lot of people are off work," Bonnie Woodfall, chief deputy for voter registration, said after fielding a flurry of calls about whether the polls should stay open. "It's neat."


'RECORD-SIZED OUTAGES'


New York and other cities closed their transit systems and schools, ordering mass evacuations from low-lying areas ahead of a storm surge that could reach as high as 11 feet.


By early Monday, water was already topping the seawall in Manhattan's Battery Park City, one of the areas ordered evacuated by Mayor Michael Bloomberg.


He ordered 375,000 New Yorkers to evacuate and told those who remained to leave immediately. "Conditions are deteriorating rapidly and the window for you getting out safely is closing."


New York electric utility Con Edison said it expected "record-size outages," with nearly 35,000 customers in lower Manhattan and Brooklyn likely to be impacted. The company is facing both falling trees knocking down power lines from above and flood waters swamping underground systems from below.


All U.S. stock markets were closed on Monday and will remain shut on Tuesday, with a plan to re-open on Wednesday that depends on conditions after the storm passes.


The United Nations, Broadway theaters and New Jersey casinos were forced to close and more than two-thirds of East Coast oil refining capacity was in the process of shutting down.


Airlines canceled flights, bridges and tunnels closed, and national passenger rail operator Amtrak suspended nearly all service on the East Coast. The U.S. government told non-emergency workers in Washington, D.C., to stay home.


Up and down the coast, worried residents in the hurricane's path packed stores, searching for generators, flashlights, batteries, food and other emergency supplies.


Johnny Lopez, an owner of Best Buy Wines and Liquors in Brooklyn, said he plans - "God help us!" - to stay open all day on Monday and Tuesday.


"Crazy busy yesterday," he said. "It was like Thanksgiving."


(Additional reporting by Greg Roumeliotis, Edith Honan, Janet McGurty and Martinne Geller in New York, Barbara Goldberg in New Jersey, Mary Ellen Clark and Lynnley Browning in Connecticut, Daniel Lovering in Boston, Ian Simpson in West Virginia, Susan Heavey in Washington, Jane Sutton in Miami; Writing by Paul Thomasch and Ben Berkowitz; Editing by Eric Beech)

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UN says 22,000 displaced in Myanmar unrest

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SITTWE, Myanmar (AP) — Victims of Myanmar's latest explosion of Muslim-Buddhist violence fled to already packed displacement camps along the country's western coast Sunday, with a top U.N. official saying the unrest has forced more than 22,000 people from their homes.

State television reported the casualty toll has risen to 84 dead and 129 injured over the past week in nine townships in Rakhine state. The figures have not been broken down by ethnic group, but New York-based Human Rights Watch has said Rohingya Muslims bore the brunt of the unrest and the true death toll may be far higher.

On Sunday, wooden boats carrying some refugees arrived outside the state capital, Sittwe. The people trudged to the nearby Thechaung camp, a place already home to thousands of Rohingya who took refuge there after a previous wave of violence in June.

"I fled my hometown, Pauktaw, on Friday because there is no security at all," said 42-year-old fisherman Maung Myint, who arrived on a boat carrying 40 other people, including his wife and six children. "My house was burned to ashes and I have no money left."

Another Muslim refugee said she fled her village, Kyaukphyu, on Thursday after attackers set her home on fire.

"We don't feel safe," said 40-year-old Zainabi, a fish seller who left with her two sons, aged 12 and 14. "I wish the violence would stop so we can live peacefully."

Human Rights Watch released dramatic satellite imagery of Kyaukphyu on Saturday showing a vast, predominantly Rohingya swath of the village in ashes. The destruction included more than 800 buildings and floating barges.

There were no reports of new violence Sunday. It was unclear what sparked the latest clashes, but ill will between Muslims and Buddhists in Rakhine state goes back decades and has its roots in a dispute over the Rohingya's origins. Although many Rohingya have lived in Myanmar for generations, they are seen as foreign intruders who came from Bangladesh to steal scarce land.

Today, the Rohingya also face official discrimination, a policy encouraged by Myanmar's previous military regimes to enlist popular support among other groups. A 1984 law formally excluded them as one of the country's 135 ethnicities, meaning most are denied basic civil rights and are deprived of citizenship.

Neighboring Bangladesh, which also does not recognize the Rohingya as citizens, says thousands of Rohingya refugees have sought to flee there by boat. Its policy, however, is to refuse them entry.

Rights groups say Myanmar's failure to address the root causes of the crisis means the situation may get worse.

Over the weekend, Border Affairs Minister Lt. General Thein Htay traveled to the affected areas with the U.N. resident and humanitarian coordinator in Myanmar, Ashok Nigam.

Nigam said 22,587 were displaced and they included both Muslims and ethnic Rakhine Buddhists, but he gave no breakdown.

Speaking to The Associated Press on Sunday while visiting Thechaung camp, Nigam said getting aid to the new wave of displaced people will be a challenge as some fled on boats and others have sought refuge on isolated hilltops.

"The situation is certainly very grave and we are working with the government to provide urgent aid to these people," he said.

Some 4,600 homes were also destroyed, according to the U.N, which said in a separate statement that it had begun distributing emergency food and shelter supplies with its humanitarian partners to refugees in urgent need of help.

The latest unrest pushes the total displaced to nearly 100,000 since sectarian clashes broke out in June, when at least 90 people died and 3,000 homes were destroyed. That unrest left about 75,000 people, mostly Rohingya, living in refugee camps since then. Curfews have been in place in some areas since the earlier violence and were extended this past week.

"It is critically important that the government ensures that the rule of law prevails, prevents any further spreading of this violence and continues to communicate strong messages of harmony," Nigam said in a statement later Sunday.

"The violence, fear and mistrust are contrary to the democratic transition and economic and social development that Myanmar is committed to," Nigam said. "It should not become an impediment to progress."

___

Associated Press writer Aye Aye Win in Yangon, Myanmar, and Todd Pitman in Bangkok contributed to this report.

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SAP eyes "long" period of high sales growth: report

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Broadway takes few chances with superstorm coming

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NEW YORK (AP) — Broadway took the threat of the mammoth storm seriously, with theater owners canceling all Sunday evening and Monday performances of shows like "The Book of Mormon" ''Once" and "Mama Mia!" long before a drop of rain fell in Times Square.

"The safety and security of theatregoers and employees is everyone's primary concern," said Charlotte St. Martin, executive director of The Broadway League, which represents producers.

Forecasts called for rain late Sunday or early Monday, and subway and public transportation service is to be halted Sunday evening, potentially stranding theatergoers. Refunds will be made available from the point of purchase.

Off-Broadway shows including "Stomp," ''Bad Jews" and "Golden Child" were also canceled Sunday night. Most matinees on and off Broadway stayed open. Mondays are usually very light on Broadway, with most shows having that as their day off.

Some Broadway shows had no evening shows scheduled Sunday, including "Cyrano de Bergerac," ''Annie," ''Chaplin," ''Enemy of the People," ''Once," ''Jersey Boys" and "Nice Work If You Can Get It."

It was the most disruptive storm for the theater community since the threat of Hurricane Irene in late August 2011 prompted producers to cancel matinee and evening performances on Saturday and Sunday. While that hurricane mostly fizzled over New York, every show lost money because they were mostly limited to five or six performances that week.

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FDA: Pharmacy tied to outbreak knew of bacteria

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WASHINGTON (AP) — Staffers at a pharmacy linked to the deadly meningitis outbreak documented dozens of cases of mold and bacteria growing in rooms that were supposed to be sterile, according to federal health inspectors.

In a preliminary report on conditions at the pharmacy, the Food and Drug Administration said Friday that even when the contamination at New England Compounding Center exceeded the company's own safety levels, there is no evidence that staffers investigated or corrected the problem. The FDA uncovered some four dozen reports of potential contamination in company records, stretching back to January this year.

The report comes from an FDA inspection of the Framingham, Mass.-based company earlier this month after steroid injections made by the company were tied to an outbreak of fungal meningitis. FDA officials confirmed last week that the black fungus found in the company's vials was the same fungus that has sickened 338 people across the U.S., causing 25 deaths.

The New England Compounding Center's lawyer said Friday the pharmacy "will review this report and will continue our cooperation with the FDA."

Compounding pharmacies like NECC traditionally fill special orders placed by doctors for individual patients, turning out a small number of customized formulas each week. They have traditionally been overseen by state pharmacy boards, though the FDA occasionally steps in when major problems arise. Some pharmacies have grown into much larger businesses in the last 20 years, supplying bulk orders of medicines to hospitals that need a steady supply of drugs on hand.

The FDA report provides new details about NECC's conditions, which were first reported by state officials earlier this week. The drug at the center of the investigation is made without preservative, so it's very important that it be made under highly sterile conditions. Compounding pharmacies prepare their medications in clean rooms, which are supposed to be temperature-controlled and air-filtered to maintain sterility.

But FDA inspectors noted that workers at the pharmacy turned off the clean room's air conditioning every night. FDA regulators said that could interfere with the conditions needed to prevent bacterial growth.

Inspectors also say they found a host of potential contaminants in or around the pharmacy's clean rooms, including green and yellow residues, water droplets and standing water from a leaking boiler.

Additionally, inspectors found "greenish yellow discoloration" inside an autoclave, a piece of equipment used to sterilize vials and stoppers. In another supposedly sterile room inspectors found a "dark, hair-like discoloration" along the wall. Elsewhere FDA staff said that dust from a nearby recycling facility appeared to be drifting into the pharmacy's rooftop air-conditioning system.

The FDA on Friday declined to characterize the severity of the problems at NECC, or to speculate on how they may have led to contamination of the products made by the pharmacy. FDA emphasized that the report is based on "initial observations" and that the agency's investigation is ongoing.

The agency also provided new details about the pharmacy's handling of the steroids it recalled last month. The company recalled three lots of steroids made since May that totaled 17,676 single-dose vials of medicine — roughly equivalent to 20 gallons. The shots are mainly used to treat back pain.

According to the agency's report, the pharmacy began shipping vials from the August lot to customers on Aug. 17. That was nearly two weeks before the pharmacy received test results from an outside laboratory confirming the sterility of the drug. When FDA scientists went back and tested the same lot this month, they found contamination in 50 vials.

Outside experts said the report paints a picture of a dysfunctional operation.

"The entire pharmacy was an incubator of bacteria and fungus," said Sarah Sellers, a former FDA officer who left the agency in 2008 after unsuccessfully pushing it to increase regulation of compounding pharmacies. She now consults for drug manufacturers. "The pharmacy knew this through monitoring results, and chose to do nothing."

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Analysis: Fiscal cliff could hit economy harder than many expect

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By Jason Lange


WASHINGTON (Reuters) - The United States runs the risk of a recession far deeper than many investors and policymakers may think if lawmakers fail to avert looming tax hikes and cuts to public spending.


Absent action by Congress, the country will face the so-called fiscal cliff at the start of next year, a combination of lower spending and higher taxes that is expected to extract about $600 billion from the economy.


Many economists think every dollar of deficit reduction will subtract nearly the same amount from economic growth.


By that measure, the current course could cause the economy to contract by 0.5 percent in 2013, according to estimates by the Congressional Budget Office (CBO) that have been largely embraced by Wall Street and the U.S. Federal Reserve.


But research by economists in academia and at the International Monetary Fund suggests a dollar of deficit reduction could drain as much as $1.70 from the economy, making the prospective belt tightening much more dangerous.


"You can take that 0.5 percent contraction and double it," said Barry Eichengreen, an economist at the University of California, Berkeley.


These researchers suspect fiscal contractions take a bigger-than-normal bite from economies when interest rates are very low, as is the case at the moment in the United States and in much of the developed world.


One explanation, Eichengreen said, is that when rates are higher, central banks can easily lower them to provide a counterweight to austerity. But when rates are near zero, as they are in the United States, it's harder to ease the pinch.


Historical data suggests higher taxes or lower government spending normally lead households to cut back on purchases only modestly. In the three decades through 2009, a dollar in government austerity would suck only half that from the economy, according to IMF research published this month which examined fiscal policy in 28 countries.


But economies around the world appear to be acting differently since the Great Recession. The IMF said it appeared that every dollar of recent fiscal consolidation has drained anywhere from $0.90 to $1.70 from economies.


The IMF said this suggested central banks have been having difficulty offsetting the impact from tighter budgets.


That could well be the case in the United States as well. The Fed pushed overnight rates to near zero in December 2008 and has resorted to the unconventional policy of purchasing government and housing-related bonds to revive the economy.


The central bank's chairman, Ben Bernanke, has acknowledged he would not be able to fully offset the pain if the economy runs into the "fiscal cliff."


With the U.S. jobless rate at 7.8 percent and the recovery still shaky, the possibility of a greater-than-expected hit to activity might be food for thought for lawmakers, who will be looking to cut some sort of deal on the budget before year end.


LET'S MAKE A DEAL


There's little room for error. Forecasters expect economic growth next year of just 2.1 percent, with the jobless rate edging down only slightly.


As it is, economists believe even the level of danger outlined by the nonpartisan CBO will be enough to propel lawmakers, who are deeply divided over taxes and spending, to reach an accord, although signs have yet to emerge that a deal is starting to gel.


"No political party wants to go down in history as the one that triggered the second half of the worst recession since the Great Depression," said Paul Dales, an economist with Capital Economics in London.


Capital Economics expects Congress will allow just under $100 billion in fiscal tightening, which it thinks would knock the same amount off gross domestic product (GDP).


Yields on U.S. government debt suggest investors as a whole are betting on even less tightening next year, according to research by analysts at Bank of America.


Bank of America itself expects lawmakers will allow much of the fiscal cliff to transpire, leading to about $325 billion in budget tightening, enough in their view to stall job growth.


Like Capital Economics and many other research units in the financial world, Bank of America presumes every dollar of tightening would drain the economy by about the same amount, although it says a bigger effect is possible.


"The economic impacts could be worse than our baseline assumptions," said Michael Hanson, an economist with the bank in New York.


Eichengreen and others who have studied economic data from the Great Depression, another time central banks were constrained, found the drag from a tightening of fiscal policy was much higher at the time. Eichengreen thinks currently the so-called multiplier is about 1.7, in line with the upper range of the IMF's estimate.


If he is right, even avoiding just half of the fiscal cliff would not be enough to steer the economy clear of recession.


Earlier this month, Senate Republican leader Mitch McConnell argued for not "a penny less" than $109 billion in budget tightening next year. But even a tightening in the budget of that magnitude would have an outsized effect if Eichengreen and others are on the mark.


"It would make more sense to assure a strong self-sustaining recovery before embarking on significant fiscal consolidation," Goldman Sachs economists said in a recent report that summarized research pointing to heightened risks of budget slashing.


(Reporting by Jason Lange; Editing by Tim Ahmann and Sandra Maler)

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