New Crowdfunding Site Seeks to Protect Backers of Industrial Design

Entrepreneur Jamie Siminoff wants to build more credibility into crowdfunding — so he’s launching a new platform that takes responsibility for ensuring the viability of new projects.

The crowdfunding process, pioneered by sites like Kickstarter, has had its share of huge successes, as well as failures. The problem, says Siminoff, is that when a venture fails, the funders are left holding the bag. That’s all well and good if you were investing in an artist’s crazy project. It’s much more of a problem if you thought you were pre-ordering a nearly finished gadget.

The biggest culprit for these kinds of issues are physical products. Witness the anger unleashed when Kickstarter darling Pebble announced a further delay alongside underwhelming color choices.

This kind of issue is why Kickstarter recently made some changes, undertaking a combination of education and rule revision. They reminded consumers that Kickstarter is not a store while requiring that all projects disclose risks and challenges, as well as forbidding renderings and concept videos in hardware products.

Siminoff’s answer is Christie Street, a crowdfunding site devoted exclusively to physical products. The promise of Christie Street is that it will vet the projects that it launches carefully, and provide guarantees of progress along the way. The idea is that these protections will make consumers feel safer about the products they’re backing. “We built something that we felt we needed,” he says.

Christie Street, named for the New Jersey road where Edison’s workshop was located, will require that all funders go through an auditing process before they are allowed to go live. Siminoff says that the idea will be to check for basic viability, a kind of sanity test.

“You look at the chips they say they want to use, the size of components that will need to fit in, and so on,” he says, “You check that things conform to what’s available on the market.” From there, they also perform third-party audits of the places where the product will be manufactured, and look at things like production cost and likely shipping time, to ensure that all of this seems realistic.

It’s an all-or-nothing audit. Either the new project meets Christie Street’s approval or it doesn’t. “Our feeling is that the customer that’s buying doesn’t have the sophistication to make the right decision [about whether a design's production targets are reliable],” says Siminoff, “The only way is create a place where you can trust to buy.”

Even after the initial approval, Christie Street stays involved in the project. Successfully funded projects get their money in stages, with Christie Street holding the rest in escrow. Inventors get one-third of the money on funding, one-third of the money once they have a production-ready prototype, and the final one-third when they have a golden prototype, which means they are ready for full manufacturing.

If at any time along the way the project fails, Christie Street will can the project and refund the remaining money to investors.

What constitutes failure? Siminoff ticks off four conditions.

First, the inventor could for whatever reason announce that they couldn’t finish.

Second, if the project ends up more than six months late. “This forces people to be more careful with their delivery dates,” says Siminoff.

Third, if the product falls short of what was promised. “If the pre-production sample is more than 15 percent worse than what was promised, we will not allowed you to manufacture the product,” says Siminoff. (For example, if you promised me 512GB and only delivered 256.)

Last, says Siminoff there are other nuances that they’ll have to work out as the site develops. For example, if a product ends up requiring significant redesign, then Christie Street might end up withholding funds. “Design is a tougher one to quantify,” he says, “but it’s important that the design overall fits what was promised to the customer.”

For the extra cautious, Christie Street goes even further than the refund of remaining money. For 10 percent of their pledge value, backers can insure their entire pledge. If the project goes wrong they’ll get all of it back. Combine that with a pledge from inventors that the product will retail for at least 10 percent more than the pledge amount, and you can either take a 10 percent discount for some additional risk or pay full retail, with a money-back guarantee.

In effect, Christie Street is navigating a space between crowfunding sites like Kickstarter and Indiegogo, which expect backers to handle a lot of their own due diligence while allowing the inventors to be entrepreneurs, and crowdsourcing design sites like Quirky, which handles all of the business elements in-house.

Christie Street is an effort at drawing the lines of trust in a new way, one tied directly to the realities of post-industrial product design. Rather than a blanket ban on renderings and early designs, or a Wild West ‘anything goes’ approach, they instead seeks to tame the parts where production can go really wrong, in the devilish details of prototyping and manufacturing. It leaves questions of whether or not the thing is cool to the wisdom of the crowds, while taking on the question of whether or not the thing is possible.

This is obviously a lot more intervention between middleman and inventor than you’d see on a site like Indigegogo or Kickstarter. Siminoff says that they can still take the same 5 percent cut as their competitors because physical products tend to be involved higher dollar-value projects from the start. “If all goes well, we’ll be doing 10 to 15 live projects a months a year from now,” he says, “We think we can be profitable in the product world.”

“We’re not trying to make it where inventors are just be a name on a product,” says Siminoff, “We still want them to be entrepreneur and build this thing. We just want to make sure that they don’t fail in a way that hurts the customer.”

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Cablevision to raise Internet prices by $5 a month

(Reuters) – Cablevision Systems Corp, the New York-based cable operator, said on Thursday it would raise its Internet prices by $ 5 in January, representing an average hike of 3.2 percent for customers’ total monthly bills.

The company said in a statement that prices for its video and phone services will not be affected and that prices for promotional packages, which generally last one year, will not rise.

But all customers who have Internet service as part of their video or phone package will see prices rise.

Cablevision said it had not raised Internet prices in a decade. It raised video prices in 2011, which saw customer bills rise by 2.88 percent on average.

The company said it has invested $ 140 million in improving its Internet network, deployed more than 50,000 WiFi “hotspots,” and puts no usage caps on its service, unlike some cable competitors.

Canaccord Genuity analyst Tom Eagan downgraded his Cablevision rating from “buy” to “hold” on November 27 and said that Cablevision would lose customers if it were to decide to raise prices not long after Superstorm Sandy.

“Given the massive service outages among its subscribers (after Sandy), we don’t believe the company can raise rates … without incurring material customer churn,” Eagan said.

The cable provider, which is controlled by the Dolan family, said in early November that costs from Sandy, which knocked out service for as many as half its customers, would be substantially higher than its $ 16 million bill from Hurricane Irene in 2011.

Like bigger operators Comcast and Time Warner Cable, Cablevision has been losing customers to rivals such as satellite television provider DirecTV and telephone operator Verizon Communications.

Cablevision shares closed up 2.6 percent, at $ 14.16, on Thursday.

(Reporting By Liana B. Baker; Editing by Steve Orlofsky and Leslie Adler)

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New Taxes to Take Effect to Fund Health Care Law

WASHINGTON — For more than a year, politicians have been fighting over whether to raise taxes on high-income people. They rarely mention that affluent Americans will soon be hit with new taxes adopted as part of the 2010 health care law.

The new levies, which take effect in January, include an increase in the payroll tax on wages and a tax on investment income, including interest, dividends and capital gains. The Obama administration proposed rules to enforce both last week.

Affluent people are much more likely than low-income people to have health insurance, and now they will, in effect, help pay for coverage for many lower-income families. Among the most affluent fifth of households, those affected will see tax increases averaging $6,000 next year, economists estimate.

To help finance Medicare, employees and employers each now pay a hospital insurance tax equal to 1.45 percent on all wages. Starting in January, the health care law will require workers to pay an additional tax equal to 0.9 percent of any wages over $200,000 for single taxpayers and $250,000 for married couples filing jointly.

The new taxes on wages and investment income are expected to raise $318 billion over 10 years, or about half of all the new revenue collected under the health care law.

Ruth M. Wimer, a tax lawyer at McDermott Will & Emery, said the taxes came with “a shockingly inequitable marriage penalty.” If a single man and a single woman each earn $200,000, she said, neither would owe any additional Medicare payroll tax. But, she said, if they are married, they would owe $1,350. The extra tax is 0.9 percent of their earnings over the $250,000 threshold.

Since the creation of Social Security in the 1930s, payroll taxes have been levied on the wages of each worker as an individual. The new Medicare payroll is different. It will be imposed on the combined earnings of a married couple.

Employers are required to withhold Social Security and Medicare payroll taxes from wages paid to employees. But employers do not necessarily know how much a worker’s spouse earns and may not withhold enough to cover a couple’s Medicare tax liability. Indeed, the new rules say employers may disregard a spouse’s earnings in calculating how much to withhold.

Workers may thus owe more than the amounts withheld by their employers and may have to make up the difference when they file tax returns in April 2014. If they expect to owe additional tax, the government says, they should make estimated tax payments, starting in April 2013, or ask their employers to increase the amount withheld from each paycheck.

In the Affordable Care Act, the new tax on investment income is called an “unearned income Medicare contribution.” However, the law does not provide for the money to be deposited in a specific trust fund. It is added to the government’s general tax revenues and can be used for education, law enforcement, farm subsidies or other purposes.

Donald B. Marron Jr., the director of the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, said the burden of this tax would be borne by the most affluent taxpayers, with about 85 percent of the revenue coming from 1 percent of taxpayers. By contrast, the biggest potential beneficiaries of the law include people with modest incomes who will receive Medicaid coverage or federal subsidies to buy private insurance.

Wealthy people and their tax advisers are already looking for ways to minimize the impact of the investment tax — for example, by selling stocks and bonds this year to avoid the higher tax rates in 2013.

The new 3.8 percent tax applies to the net investment income of certain high-income taxpayers, those with modified adjusted gross incomes above $200,000 for single taxpayers and $250,000 for couples filing jointly.

David J. Kautter, the director of the Kogod Tax Center at American University, offered this example. In 2013, John earns $160,000, and his wife, Jane, earns $200,000. They have some investments, earn $5,000 in dividends and sell some long-held stock for a gain of $40,000, so their investment income is $45,000. They owe 3.8 percent of that amount, or $1,710, in the new investment tax. And they owe $990 in additional payroll tax.

The new tax on unearned income would come on top of other tax increases that might occur automatically next year if President Obama and Congress cannot reach an agreement in talks on the federal deficit and debt. If Congress does nothing, the tax rate on long-term capital gains, now 15 percent, will rise to 20 percent in January. Dividends will be treated as ordinary income and taxed at a maximum rate of 39.6 percent, up from the current 15 percent rate for most dividends.

Under another provision of the health care law, consumers may find it more difficult to obtain a tax break for medical expenses.

Taxpayers now can take an itemized deduction for unreimbursed medical expenses, to the extent that they exceed 7.5 percent of adjusted gross income. The health care law will increase the threshold for most taxpayers to 10 percent next year. The increase is delayed to 2017 for people 65 and older.

In addition, workers face a new $2,500 limit on the amount they can contribute to flexible spending accounts used to pay medical expenses. Such accounts can benefit workers by allowing them to pay out-of-pocket expenses with pretax money.

Taken together, this provision and the change in the medical expense deduction are expected to raise more than $40 billion of revenue over 10 years.

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As Recovery Inches Ahead, Banks Face a New Reckoning

The nation’s largest banks are facing a fresh torrent of lawsuits asserting that they sold shoddy mortgage securities that imploded during the financial crisis, potentially adding significantly to the tens of billions of dollars the banks have already paid to settle other cases.

Regulators, prosecutors, investors and insurers have filed dozens of new claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and others, related to more than $1 trillion worth of securities backed by residential mortgages.

Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life.

The banks are battling on three fronts: with prosecutors who accuse them of fraud, with regulators who claim that they duped investors into buying bad mortgage securities, and with investors seeking to force them to buy back the soured loans.

“We are at an all-time high for this mortgage litigation,” said Christopher J. Willis, a lawyer with Ballard Spahr.

Efforts by the banks to limit their losses could depend on the outcome of one of the highest-stakes lawsuits to date — the $200 billion case that the Federal Housing Finance Agency, which oversees the housing twins Fannie Mae and Freddie Mac, filed against 17 banks last year, claiming that they duped the mortgage finance giants into buying shaky securities.

Last month, lawyers for some of the nation’s largest banks descended on a federal appeals court in Manhattan to make their case that the agency had waited too long to sue. A favorable ruling could overturn a decision by Judge Denise L. Cote, who is presiding over the litigation and has so far rejected virtually every defense raised by the banks, and would be cheered in bank boardrooms. It could also allow the banks to avoid federal housing regulators’ claims.

At the same time, though, some major banks are hoping to reach a broad settlement with housing agency officials, according to several people with knowledge of the talks. Although the negotiations are at a very tentative stage, the banks are broaching a potential cease-fire.

As the housing market and the nation’s economy slowly recover from the 2008 financial crisis, Wall Street is vulnerable on several fronts, including tighter regulations assembled in the aftermath of the crisis and continuing investigations into possible rigging of a major international interest rate. But the mortgage lawsuits could be the most devastating and expensive, bank analysts say.

“All of Wall Street has essentially refused to deal with the real costs of the litigation that they are up against,” said Christopher Whalen, a senior managing director at Tangent Capital Partners. “The real price tag is terrifying.”

Anticipating painful costs from mortgage litigation, the five major sellers of mortgage-backed securities set aside $22.5 billion as of June 30 just to cushion themselves against demands that they repurchase soured loans from trusts, according to an analysis by Natoma Partners.

But in the most extreme situation, the litigation could empty even more well-stocked reserves and weigh down profits as the banks are forced to pay penance for the subprime housing crisis, according to several senior officials in the industry.

There is no industrywide tally of how much banks have paid since the financial crisis to put the mortgage litigation behind them, but analysts say that future settlements will dwarf the payouts so far. That is because banks, for the most part, have settled only a small fraction of the lawsuits against them.

JPMorgan Chase and Credit Suisse, for example, agreed last month to settle mortgage securities cases with the Securities and Exchange Commission for $417 million, but still face billions of dollars in outstanding claims.

Bank of America is in the most precarious position, analysts say, in part because of its acquisition of the troubled subprime lender Countrywide Financial.

Last year, Bank of America paid $2.5 billion to repurchase troubled mortgages from Fannie Mae and Freddie Mac, and $1.6 billion to Assured Guaranty, which insured the shaky mortgage bonds.

But in October, federal prosecutors in New York accused the bank of perpetrating a fraud through Countrywide by churning out loans at such a fast pace that controls were largely ignored. A settlement in that case could reach well beyond $1 billion because the Justice Department sued the bank under a law that could allow roughly triple the damages incurred by taxpayers.

Bank of America’s attempts to resolve some mortgage litigation with an umbrella settlement have stalled. In June 2011, the bank agreed to pay $8.5 billion to appease investors, including the Federal Reserve Bank of New York and Pimco, that lost billions of dollars when the mortgage securities assembled by the bank went bad. But the settlement is in limbo after being challenged by investors. Kathy D. Patrick, the lawyer representing investors, has said she will set her sights on Morgan Stanley and Wells Fargo next.

Of the more than $1 trillion in troubled mortgage-backed securities remaining, Bank of America has more than $417 billion from Countrywide alone, according to an analysis of lawsuits and company filings. The bank does not disclose the volume of its mortgage litigation reserves.

“We have resolved many Countrywide mortgage-related matters, established large reserves to address these issues and identified a range of possible losses beyond those reserves, which we believe adequately addresses our exposures,” said Lawrence Grayson, a spokesman for Bank of America.

Adding to the legal fracas, the New York attorney general, Eric T. Schneiderman, accused Credit Suisse last month of perpetrating an $11.2 billion fraud by deceiving investors into buying shoddy mortgage-backed securities. According to the complaint, the bank dismissed flaws in the loans packaged into securities even while assuring investors that the quality was sound. The bank disputes the claims.

It is the second time that Mr. Schneiderman — who is also co-chairman of the Residential Mortgage-Backed Securities Working Group, created by President Obama in January — has taken aim at Wall Street for problems related to the subprime mortgage morass. In October, he filed a civil suit in New York State Supreme Court against Bear Stearns & Company, which JPMorgan Chase bought in 2008. The complaint claims that Bear Stearns and its lending unit harmed investors who bought mortgage securities put together from 2005 through 2007. JPMorgan denies the allegations.

Another potentially costly headache for the banks are the demands from a number of private investors who want the banks to buy back securities that violated representations and warranties vouching for the loans.

JPMorgan Chase told investors that as of the second quarter of this year, it was contending with more than $3.5 billion in repurchase demands. In the same quarter, it received more than $1.5 billion in fresh demands. Bank of America reported that as of the second quarter, it was dealing with more than $22 billion in unresolved demands, more than $8 billion of which were received during that quarter.

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Surgeon infected patients during heart procedure, Cedars-Sinai admits

A heart surgeon at Cedars-Sinai Medical Center unwittingly infected five patients during valve replacement surgeries earlier this year, causing four of the patients to need a second operation.

The infections occurred after tiny tears in the latex surgical gloves routinely worn by the doctor allowed bacteria from a skin inflammation on his hand to pass into the patients' hearts, according to the hospital. The patients survived the second operation and are still recovering, hospital officials said.

The outbreak led to investigations by the hospital and both the L.A. County and California departments of public health. The federal Centers for Disease Control and Prevention was also consulted.

Hospital officials called it a "very unusual occurrence" probably caused by an unfortunate confluence of events: the nature of the surgery, the microscopic rips in the gloves and the surgeon's skin condition. Valve replacement requires the surgeon to use thick sutures and tie more than 100 knots, which can cause extra stress on the gloves, they said.

Nevertheless, the hospital's goal is to have zero infections, said Harry Sax, vice chairman of the hospital's department of surgery. "Any hospital-acquired infection is unacceptable," he said.

The infections raise questions about what health conditions should prevent a surgeon from operating and how to get the best protection from surgical gloves. Surgeons with open sores or known infections aren't supposed to operate, but there is no national standard on what to do if they have skin inflammation, said Rekha Murthy, medical director of the hospital's epidemiology department. She added that there were also no national standards on types of gloves used, whether to wear double gloves or how many times surgeons should change those gloves during a procedure.

Healthcare-acquired infections are very common throughout the United States. Each year, infections cause 99,000 deaths in the country, including about 12,000 in California. Hospitals in the state are required to report certain infections to the California Department of Public Health. That reporting makes the public more aware of the quality of care provided at local hospitals and is an important tool for reducing infections, said Debby Rogers, deputy director of the department's Center for Health Care Quality.

Cedars-Sinai has low rates for hospital-acquired infections compared with the state and national average but has not performed as well on other surgical quality measures recently, according to the Leapfrog Group, an employer-backed nonprofit focused on healthcare quality. The organization gave the hospital a C rating last month on its national report card, down from an A in June, though it was not related to the infection outbreak.

"Clearly this hospital is making attempts to reduce infections, but they have more work to do," said Leah Binder, Leapfrog's chief executive.

Cedars-Sinai Medical Center conducts about 360 valve replacement surgeries each year and said infections occur in fewer than 1% of its cases — lower than the national average.

The hospital learned about the problem in June after three patients who had undergone valve replacement surgery showed signs of infection. Doctors diagnosed the patients with an infection called endocarditis. Concerned there might be a connection among the cases, epidemiologists analyzed the bacteria, staphylococcus epidermidis, and determined that it was an identical strain and therefore must have come from a single source. "It led to the question of gee, I wonder where it came from?" Murthy said.

Epidemiologists homed in on the surgeon with the skin inflammation. The bacteria matched, and then they made a surprising discovery: microscopic tears in the gloves typically worn by surgeons after performing valve replacement surgery. The surgeon, whose name was not released, was not allowed to operate again until he healed. He is still a member of the medical staff but no longer performs surgeries at the hospital.

The hospital soon found the same infection in two more patients. Officials also reached out to 67 patients who had heart valve replacements with the same surgeon but didn't find any other cases. One of the five infected patients was treated with antibiotics, and the other four had new valve replacement surgeries. Sax said the hospital apologized to the patients and has continued to monitor their health. The hospital has also covered the cost of their care, including follow-up treatment and all the related surgeries.

All surgeons doing valve replacements are now required to change gloves more frequently, officials said. Some surgeons are wearing double gloves during the operations, Sax said.

Following the outbreak, Cedars-Sinai did the proper follow-up to ensure the safety of their patients, said Dawn Terashita, a medical epidemiologist with L.A. County, who was notified in September. What occurred at Cedars-Sinai was an unintentional consequence of the surgery, she said.

"There is no way to keep a room entirely sterile and all the people in it sterile," she said. "You will always have risk of infection."

anna.gorman@latimes.com

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15 Agonizing Automotive Atrocities

Yugo.

There, we got it out of the way. When you read the headline, of course an image of a tiny Cold War-era hatchback popped into your head. We bet you also shuddered at the thought of a Pontiac Aztek.

We love to poke fun at failure, and no failure made a punchline better than the Yugo. We found that out while talking with Jason Vuic, author of The Yugo: The Rise and Fall of the Worst Car in History. Vuic was aware that the Yugo fell far short of being a good car, but what truly amazed him was how many people who had never driven a Yugo knew just how bad it was. In failure, it became a wild viral marketing success.

Not all cars rose to level of infamy embodied by the Yugo. To paraphrase Shakespeare, some cars were born awful while others had awfulness thrust upon them. Some automotive atrocities were the result of automakers trying something new and falling far short of the mark, while other cars failed from a lack of effort. Still others were perfectly adequate cars but came to represent a regrettable moment in time.

Here we display all three kinds of auto-trocities, highlighting famous failures and digging deep to dredge up detritus better off forgotten. Yes, we know there are many, many more automotive atrocities and this list only scratches the surface of the heap. You’ll have a chance to list your favorite heaps tomorrow, so stay tuned.

Above: Peel Trident 1965-1966

Famous from appearances on Top Gear and Monster Garage, the Peel Trident was a “shopping car” built on the Isle of Man. Along with the bubblelicious BMW Isetta and the fiberglass Reliant Robin, the Trident was ridiculed for its small size and three wheels.

Photo: Casaflamingo/Flickr

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Rolling Stones hit NY for 50th anniversary gig

NEW YORK (AP) — “Time Waits for No One,” the Rolling Stones sang in 1974, but lately it’s seemed like that grizzled quartet does indeed have some sort of exemption from the ravages of time.

At an average age of 68-plus years, the British rockers are clearly in fighting form, sounding tight, focused and truly ready for the spotlight at a rapturously received pair of London concerts last month.

On Saturday, Mick Jagger, Keith Richards, Ronnie Wood and Charlie Watts hit New York for the first of three U.S. shows on their “50 and Counting” mini-tour, marking a mind-boggling half-century since the band first began playing its unique brand of blues-tinged rock.

And the three shows — Saturday’s at the new Barclays Center in Brooklyn, then two in Newark, N.J., on Dec. 13 and 15 — aren’t the only big dates on the agenda. Next week the Stones join a veritable who’s who of British rock royalty and U.S. superstars at the blockbuster 12-12-12 Sandy benefit concert at Madison Square Garden. Also scheduled to perform: Paul McCartney, the Who, Eric Clapton, Bruce Springsteen & The E Street Band, Alicia Keys, Kanye West, Eddie Vedder, Billy Joel, Roger Waters and Chris Martin.

The Stones‘ three U.S. shows promise to have their own special guests, too. Mary J. Blige will be at the Brooklyn gig, as well as guitarist Gary Clark Jr., the band has announced. (Blige performed a searing “Gimme Shelter” with frontman Jagger in London.) Rumors are swirling of huge names at the Dec. 15 show, which also will be on pay-per-view.

In a flurry of anniversary activity, the band also released a hits compilation last month with two new songs, “Doom and Gloom” and “One More Shot,” and HBO premiered a new documentary on their formative years, “Crossfire Hurricane.”

The Stones formed in London in 1962 to play Chicago blues, led at the time by the late Brian Jones and pianist Ian Stewart, along with Jagger and Richards, who’d met on a train platform a year earlier. Bassist Bill Wyman and drummer Charlie Watts were quick additions.

Wyman, who left the band in 1992, was a guest at the London shows last month, as was Mick Taylor, the celebrated former Stones guitarist who left in 1974 — to be replaced by Wood, the newest Stone and the youngster at 65.

The inevitable questions have been swirling about the next step for the Stones: another huge global tour, on the scale of their last one, “A Bigger Bang,” which earned more than $ 550 million between 2005 and 2007? Something a bit smaller? Or is this mini-tour, in the words of their new song, really “One Last Shot”?

The Stones won’t say. But in an interview last month, they made clear they felt the 50th anniversary was something to be marked.

“I thought it would be kind of churlish not to do something,” Jagger told The Associated Press. “Otherwise, the BBC would have done a rather dull film about the Rolling Stones.”

__

Associated Press writer David Bauder contributed to this report.

Entertainment News Headlines – Yahoo! News

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Supreme Court to rule on California's Prop. 8 ban on gay marriage

The Supreme Court announced Friday it will rule for the first time on same-sex marriage by deciding the constitutionality of California’s Proposition 8, the voter initiative that limited marriage to a man and a woman.

The justices also said they would decide whether legally married gay couples have a right to equal benefits under federal law.

The California case raises the broad question of whether gays and lesbians have an equal right to marry.

FULL COVERAGE: The battle over gay marriage 

If the justices had turned down the appeal from the defenders of Prop. 8, it would have allowed gay marriages to resume in California, but without setting a national precedent.

Now, the high court has agreed to decide whether a state’s ban on same-sex marriages violates the U.S. Constitution. The court’s intervention came just one month after voters in three states — Maine, Maryland and Washington — approved gay marriages. This brought the total to nine states having legalized same-sex marriages. 

But the justices also left themselves a way out. They said they would consider whether the defenders of Prop. 8 had legal standing to bring their appeal.

The justices made the announcement after meeting behind closed doors. They did not say which justices voted to hear the appeals.

Last year, the U.S. 9^th Circuit Court of Appeals struck down Prop. 8, but it did so on a narrow basis. Judge Stephen Reinhardt reasoned that the voter initiative was unconstitutional because it took away from gays and lesbians a right to marry that they had won before the state Supreme Court.

The justices now will have at least three options before them: They could reverse the 9^th Circuit and uphold Prop. 8, thereby making it clear that the definition of marriage will be left to the discretion of each state and its voters.

They could rule broadly that denying gays and lesbians the fundamental right to marry violates the Constitution’s guarantee of equal protection of the laws. Such a decision would open the door to gay marriages nationwide.

Or as a third option, they could follow the approach set by the 9^th Circuit and strike down Prop. 8 in a way that limits the ruling to California only.

In the other gay-marriage cases, the court will decide the constitutionality of part of the Defense of Marriage Act  that denies federal benefits to legally married couples. Judges in New England, New York and California have ruled this provision unconstitutional.

The justices are expected to hear arguments in the two sets of gay marriage cases in March and issue decisions by late June.

FULL COVERAGE: The battle over gay marriage 

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david.savage@latimes.com

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Apple's U.S.-Made Macs Are a Drop in the Bucket — But Could Herald a Job Flood

Apple spent nearly $10 billion this past year on the tools and equipment needed to make its products. In that light, Apple CEO Tim Cook’s promise this week to invest more than $100 million to move production for one of its Mac lines to the U.S. next year sounds paltry.

But even such a small sum could signal something much bigger for the U.S. economy: namely, that moving manufacturing jobs back from China to the U.S. is starting to make financial sense.

For more than a dozen years, Apple has relied on a “designed in the U.S., made in China” strategy. That’s chiefly because the cost of labor in China is so much cheaper. This simple reality has shifted the globe’s economic center of gravity over the past decade. China has become the world’s manufacturing hub.

But that influx of wealth into China hasn’t only meant more money for factory owners and CEOs. Hal Sirkin, a senior partner with The Boston Consulting Group, has spent the past two years examining the phenomenon of “insourcing” — the return of jobs to the U.S. from overseas. When China joined the World Trade Organization in 2001, Sirkin says, the average Chinese worker made 58 cents per hour — a cost that had companies around the world banging on the doors of Chinese factories. Every year since, however, Sirkin says wages in China have risen an average of 15 to 20 percent annually.

“Once labor stops becoming cheap, all of a sudden the equation turns,” he says.

Worker productivity adds another variable that could make the math behind insourcing even more attractive to U.S. companies. Sirkin says American workers are about three times as productive as their Chinese counterparts, even as the Great Recession has kept U.S. wages stagnant. At 58 cents an hour, 10 Chinese workers were still cheaper than a single more productive worker in the U.S. But by 2015, if current trends continue, Sirkin says the wage gap will shrink enough that lower productivity combined with transportation costs will make Chinese workers the more expensive option for making goods to be sold in the U.S.

All that said, a mere $100 million from Apple doesn’t register as a huge vote of confidence in insourcing, nor does the part of its business it’s bringing back home. The Mac lineup is no longer Apple’s main source of revenue, nor is it a growing sector. In its most recent quarter, the company sold just under 5 million Macs, a 1 percent increase from the previous year. In comparison, the company sold 14 million iPads, up 26 percent from the prior year, and just under 27 million iPhones, a whopping 58 percent jump from the same quarter one year ago.

“This is going to impact a very small percentage of the business,” says Tom Dinges, a senior supply chain analyst at IHS.

Dinges says Cook is under a lot of pressure to create more U.S. jobs in the U.S. when so many of its products are sold here, though the company itself says it’s responsible for nearly 600,000 American jobs directly and indirectly. Add the bad publicity Apple has faced following revelations of employee suicides, poor working conditions and low wages at Foxconn factories in China and $100 million starts to seem like a small price for Apple to pay to polish its tarnished corporate image.

But no company gets to be as big as Apple without keeping a sharp eye on global economic trends. Apple has built up an incredibly efficient supply chain overseas, and we won’t be seeing iPhone or iPad factories springing up stateside anytime soon. But even a small move back to the U.S. gives Apple better footing to make further strides if insourcing starts to look like a clearer path to more profits.

And it’s not the only PC maker headed in that direction. Lenovo, the world’s second largest PC maker, has committed to building a manufacturing facility in Whitsett, North Carolina, close to its U.S. headquarters — though this isn’t exactly insourcing, since Lenovo is itself a Chinese company. Google made it’s Nexus Q, albeit a failed device, in the U.S. And server companies like SeaMicro have also opted to manufacture close to home.

In the end, every company will make its own calculations, and the answer won’t always come out the same, says Michael Marks, former CEO of contract manufacturer Flextronics Inc. and a founding partner at Riverwood Capital, a private equity firm. Asia has built up a huge infrastructure over decades supplying the components to make consumer electronics, which makes makes any attempt to manufacture gadgets in the U.S. again a complicated proposition.

At the same time, he says “the balance of power in cost has changed.” Nobody will be making circuit boards or displays in U.S., Marks predicts. But he says bringing all the components together and assembling them for just-in-time delivery to stores and customers could help PC makers stay competitive in the domestic market compared to having a fully assembled machine sit on a boat for a month en route from China.

Even then, insourcing still might not be an unequivocal cause for celebration. If more assembly-line jobs do return to the U.S., Marks says they won’t be like the fabled post-World War II middle-class manufacturing jobs in automaking and aerospace. “A hamburger flipper makes more money at McDonald’s than an assembly line worker would make,” he says. Such factories also won’t be massive 5,000-employee behemoths, he says, since the U.S. — even with its current unempoloyment rate — doesn’t have the labor pool to staff them. Instead, he says the country will see smaller shops more in the range of 100 employees each.

Still, he says insourcing is real. And it will change the job landscape.

“A whole bunch of hundreds turns into thousands,” Marks says. “It’s definitely a useful trend for America.”

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UK’s Kate and William “saddened” by nurse’s death

LONDON (Reuters) – Britain’s Prince William and his wife Kate said on Friday they were “deeply saddened” by the death of a nurse who fell victim to a prank call from an Australian radio station seeking details of the duchess’s condition while she was in hospital for morning sickness.

The King Edward VII hospital earlier confirmed the death of the nurse, Jacinda Saldanha.

“Their Royal Highnesses were looked after so wonderfully well at all times by everybody at King Edward VII Hospital, and their thoughts and prayers are with Jacintha Saldanha‘s family, friends and colleagues at this very sad time,” said a statement from William’s office.

(Reporting by Tim Castle; editing by Stephen Addison)

Celebrity News Headlines – Yahoo! News

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