Millions in Northeast struggle after massive storm

NEW YORK (Reuters) - The northeastern United States battled epic flood waters and lengthy power outages on Tuesday after the massive storm Sandy pummeled the coast with a record storm surge, high winds and heavy rains that killed at least 45 people and caused billions of dollars in losses.

Millions of people in New York City and other hard-hit areas will spend days or weeks recovering from a storm already seen as far more destructive that Hurricane Irene, which slammed into the same region a year ago. One disaster modeling company said Sandy may have caused up to $15 billion in insured losses.

The storm killed 18 people in New York City, among 23 total in New York state, while six died in New Jersey. Seven other states reported fatalities.

Some 8.2 million homes and businesses in several states were without electricity as trees toppled by Sandy's fierce winds took down power lines.

Sandy hit the coast with a week to go to the November 6 presidential election and turned its fury inland with heavy snowfall, dampening an unprecedented drive to encourage early voting and raising questions whether some polling stations will be ready to open on Election Day.

New York City will struggle without its subway system, which was inundated and will remain shut for days. Much of the Wall Street district was left underwater but officials hoped to have financial markets reopen on Wednesday.

Sandy was the biggest storm to hit the country in generations when it crashed ashore with hurricane-force winds on Monday near the New Jersey gambling resort of Atlantic City, devastating the Jersey Shore tourist haven. Flood waters lifted parked cars and deposited them on an otherwise deserted highway.

With the political campaign and partisanship on hold, Democratic President Barack Obama and Republican New Jersey Governor Chris Christie planned to tour New Jersey disaster areas on Wednesday.

"It's total devastation down there. There are boats in the street five blocks from the ocean," said Peter Sandomeno, an owner of the Broadway Court Motel in Point Pleasant Beach, New Jersey.

Christie, who has been a strong supporter of Republican presidential challenger Mitt Romney, praised Obama and the federal response to the storm.

Obama and Romney put campaigning on hold for a second day but Romney planned to hit the trail again in Florida on Wednesday and Obama seemed likely to resume campaigning on Thursday for a final five-day sprint to Election Day.

Obama faces political danger if the government fails to respond well, as was the case with predecessor George W. Bush's botched handling of Hurricane Katrina in 2005. Obama has a chance to show that his administration has learned the lessons of Katrina and that he can lead during a crisis.

NEW YORK UNDER WATER

Sandy brought a record storm surge of almost 14 feet to downtown Manhattan, well above the previous record of 10 feet during Hurricane Donna in 1960, the National Weather Service said.

The storm forced New York City to postpone its traditional Halloween parade, which had been set for Wednesday night in Greenwich Village and threatened to disrupt Sunday's New York City marathon.

The lower half of Manhattan went dark when surging seawater flooded a substation and as power utility Consolidated Edison shut down others pre-emptively. Some 250,000 customers lost power.

Fire ravaged the Breezy Point neighborhood in the borough of Queens, destroying 110 homes and damaging 20 while destroying still more in the nearby neighborhood of Belle Harbor. Remarkably, no fatalities were reported.

"To describe it as looking like pictures we've seen of the end of World War Two is not overstating it," New York Mayor Michael Bloomberg said after touring the area. "The area was completely leveled. Chimneys and foundations were all that was left of many of these homes."

Hospitals closed throughout the region, forcing patients to relocate and doctors to carry premature babies down more than a dozen flights of stairs at one New York City facility.

While some parts of the city went unscathed, neighborhoods along the East and Hudson rivers bordering Manhattan were underwater and expected to be without power for days, as were low-lying streets in Battery Park near Ground Zero, where the World Trade Center stood before the September 11, 2001, attacks.

"I'm lucky to have gas; I can make hot water. But there is no heating and I'm all cold inside," said Thea Lucas, 87, who lives alone in Manhattan's Lower East Side.

DESTRUCTION THROUGHOUT REGION

Airlines canceled more than 18,000 flights, though two of the New York City area's three major airports planned to reopen with limited service on Wednesday.

Cellphone service went silent in many states and some emergency call centers were affected.

Some cities like Washington, Philadelphia and Boston were mostly spared but he storm reached as far inland as Ohio and parts of West Virginia were buried under 3 feet (1 meter) of snow, a boon for ski resorts that was one of the storm's few bright spots.

The western extreme of Sandy's wind field buffeted the Great Lakes region, according to Andrew Krein of the National Weather Service, generating wind gusts of up to 60 mph on the southern end of Lake Michigan and up to 35 mph Chicago.

In Cleveland, buildings in the city's downtown area were evacuated due to flooding, police said. Winds gusting to 50 mph brought down wires and knocked out power to homes and business. City officials asked residents to stay inside and for downtown businesses to remained closed for the day.

Amid the devastation there was opportunity. Snowmakers at Snowshoe Mountain in the mountains of West Virginia had their equipment running at full speed on Tuesday, taking advantage of the cold temperatures to build the 24-30 inch base they need to open for skiing by Thanksgiving.

"There are snowmakers out there making snow in what was a hurricane and blizzard," said Dave Dekema, marketing director for the resort, which received a foot-and-a-half of snow, with another foot or two expected.

The resort's phones, email account and Facebook pages were "going crazy," Dekema said, with avid skiers and snowboarders wondering if there was any chance of getting out on the mountain this weekend. He said that was unlikely.

(Additional reporting by Scott Malone in Boston; Ilaina Jonas, Daniel Bases, Lucas Jackson, Edward Krudy and Scott DiSavino in New York; Ian Simpson in West Virginia; Diane Bartz and Andrea Shalal-Esa in Washington; Brendan O'Brien in Milwaukee; Susan Guyett in Indianapolis; Kim Palmer in Cleveland and James B. Kelleher in Chicago. Writing by Daniel Trotta and Ros Krasny; Editing by Bill Trott)

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Panasonic may curb solar panel, lithium battery expansion: sources

TOKYO (Reuters) - Electronics conglomerate Panasonic Corp may curtail its expanded production of solar panels and small lithium batteries used in PCs and other devices as part of new round of restructuring, two sources at the company told Reuters.

Panasonic recently built a solar panel plant in Malaysia for 45 billion yen ($564 million), upping capacity by one-third to 900 megawatts. Plans to further ramp up production to 1.5 gigawatts may be scaled back, however, because of weak demand, particularly in Europe, the sources said on condition they were not identified.

Panasonic's new president, Kazuhiro Tsuga, has promised a new revival plan for the Japanese company by the end of the current business year next March 31. He has said he will weed out loss-making or low-profitability units.

The firm's business in small lithium batteries has been hurt by price competition from Korean and Chinese competitors. Falling into the red last year, it was aiming to return to profit this year by shifting production to China, where costs are lower, but may post a loss instead, the sources said.

As a result of the squeeze on expanded output of solar panels and batteries, Panasonic's energy unit may struggle to reach a target of raising sales to more than 1 trillion yen, or 10 percent of overall sales, and operating margin to at least 10 percent by March 2016, the sources said.

The unit retains 202 billion yen of goodwill following the acquisition of Sanyo in 2010. Analysts estimate that two-thirds of that is related to solar panels and small lithium batteries.

Shares of Panasonic, which releases its results on Wednesday for the quarter ended September 30, rose 3 percent in morning trading in Tokyo to 507 yen. ($1 = 79.8150 Japanese yen) (Writing by Tim Kelly; Editing by Michael Watson)

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In Vietnam, US relies on pirate site to network

HO CHI MINH CITY, Vietnam (AP) — It's a wildly popular website laden with unlicensed songs and Hollywood movies, a prime exhibit of the digital piracy that is strangling the music industry in Asia and eroding legitimate online sales around the world.

The free-to-download bonanza has pushed Vietnam's Zing.vn into the ranks of the globe's top 550 websites. But a few clicks inside the site reveal a surprising presence: the U.S. government, which maintains a bustling social media account there.

Washington is a vocal proponent of intellectual property rights in Vietnam as it is around the world, and a site like Zing would be shut down in the United States. But with space for public diplomacy limited in Communist Vietnam, the American embassy uses its "Zingme" account to reach out to young people in Vietnam as it seeks to build closer ties with its former enemy.

The embassy's presence shows just how mainstream pirate sites have become in Vietnam, where the government does nothing to stop them operating. But it also raises questions whether Washington is legitimizing a renowned pirate site that record labels, singers and industry groups say ignores requests that it take down infringing material.

Coca-Cola and Samsung pulled their advertising from the site earlier this month because of piracy concerns following questions by The Associated Press. The move challenged Zing's business model and was praised by recording industry groups. Samsung said last week it was also closing its Zingme account for the same reason.

The embassy said it recognizes the concerns for U.S. copyright interests posed by Zing but that it believes that contact with the website's users could reduce traffic or infringing activity on it. The mission sometimes uses its Zingme page to post about copyright infringement.

Its statement noted that the site had removed, at its request, the link to infringing material that appears on other Zingme pages as a matter of course. It also noted to its lack of options in a country where the Communist government controls the media, saying "there were few spaces for public discourse and intermittent access to Facebook", referring to a block the government sometimes puts on the American social networking site.

But not everyone thinks engaging with Zing is the right thing to do.

"Here we are as an American company trying to set things right with one of the biggest pirates in Vietnam but the U.S. embassy is essentially showing its support by being on its site," said Mimi Nguyen, an American who has been trying fruitlessly to get Zing to take down some 10,000 songs owned by her family's business for a year.

"It is really sad to find out the embassy is using their platform."

The Recording Industry Association of America, which praised the decision by Samsung and Coke to withdrawn from Zing and has labeled Zing a "notorious" pirate site, said it was neither endorsing nor criticizing the embassy's decision to maintain the site.

Neil Turkewitz, a senior vice president at the association, said he imagined the embassy had tried to balance the ability to target a tech-savvy demographic with anti-piracy messages against the appearance of a connection between it and the site.

"My guess is that it wasn't an easy decision," he said.

The recording industry around the world is struggling to make money from online distribution models, and illegal downloading remains rampant. Artists and producers in much of Asia are feeling the pinch especially hard because governments have failed to pass or enforce anti-piracy laws. Licensed CDs, films and downloads can cost the equivalent of a day's salary, making it even harder to wean people off pirated products.

In Vietnam, inaction by a government that sees no political upside in cracking down on what many see as a victimless crimes has pushed the industry to the point of collapse. Zing is seen as the No.1 enemy by those who speak out against its effective stranglehold over the country's music industry.

"Zing is destroying the industry and they know it," said record producer Quoc Trung, who is leading a campaign against online piracy. "We need people to pay for music, not just click on it. It is now or never."

Zing, which declined repeated requests for comment on this article and a previous one, has used free download to become the sixth-most visited site in Vietnam, and the second most popular Vietnamese music download site. Around 15 percent of its visitors are from overseas. It is not the only infringing website in Vietnam by far, but it is the most visited.

Sites that offer pirated content alongside other Internet services like Zing exist elsewhere around the world and are among the most reprehensible, according to the Recording Industry Association of America.

"They want to appear as legitimate actors, and have functions unrelated to piracy, yet operate network services that include features that intentionally and effectively induce infringement," it said in a letter to the U.S. Trade Representative in August asking the government to use all the tools at its disposal to ensure Zing and others are not permitted to undermine legitimate online markets.

"These services deliberately gain market share by providing access to infringing materials, launching music services without any form of licensing, and have demonstrated continued resolve to engage in conduct based upon misappropriation."

Zingme closely resembles Facebook, which recently overtook the Vietnamese site in subscriber numbers, according to one research group. Facebook is sometimes blocked by the government because of fears it could be used to mobilize dissent against its one-party rule. Zingme is never blocked, and is more popular with younger, less educated Vietnamese. Companies and institutions often have accounts on both. The embassy has more than 18,000 friends on Zingme, compared to 12,000 on Facebook.

Many in the industry have no choice but to work with Zing even as it distributes their music and films for free. Not having your music on the site means getting an audience for live concerts, or attracting commercial sponsorship, is almost impossible, industry executives said. But a few are pushing back, among them established singer Le Quyen, who is suing Zing and eight other infringing websites.

"I'm sure that Zing is aware that what they do is wrong, but they are afraid that other singers will put pressure on them if I win the case," she said before one of her near-weekly concerts at a venue owned by her husband here. "That's why they keep avoiding my demands. Their tactic is to drag the case on until their opponent gets tired and gives up."

Some in the industry predict Zing and other websites will embrace a more legitimate model, rather like Baidu in neighboring China, which after years of complaints from international and local record labels about pirated content signed a licensing deal with its former critics last year. Major Western record labels eager to sell music in the 13th most populous country in the world have been in early talks with Zing and other sites, but there is no deal on the horizon.

For now, the sites are not taking down their unlicensed content because doing so would mean that users would flock to that of a rival, and new ones are cropping all the time. Those offering unlimited downloads of Hollywood movies for a monthly subscription as low as $2 are amassing large audiences, and could be looking to leveraging their popularity to become legitimate providers.

"In Vietnam, you build an audience first, and then you negotiate," said Phung Tien Cong, a manager at MVCorp, which is trying to establish a pay-for-song business in collaboration with Zing, other websites and license holders.

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Brummitt can be reached at https://twitter.com/cjbrummitt.

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Poll: Australians split over PM's sexism judgment

CANBERRA, Australia (AP) — Australians appear to be split over Prime Minister Julia Gillard's judgment that her main political rival is sexist.

In a fiery speech to Parliament on Oct. 9, Gillard branded opposition leader Tony Abbott a misogynist for a string of allegedly sexist comments. Her commentary has been lauded by feminists around the world, but a poll published Tuesday showed Australians are divided.

Abbott apologized last week for suggesting that Gillard's government was inexperienced in family policy — a criticism some saw as a cheap shot at Gillard, who has no children.

The poll by Sydney market researcher Newspoll published in The Australian newspaper found that 45 percent of respondents said Abbott had behaved in a sexist way toward Gillard recently and 39 percent said he had not. There was no clear majority view, with 16 percent of respondents undecided.

How Abbott was judged on the sexism charge closely correlated with how respondents intend to vote at general elections next year.

Of those who said Abbott is sexist, 66 percent support Gillard's center-left Labor Party. Of those who said he is not, 76 percent back his conservative coalition.

Women were more likely than men to condemn Abbott for sexism.

Of those who said he was sexist, 43 percent were women and 35 percent were men. Of those who responded that he was not sexist, 48 percent were men and 41 percent were women.

Despite the divide, Gillard's public stance against sexism has gained solid support.

Gillard has said she stands by every word of her blistering attack on Abbott and has vowed to speak out against sexism in the future whenever she sees it.

More than three in four respondents (78 percent) said Gillard's response to the sexism issue had been "about right," including 83 percent of women and 72 percent of men.

Another 16 percent accused her of overreacting (22 percent of men and 12 percent of women), while 5 percent said she had underreacted (5 percent of men and 4 percent of women).

The poll was based on a random telephone survey of 1,218 voters nationwide at the weekend. It had a 3 percentage point margin of error.

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China passes law to curb abuse of mental hospitals

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.

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Associated Press researcher Flora Ji contributed to this report.

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

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Superstorm Sandy clobbers New York City

  NEW YORK, N.Y. - Superstorm Sandy slammed into the New Jersey coastline and hurled a record-breaking four-metre surge of seawater at New York City on Monday, roaring ashore and putting the presidential campaign on hold a week before election day At least 13 deaths were blamed on the storm.

Sandy knocked out power to at least 5.7 million people, and New York's main utility said large sections of Manhattan had been plunged into darkness by the storm, with 250,000 customers without power as water pressed into the island from three sides, flooding rail yards, subway tracks, tunnels and roads.

Just before its centre reached land, the storm was stripped of hurricane status, but the distinction was purely technical, based on its shape and internal temperature. It still packed hurricane-force wind, and forecasters were careful to say it remained every bit as dangerous to the 50 million people in its path. By late night, the centre of the storm was over southern New Jersey.

The National Hurricane Center announced at 8 p.m. that Sandy had come ashore near Atlantic City. It smacked the boarded-up big cities of the Northeast corridor, from Washington and Baltimore to Philadelphia, New York and Boston, with stinging rain and gusts of more than 85 135 kilometres per hour. The sea surged a record of nearly four metres at the foot of Manhattan, flooding the financial district and subway tunnels.

The 13 deaths were reported in New Jersey, New York, West Virginia, Pennsylvania and Connecticut. Some of the victims were killed by falling trees. Police in Toronto said a woman was killed by a falling sign as high winds closed in on Canada's largest city.

As it made its way toward land, it converged with a cold-weather system that turned into a fearsome superstorm, a monstrous hybrid consisting not only of rain and high wind but of snow. Forecasters warned of six-metre waves bashing into the Chicago lakefront and up to 90 centimetres of snow in West Virginia.

Storm damage was projected at $10 billion to $20 billion, meaning it could prove to be one of the costliest natural disasters in U.S. history.

President Barack Obama and Mitt Romney suspended their campaigning with just over a week to go before election day.

At the White House, Obama made a direct appeal to those in harm's way: "Please listen to what your state and local officials are saying. When they tell you to evacuate, you need to evacuate. Don't delay, don't pause, don't question the instructions that are being given, because this is a powerful storm."

The storm washed away a section of the Atlantic City Boardwalk in New Jersey. Water was splashing over the seawalls at the southern tip of Manhattan.

New York Mayor Michael Bloomberg said late Monday that the worst of the rain had passed for the city, and that the high tide that sent water sloshing into Manhattan from three sides was receding.

Still, authorities also feared the surge of seawater would damage the underground electrical and communications lines in lower Manhattan that are vital to the nation's financial centre.

Water began pooling in rail yards and on highways near the Hudson River waterfront on Manhattan's far west side. On coastal Long Island, floodwaters swamped cars, downed trees and put neighbourhoods under water as beachfronts and fishing villages bore the brunt of the storm. A police car was lost rescuing 14 people from the popular resort Fire Island.

In downtown Manhattan, rescue workers floated bright orange rafts on flooded streets, while police officers with loudspeakers told people to go home.

"Now it's really turning into something," said Brian Damianakes, taking shelter in a bank vestibule and watching a trash can blow down the street in Battery Park.

A construction crane atop a luxury high-rise in midtown Manhattan collapsed in high winds and dangled precariously. Residents in surrounding buildings were ordered to move to lower floors and the streets below were cleared, but there were no immediate reports of injuries.

The facade of a four-storey Manhattan building in the Chelsea neighbourhood crumbled and collapsed suddenly, leaving the lights, couches, cabinets and desks inside visible from the street. No one was hurt, although some of the falling debris hit a car.

The major American stock exchanges closed for the day, the first unplanned shutdown since the Sept. 11 attacks in 2001. Wall Street expected to remain closed on Tuesday. The United Nations cancelled all meetings at its New York headquarters.

Not only was the New York subway shut down, but the Holland Tunnel connecting New York to New Jersey was closed, as was a tunnel between Brooklyn and Manhattan. The Brooklyn Bridge, the George Washington Bridge, the Verrazano-Narrows Bridge and several other spans were closed because of high winds.

Authorities had warned that New York City and Long Island could get the worst of the storm surge: a three-metre onslaught of seawater that could swamp Lower Manhattan, flood the subways and damage the underground network of electrical and communications lines that are vital to the nation's financial capital.

"Leave immediately. Conditions are deteriorating very rapidly, and the window for you getting out safely is closing," New York Mayor Michael Bloomberg told those in low-lying areas earlier in the day.

Defiant New Yorkers jogged, pushed strollers and took snapshots of churning New York Harbor during the day Monday, trying to salvage normal routines.

Without most stores and museums open, tourists were left to snap photos of the World Trade Center site, Wall Street and Times Square in largely deserted streets.

Belgian tourist Gerd Van don Mooter-Dedecker, 56, wandered in to Trinity Church after learning that a planned shopping spree with her husband Monday wouldn't happen. "We brought empty suitcases so we could fill them up," she said.

As rain from the leading edges began to fall over the Northeast on Sunday, hundreds of thousands of people from Maryland to Connecticut were ordered to leave low-lying coastal areas, including 375,000 in lower Manhattan and other parts of New York City, 50,000 in Delaware and 30,000 in Atlantic City, New Jersey.

Obama declared emergencies in Massachusetts, Connecticut, Rhode Island, New York, New Jersey and Pennsylvania, authorizing federal relief work to begin well ahead of time. He promised the government would "respond big and respond fast" after the storm hits.

Off North Carolina, a replica of the 18th-century sailing ship HMS Bounty that was built for the 1962 Marlon Brando movie "Mutiny on the Bounty" went down in the storm, and 14 crew members were rescued by helicopter from rubber lifeboats bobbing in 5.5-metre seas. Another crew member was found hours later and was hospitalized in critical condition. The captain was still missing.

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In San Francisco, tech investor leads a political makeover

SAN FRANCISCO (Reuters) - One morning in April, Ron Conway, the billionaire technology investor, sat in a conference room on the second floor of San Francisco's City Hall with about 50 representatives from the city's business community.

On the agenda was a sweeping proposal by Mayor Ed Lee to reform the city's payroll tax, a plan that would favor companies with many employees but little revenue — tech start-ups, namely — while shifting the burden to the real estate and financial industries.

The head of the San Francisco Chamber of Commerce was arguing against the proposal when Conway abruptly cut him off.

"The tech industry is producing all the jobs in this city," Conway snapped, according to four people present, his voice rising as he insisted that old-line businesses "need to get on board."

In the end, they did get on board — and San Francisco voters on November 6 will decide whether to approve the change in the tax code.

Conway's success with the tax initiative demonstrates the profound transformation playing out in San Francisco's business corridors and its halls of power. As start-ups blossom, attracting a wave of entrepreneurs and investment dollars, the tech industry is wielding newfound clout in local politics — largely thanks to Conway, its brash, silver-haired champion.

The shift, local political experts say, harks back to the turn of the last century, when financial institutions like the Bank of Italy — forebear to present-day Bank of America — gradually eroded the railroad barons' grip over California politics.

Now the tech industry, led by Conway, is beginning to overshadow long-dominant local business lobbies, said Chris Lehane, a political consultant and former adviser in the Clinton White House.

"When you have a new business entity that really hasn't existed in the past and becomes a real player in local politics, that changes the balance a bit," said Lehane, who is based in San Francisco. "People like Ron Conway, he's an angel investor in companies but also an angel supporter of politicians he cares about."

Not everyone in this famously liberal city is enthused about the new tech boom, which is driving up rents and threatening to price out all but the wealthy.

"As someone who lived through the tech boom in the '90s and watched countless friends and community members get pushed out of their homes, only for the bubble to disintegrate, this is painful to watch," said Gabriel Haaland, political director for the SEIU Local 1021, the largest union in the city. "Those times are here again."

Last month, when San Francisco Magazine published an article bemoaning tech-driven gentrification, traffic on the magazine's website broke all records.

"It touched on an issue that people have been thinking about for a while," said Jon Steinberg, the magazine's editor.

Conway and Lee make no apologies.

"Tech added 13,000 out of the 25,000 new jobs we created the last couple years, which helped us bring the unemployment rate to the third-lowest in the state," Lee, a Democrat, said in an interview. "We have to work with the new jobs creators, and that's what I believe the public wants me to do."

Conway, who made his name in the 1990s by betting on small, early-stage companies and scoring a huge win with Google, says a key goal of a new civic organization he has started, San Francisco Citizens Initiative for Technology & Innovation, is to provide service jobs in tech for long-term residents and the unemployed.

"It would be great if we could create a few hundred jobs in the $50,000 to $80,000 income bracket," said Conway. "We're here to improve the living conditions for all of San Francisco. That's the responsibility tech wants to take."

ODD COUPLE

Conway and Lee have an exceptionally close relationship, one that has captivated the city's political set even while attracting accusations of favoritism from the mayor's rivals.

The two make an odd couple. Lee was a publicity-shy city bureaucrat and civil rights lawyer for decades before being named caretaker mayor of this Democratic bastion in 2011 after his predecessor was elected lieutenant governor. Conway, until recently a registered Republican, counts Tiger Woods and Henry Kissinger among his investors and considers a start-up tour with Ashton Kutcher in tow just another day's work.

In a city that faces chronic budget deficits even as it enjoys a comparatively strong economy, the relationship is symbiotic. Conway taps his access to Lee to promote his companies, from Twitter to Zynga to Airbnb; Lee persuades Conway to rally tech leaders to help fund the police, the schools, the parks.

Their alliance began only last year. As interim mayor, Lee impressed Conway when he pushed through a tax exemption for Twitter, which had considered moving out of the city to avoid the tax bill that would have resulted from an initial public offering. San Francisco imposes a 1.5 percent payroll tax on local companies, a levy that applies to any gains in an IPO.

When Lee ran for a full four-year term several months later, Conway formed an independent political action committee on his behalf. He rustled up almost $700,000 from the likes of entrepreneur Sean Parker; Zynga CEO Mark Pincus; Salesforce CEO Marc Benioff; venture capitalists John Doerr and Tom Byers; and Credit Suisse banker Bill Brady.

He also enlisted Portal A, a video production outfit consisting of three twentysomething hitmakers, to create a YouTube video that featured rapper MC Hammer, Yahoo CEO Marissa Mayer and San Francisco Giants pitcher Brian Wilson dancing on Conway's rooftop. The clip went viral and effectively drowned out ads from Lee's rivals.

A year later, Conway rated the mayor's performance a "9.5 out of 10."

"I have a tremendous respect for Mayor Lee," he said. "He listens to people. He builds consensus, and that's an improvement from the past."

Conway said he and Lee are "too busy with our day jobs" to socialize frequently. Neither likes to publicly discuss their relationship. But when the mayor turned 60 in May, Lee and his family sat down for a three-hour private dinner with Conway and his wife, Gayle, at an Italian restaurant in North Beach, according to the San Francisco Chronicle's gossip columnists.

For Conway — whose calls to the mayor's office are considered the highest priority, City Hall insiders say — no issue facing his portfolio companies is too insignificant for him to get involved. In one instance this year, after social media company Pinterest moved to San Francisco, Conway pressed officials to repaint curbs to allow employee parking near the start-up's offices, according to two people with knowledge of the matter. The city refused; Conway denied that the incident occurred.

While some cities have cracked down on services like Airbnb, which lets residents rent out spare bedrooms and can run afoul of local lodging ordinances, Lee has taken the opposite tack. This year he formed a policy-making group to consider how to regulate and foster such companies, which are part of what's known in Silicon Valley as the "sharing economy."

The mayor has also urged Conway to help city initiatives. Conway recently contributed $100,000 toward a campaign to approve bonds to restore the city's parks, and gave $25,000 to a charity founded by Lee that funds impoverished public schools. When a group of software developers tried recently to create an app that would improve public bus performance but lacked funds for a pilot program, SF Citi stepped in and cut a check.

Lee said he hoped Conway would fill a void left by recently deceased philanthropists such as Gap Inc founder Don Fisher, real estate mogul Walter Shorenstein and private equity investor Warren Hellman.

"The tech guys like Conway usually want to meet presidents and such. You never see them play so deep in local government," said one Democratic fundraiser. "It's unusual."

But the tech world says the headlong plunge into local politics is classic Conway.

"When Ron is passionate about an issue or a company or a person, it's never a secret," said Twitter CEO Dick Costolo. "He's passionate about San Francisco right now, and it's exhibiting itself in the way he helps companies in the city, the way he helps the city. It's fantastic to see."

CHANGING TAX POLICY

Conway says his top priority is passage of the payroll tax reform initiative on November 6.

The measure would tax local businesses based on their gross receipts instead of the size of their payroll, which benefits low-revenue, high-headcount companies like startups. Financial, insurance and real estate companies would see their local taxes rise by 30 percent, while taxes will remain flat for most scientific and technical companies.

Crucially, the measure would also mean that proceeds from an IPO would not be subject to taxes.

Landlords, and to a lesser extent financial services companies, conceded that they had lost their first political fight with the tech industry, but took the long view.

"We knew we were going to be socked in a big way, and we worked early and long and hard with the city for a rate that was fair," said Ken Cleaveland of the Building Owners and Managers Association. "In the end it wasn't in our best interest to fight our tenants."

(Reporting by Gerry Shih; Editing by Jonathan Weber, Douglas Royalty and Dale Hudson)

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'Argo' finally tops box office with $12.4M

LOS ANGELES (AP) — It took three weeks, but "Argo" finally found its way to the top of the box office.

The Warner Bros. thriller from director and star Ben Affleck, inspired by the real-life rescue of six U.S. embassy workers during the 1979 Iranian hostage crisis, made nearly $12.4 million this weekend, according to Sunday studio estimates. "Argo" had been in second place the past two weeks and has now made about $60.8 million total.

Debuting at No. 3 was the sprawling, star-studded "Cloud Atlas," which made a disappointing $9.4 million. The nearly three-hour drama, also from Warner Bros., was co-directed by siblings Lana and Andy Wachowski and Tom Tykwer and features an ensemble cast including Tom Hanks, Halle Berry and Hugh Grant playing multiple roles over six story lines.

Dan Fellman, head of distribution at Warner Bros., said the studio thought there might be a good chance of "Argo" coming out on top this weekend.

"We're thrilled. An accomplishment like that is well deserved, they don't happen very often. You would probably have to do a lot of searching to find a movie that opened in wide release to have two No. 2 weekends in a row and hit No. 1 in the third week," Fellman said. "It's a tribute to the film. Word-of-mouth has taken over the campaign. We have a long way to go, we have a lot of year-end accolades which will approach, and we'll see what happens in terms of the Academy."

On the flip side, Fellman acknowledged that "Cloud Atlas" underperformed compared to hopes that it would end up in the $11-12 million range domestically. The movie had an estimated budget of $100 million. But he pointed out that it had a higher per-screen average than any other film opening in the top 10 with $4,681.

"We did very well on the East and West coasts in a number of major cities," he said. "We're challenged in the Midwest and the South."

It was a soft weekend all around, though, with several newcomers opening poorly, Hollywood.com box-office analyst Paul Dergarabedian pointed out. The horror sequel "Silent Hill: Revelation 3-D" from Open Road Films debuted at No. 5 with $8 million and the Paramount Halloween comedy "Fun Size" arrived in 10th place with just over $4 million. "Chasing Mavericks," an inspirational surfing drama from Fox 2000, didn't even open in the top 12 — it came in at No. 13 with $2.2 million.

The World Series might have been a factor in keeping folks away from the theaters; also, potential moviegoers along the East Coast in the path of Hurricane Sandy might have stayed home this weekend.

"The whole marketplace felt more like September than October. Back in September, we had four down weekends in a row. There was no momentum in the marketplace," Dergarabedian said. "When a holdover is No. 1, it reflects a lack of strength in the marketplace. Every week should have a new movie topping the chart."

As for the philosophical, centuries-spanning "Cloud Atlas," he said: "To have a) a big budget, b) Tom Hanks and c) it's a big, epic film, it doesn't necessarily follow that it's going to be a big box office hit. I admire that they went for it."

But there's hope on the horizon with the animated comedy "Wreck-It Ralph" coming next weekend, the latest James Bond film, "Skyfall," opening Nov. 9 and the final installment in the "Twilight" saga due out Nov. 16. "Skyfall" opened this weekend overseas with a whopping $77.7 million in 25 countries.

"This is just one of those box office weekends we'd rather forget," Dergarabedian said. "Unless you're 'Argo.'"

Estimated ticket sales are for Friday through Sunday at U.S. and Canadian theaters, according to Hollywood.com. Where available, latest international numbers are also included. Final domestic figures will be released Monday.

1. "Argo," $12.4 million. ($5 million international.)

2. "Hotel Transylvania," $9.5 million. ($18.1 million international.)

3. "Cloud Atlas," $9.4 million.

4. "Paranormal Activity 4," $8.7 million. ($14.1 million international.)

5. (tie) "Silent Hill: Revelation 3-D," $8 million.

6. "Taken 2," $8 million. ($10.1 million.)

7. "Here Comes the Boom," $5.5 million.

8. "Sinister," $5.07 million.

9. Alex Cross," $5.05 million.

10. "Fun Size," $4.1 million.

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Estimated weekend ticket sales at international theaters (excluding the U.S. and Canada) for films distributed overseas by Hollywood studios, according to Rentrak:

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1. "Skyfall," $77.7 million.

2. "Hotel Transylvania," $18.1 million.

3. "Paranormal Activity 4," $14.1 million.

4. "The Bourne Legacy," $11.5 million.

5. "Taken 2," $10.1 million.

6. "The Impossible," $8.7 million.

7. "Madagascar 3," $8.4 million.

8. "Asterix et Obelix: Au Service de Sa Majeste," $5.3 million.

9. (tie) "Argo," $5 million.

10. "Ted," $5 million.

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Universal and Focus are owned by NBC Universal, a unit of Comcast Corp.; Sony, Columbia, Sony Screen Gems and Sony Pictures Classics are units of Sony Corp.; Paramount is owned by Viacom Inc.; Disney, Pixar and Marvel are owned by The Walt Disney Co.; Miramax is owned by Filmyard Holdings LLC; 20th Century Fox and Fox Searchlight are owned by News Corp.; Warner Bros. and New Line are units of Time Warner Inc.; MGM is owned by a group of former creditors including Highland Capital, Anchorage Advisors and Carl Icahn; Lionsgate is owned by Lions Gate Entertainment Corp.; IFC is owned by AMC Networks Inc.; Rogue is owned by Relativity Media LLC.

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Chinese protest factory even after official pledge

NINGBO, China (AP) — Protests against the expansion of a factory are resuming in an eastern China city despite a local government pledge to halt the project.

About 200 protesters gathered outside Ningbo government offices Monday for a fourth straight day of protests. Police channeled the crowd from the front of the building off to a side street.

The protests have occasionally featured violent clashes between protesters and police, who have detained some demonstrators. On Sunday night, the government promised to halt the expansion of the ethylene plant belonging to state-run Sinopec, though the crowd continued to protest, leaving only late in the night.

The protest, the latest on environmental issues, comes as China's authoritarian government wants calm for a transfer of power in the Communist Party leadership at a party congress that starts Nov. 8.

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FDA: Pharmacy tied to outbreak knew of bacteria

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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