Assault rifles are selling out

Dennis Pratte, owner of My Gun Factory in Falls Church, Va., said the demand for semiautomatic rifles is outstripping supply.

NEW YORK (CNNMoney)

"Our phones are ringing every 10 seconds and people are saying, 'Do you have any assault rifles?'" said Dennis Pratte, owner of My Gun Factory in Falls Church, Va., a store that also sells products online. "They've sold out of just about every gun shop nationwide and just about every distributor is out of stock."

Online retailers are running out of semiautomatic rifles -- known variously as assault weapons, tactical rifles or modern sporting rifles -- and magazines that can hold more than 10 rounds.

Brick-and-mortar gun shops are also working furiously to meet demand. Semiautomatic rifles, which fire one round for every pull of the trigger, and high-capacity magazines are flying off the shelves.

"The retail market is completely sold out of anything with high-capacity magazines," said Pratte. "We get people 20-deep waiting to buy."

Pratte said that he sells AR-15s as soon as they arrive at his store, before he even has the time to display them on the wall. Handguns are also hot commodities, especially from popular makers such as Smith & Wesson (SWHC), he said.

He said that prices are soaring, and not just for guns. High-capacity magazines, particularly the popular 30-round magazines, are going for $100 apiece on Gunbroker.com, a bidding site like Ebay (EBAY, Fortune 500). He said they used to sell for $15.

"Ammunition is hard to come by, as well," Pratte said, noting that ammunition for military-style semiautomatic rifles has tripled in price to about one dollar per bullet.

Related: Cheap ammo for sale online

Online retailers have depleted their stock of magazines containing 30, 60 or even 100 rounds.

"Due to tremendous demand, high-capacity magazine orders will be delayed," reads a notice at Surefire.com, which has sold out of $179 banana-shaped magazines capable of holding 100 rounds.

Likewise, the ungainly-looking 100-round dual-drums, which resemble a pair of cans stuck together, have sold out at Cheaperthandirt.com and Impactguns.com.

Even the manufacturers are running dry. Beta Mag makes 100-round dual-drums for rifles and even handguns, including a drum for Glock, which was featured in the latest James Bond movie, "Skyfall." But it has gotten difficult to order them through the company's Web site, where the high-capacity drums are listed as "available for purchase" but "back ordered."

The product's popularity is matched only by its controversy. A 100-round drum was allegedly used as part of the four-gun arsenal of James Holmes, accused of shooting 70 people and killing 12 at a movie theater in Aurora, Colo., on July 20.

High-capacity magazines have been used in numerous mass shootings, including the Dec. 14 attack at a school in Newtown, Conn. Police said that Adam Lanza loaded his Bushmaster rifle with multiple 30-round magazines to shoot and kill 20 school children and six educators before committing suicide.

Related: Obama's re-election drives gun sales

Later this week, Sen. Dianne Feinstein, a Democrat from California, plans to reintroduce the assault weapon ban that expired in 2004. The ban, if it passes, would outlaw the sale and manufacture of certain semiautomatic rifles, handguns and shotguns, and well as magazines that can hold more than 10 rounds.

President Obama has made it clear that he will support an assault weapon ban, and sales have soared since his re-election. But such a bill will have a tough time getting past Congress.

For now, retailers can't keep tactical rifles in stock. The staff at Georgia Gun Store in Gainesville, Ga., is too busy even to take customer calls.

"Due to high sales volume we will not be answering the phone nor will we be returning phone calls," said the Georgia Gun Store's answering machine.

First Published: December 31, 2012: 5:24 AM ET

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10 states to boost minimum wage

Workers in Rhode Island will see their paychecks grow the most -- by an average of $510 a year for the average worker, according to the National Employment Law Project.

NEW YORK (CNNMoney)

Workers in Rhode Island will see their paychecks grow the most -- by an average of $510 a year for the average worker, according to the National Employment Law Project, a nonprofit advocacy group. The state enacted a law in June raising its minimum wage 35 cents to $7.75 an hour.

In nine other states -- Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington -- the minimum wage will jump between 10 and 15 cents an hour, translating to an extra $190 to $410 per year on average, according to NELP. The increases in these states are the result of state "indexing" laws that require automatic annual adjustments to keep pace with rising living costs.

"If you don't do this, the lowest wage earners are going backwards," said Jen Kern, NELP's minimum wage campaign coordinator.

Related: 2013 minimum wage, state by state

An estimated 855,000 workers will be directly affected by the wage changes, while another 140,000 are projected to be indirectly affected by the changes as employers readjust their pay scales to accommodate the new minimum, according to analysis by the Economic Policy Institute.

The new hourly rates will range between $7.35 in Missouri and $9.19 in Washington state, which has the highest minimum wage in the nation.

Workers may not notice much of a change in their paychecks, though, if lawmakers do not extend the payroll tax cut first enacted in 2010. Without the tax cut in place, workers would pay 6.2% instead of 4.2% -- an amount that could wipe out most of the wage boost.

States must pay at least the same as the federal minimum wage, which has been set at $7.25 an hour since 2009 and is not indexed to inflation. That works out to an annual income of about $15,000 -- thousands of dollars below the poverty level for a family of four.

In 2013, 19 states and the District of Columbia will have rates above the federal level.

Related: What happens if the payroll tax cut expires

The increases come at a time when a growing percentage of Americans are employed in low-wage jobs. While the Great Recession saw widespread mid-wage job losses, the majority of jobs created during the economic recovery have been low-wage positions that pay $13.83 an hour or less, according to a NELP report released in August.

Some 72% of the employees set to be affected by the wage increases are adults 20 years or older, according to a NELP analysis.

"That makes it harder to dismiss the minimum wage as some marginal labor standard," Kern said. "In fact, it's a key component of economic recovery because so many of the jobs that are now characterizing our economy are impacted by minimum wage."

Wage advocates like Kern say that increasing minimum wage rates nationwide would stimulate the economy since low-income workers are more likely to spend the extra cash. Business groups counter that increases could create new job losses.

First Published: December 31, 2012: 5:31 AM ET

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Merkel warns Europe crisis far from over

German chancellor warns 2013 will be tougher and says reforms must continue

LONDON (CNNMoney)

But the region's most powerful political leader warns that the economic environment will be tougher in 2013.

In an address to mark the New Year, German Chancellor Angela Merkel said Monday that the sovereign debt crisis which threatened to tear the eurozone apart shows how important it is to strike a balance between prosperity and solidarity.

"The reforms that we've introduced are beginning to have an impact," she said. "But we still need a lot of patience. The crisis is far from over."

"I know that many people are naturally concerned going into the new year," Merkel added. "And in fact economic conditions will be more difficult rather than easier next year. But we shouldn't let that discourage us; on the contrary, it should spur us on."

As Europe's biggest economy, Germany has shouldered much of the cost of bailing out weaker eurozone nations such as Greece, and establishing the region's permanent rescue fund, the European Stability Mechanism.

Together with the European Central Bank's plan to buy the bonds of ailing eurozone nations, if they request an ESM bailout, Europe has given itself the tools to ward off collapse in the single currency zone for now. It has also taken the first steps toward closer integration with a single banking supervisor.

Related: Greece may remain in euro after all

In return, highly indebted eurozone states have committed themselves to spending cuts and tax increases. But the austerity drive has already helped tip the eurozone back into recession, and German growth has all but disappeared as a consequence.

Economists warn that the 17-nation eurozone could contract further in 2013 as deficit-cutting measures bite deeper. Rising unemployment and falling tax receipts would make it harder for governments in countries such as Italy, Spain, Greece and even France to meet their budget targets.

That could unsettle financial markets again, particularly in countries where political instability is adding to the uncertainty. Italy has elections in February, and the outcome will determine whether Europe's second most heavily indebted nation after Greece will continue with reforms started by outgoing Prime Minister Mario Monti.

Related: Investors back Italy despite political turmoil

In a report this month, the International Monetary Fund said it was expecting France to miss its 2013 target to keep debt at 3% of GDP, down from 4.5% in 2012, because of a more conservative growth forecast. It said the target was crucial to preserving market confidence and advised that "contingency measures" be prepared.

Merkel faces an election in September. The cost of European bailouts and slowing growth worry many Germans, but she has won support for steering Europe through its most challenging crisis in 60 years and her party has a clear lead in opinion polls.

However, a third term in office might depend on whether there's a flare up in the eurozone crisis that presents Germany with another bill, a risk that some analysts say hasn't gone away because weaker states won't be able to cut their way back to prosperity.

"They will be living on a drip-feed, life-support system of bailouts for as long as the euro system continues in its present form," wrote Tim Morgan of brokerage firm Tullet Prebon earlier this month.

First Published: December 31, 2012: 8:35 AM ET

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China stocks rebound as data improves

Click chart for more markets data.

HONG KONG (CNNMoney)

But favorable economic reports and the prospect of market reform has drawn investors back in this month, driving the index into positive territory for the year and 16% above its early December low.

As recently as Dec. 3, the index was down 9% on the year. At the same point, the Nikkei was up more than 10%, the FTSE 100 was up 3%, and Germany's DAX had skyrocketed 22%. In the United States, the S&P 500 had more than doubled from its recession lows, jumping 10% since January.

But China's marquee index has mounted a robust rally over the past month, helped by strong manufacturing, industrial and trade data. On Monday, HSBC's manufacturing PMI index, a key indicator, hit its highest level in 19 months in December. And last week, Beijing reported industrial profits were up more than 20% year over year.

Buoyed by the reports, the Shanghai Composite closed the year at 2,269 points on Monday, up 3% since January.

China's economy is still expanding at an annual rate of 7% to 8%, but it has slowed somewhat from figures that often exceeded 10% before the global financial crisis.

The slowing pace of growth -- still the envy of many nations -- has weighed on stocks. For much of 2012, listed companies reported lackluster profits while retail investors abandoned stocks in favor of higher returns on alternative investments, especially physical property, wealth management and trust products.

Related: Chinese firms go on U.S. spending spree

But the latest round of data seems to have encouraged investors. The index's rebound has also been fueled by hints at greater regulatory reform -- especially signals from policymakers that more foreign investment will be allowed.

"Foreign investors are becoming more sanguine on the A-share market, while domestic investor sentiment appears to be finally bottoming," equity analysts at HSBC wrote in a recent report.

The HSBC analysts, who are bullish on the Shanghai Composite's performance, predict that improving economic conditions, coupled with rising risk appetite, positive fund flows and structural reforms, should lead to higher returns in 2013.

Still, stumbling blocks remain, and the detailed intentions of China's new leadership are not widely known.

"The second wave of reform is set to be considerably more difficult and internally-focused than the first, as the government strives to better align government and markets through further price reform, stimulate demand through new-style urbanization, improve income distribution and enhance supply discipline by breaking up state monopolies," HSBC's analysts wrote.

First Published: December 31, 2012: 4:04 AM ET

19.33 | 0 komentar | Read More

Assault rifles are selling out

Dennis Pratte, owner of My Gun Factory in Falls Church, Va., said the demand for semiautomatic rifles is outstripping supply.

NEW YORK (CNNMoney)

"Our phones are ringing every 10 seconds and people are saying, 'Do you have any assault rifles?'" said Dennis Pratte, owner of My Gun Factory in Falls Church, Va., a store that also sells products online. "They've sold out of just about every gun shop nationwide and just about every distributor is out of stock."

Online retailers are running out of semiautomatic rifles -- known variously as assault weapons, tactical rifles or modern sporting rifles -- and magazines that can hold more than 10 rounds.

Brick-and-mortar gun shops are also working furiously to meet demand. Semiautomatic rifles, which fire one round for every pull of the trigger, and high-capacity magazines are flying off the shelves.

"The retail market is completely sold out of anything with high-capacity magazines," said Pratte. "We get people 20-deep waiting to buy."

Pratte said that he sells AR-15s as soon as they arrive at his store, before he even has the time to display them on the wall. Handguns are also hot commodities, especially from popular makers such as Smith & Wesson (SWHC), he said.

He said that prices are soaring, and not just for guns. High-capacity magazines, particularly the popular 30-round magazines, are going for $100 apiece on Gunbroker.com, a bidding site like Ebay (EBAY, Fortune 500). He said they used to sell for $15.

"Ammunition is hard to come by, as well," Pratte said, noting that ammunition for military-style semiautomatic rifles has tripled in price to about one dollar per bullet.

Related: Cheap ammo for sale online

Online retailers have depleted their stock of magazines containing 30, 60 or even 100 rounds.

"Due to tremendous demand, high-capacity magazine orders will be delayed," reads a notice at Surefire.com, which has sold out of $179 banana-shaped magazines capable of holding 100 rounds.

Likewise, the ungainly-looking 100-round dual-drums, which resemble a pair of cans stuck together, have sold out at Cheaperthandirt.com and Impactguns.com.

Even the manufacturers are running dry. Beta Mag makes 100-round dual-drums for rifles and even handguns, including a drum for Glock, which was featured in the latest James Bond movie, "Skyfall." But it has gotten difficult to order them through the company's Web site, where the high-capacity drums are listed as "available for purchase" but "back ordered."

The product's popularity is matched only by its controversy. A 100-round drum was allegedly used as part of the four-gun arsenal of James Holmes, accused of shooting 70 people and killing 12 at a movie theater in Aurora, Colo., on July 20.

High-capacity magazines have been used in numerous mass shootings, including the Dec. 14 attack at a school in Newtown, Conn. Police said that Adam Lanza loaded his Bushmaster rifle with multiple 30-round magazines to shoot and kill 20 school children and six educators before committing suicide.

Related: Obama's re-election drives gun sales

Later this week, Sen. Dianne Feinstein, a Democrat from California, plans to reintroduce the assault weapon ban that expired in 2004. The ban, if it passes, would outlaw the sale and manufacture of certain semiautomatic rifles, handguns and shotguns, and well as magazines that can hold more than 10 rounds.

President Obama has made it clear that he will support an assault weapon ban, and sales have soared since his re-election. But such a bill will have a tough time getting past Congress.

For now, retailers can't keep tactical rifles in stock. The staff at Georgia Gun Store in Gainesville, Ga., is too busy even to take customer calls.

"Due to high sales volume we will not be answering the phone nor will we be returning phone calls," said the Georgia Gun Store's answering machine.

First Published: December 31, 2012: 5:24 AM ET

19.33 | 0 komentar | Read More

10 states to boost minimum wage

Workers in Rhode Island will see their paychecks grow the most -- by an average of $510 a year for the average worker, according to the National Employment Law Project.

NEW YORK (CNNMoney)

Workers in Rhode Island will see their paychecks grow the most -- by an average of $510 a year for the average worker, according to the National Employment Law Project, a nonprofit advocacy group. The state enacted a law in June raising its minimum wage 35 cents to $7.75 an hour.

In nine other states -- Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington -- the minimum wage will jump between 10 and 15 cents an hour, translating to an extra $190 to $410 per year on average, according to NELP. The increases in these states are the result of state "indexing" laws that require automatic annual adjustments to keep pace with rising living costs.

"If you don't do this, the lowest wage earners are going backwards," said Jen Kern, NELP's minimum wage campaign coordinator.

Related: 2013 minimum wage, state by state

An estimated 855,000 workers will be directly affected by the wage changes, while another 140,000 are projected to be indirectly affected by the changes as employers readjust their pay scales to accommodate the new minimum, according to analysis by the Economic Policy Institute.

The new hourly rates will range between $7.35 in Missouri and $9.19 in Washington state, which has the highest minimum wage in the nation.

Workers may not notice much of a change in their paychecks, though, if lawmakers do not extend the payroll tax cut first enacted in 2010. Without the tax cut in place, workers would pay 6.2% instead of 4.2% -- an amount that could wipe out most of the wage boost.

States must pay at least the same as the federal minimum wage, which has been set at $7.25 an hour since 2009 and is not indexed to inflation. That works out to an annual income of about $15,000 -- thousands of dollars below the poverty level for a family of four.

In 2013, 19 states and the District of Columbia will have rates above the federal level.

Related: What happens if the payroll tax cut expires

The increases come at a time when a growing percentage of Americans are employed in low-wage jobs. While the Great Recession saw widespread mid-wage job losses, the majority of jobs created during the economic recovery have been low-wage positions that pay $13.83 an hour or less, according to a NELP report released in August.

Some 72% of the employees set to be affected by the wage increases are adults 20 years or older, according to a NELP analysis.

"That makes it harder to dismiss the minimum wage as some marginal labor standard," Kern said. "In fact, it's a key component of economic recovery because so many of the jobs that are now characterizing our economy are impacted by minimum wage."

Wage advocates like Kern say that increasing minimum wage rates nationwide would stimulate the economy since low-income workers are more likely to spend the extra cash. Business groups counter that increases could create new job losses.

First Published: December 31, 2012: 5:31 AM ET

19.33 | 0 komentar | Read More

Fiscal cliff could put your tax refund on hold

Tax refunds could be delayed.

NEW YORK (CNNMoney)

Congressional dithering over a fiscal cliff fix could force the Internal Revenue Service to delay the start of the filing season. So those expecting to file their returns in mid-January, when the agency usually begins accepting them, may have to wait several weeks.

If Congress doesn't approve a patch for the alternative minimum tax in the next few days, then up to 100 million taxpayers will not be able to file their returns -- or collect refunds, if owed -- until late March, said Steven Miller, the agency's acting commissioner. (The AMT itself would hit nearly 30 million filers with higher tax bills, and returns of the others would be held up while the IRS reprograms its systems.)

Filing and refunds would also be put on hold by the uncertain fate of a dozen other provisions, including the deduction for state and local sales taxes and the $250 tax break for teachers who buy their own school supplies.

This isn't the first time the IRS has had to deal with this. Two years ago, it took until mid-December for President Obama and lawmakers to reach an agreement on many of the same issues. That delayed the opening of the tax season by four weeks to mid-February, affecting some 9 million taxpayers.

Most of them were likely owed refunds, since that's who files early, said John Lieberman, managing director of Perelson Weiner, an accounting firm in New York. They are often folks whose income is just from wages and who take the standard deduction, making their returns fairly simple. Many are low-income families who file for the earned income tax credit.

"They need that money back to pay Christmas bills, for a downpayment on a car or a security deposit on an apartment," said Lieberman.

Related: Fiscal cliff confusion on Form 1040

This year, the situation is even more dire since we are only days away from the start of 2013.

While the IRS has published the Form 1040 for 2012, several lines are listed as "reserved." The designation is a "placeholder" for provisions that have yet to be passed, an agency spokesman said. The IRS has yet to publish an instruction booklet for filling out the tax forms, leaving tax preparers in a holding pattern.

"How they are going to handle this?" said John Roth, senior federal tax analyst for CCH, a tax services company. "We are in virgin territory."

The IRS spokesman declined to answer questions on how the Congressional delay will affect taxpayers, but said more information would be available shortly.

First Published: December 28, 2012: 4:44 PM ET

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S&P says fiscal cliff impasse won't spark downgrade

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

NEW YORK (CNNMoney)

S&P made headlines in August of 2011 by knocking the U.S. down from AAA status to to AA+ following the political wrangling over the debt ceiling. At the time, the rating agency said the affair showed "America's governance and policymaking becoming less stable, less effective, and less predictable."

More than a year later, S&P said Friday that this characterization "still holds."

Fellow rating agencies Moody's and Fitch still have the U.S. rated AAA, though with negative outlooks.

Fitch warned earlier this month that it may downgrade the U.S. should lawmakers fail to avoid the fiscal cliff and allow the debt ceiling to rise. Moody's has said it will strip the country's AAA rating should lawmakers fail to produce a long-term debt reduction plan.

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

Should lawmakers fail to avert the package of tax hikes and spending cuts that constitute the fiscal cliff, the U.S. economy is likely to contract by half a percent next year, with unemployment rising to 9% by 2014, S&P said. This contraction could mitigate the reduced spending and additional tax revenue that would come to the government.

Related: Fiscal cliff could put your tax refund on hold

On the other hand, should lawmakers reach a deal within the next few days, it's likely to be "insufficient to place the U.S. medium-term public finances on a sustainable footing," S&P said.

"Our existing negative outlook on the U.S. rating speaks to the risk of a deliberate further loosening of fiscal policy," the agency said.

Back in June, S&P warned that the United States could be in for another credit downgrade by 2014 if Congress doesn't come up with a plan to reduce the national debt. S&P spokesman John Piecuch said in an email Friday that the rating agency could make a downgrade decision before the end of that time frame.

First Published: December 28, 2012: 5:46 PM ET

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Stocks brace for fiscal cliff reckoning

The deadline to avert a looming fiscal crisis is fast approaching. Investors are hoping for the best, but bracing for the worst.

NEW YORK (CNNMoney)

For weeks, many have worried that no resolution to the fiscal cliff would lead to the kind of brutal sell-off that followed the voting down of the TARP bailout and the downgrade of America's credit rating.

Now, with the deadline fast approaching and no clear resolution in sight, strategists aren't so sure.

"I don't know how the market is going to react," said Ben Schwartz, chief market strategist at Lightspeed Financial. "But I do know that people are upset with what's going on in Washington."

The dysfunction in Washington has cast a pall over Wall Street since Election Day. But despite all the hand-wringing, stocks are currently trading at levels seen just before President Obama won a second term.

So, where do stocks go from here? Good question.

Much depends on what House lawmakers do Sunday, when they meet for a last-ditch round of budget talks. The hope is that a stopgap measure is put in place to prevent some of the tax hikes and spending cuts set to take effect on Jan. 1.

Related: Going over the cliff: What changes, what doesn't

Here are two possible outcomes:

Partial deal, modest sell-off

Like most Americans, investors view the budget impasse as an epic failure of leadership in Washington. But they still expect a deal, because doing nothing would be "political suicide" for members of both parties.

"We think they will reach some kind of agreement before the end of the year, but not until the very last minute. And it won't be much," said Kate Warne, chief investment strategist at Edward Jones.

While the details remain sketchy, investors are expecting a short-term extension of Bush-era tax breaks and a suspension of defense spending cuts, among other things.

Despite its name, many strategists say the fiscal cliff will not hit the economy right away. That could give lawmakers some time to continue negotiating, but it's unclear how long the market will tolerate such uncertainty.

Related: Real fiscal cliff deadline is inauguration

"Unlike the debt ceiling and government shutdowns in the past, not all that much changes on January first," Warne said. "But the tone will get more and more negative as time goes on."

Even with a stopgap deal, stocks could sell off, according to Peter Tuz, a portfolio manager at Chase Investment Counsel.

"It doesn't have to be sharp," he said. "A 20% drop would be astounding, but a modest drop would not be surprising."

No deal, more volatility:

Investors could be in for a rude awakening on New Year's day. Despite the political and economic stakes, it's not a given that Congress will act.

"I don't think investors have taken into account that nothing gets done," Warne said.

Wall Street vigilantes believe a sell-off may be necessary to force America's elected officials into action. But there is no guarantee that a riot in the stock market will inspire sound policymaking.

For example, the sell-off that followed the S&P downgrade did not result in a long-term solution to the debt ceiling problem, said Lawrence Creatura, a portfolio manager with Federated Clover Investment Advisors.

"The market can act as a disciplinarian, but that doesn't ensure that we get a clean and lasting solution," Creatura said. "We didn't get that last time, and it's probably not realistic to expect it this time either."

The fiscal cliff was designed to force Washington to deal with the nation's long-term debt problems, but hopes for a grand bargain have diminished as talks devolved into stalemate.

The lack of progress on structural issues, such as entitlement spending, means investors will be dealing with a certain degree of political risk long after the fiscal cliff deadline has passed.

"They're not dealing with the big issues," Tuz said. "They'll come up with a band aid approach that just delays the inevitable."

In the meantime, trading in the stock market could be volatile as investors monitor the blow-by-blow in Washington.

The market's fear gauge, the VIX (VIX)has jumped 14% over the past five days -- a sure sign that volatility is indeed on the rise.

"We're floating around here and no one has any real idea where we're going to go," Schwartz said. "That's why volatility has popped up."

First Published: December 29, 2012: 9:03 AM ET

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Fiscal cliff could put your tax refund on hold

Tax refunds could be delayed.

NEW YORK (CNNMoney)

Congressional dithering over a fiscal cliff fix could force the Internal Revenue Service to delay the start of the filing season. So those expecting to file their returns in mid-January, when the agency usually begins accepting them, may have to wait several weeks.

If Congress doesn't approve a patch for the alternative minimum tax in the next few days, then up to 100 million taxpayers will not be able to file their returns -- or collect refunds, if owed -- until late March, said Steven Miller, the agency's acting commissioner. (The AMT itself would hit nearly 30 million filers with higher tax bills, and returns of the others would be held up while the IRS reprograms its systems.)

Filing and refunds would also be put on hold by the uncertain fate of a dozen other provisions, including the deduction for state and local sales taxes and the $250 tax break for teachers who buy their own school supplies.

This isn't the first time the IRS has had to deal with this. Two years ago, it took until mid-December for President Obama and lawmakers to reach an agreement on many of the same issues. That delayed the opening of the tax season by four weeks to mid-February, affecting some 9 million taxpayers.

Most of them were likely owed refunds, since that's who files early, said John Lieberman, managing director of Perelson Weiner, an accounting firm in New York. They are often folks whose income is just from wages and who take the standard deduction, making their returns fairly simple. Many are low-income families who file for the earned income tax credit.

"They need that money back to pay Christmas bills, for a downpayment on a car or a security deposit on an apartment," said Lieberman.

Related: Fiscal cliff confusion on Form 1040

This year, the situation is even more dire since we are only days away from the start of 2013.

While the IRS has published the Form 1040 for 2012, several lines are listed as "reserved." The designation is a "placeholder" for provisions that have yet to be passed, an agency spokesman said. The IRS has yet to publish an instruction booklet for filling out the tax forms, leaving tax preparers in a holding pattern.

"How they are going to handle this?" said John Roth, senior federal tax analyst for CCH, a tax services company. "We are in virgin territory."

The IRS spokesman declined to answer questions on how the Congressional delay will affect taxpayers, but said more information would be available shortly.

First Published: December 28, 2012: 4:44 PM ET

19.33 | 0 komentar | Read More

S&P says fiscal cliff impasse won't spark downgrade

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

NEW YORK (CNNMoney)

S&P made headlines in August of 2011 by knocking the U.S. down from AAA status to to AA+ following the political wrangling over the debt ceiling. At the time, the rating agency said the affair showed "America's governance and policymaking becoming less stable, less effective, and less predictable."

More than a year later, S&P said Friday that this characterization "still holds."

Fellow rating agencies Moody's and Fitch still have the U.S. rated AAA, though with negative outlooks.

Fitch warned earlier this month that it may downgrade the U.S. should lawmakers fail to avoid the fiscal cliff and allow the debt ceiling to rise. Moody's has said it will strip the country's AAA rating should lawmakers fail to produce a long-term debt reduction plan.

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

Should lawmakers fail to avert the package of tax hikes and spending cuts that constitute the fiscal cliff, the U.S. economy is likely to contract by half a percent next year, with unemployment rising to 9% by 2014, S&P said. This contraction could mitigate the reduced spending and additional tax revenue that would come to the government.

Related: Fiscal cliff could put your tax refund on hold

On the other hand, should lawmakers reach a deal within the next few days, it's likely to be "insufficient to place the U.S. medium-term public finances on a sustainable footing," S&P said.

"Our existing negative outlook on the U.S. rating speaks to the risk of a deliberate further loosening of fiscal policy," the agency said.

Back in June, S&P warned that the United States could be in for another credit downgrade by 2014 if Congress doesn't come up with a plan to reduce the national debt. S&P spokesman John Piecuch said in an email Friday that the rating agency could make a downgrade decision before the end of that time frame.

First Published: December 28, 2012: 5:46 PM ET

19.33 | 0 komentar | Read More

Stocks brace for fiscal cliff reckoning

The deadline to avert a looming fiscal crisis is fast approaching. Investors are hoping for the best, but bracing for the worst.

NEW YORK (CNNMoney)

For weeks, many have worried that no resolution to the fiscal cliff would lead to the kind of brutal sell-off that followed the voting down of the TARP bailout and the downgrade of America's credit rating.

Now, with the deadline fast approaching and no clear resolution in sight, strategists aren't so sure.

"I don't know how the market is going to react," said Ben Schwartz, chief market strategist at Lightspeed Financial. "But I do know that people are upset with what's going on in Washington."

The dysfunction in Washington has cast a pall over Wall Street since Election Day. But despite all the hand-wringing, stocks are currently trading at levels seen just before President Obama won a second term.

So, where do stocks go from here? Good question.

Much depends on what House lawmakers do Sunday, when they meet for a last-ditch round of budget talks. The hope is that a stopgap measure is put in place to prevent some of the tax hikes and spending cuts set to take effect on Jan. 1.

Related: Going over the cliff: What changes, what doesn't

Here are two possible outcomes:

Partial deal, modest sell-off

Like most Americans, investors view the budget impasse as an epic failure of leadership in Washington. But they still expect a deal, because doing nothing would be "political suicide" for members of both parties.

"We think they will reach some kind of agreement before the end of the year, but not until the very last minute. And it won't be much," said Kate Warne, chief investment strategist at Edward Jones.

While the details remain sketchy, investors are expecting a short-term extension of Bush-era tax breaks and a suspension of defense spending cuts, among other things.

Despite its name, many strategists say the fiscal cliff will not hit the economy right away. That could give lawmakers some time to continue negotiating, but it's unclear how long the market will tolerate such uncertainty.

Related: Real fiscal cliff deadline is inauguration

"Unlike the debt ceiling and government shutdowns in the past, not all that much changes on January first," Warne said. "But the tone will get more and more negative as time goes on."

Even with a stopgap deal, stocks could sell off, according to Peter Tuz, a portfolio manager at Chase Investment Counsel.

"It doesn't have to be sharp," he said. "A 20% drop would be astounding, but a modest drop would not be surprising."

No deal, more volatility:

Investors could be in for a rude awakening on New Year's day. Despite the political and economic stakes, it's not a given that Congress will act.

"I don't think investors have taken into account that nothing gets done," Warne said.

Wall Street vigilantes believe a sell-off may be necessary to force America's elected officials into action. But there is no guarantee that a riot in the stock market will inspire sound policymaking.

For example, the sell-off that followed the S&P downgrade did not result in a long-term solution to the debt ceiling problem, said Lawrence Creatura, a portfolio manager with Federated Clover Investment Advisors.

"The market can act as a disciplinarian, but that doesn't ensure that we get a clean and lasting solution," Creatura said. "We didn't get that last time, and it's probably not realistic to expect it this time either."

The fiscal cliff was designed to force Washington to deal with the nation's long-term debt problems, but hopes for a grand bargain have diminished as talks devolved into stalemate.

The lack of progress on structural issues, such as entitlement spending, means investors will be dealing with a certain degree of political risk long after the fiscal cliff deadline has passed.

"They're not dealing with the big issues," Tuz said. "They'll come up with a band aid approach that just delays the inevitable."

In the meantime, trading in the stock market could be volatile as investors monitor the blow-by-blow in Washington.

The market's fear gauge, the VIX (VIX)has jumped 14% over the past five days -- a sure sign that volatility is indeed on the rise.

"We're floating around here and no one has any real idea where we're going to go," Schwartz said. "That's why volatility has popped up."

First Published: December 29, 2012: 9:03 AM ET

19.33 | 0 komentar | Read More

Fiscal cliff could put your tax refund on hold

Tax refunds could be delayed.

NEW YORK (CNNMoney)

Congressional dithering over a fiscal cliff fix could force the Internal Revenue Service to delay the start of the filing season. So those expecting to file their returns in mid-January, when the agency usually begins accepting them, may have to wait several weeks.

If Congress doesn't approve a patch for the alternative minimum tax in the next few days, then up to 100 million taxpayers will not be able to file their returns -- or collect refunds, if owed -- until late March, said Steven Miller, the agency's acting commissioner. (The AMT itself would hit nearly 30 million filers with higher tax bills, and returns of the others would be held up while the IRS reprograms its systems.)

Filing and refunds would also be put on hold by the uncertain fate of a dozen other provisions, including the deduction for state and local sales taxes and the $250 tax break for teachers who buy their own school supplies.

This isn't the first time the IRS has had to deal with this. Two years ago, it took until mid-December for President Obama and lawmakers to reach an agreement on many of the same issues. That delayed the opening of the tax season by four weeks to mid-February, affecting some 9 million taxpayers.

Most of them were likely owed refunds, since that's who files early, said John Lieberman, managing director of Perelson Weiner, an accounting firm in New York. They are often folks whose income is just from wages and who take the standard deduction, making their returns fairly simple. Many are low-income families who file for the earned income tax credit.

"They need that money back to pay Christmas bills, for a downpayment on a car or a security deposit on an apartment," said Lieberman.

Related: Fiscal cliff confusion on Form 1040

This year, the situation is even more dire since we are only days away from the start of 2013.

While the IRS has published the Form 1040 for 2012, several lines are listed as "reserved." The designation is a "placeholder" for provisions that have yet to be passed, an agency spokesman said. The IRS has yet to publish an instruction booklet for filling out the tax forms, leaving tax preparers in a holding pattern.

"How they are going to handle this?" said John Roth, senior federal tax analyst for CCH, a tax services company. "We are in virgin territory."

The IRS spokesman declined to answer questions on how the Congressional delay will affect taxpayers, but said more information would be available shortly.

First Published: December 28, 2012: 4:44 PM ET

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S&P says fiscal cliff impasse won't spark downgrade

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

NEW YORK (CNNMoney)

S&P made headlines in August of 2011 by knocking the U.S. down from AAA status to to AA+ following the political wrangling over the debt ceiling. At the time, the rating agency said the affair showed "America's governance and policymaking becoming less stable, less effective, and less predictable."

More than a year later, S&P said Friday that this characterization "still holds."

Fellow rating agencies Moody's and Fitch still have the U.S. rated AAA, though with negative outlooks.

Fitch warned earlier this month that it may downgrade the U.S. should lawmakers fail to avoid the fiscal cliff and allow the debt ceiling to rise. Moody's has said it will strip the country's AAA rating should lawmakers fail to produce a long-term debt reduction plan.

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

Should lawmakers fail to avert the package of tax hikes and spending cuts that constitute the fiscal cliff, the U.S. economy is likely to contract by half a percent next year, with unemployment rising to 9% by 2014, S&P said. This contraction could mitigate the reduced spending and additional tax revenue that would come to the government.

Related: Fiscal cliff could put your tax refund on hold

On the other hand, should lawmakers reach a deal within the next few days, it's likely to be "insufficient to place the U.S. medium-term public finances on a sustainable footing," S&P said.

"Our existing negative outlook on the U.S. rating speaks to the risk of a deliberate further loosening of fiscal policy," the agency said.

Back in June, S&P warned that the United States could be in for another credit downgrade by 2014 if Congress doesn't come up with a plan to reduce the national debt. S&P spokesman John Piecuch said in an email Friday that the rating agency could make a downgrade decision before the end of that time frame.

First Published: December 28, 2012: 5:46 PM ET

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Stocks brace for fiscal cliff reckoning

The deadline to avert a looming fiscal crisis is fast approaching. Investors are hoping for the best, but bracing for the worst.

NEW YORK (CNNMoney)

For weeks, many have worried that no resolution to the fiscal cliff would lead to the kind of brutal sell-off that followed the voting down of the TARP bailout and the downgrade of America's credit rating.

Now, with the deadline fast approaching and no clear resolution in sight, strategists aren't so sure.

"I don't know how the market is going to react," said Ben Schwartz, chief market strategist at Lightspeed Financial. "But I do know that people are upset with what's going on in Washington."

The dysfunction in Washington has cast a pall over Wall Street since Election Day. But despite all the hand-wringing, stocks are currently trading at levels seen just before President Obama won a second term.

So, where do stocks go from here? Good question.

Much depends on what House lawmakers do Sunday, when they meet for a last-ditch round of budget talks. The hope is that a stopgap measure is put in place to prevent some of the tax hikes and spending cuts set to take effect on Jan. 1.

Related: Going over the cliff: What changes, what doesn't

Here are two possible outcomes:

Partial deal, modest sell-off

Like most Americans, investors view the budget impasse as an epic failure of leadership in Washington. But they still expect a deal, because doing nothing would be "political suicide" for members of both parties.

"We think they will reach some kind of agreement before the end of the year, but not until the very last minute. And it won't be much," said Kate Warne, chief investment strategist at Edward Jones.

While the details remain sketchy, investors are expecting a short-term extension of Bush-era tax breaks and a suspension of defense spending cuts, among other things.

Despite its name, many strategists say the fiscal cliff will not hit the economy right away. That could give lawmakers some time to continue negotiating, but it's unclear how long the market will tolerate such uncertainty.

Related: Real fiscal cliff deadline is inauguration

"Unlike the debt ceiling and government shutdowns in the past, not all that much changes on January first," Warne said. "But the tone will get more and more negative as time goes on."

Even with a stopgap deal, stocks could sell off, according to Peter Tuz, a portfolio manager at Chase Investment Counsel.

"It doesn't have to be sharp," he said. "A 20% drop would be astounding, but a modest drop would not be surprising."

No deal, more volatility:

Investors could be in for a rude awakening on New Year's day. Despite the political and economic stakes, it's not a given that Congress will act.

"I don't think investors have taken into account that nothing gets done," Warne said.

Wall Street vigilantes believe a sell-off may be necessary to force America's elected officials into action. But there is no guarantee that a riot in the stock market will inspire sound policymaking.

For example, the sell-off that followed the S&P downgrade did not result in a long-term solution to the debt ceiling problem, said Lawrence Creatura, a portfolio manager with Federated Clover Investment Advisors.

"The market can act as a disciplinarian, but that doesn't ensure that we get a clean and lasting solution," Creatura said. "We didn't get that last time, and it's probably not realistic to expect it this time either."

The fiscal cliff was designed to force Washington to deal with the nation's long-term debt problems, but hopes for a grand bargain have diminished as talks devolved into stalemate.

The lack of progress on structural issues, such as entitlement spending, means investors will be dealing with a certain degree of political risk long after the fiscal cliff deadline has passed.

"They're not dealing with the big issues," Tuz said. "They'll come up with a band aid approach that just delays the inevitable."

In the meantime, trading in the stock market could be volatile as investors monitor the blow-by-blow in Washington.

The market's fear gauge, the VIX (VIX)has jumped 14% over the past five days -- a sure sign that volatility is indeed on the rise.

"We're floating around here and no one has any real idea where we're going to go," Schwartz said. "That's why volatility has popped up."

First Published: December 29, 2012: 9:03 AM ET

21.29 | 0 komentar | Read More

Snapchat's 'disappearing' videos don't actually vanish

Snapchat messages are designed to vanish seconds after they're opened, but a security probe revealed that some videos are being stored on recipients' iPhones.

NEW YORK (CNNMoney)

Snapchat's twist is a messaging trail that self-destructs. When a user sends an image, they can choose how long the receiver has to view it, picking a timeframe of up to 10 seconds after opening. Then it vanishes.

The allure of a disappearing act frees users to send funny, embarrassing and personal images meant to leave no digital trail. (And yes, it's often used for 'sexting.') The app has been a giant hit, especially with teens. Launched one year ago, Snapchat now hosts 50 million shared images a day, according to the company. Facebook copied the feature last week for its new Poke app.

Except that in the digital realm, nothing ever seems to vanish for good. A newly discovered security flaw can resurrect Snapchat's supposedly nuked videos.

A Buzzfeed article on Thursday explained the hack, which involves opening up an iPhone file browser, navigating to a Snapchat folder, and copying videos over to your computer. Turns out that all those video files that were intended to vanish are actually being accumulated in a cache. Photos don't seem to be stored, according to Buzzfeed's tests.

Snapchat did not respond to CNNMoney's request for comment. Founder Evan Spiegel told Buzzfeed: "The people who most enjoy using Snapchat are those who embrace the spirit and intent of the service. There will always be ways to reverse engineer technology products — but that spoils the fun!"

A similar flaw also affects Facebook's Poke app, which lets users send Facebook messages and videos that disappear in seconds. Facebook (FB) acknowledged the glitch and urged users to proceed with caution.

"While Pokes disappear after they are read, there are still ways that people can potentially save them," a Facebook spokeswoman said in a written statement. "People should think about what they are sending and share responsibly."

Security experts say it's no surprise that "vanishing" messages don't disappear as completely as users expect. True privacy is a huge technical challenge, according to Robert Leshner, founder of Safe Shepherd, a personal-data protection service.

"Some of these photos and videos have to disappear from the servers of the company and have to cease to exist entirely. It's not just removing the accessibility, it's about removing the content," he said. "There are always weak links and chinks in the armor that can be discovered."

Snapchat's app icon is a ghost, intended to illustrate how its messages are fleeting and ephemeral. Now it's got an ironic kicker: Some of those missives can stick around to haunt you.

First Published: December 28, 2012: 3:16 PM ET

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Fiscal cliff could put your tax refund on hold

Tax refunds could be delayed.

NEW YORK (CNNMoney)

Congressional dithering over a fiscal cliff fix could force the Internal Revenue Service to delay the start of the filing season. So those expecting to file their returns in mid-January, when the agency usually begins accepting them, may have to wait several weeks.

If Congress doesn't approve a patch for the alternative minimum tax in the next few days, then up to 100 million taxpayers will not be able to file their returns -- or collect refunds, if owed -- until late March, said Steven Miller, the agency's acting commissioner. (The AMT itself would hit nearly 30 million filers with higher tax bills, and returns of the others would be held up while the IRS reprograms its systems.)

Filing and refunds would also be put on hold by the uncertain fate of a dozen other provisions, including the deduction for state and local sales taxes and the $250 tax break for teachers who buy their own school supplies.

This isn't the first time the IRS has had to deal with this. Two years ago, it took until mid-December for President Obama and lawmakers to reach an agreement on many of the same issues. That delayed the opening of the tax season by four weeks to mid-February, affecting some 9 million taxpayers.

Most of them were likely owed refunds, since that's who files early, said John Lieberman, managing director of Perelson Weiner, an accounting firm in New York. They are often folks whose income is just from wages and who take the standard deduction, making their returns fairly simple. Many are low-income families who file for the earned income tax credit.

"They need that money back to pay Christmas bills, for a downpayment on a car or a security deposit on an apartment," said Lieberman.

Related: Fiscal cliff confusion on Form 1040

This year, the situation is even more dire since we are only days away from the start of 2013.

While the IRS has published the Form 1040 for 2012, several lines are listed as "reserved." The designation is a "placeholder" for provisions that have yet to be passed, an agency spokesman said. The IRS has yet to publish an instruction booklet for filling out the tax forms, leaving tax preparers in a holding pattern.

"How they are going to handle this?" said John Roth, senior federal tax analyst for CCH, a tax services company. "We are in virgin territory."

The IRS spokesman declined to answer questions on how the Congressional delay will affect taxpayers, but said more information would be available shortly.

First Published: December 28, 2012: 4:44 PM ET

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S&P says fiscal cliff impasse won't spark downgrade

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

NEW YORK (CNNMoney)

S&P made headlines in August of 2011 by knocking the U.S. down from AAA status to to AA+ following the political wrangling over the debt ceiling. At the time, the rating agency said the affair showed "America's governance and policymaking becoming less stable, less effective, and less predictable."

More than a year later, S&P said Friday that this characterization "still holds."

Fellow rating agencies Moody's and Fitch still have the U.S. rated AAA, though with negative outlooks.

Fitch warned earlier this month that it may downgrade the U.S. should lawmakers fail to avoid the fiscal cliff and allow the debt ceiling to rise. Moody's has said it will strip the country's AAA rating should lawmakers fail to produce a long-term debt reduction plan.

President Obama and congressional leaders met Friday at the White House in the latest round of fiscal cliff negotiations.

Should lawmakers fail to avert the package of tax hikes and spending cuts that constitute the fiscal cliff, the U.S. economy is likely to contract by half a percent next year, with unemployment rising to 9% by 2014, S&P said. This contraction could mitigate the reduced spending and additional tax revenue that would come to the government.

Related: Fiscal cliff could put your tax refund on hold

On the other hand, should lawmakers reach a deal within the next few days, it's likely to be "insufficient to place the U.S. medium-term public finances on a sustainable footing," S&P said.

"Our existing negative outlook on the U.S. rating speaks to the risk of a deliberate further loosening of fiscal policy," the agency said.

Back in June, S&P warned that the United States could be in for another credit downgrade by 2014 if Congress doesn't come up with a plan to reduce the national debt. S&P spokesman John Piecuch said in an email Friday that the rating agency could make a downgrade decision before the end of that time frame.

First Published: December 28, 2012: 5:46 PM ET

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You need a touchscreen for Windows 8

At $500, Asus' VivoBook laptop is the cheapest touchscreen Windows 8 PC on the market.

NEW YORK (CNNMoney)

The ability to touch, tap, swipe and pinch on Windows 8 computers is what makes the new operating system come to life. You can still use Windows 8 without a touchscreen, but that's kind of like tossing aside the remote, getting up, and repeatedly pushing buttons to change the channel on your TV -- it's an old-fashioned drag.

Yet remarkably few people are actually buying touchscreen computers. Just 5% of Windows 8 laptops sold through Dec. 15 had touchscreens, according to the NPD Group.

One challenge is that there just aren't many touch-enabled laptops out there. Only 30 of the more than 700 laptops that Best Buy (BBY, Fortune 500) sells on its website have touchscreens, and just two touchscreen laptops ranked among the retailer's top 10 sellers.

Another sticking point: Touchscreen laptops are expensive. They'll cost you around $120 to $150 more than their non-touch-enabled equivalents. The cheapest touchscreen laptop -- the 11.6-inch Asus VivoBook -- sells for about $500, but fuller-sized touchscreen notebooks with all the latest features will set you back at least $625.

That's not hugely expensive for a laptop, but it does give many people pause when they're deciding whether touch is a feature that's worth shelling out more than a hundred bucks for.

Here's the problem: It is.

Touch features aren't an afterthought in Windows 8; they're core to the entire operating system. A swipe in from the right brings up some of the software's best new additions, like in-app search and sharing. The "options" menu is accessible with a downward swipe, navigation is done with a swipe in from the left, and a laundry list of other actions are made much simpler and intuitive with gestures. The whole Windows 8 interface just begs you to touch it.

Microsoft (MSFT, Fortune 500) has been aggressively marketing Windows 8's touch features on TV, showing off new inventions like "picture passwords" (use a gesture, like a circle, on a chosen part of a favorite image as your log-in credential) and tablet-like apps. But consumers haven't gotten the message.

That gap contributed to Windows 8's mixed reviews. It's a clunky interface when used with a traditional keyboard-and-mouse arrangement.

Related story: Windows 8 makes you relearn how to use your PC

Getting people to adopt touch technology on their laptops won't be easy. It's not the way people are accustomed to interacting with PCs.

"The problem is everyone expected this to come out fully baked," said Stephen Baker, a consumer tech analyst at NPD. "But Windows 8 is not like anything before. It'll take time for people to get it."

Even some top industry executives haven't wrapped their heads around the concept. In April, when asked if Apple (AAPL, Fortune 500) would be producing touchscreen laptops to compete with Microsoft, company CEO Tim Cook scoffed.

"You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user," Cook said on a conference call with analysts. "You wouldn't want to put these things together because you wind up compromising in both."

The price, availability and awareness obstacles that touchscreen laptops face can all be overcome. But at least two of those won't be knocked down until next summer, at the earliest.

Because today's touchscreen market is dominated by smartphones and tablets, there's been little vendor demand for the larger sizes needed for laptop screens. That means suppliers aren't making many of them, which drives up their price, according to NPD's Baker.

He predicts that increased demand will force screen makers to ramp up their large touchscreen supplies by the middle of next year. That will push more touchscreen laptop prices down into the $500 range.

"It will be a very different market by 'back to school,'" Baker said.

Will consumers take notice? If they want the best Windows 8 experience, they should.

First Published: December 28, 2012: 5:22 AM ET

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Take control of your spending

NEW YORK (Money Magazine)

With 2012 winding down and 2013 fast approaching, now is an excellent time to focus on the single most effective way to build wealth and gain financial security for the long term: taking control of your spending so you can save on a regular basis.

And, indeed, Fidelity's fourth annual New Year Financial Resolutions Study shows that many people are planning to do just that in the coming year. According to Fido's survey of just over 1,000 adults, a record number, 46%, are considering financial resolutions for 2013, with saving more being the single most popular goal.

So how can you best achieve that worthy aim?

Truth is, there are a number of ways you can get a better handle on your spending and boost the amount you save. What's most important -- and most likely to lead to success -- is settling on a method that's most likely to work for you, given your temperament and your particular financial circumstances.

Some people, for example, find it convenient to use others' spending and savings habits as guideline for their own.

If you fall into that camp, you can get plenty of information about what percentage of their paychecks Americans devote to everything from their houses and cars to entertainment and gifts by going to the Bureau of Labor Statistics' Consumer Expenditures Survey, a compendium of the spending behavior of just over 122,000 U.S households. If you see that your outlays deviate markedly from those of your fellow citizens in particular areas, you can decide whether it makes sense to you're your spending in those categories.

Other people prefer to sift through their own spending, looking for places they might be able to eliminate some excesses.

Related: 12 ways you're wasting money

If that approach appeals to you, you can create your own budget using tips from our MONEY 101 lesson on budgeting, rev up a budgeting software program or go to an online site like Mint.com, which helps you create a budget based on your past spending habits.

Personally, I've never been a big fan of budgeting per se. I don't think it's especially important what percentage of your income you spend on, say, vacations versus car payments. What really matters is that you save.

So I've long advocated what I call the "Two-line Budget": On the first line you enter your gross income; on the second, put the percentage of that income you intend to save, at least initially. I'd say 10% to 15% is reasonable target, although you can tweak that later one. To make sure that percentage actually gets saved, have that amount automatically deducted from your paycheck via a 401(k) plan or a mutual fund's automatic investing plan.

The idea is that once a portion of your income is going toward savings before you can even get your hands on it, you'll be forced to live on what's left and adjust your lifestyle accordingly. How you do that -- whether you choose to spend more on a fancy car, a nicer wardrobe, whatever is really a matter of personal preference.

Related: Why high earners need to save more

There are other techniques you may want to incorporate into your overall spending and saving plan, such as using a "commitment device" to help you achieve a specific savings goal or giving yourself the added incentive of a treat for reaching that goal.

Or you may simply find it easiest to take a knife to big-ticket items in your budget on the theory that they naturally provide the biggest opportunities for significant cutbacks.

Bottom line: If you're really serious about achieving a balance between spending and saving that will improve your long-term financial prospects, I suggest that you find some approach, any approach, that works for you -- and then resolve to follow it in 2013 and beyond.

First Published: December 28, 2012: 5:46 AM ET

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Investors back Italy despite political turmoil

Italy finds demand for bonds as election raises questions about economic reforms

LONDON (CNNMoney)

Monti's technocrat government collapsed after former Prime Minister Silvio Berlusconi withdrew his support, throwing Italy into an election campaign that will determine whether the eurozone's second most indebted nation will continue to implement reforms launched over the past 12 months.

Italy auctioned €3 billion of 10-year bonds at a yield of 4.48%, little changed from the last auction in November. It also sold €2.9 billion of 5-year bonds at a steady yield of 3.26%.

Italy's government borrowing stands at about €2 trillion, equivalent to almost 130% of gross domestic product, and it needs to issue some €420 billion in bonds for 2013 to service that debt.

Only Greece, which has been bailed out by the European Union and IMF, has a higher debt-to-GDP ratio in the eurozone.

Related: Greece may remain in euro after all

Monti's commitment to reform has reassured investors and his eurozone partners. Bond yields edged up on news of his departure, but are still far below the 7% seen just over a year ago, when he was appointed head of an unelected government to rescue Italy from the debt crisis that was threatening to tear the eurozone apart.

Italy has also benefited this year from the as-yet untested commitment by the European Central Bank to buy the bonds of ailing eurozone states, provided they request a formal bailout and agree to the conditions attached.

"That Italy is able to sell 10-year paper at a yield of 4.5% eight weeks before a crucial parliamentary election says much about the dramatic shift in sentiment towards the eurozone," said Nicholas Spiro, managing director of Spiro Sovereign Strategy. "Yet the fact remains that complacency has seeped into Italy's bond market.

Related: EU strikes deal to bring banks under single supervisor

Italy faces a tough 2013. It has already been in recession for five consecutive quarters. The economy is expected to contract by 2.4% in 2012, and shrink again next year. Some private forecasters believe budget targets Monti set for 2013 were overly optimistic, and that further austerity measures will be needed to wipe out the structural budget deficit.

Opinion polls suggest the center-left Democratic Party led by Pier Luigi Bersani -- who supports much of Monti's program - will win the lower house elections due in late February, but he may need to build a coalition to gain a majority, and the election could become a referendum on austerity.

Monti, an economics professor and former European Commissioner, signaled earlier this week that he may be ready to lead Italy again if a party or coalition came forward with a program he could support. He has called for the next government to accelerate his reforms and open up Italy's labor markets.

Investors looking for continuity after the election would welcome a role for Monti in the new government but some analysts caution that the "Monti effect" could have unintended consequences.

"Although a Monti-led centrist alliance would draw votes away from both the center-left and center-right, it would also lead to a much more fragmented parliament and, quite possibly, an awkward coalition government with a questionable commitment to reform," said Spiro.

First Published: December 28, 2012: 7:46 AM ET

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Bank fines top $10 billion this year

UBS's fine for manipulating Libor capped a record year for bank fines.

NEW YORK (CNNMoney)

When UBS agreed earlier this month to pay U.S. authorities $1.2 billion for manipulating Libor, it capped a record year for bank fines. And the total includes only what the banks paid to U.S. and state authorities, not billions more these global banks also agreed to pay European regulators.

Slightly more than half of the fines were related to improper mortgage practices, and most of that money was earmarked to provide help to the victims.

For example, $1.5 billion of a broader mortgage settlement with major home lenders announced in February was used to set up a fund to pay borrowers whose homes were improperly sold or taken in foreclosure. Another $3.5 billion of that settlement went to state and federal governments to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.

Another $175 million was paid by Wells Fargo (WFC, Fortune 500) in a July settlement to help minority homeowners who were sold subprime loans when they qualified for less-expensive traditional mortgages.

Some victims of ponzi schemer Bernard Madoff also will benefit from the $210 million fine that a unit of Bank of New York Mellon (BK, Fortune 500) agreed to pay New York authorities for steering customers to Madoff.

But nearly half the fines -- more than $5 billion -- ended up in government coffers, mostly the U.S. Treasury's general fund.

Related: UBS's Libor charges - no longer a victimless crime

Those fines included $3.2 billion that HSBC (HBC), ING (ING) and Standard Chartered (SCBFF) paid for money laundering violations for their transactions with countries such as Cuba and Iran.

It also included about $1.56 billion in U.S. fines paid by UBS (UBS) and Barclays (BCS) for manipulating Libor, and $335 million that Deutsche Bank (DB) and Flagstar (FBC) paid for selling mortgages without disclosing the riskiness of the borrowers.

Related: Cases against UBS traders tip of the iceberg

Just about all the misdeeds were committed well before 2012. Penalties have yet to be handed down on the problems that occurred this year, such as the $5.8 billion trading loss at JPMorgan Chase (JPM, Fortune 500), which is now under investigation by the Securities and Exchange Commission and the FBI, or the fraud that caused the collapse of Peregrine Financial Group.

But while Peregrine was forced out of business, most of those paying these hefty bank fines can easily afford to do so.

Thomson Reuters estimates that the financial sector stocks in the S&P 500 earned $167.7 billion in profits this year, up 21% from 2011. That doesn't include earnings from major foreign banks, including UBS and HSBC, that paid some of the biggest fines. The stocks of the major banks that were hit with major fines are all up at least 20% this year, despite the large checks they had to write.

First Published: December 28, 2012: 5:13 AM ET

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You need a touchscreen for Windows 8

At $500, Asus' VivoBook laptop is the cheapest touchscreen Windows 8 PC on the market.

NEW YORK (CNNMoney)

The ability to touch, tap, swipe and pinch on Windows 8 computers is what makes the new operating system come to life. You can still use Windows 8 without a touchscreen, but that's kind of like tossing aside the remote, getting up, and repeatedly pushing buttons to change the channel on your TV -- it's an old-fashioned drag.

Yet remarkably few people are actually buying touchscreen computers. Just 5% of Windows 8 laptops sold through Dec. 15 had touchscreens, according to the NPD Group.

One challenge is that there just aren't many touch-enabled laptops out there. Only 30 of the more than 700 laptops that Best Buy (BBY, Fortune 500) sells on its website have touchscreens, and just two touchscreen laptops ranked among the retailer's top 10 sellers.

Another sticking point: Touchscreen laptops are expensive. They'll cost you around $120 to $150 more than their non-touch-enabled equivalents. The cheapest touchscreen laptop -- the 11.6-inch Asus VivoBook -- sells for about $500, but fuller-sized touchscreen notebooks with all the latest features will set you back at least $625.

That's not hugely expensive for a laptop, but it does give many people pause when they're deciding whether touch is a feature that's worth shelling out more than a hundred bucks for.

Here's the problem: It is.

Touch features aren't an afterthought in Windows 8; they're core to the entire operating system. A swipe in from the right brings up some of the software's best new additions, like in-app search and sharing. The "options" menu is accessible with a downward swipe, navigation is done with a swipe in from the left, and a laundry list of other actions are made much simpler and intuitive with gestures. The whole Windows 8 interface just begs you to touch it.

Microsoft (MSFT, Fortune 500) has been aggressively marketing Windows 8's touch features on TV, showing off new inventions like "picture passwords" (use a gesture, like a circle, on a chosen part of a favorite image as your log-in credential) and tablet-like apps. But consumers haven't gotten the message.

That gap contributed to Windows 8's mixed reviews. It's a clunky interface when used with a traditional keyboard-and-mouse arrangement.

Related story: Windows 8 makes you relearn how to use your PC

Getting people to adopt touch technology on their laptops won't be easy. It's not the way people are accustomed to interacting with PCs.

"The problem is everyone expected this to come out fully baked," said Stephen Baker, a consumer tech analyst at NPD. "But Windows 8 is not like anything before. It'll take time for people to get it."

Even some top industry executives haven't wrapped their heads around the concept. In April, when asked if Apple (AAPL, Fortune 500) would be producing touchscreen laptops to compete with Microsoft, company CEO Tim Cook scoffed.

"You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user," Cook said on a conference call with analysts. "You wouldn't want to put these things together because you wind up compromising in both."

The price, availability and awareness obstacles that touchscreen laptops face can all be overcome. But at least two of those won't be knocked down until next summer, at the earliest.

Because today's touchscreen market is dominated by smartphones and tablets, there's been little vendor demand for the larger sizes needed for laptop screens. That means suppliers aren't making many of them, which drives up their price, according to NPD's Baker.

He predicts that increased demand will force screen makers to ramp up their large touchscreen supplies by the middle of next year. That will push more touchscreen laptop prices down into the $500 range.

"It will be a very different market by 'back to school,'" Baker said.

Will consumers take notice? If they want the best Windows 8 experience, they should.

First Published: December 28, 2012: 5:22 AM ET

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Take control of your spending

NEW YORK (Money Magazine)

With 2012 winding down and 2013 fast approaching, now is an excellent time to focus on the single most effective way to build wealth and gain financial security for the long term: taking control of your spending so you can save on a regular basis.

And, indeed, Fidelity's fourth annual New Year Financial Resolutions Study shows that many people are planning to do just that in the coming year. According to Fido's survey of just over 1,000 adults, a record number, 46%, are considering financial resolutions for 2013, with saving more being the single most popular goal.

So how can you best achieve that worthy aim?

Truth is, there are a number of ways you can get a better handle on your spending and boost the amount you save. What's most important -- and most likely to lead to success -- is settling on a method that's most likely to work for you, given your temperament and your particular financial circumstances.

Some people, for example, find it convenient to use others' spending and savings habits as guideline for their own.

If you fall into that camp, you can get plenty of information about what percentage of their paychecks Americans devote to everything from their houses and cars to entertainment and gifts by going to the Bureau of Labor Statistics' Consumer Expenditures Survey, a compendium of the spending behavior of just over 122,000 U.S households. If you see that your outlays deviate markedly from those of your fellow citizens in particular areas, you can decide whether it makes sense to you're your spending in those categories.

Other people prefer to sift through their own spending, looking for places they might be able to eliminate some excesses.

Related: 12 ways you're wasting money

If that approach appeals to you, you can create your own budget using tips from our MONEY 101 lesson on budgeting, rev up a budgeting software program or go to an online site like Mint.com, which helps you create a budget based on your past spending habits.

Personally, I've never been a big fan of budgeting per se. I don't think it's especially important what percentage of your income you spend on, say, vacations versus car payments. What really matters is that you save.

So I've long advocated what I call the "Two-line Budget": On the first line you enter your gross income; on the second, put the percentage of that income you intend to save, at least initially. I'd say 10% to 15% is reasonable target, although you can tweak that later one. To make sure that percentage actually gets saved, have that amount automatically deducted from your paycheck via a 401(k) plan or a mutual fund's automatic investing plan.

The idea is that once a portion of your income is going toward savings before you can even get your hands on it, you'll be forced to live on what's left and adjust your lifestyle accordingly. How you do that -- whether you choose to spend more on a fancy car, a nicer wardrobe, whatever is really a matter of personal preference.

Related: Why high earners need to save more

There are other techniques you may want to incorporate into your overall spending and saving plan, such as using a "commitment device" to help you achieve a specific savings goal or giving yourself the added incentive of a treat for reaching that goal.

Or you may simply find it easiest to take a knife to big-ticket items in your budget on the theory that they naturally provide the biggest opportunities for significant cutbacks.

Bottom line: If you're really serious about achieving a balance between spending and saving that will improve your long-term financial prospects, I suggest that you find some approach, any approach, that works for you -- and then resolve to follow it in 2013 and beyond.

First Published: December 28, 2012: 5:46 AM ET

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The rich will pay more taxes next year - no matter what

Taxes are going up on the rich in 2013 to pay for Obama's health care law no matter what Congress does.

NEW YORK (CNNMoney)

The new levies will help foot the bill for the program to expand health care coverage for the uninsured, which involves government subsidies for lower- and middle-income Americans.

The vast majority of taxpayers will escape unscathed, however. Fewer than 2% will be subject to the new taxes, said Roberton Williams, a senior fellow at the Tax Policy Center.

Here's what's coming:

Medicare payroll tax: Single taxpayers earning more than $200,000 and couples making more than $250,000 will have to pay an additional 0.9% payroll tax on the amount they earn above those thresholds.

Unlike traditional payroll taxes, however, this tax will be based on household income, not individual earnings. So couples may find themselves subject to it even if they each make less than $250,000.

That could lead to a surprise at tax time since employers withhold payroll taxes only on their own workers.

For instance, if a husband and wife each earn $175,000, they will owe the additional tax, but their employers likely will not have withheld it. So they will owe $900.

Related: How to survive the fiscal cliff

Investment income tax: Wealthier taxpayers with investment income could be subject to an additional 3.8% levy. Investment income includes interest, dividends and capital gains, among other things.

The formula is somewhat complicated. Only those with modified adjusted gross incomes above a threshold of $200,000, or $250,000 if married, need be concerned.

But filers don't always owe tax on all their investment income. It's just on the investment income that exceeds the threshold.

For example, if a married couple has income of $300,000, of which $275,000 is from wages and $25,000 is from investments, they would owe the tax on all the investment income, or $950 in taxes.

But if the same couple had $125,000 in investment income, they would owe tax only on $50,000, or $1,900 in taxes, because that's the amount that exceeds the threshold.

Related: Going over the Cliff - what changes, what doesn't

Deduction for medical expenses: Also, it will become harder to deduct medical expenses, though this deduction is more common among middle class taxpayers.

Until now, taxpayers could deduct medical expenses that exceeded 7.5% of their adjusted gross income. This level is rising to 10% next year.

One-third of the people who took this deduction had income in the $50,000 to $100,000 range in 2010, according to a CNNMoney analysis of Internal Revenue Service data. Only a tiny fraction of the rich took advantage of this deduction because their high incomes made it hard to reach the threshold.

First Published: December 27, 2012: 5:19 AM ET

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What happens to the economy if we go over the cliff?

It's looking like Congress might go over the fiscal cliff. A long stay over the cliff would hit the economy hard - a short one would have a less severe impact.

NEW YORK (CNNMoney)

What happens to the economy if lawmakers don't cut a deal and the tax hikes and spending cuts become law?

The worst-case scenario is if Congress stands by and lets the fiscal cliff stay in effect all next year. Economists expect the U.S. economy would then fall into a recession.

Specifically, the Congressional Budget Office forecasts a drop of 0.5% in real gross domestic product and a 9.1% unemployment rate by the end of next year.

Related: What if there's no fiscal cliff deal

The good news is that no one expects Congress to let all fiscal cliff measures have their way with the economy for an extended period.

But there could still be an economic hit if lawmakers push the country over the fiscal cliff temporarily and then pass a fallback bill -- one that mostly just averts some of the tax increases.

For example, a bill passed in early January that does not address the scheduled automatic spending cuts or raise the country's debt ceiling.

In that case, economic growth could be dragged down somewhat in the first half of next year, according to estimates by economists at Goldman Sachs.

And that would come on top of a drag on growth that Goldman Sachs already expects from three things it believes are likely to happen: the expiration of the payroll tax cut, the expiration of the Bush-era tax cuts on the highest-income households, and the start of the new Medicare surtax on high income earners.

Five days left.

First Published: December 27, 2012: 5:24 AM ET

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