WASHINGTON ? Fearing a stalemate in Libya, three members of the Senate Armed Services Committee want immediate military aid for the rebels fighting Moammar Gadhafi's forces, stepped up NATO airstrikes and more direct U.S. involvement.

They said they interpreted the U.N. Security Council resolution ? authorizing military action to protect Libyan civilians and imposing a no-fly zone ? as also allowing moves necessary to drive Gadhafi from power.

"I think it gives justification if NATO decides it wants to, for going directly after Gadhafi," said Sen. Joe Lieberman, an independent from Connecticut. "I can't think of anything that would protect the civilian population of Libya more than the removal of Moammar Gadhafi."

A protracted stalemate and a divided Libya, with Gadhafi and the opposition controlling different parts, could open the door to the al-Qaida terrorist network, said Arizona Sen. John McCain, who visited a rebel stronghold this past week. He described the opposition in Benghazi as "this very legitimate government."

Even with more arms for the rebels, said Sen. Lindsey Graham, R-S.C., there isn't enough momentum for them to reach Tripoli, the capital, and there isn't "deep support" for Gadhafi's continued rule.

"So my recommendation to NATO and the administration is to cut the head of the snake off, go to Tripoli, start bombing Gadhafi's inner circle, their compounds, their military headquarters," he said.

"The way to get Gadhafi to leave is have his inner circle break and turn on him. And that's going to take a sustained effort through an air campaign," Graham said.

While saying it's good to have international coalitions and U.N. involvement, "the goal is to get rid of Gadhafi," he argued.

"The people around Gadhafi need to wake up every day wondering, `Will this be my last?' The military commanders in Tripoli supporting Gadhafi should be pounded," Graham said. "So I would not let the U.N. mandate stop what is the right thing to do. You cannot protect the Libyan people if Gadhafi stays. You cannot protect our vital national security interests if Gadhafi stays."

He urged actions that are in the best interests of the U.S., the Libyan people and the world, without being hamstrung by U.N. politics.

"You can't let the Russians and the Chinese veto the freedom agenda. So any time you go to the United Nations Security Council, you run into the Russians and the Chinese. These are quasi-dictatorships, so I wouldn't be locked down by the U.N. mandate," Graham said.

McCain was not as enthusiastic about targeting Gadhafi, saying "we have tried those things in the past with other dictators, and it's a little harder than you think it is." Gadhafi is elusive and "a great survivor, and there's the potential for civilian casualties, which could turn the Libyan people against the U.S., he said.

"The point is that we can't count on taking Gadhafi out. What we can count on is a trained, equipped, well-supported liberation forces which can either force Gadhafi out or obtain victory and send him to an international criminal court," said McCain, the top Republican on the Senate committee.

"My emphasis is on winning the battle on the ground, not taking a chance on taking him out with a lucky air strike."

Lieberman and McCain want increased use of U.S. precision weapons and American air power returned to the mission.

"We need our allies. I appreciate that they've come in. But we're the heart of NATO and it's not exactly as if we took the ball and gave it to NATO," Lieberman said. "We're still NATO, and I think some of our assets that we removed ... ought to go back into the fight."

He said that "every time we pull back, it says to Gadhafi that he can tough this out. And I want him to feel that we're just going to squeeze and squeeze until he decides it is time to go because that's the only end that will be meaningful here."

Lieberman and McCain appeared on CNN's "State of the Union" broadcast on Sunday; Graham's remarks, aired on the same show, were taped on Friday.

The royal wedding of Prince William and Kate Middleton is now less than a week away. Guests have already received their invitations and sent in their official acceptances or apologies to RSVP.

Although a comprehensive list has not been released, official sources have shared a list of some of the definite wedding guests. The list includes relatives of both the bride and groom, other royals and government leaders, friends, celebrities and other people of note or interest to the happy couple (or the royal family). We can be sure that the wedding guest list was carefully conceived and that many different people were consulted before it was made official. However, did some possible mistakes still slip into the royal wedding guest list?

Here's a look at some of the possible faux pas invitations.

The Crown Prince of Bahrain

http://news.bbc.co.uk/1/hi/world/middle_east/country_profiles/790690.stm">Bahrain is a Middle Eastern country that has strong economic ties with the U.K. However, Bahrain is also known for human rights violations and other internal problems (such as a lack of true legal and safe freedom of speech and press). Earlier this year, the http://ukinbahrain.fco.gov.uk/en/about-us/working-with-bahrain/Human-Rights/h..."> British government publicly spoke against Bahrain because of its disapproval of the human rights violations repeatedly made by the government of Bahrain, and intervened after violence was used against protesters. Inviting the Crown Prince of Bahrain may have been meant to increase communication and good will between the countries (and therefore increase the likelihood of change in Bahrain), but it could also be interpreted as implicit acceptance of Bahrain's reigning family.

The Obamas

The royal wedding is a social and religious event. As Prince William is an heir to the throne, however, it is also a political occasion. A long list of dignitaries and international government officials have been http://www.officialroyalwedding2011.org/blog/2011/April/23/Selected-Guest-Lis..."> invited to the royal wedding . Some of these include the prime ministers of Australia, Barbados and Saint Lucia. Most of the countries included on the list are http://www.thecommonwealth.org/Internal/191086/191247/the_commonwealth/"> Commonwealth countries that obviously have close ties to the U.K. The U.S. -- although not a member of the Commonwealth -- does have long-standing and strong ties with Britain. It seems odd that of all of the international leaders invited, no Americans were included. If Prince William and Kate Middleton didn't want to invite the President and Michelle Obama, they could have invited someone like Secretary of State Hilary Clinton.

Sarah Ferguson

Divorce is always a tricky situation when it comes to family events. Sarah Ferguson (usually called "Fergie" or referred to as the Duchess of York) is Prince Andrew's ex-wife. Although she was not invited to the wedding, her ex-husband and children will be attending.

NEW YORK (Reuters) ? Large blue chips, including some consumer-oriented companies, will have to show they can counter sluggish developed economies by leveraging growth in emerging markets and technology -- if Wall Street is to maintain earnings momentum this week.

Companies like Microsoft (MSFT.O), PepsiCo (PEP.N), and Coca-Cola (KO.N), unloved on Wall Street, could turn out to be good buys if they can show they justify higher valuations than investors are now willing to give them.

"If you see these Cokes and Pepsis and these kinds of multinational consumer names post good results, I think it is going to give the perception that the equity market can overcome a lot of these domestic issues," said Nick Kalivas, an analyst at MF Global in Chicago.

Before the recession, the consumer and financial sectors benefited from huge credit expansion. Not so any more.

Growth is now concentrated in industrial, materials and energy stocks that benefit from strong demand in emerging markets, as well as a technology sector boosted by robust demand from businesses.

Average earnings growth across those sectors amounts to almost 33 percent in the first quarter over a year ago, according to Thomson Reuters data. That is more than double the estimated growth for the S&P 500 and towers over the 5 percent growth in a financial sector burdened by a weak housing market.

Investors will also want to see at least stable performance in developed markets as they gear up this week for a press conference by U.S. Federal Reserve Chairman Ben Bernanke. Tough questions will be asked about what monetary policy will look like after the Fed's easy money policies come to a close at the end of June.

EMBRACING THE UNLOVED

Growth is scarce and it is driving up valuations in sectors where it is concentrated.

Last week, investors chased a host of relatively expensive technology names like Apple (AAPL.O) and VMware (VMW.N). Some valuations look extreme: Cloud computing company Saleforce.com (CRM.N) is priced at nearly 300 times current earnings.

The trailing price-to-earnings ratio in the S&P's materials sector is more than 20 times current earnings compared with 16.3 for the whole market, according to data from Thomson Reuters' StarMine.

For investors like Whitney Tilson, a hedge fund manager at T2 Partners in New York, that is creating opportunities in unloved blue chips, where he is focusing his attention instead.

"There are a lot of big-cap blue-chip companies that are trading at moderate prices," he said.

"At a time when everyone is getting enamored with high- growth darlings and commodities, that is precisely the time when we look to play defense and own boring companies that we think have a lot of growth."

One of those less favored companies set to report next week is Microsoft. The company suffers from a reputation for slow growth and its price at nearly 11 times current earnings clearly reflects that.

Comparing Microsoft with Apple, Tilson says that the former is an inherently better business as it focuses on software with marginal incremental production costs compared with Apple's consumer hardware business.

Apple is "a fabulous business, but I'm simply pointing out that you can own a better business, albeit one that is not growing as quickly -- but still growing nicely -- for half the price in terms of price-to-earnings multiple," Tilson said.

Blowout earnings from Apple and exceptionally strong results from other big tech and industrial companies drove the three major U.S. stock indexes higher for the past week. The blue-chip Dow Jones industrial average (.DJI) ended the holiday-shortened week on Thursday at 12,505.99, its highest close for the year and its best closing level since June 5, 2008. For the week, the Dow and the benchmark Standard & Poor's 500 Index (.SPX) each gained 1.3 percent, while the Nasdaq Composite Index (.IXIC) climbed 2 percent.

U.S. financial markets were closed for Good Friday.

EARNINGS FRENZY, TALKING FED

This week, 180 of the S&P 500 companies are set to report earnings. Of companies that have reported to date, 75 percent beat analysts' expectations. That is just above the average over the last four quarters, but well above the average of 62 percent since 1994, Thomson Reuters data showed.

"As people are lowering GDP (estimated) numbers seemingly weekly, the companies are still maintaining some pretty solid revenue growth and margins are staying intact," said Jerome Heppelmann, portfolio manager and chief investment officer of Old Mutual Focused Fund in Berwyn, Pennsylvania.

"I see it more as a broad-based continuation of the economic recovery," he said. "In some cases, the technology names are going to be more exposed and more levered to it."

While earnings are driving ahead at full force, investors will also focus on the first of the Federal Reserve's press conferences. The press briefing on Wednesday is scheduled to start after the rate-setting Federal Open Market Committee wraps up its two-day meeting. Bernanke, the Fed chairman, intends to give four press briefings a year.

There will likely be questions raised about the type of monetary policy the Fed will pursue when its $600 billion bond-buying program, known as quantitative easing, or QE2 on Wall Street, draws to a close at the end of the June.

One school of thought says that QE2 drove the rally in stocks and commodities by underwriting the government's budget deficit and forcing money that would have gone into Treasury bonds into equity and commodity markets instead.

"What happens when QE2 ends and the government starts to withdraw some of that liquidity?" Tilson asked. "How much of this is just artificial, deficit-driven, money-printing stimulus? And how much of it is really genuine? I don't know the answer to that, but I worry."

(Reporting by Edward Krudy; Editing by Jan Paschal)

SEOUL (AFP) ? A group of former statesmen led by ex-US president Jimmy Carter on Sunday said they were in Beijing on the way to North Korea in a visit aimed at easing tension on the Korean Peninsula.

A delegation of the Elders group of retired state leaders began the six-day trip to China, Pyongyang and Seoul to discuss issues including denuclearisation and reported food shortages in North Korea, the group said in a statement.

The four-member group, led by Carter, includes former Finish president Martti Ahtisaari, ex-Norwegian prime minister Harlem Brundtland and former Irish president Mary Robinson, it said.

The delegation will start their Pyongyang visit on Tuesday before moving to Seoul on Thursday to "meet senior officials, members of civil society, academic experts and foreign diplomats," said the group.

"At a time when official dialogue with DPRK (North Korea) appears to be at a standstill, we aim to see how we may be of assistance in reducing tensions and help the parties address key issues including denuclearisation," the statement quoted Carter as saying.

Brundtland expressed a concern at "the acute shortage of food" reported by the North and UN aid agencies.

"Any immediate humanitarian needs must be met - but we also want to discuss longer-term food security and health issues that are so important to economic development," Brundtland was quoted as saying.

United Nations food agencies who recently visited the North say more than six million people -- a quarter of the population -- urgently need food aid.

It was not immediately clear whether the delegates would meet with the North's leader Kim Jong-Il.

Yonhap news agency, citing diplomatic sources, said on Sunday South Korea's foreign minister Kim Sung-Hwan and unification minister Hyun In-taek, Seoul's pointman in cross-border affairs, would meet the delegates upon their request.

South Korean President Lee Myung-Bak is also likely to meet the former statesmen if requested, it said.

Cross-border tension has been acute since the North's bombardment of a border island that killed four South Koreans including two civilians in November, which sparked a brief fear of war.

The first attack on civilians since the 1950-53 Korean War came weeks after Pyongyang disclosed an apparently operational uranium enrichment plant to visiting US experts.

The North claimed it was a peaceful energy project but experts said it could be reconfigured to produce weapons-grade uranium.

Six-party disarmament talks with the North have been on a standstill since Pyongyang walked out in April 2008 and staged its second nuclear test a month later.

Carter has mediated in North Korea before. In 1994 he visited Pyongyang after the United States came close to war with North Korea over its nuclear weapons programme.

Last August the 2002 Nobel peace prizewinner visited Pyongyang to secure the release of jailed US citizen Aijalon Mahli Gomes.

Some analysts believe Carter will also seek to secure the freedom of a Korean-American detained by the North since last November and facing trial for unspecified crimes against the nation.

A source has said the man was involved in missionary work.

NEW YORK ? Obama faces a maddeningly complex strategy in the Mideast, yet critics like John McCain, who urged more action in Libya this week, will blast him no matter what. Leslie H. Gelb on how to hold them accountable.

Those who are convinced that Barack Obama's birth certificate is a fabrication and believe he is the emission of some Kenyan voodoo ceremony, see the president as a black Damien, the offshoot of the Devil who can only do evil. No evidence will ever alter their revelation. And day after day, the news media actually gives these racist and political cynics air and print space. There's no excuse for this.

Then there are the foreign policy birthers, who see Obama as Jimmy Carter, a vacillating over-intellectualized liberal who can't make up his mind. To them, whatever Obama does abroad is wrong?seriously and dangerously wrong. If he supports the Mideast democrats, they chant that he's "betraying" our longtime allies. If he doesn't demand the removal of these longtime allies, they charge him with selling out the democrats. Of course, our birthers can say whatever they want. This is America. Nonetheless, I indulge myself in the fantasy that some editor or TV producer would ask one simple question to these foreign policy birthers: What exactly in heaven's name would you do?

Take Libya. http://www.thedailybeast.com/cheat-sheet/item/mccain-visits-libyan-rebels/dro...">Senator John McCain recently visited that sad land and called upon the White House to "intensify" military operations. What did he mean by that? He talked about resuming flights of the AC-130 and A-10 ground attack jets. Fine, only the U.S. military judged last week that such flights were highly vulnerable to ground-to-air missiles, and that there was high risk of these aircraft not being able to distinguish between the bad Libyans and the good rebel Libyans.

In any event and by all accounts, these potent jets by themselves would not even begin to turn the tide of war or end the seeming stalemate. And yet, birthers like McCain demand MORE without beginning to define what more means and what effects they think MORE will have on the battlefield or among Col. Gaddafi's entourage. They demand decisive action, but never specify what that would be. And keep in mind that the birthers almost always swear to the highest heavens that they are not recommending the introduction of U.S. or other nations' ground troops. Be honest, birthers: No one predicts an early end to the fighting without a large contingent of land forces, and no birther is going to propose that. So, what we have is the birthers slamming Obama for the stalemate in a war THEY pushed him into without THEIR offering the necessary means to win it.

Be honest, the birthers don't know a democratic revolutionary in Syria from a Los Angeles Dodger.

They are on a similar hobby horse in http://www.thedailybeast.com/blogs-and-stories/2011-04-22/syria-protests-over...">Syria. Take our newly deployed ambassador out of Damascus and proclaim our total solidarity with the "democratic revolutionaries." Be honest, the birthers don't know a democratic revolutionary in Syria from a Los Angeles Dodger, just like they don't know democratic rebels in Libya from Gaddafi's former cabinet minister, who is now leading the rebels. So, let's say Obama gratifies the birthers and says all power to the Syrian people. And let's say the Syrian people think that means the United States will support them and flood in the streets with renewed courage. And let's say President Assad's nasties kill them in droves. What do the birthers say Washington should do then? They say nothing. They just criticize Obama for not bellowing his everlasting support for the Syrian people whoever they might turn out to be. Remember, too, that Syria's neighbors like Lebanon, Jordan, and Israel are not calling for American democratic orations.

Birthers apparently believe that it is undemocratic to be pragmatic, and that it is un-American to look at the full range of U.S. interests in these terribly complicated Mideast countries. But while they're pounding the drums about Syria and Libya, at the moment, you don't hear them yelling for Saudi Arabia to democratize. Apparently, the birthers draw the humanitarian line at America's huge oil suppliers. Good. By the way, the Saudis draw their line in Bahrain, where a Shiite majority is trying to overturn a Sunni autocracy. The birthers keep pushing for more rhetoric pressure by Obama to democratize Bahrain. But why don't they just come right out and say, yes, we'd run the risk of further alienating Riyadh to get democracy in Bahrain? They don't say that. They just say beat up on the Saudis about Bahrain and completely ignore joining the broader policy issue.

You know, it's interesting that many of the rebels we're trying to help in Libya and Egypt are far more sensible about risks than the birthers. In interviews, they often speak of their fear about who will profit from the power vacuums opening up throughout the region. The birthers toss this consideration aside. They forget that in 1979, revolution in Iran was begun by genuine democrats. They don't like to talk about how democratic elections in Lebanon are resulting in increased power for radical Hezbollah. And for sure, birthers close their ears when you start reminding them that the democratic elections they demanded for Gaza under George W. Bush were won by the terrorist Hamas organization.

http://www.thedailybeast.com/blogs-and-stories/2009-12-28/obamas-jimmy-carter...">I myself have often written that President Obama resembles President Carter in his indecisiveness and desire to have things both ways. But in the Mideast today, Obama is exercising plain common sense in treading carefully. He has said again and again that America's aim is for a peaceful and stable transition to democracies throughout the region, that it is up to the people and governments of the region to make their transition, and that the United States stands ready to help. That is the right U.S. policy, the humanitarian one, the one best suited to result in real democracies. If the birthers have a better way, let them present that position with the details they insist of the president. Let them put up specific plans. The only way that will happen is if editors, reporters, producers, and TV anchors hold them to account.

http://www.cfr.org/bios/3325/leslie_h_gelb.html" target="_blank">Leslie H. Gelb, a former New York Times columnist and senior government official, is author of http://www.amazon.com/exec/obidos/ASIN/0061714542/thedaibea-20" target="_blank" />http://www.amazon.com/exec/obidos/ASIN/0061714542/thedaibea-20" target="_blank">Power Rules: How Common Sense Can Rescue American Foreign Policy (HarperCollins 2009), a book that shows how to think about and use power in the 21st century. He is president emeritus of the http://www.cfr.org/" target="_blank">Council on Foreign Relations.

Like http://www.facebook.com/thedailybeast">The Daily Beast on Facebook and http://twitter.com/thedailybeast">follow us on Twitter for updates all day long.

For inquiries, please contact The Daily Beast at editorial@thedailybeast.com.

NEW YORK (Reuters) ? Large blue chips, including some consumer-oriented companies, will have to show they can counter sluggish developed economies by leveraging growth in emerging markets and technology -- if Wall Street is to maintain earnings momentum next week.

Companies like Microsoft (MSFT.O), PepsiCo (PEP.N), and Coca-Cola (KO.N), unloved on Wall Street, could turn out to be good buys if they can show they justify higher valuations than investors are now willing to give them.

"If you see these Cokes and Pepsis and these kinds of multinational consumer names post good results, I think it is going to give the perception that the equity market can overcome a lot of these domestic issues," said Nick Kalivas, an analyst at MF Global in Chicago.

Before the recession, the consumer and financial sectors benefited from huge credit expansion. Not so any more.

Growth is now concentrated in industrial, materials and energy stocks that benefit from strong demand in emerging markets, as well as a technology sector boosted by robust demand from businesses.

Average earnings growth across those sectors amounts to almost 33 percent in the first quarter over a year ago, according to Thomson Reuters data. That is more than double the estimated growth for the S&P 500 and towers over the 5 percent growth in a financial sector burdened by a weak housing market.

Investors will also want to see at least stable performance in developed markets as they gear up for a press conference by U.S. Federal Reserve Chairman Ben Bernanke next week. Tough questions will be asked about what monetary policy will look like after the Fed's easy money policies come to a close at the end of June.

EMBRACING THE UNLOVED

Growth is scarce and it is driving up valuations in sectors where it is concentrated.

During the week, investors chased a host of relatively expensive technology names like Apple (AAPL.O) and VMware (VMW.N). Some valuations look extreme: Cloud computing company Saleforce.com (CRM.N) is priced at nearly 300 times current earnings.

The trailing price-to-earnings ratio in the S&P's materials sector is more than 20 times current earnings compared with 16.3 for the whole market, according to data from Thomson Reuters' StarMine.

For investors like Whitney Tilson, a hedge fund manager at T2 Partners in New York, that is creating opportunities in unloved blue chips, where he is focusing his attention instead.

"There are a lot of big-cap blue-chip companies that are trading at moderate prices," he said.

"At a time when everyone is getting enamored with high- growth darlings and commodities, that is precisely the time when we look to play defense and own boring companies that we think have a lot of growth."

One of those less favored companies set to report next week is Microsoft. The company suffers from a reputation for slow growth and its price at nearly 11 times current earnings clearly reflects that.

Comparing Microsoft to Apple, Tilson says that the former is an inherently better business as it is focused on software with marginal incremental production costs compared to Apple's consumer hardware business.

Apple is "a fabulous business, but I'm simply pointing out that you can own a better business, albeit one that is not growing as quickly -- but still growing nicely -- for half the price in terms of price-to-earnings multiple," Tilson said.

Blowout earnings from Apple and exceptionally strong results from other big tech and industrial companies drove the three major U.S. stock indexes higher for the week. The blue-chip Dow Jones industrial average (.DJI) ended the holiday-shortened week on Thursday at 12,505.99, its highest close for the year and its best closing level since June 5, 2008. For the week, the Dow and the benchmark Standard & Poor's 500 Index (.SPX) each gained 1.3 percent, while the Nasdaq Composite Index (.IXIC) climbed 2 percent.

U.S. financial markets were closed for Good Friday.

EARNINGS FRENZY, TALKING FED

Next week, 180 of the S&P 500 companies are set to report earnings. Of companies that have reported to date, 75 percent beat analysts' expectations. That is just above the average over the last four quarters, but well above the average of 62 percent since 1994, Thomson Reuters data showed.

"As people are lowering GDP (estimated) numbers seemingly weekly, the companies are still maintaining some pretty solid revenue growth and margins are staying intact," said Jerome Heppelmann, portfolio manager and chief investment officer of Old Mutual Focused Fund in Berwyn, Pennsylvania.

"I see it more as a broad-based continuation of the economic recovery," he said. "In some cases, the technology names are going to be more exposed and more levered to it."

While earnings are driving ahead at full force, investors will also focus on the first of the Federal Reserve's press conferences. The press briefing on Wednesday is scheduled to start after the rate-setting Federal Open Market Committee wraps up its two-day meeting. Bernanke, the Fed chairman, intends to give four press briefings a year.

There will likely be questions raised about the type of monetary policy the Fed will pursue when its $600 billion bond-buying program, known as quantitative easing, or QE2 on Wall Street, draws to a close at the end of the June.

One school of thought says that QE2 drove the rally in stocks and commodities by underwriting the government's budget deficit and forcing money that would have gone into Treasury bonds into equity and commodity markets instead.

"What happens when QE2 ends and the government starts to withdraw some of that liquidity?" Tilson asked. "How much of this is just artificial, deficit-driven, money-printing stimulus? And how much of it is really genuine? I don't know the answer to that, but I worry."

(Reporting by Edward Krudy; Editing by Jan Paschal)

TOKYO ? Sony says its former president and chairman Norio Ohga, credited with developing the compact disc, has died. He was 81.

Sony Corp. Chairman Howard Stringer said Ohga helped redefine the Japanese manufacturer not only as an electronic hardware company but helped it also expand into software or entertainment.

Ohga died Saturday in Tokyo of multiple organ failure. He was president of the company from 1982 to 1995.

WASHINGTON ? The United States has never defaulted on its debt and Democrats and Republicans say they don't want it to happen now. But with partisan acrimony running at fever pitch, and Democrats and Republicans so far apart on how to tame the deficit, the unthinkable is suddenly being pondered.

The government now borrows about 42 cents of every dollar it spends. Imagine that one day soon, the borrowing slams up against the current debt limit ceiling of $14.3 trillion and Congress fails to raise it. The damage would ripple across the entire economy, eventually affecting nearly every American, and rocking global markets in the process.

A default would come if the government actually failed to fulfill a financial obligation, including repaying a loan or interest on that loan. The government borrows mostly by selling bonds to individuals and governments, with a promise to pay back the amount of the bond in a certain time period and agreeing to pay regular interest on that bond in the meantime.

Among the first directly affected would likely be money-market funds holding government securities, banks that buy bonds directly from the Federal Reserve and resell them to consumers, including pension and mutual funds; and the foreign investor community, which holds nearly half of all Treasury securities.

If the U.S. starts missing interest or principal payments, borrowers would demand higher and higher rates on new bonds, as they did with Greece, Portugal and other heavily indebted nations. Who wants to keep loaning money to a deadbeat nation that can't pay its bills?

At some point, the government would have to slash spending in other areas to make room for any further sales of Treasury bills and bonds. That could squeeze payments to federal contractors, and eventually even affect Social Security and other government benefit payments, as well as federal workers' paychecks.

A default would likely trigger another financial panic like the one in 2008 and plunge an economy still reeling from high joblessness and a battered housing market back into recession. Federal Reserve Chairman Ben Bernanke calls failure to raise the debt limit "a recovery-ending event." U.S. stock markets would likely tank ? devastating roughly half of U.S. households that own stocks, either individually or through 401(k) type retirement programs.

Eventually, the cost of most credit would rise ? from business and consumer loans to home mortgages, auto financing and credit cards.

Continued stalemate could also further depress the value of the dollar and challenge the greenback's status as the world's prime "reserve currency."

China and other countries that now hold about 50 percent of all U.S. Treasury securities could start dumping them, further pushing up interest rates and swelling the national debt. It would be a vicious cycle of higher and higher interest rates and more and more debt.

The U.S. has long been the global standard for financial stability and creditworthiness, with Treasury securities seen as a fail-safe investment. But after the near-shutdown of the U.S. government and a new credit-rating report this week questioning the country's fiscal health, Treasury bills and bonds are losing luster.

If there is a debt limit deadlock, the government by this summer could find itself legally unable to borrow more money to pay its bills, beginning with interest on its debt and gradually extending to day-to-day federal operations. At some point, the government would have to decide which bills to pay and which to put aside.

The debt ceiling will be hit on or around May 16, the Treasury Department says. Unlike the threatened government shutdown, the impact would start slowly, but then build mightily until the damage would be so dire that few political leaders or economists even want to contemplate it. The day of reckoning could likely be delayed at least until early July with creative bookkeeping.

When the House first rejected the Bush administration's $600-billion bank bailout in September 2008, the Dow Jones industrials went into a dizzying 778-point tailspin. A whiff of a possible similar stock market collapse came on Monday with a sharp selloff on Wall Street when the Standard & Poors lowered its outlook on U.S. debt to "negative" from "stable," possibly a first step toward a possible downgrade of America's coveted AAA credit rating.

"We haven't downgraded it. We just said, if nothing happens, we may have to," said S&P chief economist David Wyss. He said a government default remains uncharted territory, "which is one reason why it's not a good idea to hit the debt ceiling."

"There's reason to worry," said Wyss. "But my best guess is that we sort of muddle through this. Cuts will be made, they'll be too little too late, but at least they will be enough to maintain a triple-A rating."

"It's another game of chicken. And this time there are Mack trucks going at each other, not bumper cars. This is a biggie," said American University political scientist James Thurber. But he predicted that, as in the past, "there will be an accommodation. They will avoid a crash."

Investment bank J.P. Morgan Chase recently concluded that any delay in making an interest or principal payments by the Treasury "even for a very short period of time" would have large "long-term adverse consequences for Treasury finances and the U.S. economy." The analysis is being circulated on Capitol Hill by supporters of raising the debt limit.

"If anyone wants to push that button, which I think would be catastrophic and unpredictable, I think they're crazy," JP Morgan CEO Jaime Dimon said recently of those seeking to block raising the debt limit.

House Speaker John Boehner and most other GOP leaders agree on the need to raise the debt limit ? and don't want to be held responsible for a new financial meltdown. Still, they want Obama to make more concessions on spending cuts than he has done thus far. That isn't sitting well with liberal Democrats, who think Obama has already given too much ground.

One reason the two parties can't find common ground: they can't even agree on what's causing high deficits. Democrats mostly blame it on policies of George W. Bush: two wars, tax cuts that continue to benefit the wealthy and an expensive prescription drug program. Republicans see government spending as the culprit, particularly on Obama's watch.

In fact, the main reason is the deep recession, which slashed tax revenues and led to hundreds of billions of dollars in recession-fighting spending by both Bush and Obama. The debt was $9 trillion in late 2007 before the start of the Great Recession, and it's just a sliver under the $14.3 trillion limit today.

Even though GOP leaders say they want to avoid more economic chaos, there is a large crop of tea-party aligned Republicans threatening to refuse to raise the cap under almost any circumstance. Polls suggest a large percentage of Americans oppose raising the debt limit.

The debt limit has been raised ten times over the past decade. Obama voted against Bush's debt-limit increase in 2006 as a senator, accusing Bush of "a leadership failure." Obama recently apologized for "making what is a political vote as opposed to doing what was important for the country."

When Sony's PlayStation Network http://www.pcworld.com/article/225943/playstation_network_down_for_a_day_or_t...">was taken offline three days ago, all eyes fell on the Anonymous group, who've taken a dislike to Sony http://www.pcworld.com/article/224841/sony_and_ps3_hacker_george_hotz_kiss_an...">over its treatment of hardware hacker George Hotz. The network allows online play between PlayStation 3 consoles and boasts 70 million users, so this is no small inconvenience.

Last night Sony confessed that http://blog.us.playstation.com/2011/04/22/update-on-playstation-network-qrioc...">an "external intrusion" caused the company to take-down the PlayStation Network and also Sony's Qriocity service in order "to verify the smooth and secure operation of our network services going forward". However, they're not saying anything more, or giving a time scale as to when gamers will be able to resume playing online.

What makes it strange is that Anonymous has denied being involved, claiming "http://anonnews.org/?p=press&a=item&i=848">for once we didn't do it" and suggesting Sony was using rumors of an Anonymous attack as cover for an internal problem with their servers. As yet Anonymous hasn't responded to the latest update from Sony.

However, the decentralized nature of Anonymous means that individuals act alone with no governance, and Anonymous admitted that "it could be the case that other Anons have acted by themselves."

The phrasing Sony used--talking of an "external intrusion"--indicates that this wasn't a http://www.pcworld.com/businesscenter/article/218533/will_ddos_attacks_take_o...">Distributed Denial of Service (DDoS) attack, which is one of Anonymous' most popular modus operandi. Instead, this seems to be an individual breaking into the network and this is probably why it's taking so long to clean-up--Sony has to trace every corner of their systems affected by the hacker and repair it or restore files. It's like removing a rodent infestation from a house--there's no quick and easy fix.

The break-in might even be coincidental to the recent Anonymous actions, or could be a hack attack from some time ago that has until now remained undiscovered. However, the timing is certainly suspicious, with several of 2011's most anticipated game titles launching this week, including Mortal Kombat, Portal 2 and SOCOM 4.

WASHINGTON (AFP) ? The United States is considering providing unmanned drones to Pakistan for aerial surveillance despite tensions between the two countries over measures to combat terrorist activity, a US official said Friday.

The plan being studied would provide several dozen of the small Raven aircraft -- with a wingspan of just 1.4 meters (4.5 feet) -- equipped with cameras but without the capability of firing missiles, unlike the Predator or Reaper aircraft used by US forces.

The plans for the drones "are under consideration," a US official told AFP on condition of anonymity.

Captain Darryn James, a Pentagon spokesman, said no final decision has been made.

"We are in discussions with our Pakistani partners about their requirements to continue the ongoing counter-insurgency campaign, but it would be premature for us to discuss specific equipment before any decisions have been made and before a contract is in place," James said.

The discussions on drones comes amid heightened tensions between Islamabad and Washington after a fatal shooting by a CIA contractor in January inflamed a row between the US and Pakistan over intelligence sharing and raised tensions over the controversial US drone war.

Pakistan is a key US ally in the war in Afghanistan, and receives billions of dollars in military and civilian aid from the global superpower.

But covert missile strikes targeting militants in Pakistan's lawless border regions, believed to operate with the tacit consent of Islamabad, stoke rampant anti-American sentiment throughout the South Asian nation.

Pakistan has publicly insisted US drone attacks stop and that the United States slashes the number of CIA agents on its soil, while US officials say operations will continue in order to prevent more attacks by Al-Qaeda-linked militants on the United States.

Husain Haqqani, the Pakistani ambassador to the United States, declined to discuss details of talks on drones but said he saw progress in the longtime sticking point in relations.

"Pakistan has always maintained that civilian casualties resulting from the activities of Predator drones have not been very conducive and feed a narrative that does not help our partnership," he said.

"We've been negotiating and working on finding ways whereby the Pakistani military's own capabilities will be enhanced," he said.

The chairman of the US Joint Chiefs of Staff was in Islamabad this week for talks with Pakistan's top general expected to address concerns over official links with militants in the region.