Former head of 20th Century Fox Tom Rothman (L) and Director Lee Ang attend the opening night gala presentation of film ''Life Of Pi'' at the 50th New York Film Festival at Alice Tully Hall in New York September 28, 2012.

NEW YORK | Fri Sep 28, 2012 10:20pm EDT

NEW YORK (Reuters) - Once considered impossible to make, the big-screen 3D adaptation of the bestselling novel "Life of Pi" opened the 50th New York Film Festival on Friday, marking another advance in digital filmmaking.

The movie's director, Ang Lee, hit the red carpet at the big-budget movie's world premiere, with the black-tie audience getting the first glimpse of the spiritual story of a boy stranded on a boat with a tiger. It kicked off the screenings of more than 160 films over 17 days at the New York festival.

One of the world's most respected movie showcases, the festival typically emphasizes the art of cinema by focusing on the best films from the year's European festivals rather than Hollywood-style premieres. But the event is still seen as an important step in gathering buzz as Hollywood's awards season gets going.

More splashy world premieres than usual are on this year's schedule, including "Sopranos" maker David Chase's film feature debut, "Not Fade Away" and Robert Zemeckis' first live-action film "Flight," starring Denzel Washington, which will close the festival.

"Life of Pi" uses computer-generated imagery to bring a cinematic feel to the tale of a Hindu boy who survives a shipwreck and gets stranded on a lifeboat for 227 days with a spotted hyena, an injured zebra, an orangutan and a Bengal tiger called Richard Parker.

It is director Lee's riskiest film to date, even after 2005's "Brokeback Mountain," for which he won the best director Oscar. That film generated controversy for breaking barriers about gay portrayals on screen.

The 57-year-old Taiwanese born-director told the premiere on Friday night the film took four years to make and he joked about learning the hard way the difficulties of making a film in 3D predominantly set in the middle of the ocean portraying a host of zoo animals.

"'Life of Pi' was such an incredible story I just couldn't help myself, I had to tell this story," he said to audience applause. "This was an incredible journey for me."

DIRECTOR FOUND NOVEL 'MIND-BOGGLING'

With a budget of nearly $100 million, the film that opens in November in the United States is considered one of the riskier holiday season films.

Early reviews posted on Friday were mixed. The Hollywood reporter called it "exceptionally beautiful" and appealing to diverse audiences. Variety called it visually stunning but lacking in dramatic tension and grit.

Lee told reporters earlier on Friday that he read the novel soon after its release in 2001, and found it "mind-boggling." But he added, "I remember thinking to myself, nobody in their right mind" would transfer it to film due to the technical difficulties of filming the story.

Spurred on by its spiritual message, Lee agreed to make the movie and saw 3D as the only way to realize it, even before "Avatar" in 2009 broke through as a box-office bonanza for 3D movies.

"Life of Pi" stars novice Indian actor Suraj Sharma, who was plucked from more than 3,000 hopefuls. The book's author, Canadian writer Yann Martel, said he never imagined the film adaptation. "It was cinematic in my mind but I never thought I would actually see it on the screen, that it would be too complicated to do," he said.

Other films looking to gain favor with critics and audiences coming off showings at earlier festivals include Michael Haneke's "Amour," Romanian director Cristian Mungiu's "Beyond the Hills," Noah Baumbach's black-and-white ode to New York, "Frances Ha," starring Greta Gerwig, and Chile director Pablo Larrain's "No."

(Editing by Richard Chang and Peter Cooney)

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Homes that are valued at over $1 million, sit along Bersano Lane in Los Gatos, California September 6, 2012.

CHICAGO | Fri Sep 28, 2012 8:55am EDT

CHICAGO (Reuters) - While there's some comfort in a slowly improving U.S. economic climate, the majority of Americans are still trying to close a prosperity gap that has widened in the last ten years.

There is the painful realization that a combination of stagnating wages, job loss, recessions and depletion of wealth is morphing the middle class into a "muddled class" unable to keep up with the cost of living. This decline has been most pronounced over the past decade.

The most recent Census Bureau study showed that real median household income fell eight percent from 2007 through last year, and is almost nine percent lower than the 1999 level. Can families climb back? It's possible, but not without some financial rigor.

As many analysts have noted, the early part of this century has been a lost decade for most of the middle class. Some income experts cite a "Gini Index," which measures the disparity between higher and lower income groups. A zero means perfect equality between groups, and one is perfect inequality; meaning a huge gap between the lower and middle class and upper-tier earners.

Between 2010 and 2011, the Gini index increased 1.6 percent, to 0.477, the first time the measure showed an annual increase since 1993, the Census Bureau noted. Higher inequality translates into more losers than winners based on the sheer size of the middle class, echoing dozens of other reports showing that the top one percent of the population is reaping most of the benefits of economic growth and tax advantages.

The multiple roundhouse punches of the dot-com meltdown, two recessions and the 2008 housing meltdown wiped out much of the 43-percent gain in net worth that middle-income families experienced from 1992 to 2001. That's when the bulk of white-collar wage earners were involuntarily moved into 401(k) plans and stock mutual funds as the housing market kept rising.

According to a recent study by the Pew Research Center, median net worth of middle-income families dropped 28 percent from 2001 to 2010, which "erased two decades of gains". Net worth is basically what you own, minus liabilities such as debt. With paltry 401(k) savings and loss in home equity, many households now have a negative net worth.

The lost decade hurt unmarried, non-college educated Americans from ages 30 to 44 the hardest. Least impacted were those over 65, who were largely enjoying the protection of Medicare, Social Security and guaranteed defined-benefit pensions.

Given that the economy is not going to show a robust rebound soon, and some jobs may be lost for good due to automation, downsizing and off-shoring, is there any way to reclaim prosperity if you're slipping into the muddled class? Here are some strategies to move forward:

* Cost out and compare your lifestyle - When Pew did its study, it asked middle-income Americans to estimate their lifestyle costs. The median amounts were $85,000 per year in the East, $60,000 in the Midwest and $70,000 in the South and West. Those living in rural areas said $55,000 was the right amount. If you're living above your means in any area -- and you can relocate or lower your cost of living -- you could save money.

* Refinance - You can still take advantage of generational lows in mortgage rates as the housing market rebounds. Want to re-build your net worth? Take your mortgage payment savings and direct it into your retirement accounts. Buy funds that invest in high-quality, dividend-paying stocks such as the SPDR S&P International Dividend ETF (DWX), which gives you global diversification and decent dividend payments.

* Stay married - Those who stayed married from 2001 to 2011, according to Pew, saw their incomes rise almost 4 percent, compared to a more than 3 percent decline for those who separated or divorced. If your marital relationship is on an even keel, it tends to translate into more economic stability.

* Invest in your human capital - More education, especially courses that update your vocational skills, is always a good idea, particularly if a spouse can support you while you're learning. Those who had more education, i.e. graduate degrees, fared much better in income growth than those without college degrees.

* Reduce your investment expenses - This is the low-hanging fruit of rebuilding your net worth. Are you paying more than one percent annually in expenses on your 401(k) or other mutual funds? That's too much. You can easily pay half as much and invest the difference. Look to iShares, Vanguard, Fidelity, Schwab and SPDR groups for savings. (I invest in Vanguard, Fidelity and iShares funds because their costs are low and their fund offerings are numerous).

How do you reclaim a lost decade of economic destruction? You can't make up the difference overnight. But if you can refocus on lifestyle, savings and investments that make sense for you, it will be easier to find a more prosperous path.

(The author is a Reuters columnist and the opinions expressed are his own. For more from John Wasik see link.reuters.com/syk97s)

(Editing by Heather Struck and Andrew Hay)

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Shoppers checkout at a Target store in Falls Church, Virginia May 28, 2010. U.S. consumer spending was unexpectedly flat in April but real disposable incomes recorded their biggest increase in nearly a year a government report showed on Friday.

WASHINGTON | Fri Sep 28, 2012 4:31pm EDT

WASHINGTON (Reuters) - U.S. households stretched to pay for costlier gasoline on meager income growth in August, undercutting spending on other items and pointing to lackluster economic growth.

Other data on Friday showed factory activity in the Midwest contracted this month for the first time in three years.

The Commerce Department said consumer spending rose 0.5 percent last month after gaining 0.4 percent in July. The increase was the largest in six months, but it reflected a rise in gasoline costs that pushed inflation up by the most in nearly 1-1/2 years.

Adjusting for the jump in prices, spending edged up a scant 0.1 percent. With inflation wiping out their buying power, consumers curbed their saving to fund purchases -- a potentially bad omen for future spending.

"Consumers are supporting the recovery, but they are just not able to lead it because of the soft jobs market and little income. They are running low on fire power," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

Income ticked up 0.1 percent but was down 0.3 percent after accounting for inflation and taxes. It was the first decline in real disposable income since November.

With inflation-adjusted spending barely rising last month, real consumer spending, which accounts for about 70 percent of U.S. economic activity, is unlikely to grow much more than the tepid 1.5 percent annual pace recorded in the April-June period.

Walgreen Co, the largest U.S. drugstore chain, posted a lower quarterly profit on Friday and said it had faced a challenging year in which consumers cut back on everyday purchases. At stores open at least a year, sales fell 8.7 percent in Walgreen's latest quarter.

FACTORIES LOSING STEAM

Separately, the Institute for Supply Management-Chicago said its Midwest factory barometer found activity contracted this month for the first time since September 2009, reflecting weak new orders and a slowdown in hiring.

It was consistent with other recent reports flagging a cooling in manufacturing, a sector that had been the pillar of the economy's recovery.

"To the extent that the moderation in manufacturing activity is reflecting weakening domestic and global demand, it may be a harbinger of continued sup-par GDP growth," said Millan Mulraine, a senior economist at TD Securities in New York.

But households appear little perturbed by the gathering dark clouds. Consumer confidence touched a four-month high in September, boosted by higher stock market prices and gains in home values. That resilience could be a boost to President Barack Obama as he seeks a second term in November.

Economists, however, cautioned that household morale could sour towards the end of the year if the U.S. Congress fails to avoid the so-called fiscal cliff -- $600 billion or so in expiring tax cuts and government spending reductions set to take hold in 2013.

The mixed data sent U.S. stocks lower. However, Wall Street recorded its best third quarter since 2010. Prices for U.S. Treasury debt pushed higher, supported by doubts over the chances for success of debt-ridden Spain's 2013 budget. The dollar rose against the euro, advancing for a second straight week.

TROUBLE GAINING STEAM

Slower consumer spending and a drop in farm inventories due to a severe drought in the Midwest held gross domestic product growth to a 1.3 percent pace in the second quarter, a step down from 2 percent in the first three months of the year.

Growth estimates for the third quarter range from 1.2 percent to 2.1 percent. Spending last month was funded by cutting back on saving, which economists said put households on shaky ground, particularly if income taxes go up in January.

"It highlights how imperative it is that Congress deals with this issue. This is not an economy that can bear the burden of fiscal tightening right now," said Julia Coronado, chief North America economist at BNP Paribas in New York.

Inflation pressures picked up last month on the back of the 28.2 cents per gallon rise in gasoline prices. A price index for personal spending increased 0.4 percent, the largest rise since March last year, taking the 12-month gain up to 1.5 percent from 1.3 percent in July.

However, a measure which strips out food and energy costs, rose only 0.1 percent from July. Year-on-year that core measure was up 1.6 percent, the same as in July and the fifth straight month of increases below 2 percent.

The Federal Reserve has a 2 percent inflation target and the still-moderate pace of inflation should give it comfort to maintain its accommodative monetary policy stance for a while as it seeks to spur job growth and domestic demand.

(Additional reporting by Jessica Wohl in Chicago; Editing by Tim Ahmann and Kenneth Barry)

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NEW YORK | Fri Sep 28, 2012 5:45pm EDT

NEW YORK (Reuters) - Tim Buckley, who takes over as chief investment officer at The Vanguard Group in January, has never managed money in his 20 years at the firm. He has no plans to make big market calls and he won't micro-manage his team's thinking or strategies.

There isn't any of the swagger you might expect from a guy charged with running the money at the No.1 U.S. fund company. Instead, the 43-year-old father of three says his top priority is to focus the firm's 300-strong group of portfolio managers, analysts and traders to be more efficient.

That's something Buckley says is crucial to help Vanguard maintain its place as the lowest-cost provider of mutual funds and exchange-traded funds. "There is only one firm that is lowest cost," Buckley said.

Vanguard's approach, whether seen as cheapskate or value for money, has helped the firm surpass rival Fidelity Investments to become the largest U.S. provider of open-end and closed-end mutual funds and ETFs. Vanguard, based in suburban Philadelphia, has $1.9 trillion in mutual fund, closed-end and variable annuity assets, up from $1.33 trillion five years ago, according to Lipper, a unit of Thomson Reuters.

Vanguard offers actively-managed equity funds - most are managed by outside firms like Wellington Investments and PRIMECAP Management Company. But its bread and butter has been in passive management, which has been popular in recent years after many active managers failed to deliver returns.

"Vanguard owns the low-cost attribute in the public's minds," said Don Phillips, president of Morningstar's investment research division. "Whereas Fidelity wanted to own equity performance, Vanguard wanted low cost, and that gave it a leg up."

Much of Vanguard's recent growth has come from its exchange-traded fund business. The firm's U.S. market share in ETFs has increased 29 percent in the past two years. It now holds 17.9 percent of the market, whittling away at the dominance of competitor BlackRock Inc, which has seen its market share fall to 40.6 percent from 46.6 over the same period.

BlackRock and others are slashing costs on ETFs to match or undercut Vanguard. Early in September, BlackRock's Chairman and CEO Laurence Fink announced that the firm will lower expenses on a number of its ETFs to better compete with Vanguard. And on September 20, Charles Schwab Corp. chopped fees by as much as 59 percent on its ETFs - with some being offered at a mere 7 cents for each $100 invested.

On average, Vanguard's ETFs cost 17 cents for every $100 invested, with the cheapest ETF costing 5 cents for $100 invested.

Buckley, who was on Harvard University's premier rowing team all four years, welcomes the competition and has no intention of giving up ground over prices.

"If you undercut us today, be prepared to do it again tomorrow," he said. "We won't just lower costs on one or two funds, we will do it across the board."

Since most of Vanguard's funds track indexes, having an investing expert as chief investment officer may not be necessary. What's more, Buckley's razor sharp focus on the bottom line may be exactly what Vanguard needs right now, Phillips said.

HOMEGROWN CIO

Buckley, who has held a variety of roles at Vanguard - including chief information officer and head of the retail group - will be fighting the market share battle while also trying to maintain Vanguard's no-frills culture. It's something firm founder Jack Bogle worries could be impeded by Vanguard's growth and size.

"With bigness you can get bureaucracy and complacency," said Bogle, emphasizing the importance of Vanguard remaining "a place where judgment has a fighting chance against process." Bogle, who retired from Vanguard in 1996, continues to give speeches and write books emphasizing the importance of long-term investing and sharing his views about the state of the mutual fund industry.

During his senior year at Harvard, Buckley, who majored in economics, considered pursuing a career in medicine like his mother, a nurse, and his father, who headed the cardiac surgical unit at Massachusetts General Hospital.

But then he met Bogle, and he realized he could go into finance and serve a purpose. As CEO Bogle's assistant, Buckley handled a number of projects, including helping Bogle research his first book. Buckley returned to Harvard for an M.B.A., but came back to Vanguard after graduation.

His next job was to help create a competitive analysis for Vanguard, detailing - and tracking - the firm's main rivals. That project gave Buckley perspective on how industry players compete and what gave Vanguard's model as a mutual company an advantage, he said.

Vanguard is owned by its customers, with profits invested back into the business. That makes it nearly impossible for publicly-traded competitors who answer to shareholders to compete on cost, experts said.

Vanguard is trying to maintain its pricing edge while also growing around the world. Over the past five years, the firm has gone from 12,000 employees in just six offices to 13,500 employees in 15 offices worldwide.

Since June, Buckley, who gets up every morning at 5 a.m. to ride a few miles on his bike before work, has been traveling to Vanguard's offices around the world to observe traders and managers at work so that he could find ways to increase efficiency.

He has identified that in certain regions the real-time systems Vanguard used to get cash flow into the funds are not necessarily being used in all of Vanguard's international locations.

Vanguard is in the middle of an effort to standardize its investment management IT across the globe.

Buckley's other priorities center around developing the firm's managers and establishing global best practices around that process.

Buckley's previous experience as chief information officer and head of Vanguard's information and technology division will help a lot in combating inefficiencies that crop up in global organization, said Gus Sauter, who Buckley is replacing as chief investment officer.

"My strength was more on growing the business and his strengths are more on managing a business," said Sauter, who is retiring after 25 years.

In some ways, Buckley's biggest challenge is to make sure he doesn't mess up a good thing, said Dan Wiener, who runs a newsletter for Vanguard investors.

"The biggest mistake they could make is to try to change anything," he said.

(Reporting By Jessica Toonkel; Editing by Jennifer Merritt, Lauren Young, Martin Howell, Bernard Orr)

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BOSTON | Fri Sep 28, 2012 5:40pm EDT

BOSTON (Reuters) - Federated Investors Inc Chief Executive Christopher Donahue, who has fought increased regulation of money market funds, said on Friday he would support a limited reform proposal.

Donahue, whose Pittsburgh-based firm is one of the largest sponsors of money funds, said in an interview that he would back allowing funds to limit customer withdrawals in times of stress, a practice the industry calls "voluntary gates."

"That would work," he said. "It would be enhancing the resilience of the funds."

Forcing funds to adopt other reforms such as a floating net asset value would still be unacceptable, however, he said.

Donahue's comments come as federal regulators this week renewed their efforts to strengthen regulation of the $2.5 trillion money fund industry following the financial crisis, when dozens came under stress amid rapid withdrawals.

The revived talk of regulation hit Federated's share price, which dropped 5.4 percent this week, more than double the decline of competitors like BlackRock and Franklin Resources.

One member of the U.S. Securities and Exchange Commission, Daniel Gallagher, who had opposed a prior reform effort in August, said on Friday he hoped his agency would consider a fresh approach, even as the new U.S. risk council is exploring ways to also tighten regulations on the industry. Gallagher's openness to an alternative proposal may greatly increase the chances for new rules.

SEC Chairman Mary Schapiro and others have called for reforms that include requiring the funds to hold capital against potential future losses or move away from the traditional $1 per share fixed net asset value.

The changes proposed by Schapiro, a Democrat, faced strong industry opposition from Federated and other firms. Ultimately, Schapiro could not garner enough support from Gallagher and fellow Republican Commissioner Troy Paredes and Democrat Luis Aguilar last month.

Gallagher and Paredes have described optional withdrawal limits like those favored by Donahue as a way that money fund boards could avoid rapid and destabilizing withdrawals. Under a 2010 rule change, such limits could only be imposed if the fund was closed and put into liquidation.

Donahue said his firm has backed "voluntary gates" in the past, and that the device helped preserve capital at a $12 billion fund run by Putnam Investments before it was taken over by Federated at the peak of the crisis.

(Editing by Leslie Gevirtz)

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n">(Reuters) - Rising foreclosures and delinquent real estate mortgages are threatening the credit quality of New Jersey's local governments, Moody's Investors Service said.

Cities, towns and other local governments in New Jersey and many other states rely on property tax collections as their main source of revenue. Abundant foreclosures keep the taxable value of property low, hurting that funding source, Moody's said in a commentary late Thursday.

New Jersey has the second highest percentage of foreclosures in the United States behind Florida, Moody's said, citing an August report by the Mortgage Bankers Association.

And the percentage of seriously delinquent mortgages increased by 2.4 percent in New Jersey in the second quarter of 2012, while they declined nationally, Moody's said.

"Foreclosure rates in the state are likely to stay higher than the national average over the medium term because New Jersey's practice of administering foreclosures through the courts tends to be a slow and cumbersome process that tends to be prone to backlogs," Moody's said.

The scenario is likely to keep housing prices in the state low for years, because distressed properties usually sell at steep discounts, Moody's said.

The credit rating agency expects New Jersey's economy to recover more slowly than the rest of the nation from the recession.

The state's credit quality is also under pressure. On September 18, Standard & Poor's Ratings Services revised its outlook to negative from stable on New Jersey's "AA-minus" general obligation rating, citing a structural budget imbalance and optimistic revenue assumptions.

In August, the state's jobless rate was 9.9 percent, the fourth-highest rate in the country and the highest rate for New Jersey since 1977.

(Reporting By Hilary Russ; Editing by M.D. Golan)

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