Can Barack Obama walk and chew gum at the same time? "For all the talk of putting the [Middle East] conflict on the back burner, it's going to force itself onto the front burner," Daniel Levy, a fellow at the New America Foundation, tells Politico. Already tasked with fixing the economy, Obama “will face regional and international pressure to broker a [Middle East peace] settlement.” But it’s unclear what course Obama will take. During the campaign, he seemed to give his approval to strikes like the ones Israel is conducting, but for the most part, his views remain opaque. He has so far remained mum on the Gaza operation, deferring to President Bush. The operation is likely, however, to “complicate his approach to a region that he had clearly hoped to keep low on his to-do list for awhile.”

It's official—Sarah Palin is now a hockey grandma. Her 18-year-old daughter, Bristol, gave birth to a healthy 7 lb., 4 oz., pound baby boy on Saturday in Palmer, Alaska. And in a departure from her mother's penchant for creative names (Track, Piper, Willow, and Trigg), Bristol named her firstborn the relatively normal Tripp Easton Mitchell Johnston. Bristol and Tripp's father, Levi Johnston, are engaged and have been together for three years. "We think it’s wonderful,” Colleen Jones, sister of Bristol’s grandmother Sally Heath, told People. “The baby is fine and Bristol is doing well. Everyone is excited.” Most notably excited is sporting goods manufacturer Easton, which just got itself loads of free publicity.

Bloomberg is reporting that up to 73,000 retail stores may close in 2009, with companies like Talbots and Sears leading the way. Several companies, like Circuit City, Sharper Image, and Steve & Barry’s have already gone under. Sales at stores open at least a year fell 2 percent in November and December, double the projected 1 percent decline. Particularly hard hit were women’s clothing, electronics, and jewelry, where consumer spending fell 20 percent. “You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” said the director of a retail-industry consulting firm.

Barack Obama's cabinet choices have earned steady praise, but one nominee is likely to face a difficult confirmation hearing: Attorney General Eric Holder, who previously worked in the Clinton White House. According to The Boston Globe, Republicans have asked the Justice Department to hand over documents related to "Clinton's impeachment, former vice president Al Gore's fund-raising activities during the 1996 presidential campaign, the 1993 federal raid on the Branch Davidian complex in Waco, Texas, and the pardon of financier Marc Rich," suggesting a myriad of fronts from which Holder might face attack.

In 2007, politicians considered regulating hedge funds before the funds fired up their lobbyists and effectively killed any legislation. Might the Bernard Madoff scandal be new impetus for regulation? The Financial Times reports that after Madoff, “hedge funds are bracing themselves for a raft of more stringent requirements by investors and increasing regulatory scrutiny.” Hedge fund of funds, which invest only in other investment funds, are most likely to be targeted, and they hold more than 40 percent of all hedge-fund money. Many consider the use of third-party administrators, which will value assets and create investor statements, as the most likely regulation. “This is just the start,” said one hedge-fund adviser. “Third party administrators, greater transparency in investments, more regulatory oversight—we can expect them all.”

Famed sculptor Robert Graham died on Saturday at 70 from an undisclosed illness, and is survived by his wife, actress Angelica Huston (they married in 1992). The Mexican-born artist worked mostly in bronze and created several iconic works, including the Franklin D. Roosevelt Memorial in Washington D.C. and the Duke Ellington Memorial in New York. Earlier this month, Graham was inducted into The California Museum's California Hall of Fame. He lived in Los Angeles, where his 25-ton brass doors adorned the Cathedral of Our Lady of the Angels. In a statement, California Governor Arnold Schwarzenegger said, “His work was truly influential and he will forever remain an icon in this state.”

Just who is Michael Shannon? According to New York Magazine’s David Edelstein, he’s one of the best actors you haven't heard of. Give it time. With a role earlier this year as a jilted son in Shotgun Diaries and another as a “hyperobservant head case” in Leonardo DiCaprio and Kate Winslet drama Revolutionary Road, he’s given two blistering performances this year. The child of a broken home, Shannon found refuge from his dysfunctional family life in Chicago’s acting scene. After two years in L.A. and three Jerry Bruckheimer movies, Shannon got to New York and truly discovered his talents, best summed up by friend and fellow thespian Amy Ryan: “He’s one of those actors you swear is not an actor. You hold your breath ’cause you feel he’s a real person and you’re spying on him.”

Amidst the Kennedy family revival, the Los Angeles Times flags an overlooked member of Camelot’s court. Ena Bernard worked for four decades as a nanny to Ethel and Robert F. Kennedy’s 11 children. "I just had a lot of love in my heart for children," said Bernard, now 100. "After our father died, my mother had to play both roles," Chris Kennedy said. "Ena backfilled and was always loving and supportive." When she was cross, she would threaten the children with a “pow-pow”—a smack on the hand—but she never saw it through. On her 100th birthday, the family gave her an award saying, "For Ena, who captured the hearts of the whole family and whose 50 years of giving Pow-Pow has made us all better."

The Holocaust memoir based on what Oprah called "the single greatest love story" has been canned. Berkley Books has cancelled the publication of Angel at the Fence and demanded that the author, Herman Rosenblat, pay back his money. Rosenblat is an actual Holocaust survivor, but his story of meeting his future wife through a concentration camp (he claimed she threw food over to help him survive) seems to have been invented. Rosenblat's story was questioned in an article in The New Republic last week. In a statement, Rosenblat said, "I wanted to bring happiness to people. I brought hope to a lot of people. My motivation was to make good in this world."

Tom Cruise often plays an action hero, but now it appears he is living like one. The Telegraph reports that Tom Cruise has been so alarmed by recent threats against him that he has alerted the FBI and begun increasing security around him and his family. In addition to attacking Scientology, protestors also took exception to Cruise's recent movie Valkyrie, on the grounds that the film is sympathetic to Nazis. Currently, Cruise reportedly lives in a separate residence from Katie and Suri, and the whole family travels in bomb-proof cars. He is also thought to have had an underground bunker built in his Colorado estate for over $7 million.

In yet another reminder that no one is immune to the global credit crunch, Donald Trump is delaying construction of 500 private homes on his giant Scottish golf resort. The controversial $2 billion resort will also include an 18-hole golf course, a hotel and 36 golf villas—all built on top of protected sand dunes. But with the housing market the way it is, the curiously coiffed mogul has decided to hold up on his plans. “We can’t help but acknowledge the slow-down in the market. We have to sell [the houses], so we’re not going to build anything until it feels right,” said Trump’s lawyer George Sorial. With Trumpian flare, Sorial added that interest in the unbuilt, now-delayed homes has been “overwhelming.”

This can't make the Ayatollah happy: According to The Guardian, Iran's state-run body for youth affairs has found that more than one in four men aged 19 to 29 have had premarital sex and that 13 percent of the liaisons led to unwanted pregnancies that resulted in abortions. Extramarital sex and abortion are illegal in Iran. Also, the average age of marriage has risen to 40 for men and 35 for women, far above the state-recommended age of 29. The current economic crisis may be responsible for the rising rates of illicit sex, as marriage can be expensive. However, Hojatoleslam Ghasem Ebrahimipour, a sociologist, credited feminism. "When a woman is educated and has an income, she does not want to accept masculine domination through marriage."

It looks like Israel's next move will be on the ground. The country has massed tanks along the Gazan border, called up reservists, and declared Gaza a "closed military zone," meaning civilians, including journalists, could be denied access to an area up to two miles from Gaza. A military spokeswoman said the establishment of the zone was not to hide anything but to protect civilians from Hamas, which she said may use suicide bombers and missiles. Anger in the Arab world, meanwhile, is heating up, much of it directed at Egypt for sealing its border with Gaza. In gunfire between Egyptian border guards and Palestinians, at least one guard and one Palestinian were killed. The death toll so far has climbed over 300. The United Nations estimated that at least 51 civilians have been killed.

Add one more to the gone-wrong pile - even OSHA went haywire under President Bush. The workplace safety agency issued 86 percent fewer rules or regulations from 2001 to 2007 than it did under President Clinton and experts say it dropped the ball on protecting workers' safety. According to a Washington Post article, former OSHA director Edwin Foulke Jr. "literally fell asleep on the job," frequently passing out during meetings. "We'll be sitting there and things will fall out of his hands; people will go on talking like nothing ever happened," one OSHA official said.

The recession is throwing a monkey wrench into the best laid plans, but Obama advisor David Axelrod said on Sunday that the president-elect's promise to cut taxes for the middle class will be a top priority, with some tax breaks to be included in the proposed $675 billion to $775 billion stimulus package. "I don't think Americans can wait. People are suffering, our economy is sliding, and we need to act," Axelrod said on CBS's Face the Nation. Bush's tax cuts for the wealthy will also have to end, though they might not be dumped immediately. "Whether it expires or whether we repeal it a little bit early, we'll determine later, but it's going to go," Axelrod said.

An interesting column from Michael Oren and Yossi Klein Halevi in today's Wall Street Journal argues that an Israeli victory may be the best hope for Palestinian statehood. The reluctance of the international community to support Israel's deterrence power only diminishes the prospects of a Palestinian state, the authors write. Israel will be especially reluctant to hand over the West Bank, which is within rocket range of its population and industrial centers if it is not guaranteed the right to self-protection. "Without the assurance that they will be allowed to protect their homes and families following withdrawal, Israelis will rightly perceive a two-state solution as an existential threat. They will continue to share the left-wing vision of coexistence with a peaceful Palestinian neighbor in theory, but in reality will heed the right's warnings of Jewish powerlessness."

The failure of Lehman Brothers is now considered by most to be Wall Street's reckoning day. So how bad, exactly, was it? According to The Wall Street Journal, the chaotic bankruptcy of Lehman destroyed up to $75 billion in value, and a more organized proceeding could have saved tens of billions of dollars. While it's still too early to tell how much Lehman's creditors will recover, they have asserted in court filings that they are owed about $200 billion, while the bond market projects a recovery of $20 billion. "While I have no position on whether or not the federal government should have provided further assistance to Lehman, once the decision was made not to provide further assistance, an orderly wind-down plan should have been pursued. It was an unconscionable waste of value," said Lehman's chief restructuring officer.

Israel’s attacks on Hamas in Gaza have, so far, been effective: It has destroyed its security and civil infrastructure and damaged its credibility by making it look unprepared. But, if Israel succeeds in toppling Hamas altogether, what’s next? “It's not clear at this stage,” writes Khaled Abu Toameh in the Jerusalem Post, “whether there is any Palestinian party that would be able to fill the vacuum in the aftermath of the downfall of the Hamas government.” Palestinian President Mahmoud Abbas and his Fatah party have made it known to Israel that they would like to takeover, but, according to one Hamas representative, “the majority of the Palestinians in the Gaza Strip would revolt against any Palestinian official who returns with the help of Israel.” Toameh writes, “As of now, Abbas and [Egyptian President Hosni] Mubarak appear to be the biggest losers as a result of the IDF offensive. The two are being openly accused by many Arabs of having granted Israel a green light to launch the operation.”

The Washington Post has a three-part investigative series on the collapse of AIG. In Part 1, the paper argues that the seeds of the fall be traced to a pair of nerdy go-getters, Howard Sosin and Randy Rackson, who hatched a scheme in 1986 to boost profits and minimize risk that ended up becoming AIG Financial Products. The venture earned billions, but "unleashed techniques that others on Wall Street rushed to emulate, creating vast, interlocking deals that bound together financial institutions in ways that no one fully understood and contributed to the demise of its parent company as a private enterprise." Chief among these techniques was the expanded use of derivatives backed by AIG's top bond rating in order to hedge the unit's bets on investments. The scheme made it almost impossible to lose money—until the whole system came crashing down in September.

Bernard Madoff may be headed to jail, but it looks like he could avoid the poorhouse. According to the New York Post, Madoff is believed to have stowed hundreds of millions of dollars of profits in offshore accounts in the Caribbean and Europe. That's bad news for investigators who are hoping to recover Madoff's money, since "the tax havens are designed under local laws to be nearly impervious to subpoenas or other investigative inquiries, making it notoriously tough for US officials to seize or even see what's there."