Consumers are retreating even further after a devastating holiday season for retailers, the Federal Reserve revealed Wednesday in its new beige book of economic outlooks for the new year. "Overall economic activity continued to weaken across almost all of the Federal Reserve's districts," the report says. To compensate, Fed Chairman Ben Bernanke has indicated that key interest rates will remain at record-low levels for the foreseeable future.

Apple CEO Steve Jobs is taking a medical leave of absence until the end of June, he wrote in a letter to employees today. “Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well,” he wrote. “During the past week I have learned that my health-related issues are more complex than I originally thought.” Last week Jobs announced that he was beginning treatment for a hormone imbalance. Trading in Apple’s stock was halted following the announcement, in which Jobs also said that he was handing the reigns over to Apple COO Tim Cook in his absence.

Disgraced Illinois Gov. Rod Blagojevich welcomed the incoming class of state senators in Springfield on Wednesday as he swore in members whose first agenda item is his own impeachment. "Hi guys," he said to reporters. Blago's impeachment trial is set for Jan. 26; the 13-point measure passed in the state house by a vote of 114-1.

A second attempt by federal prosecutors to have Bernard Madoff jailed as he awaits trail has failed. After reviewing a 49-page document arguing that Madoff could not be trusted, U.S. District Judge Lawrence McKenna allowed the ponzi schemer to remain free this afternoon. The judge said prosecutors failed to make a compelling argument that Madoff is a flight risk or a danger to the community—the two main requirements to revoke bail. Madoff's defense said prosecutors are using "inflammatory rhetoric and hyperbole" to make a weak argument. He will await trial under house arrest.

President-elect Barack Obama wasted no time meeting with the other side of the aisle after last night's secretive meeting with conservative commentators. On Wednesday morning, Obama met with liberal and moderate media A-listers including the New York Times' Frank Rich and Maureen Dowd plus Rachel Maddow. Both gatherings were off-the-record.

Forgetting for a moment all of the life lost, Palestinian surveyors turned for a moment to the amount of infrastructure destroyed since Israel began its assault on Gaza. Their determination: $1.4 billion worth of buildings, roads, pipes, and power lines have been demolished. Economists are estimate that rebuilding will take five years or more, with Arab and western countries footing the bill. With this price tag in mind, Europe’s top four fundraisers for Palestinians are meeting in Paris to discuss Gaza’s reconstruction. One fear: donors will have a hard time contributing aid as the global economy continues to flounder.

Caroline Kennedy better have a Plan B: A new poll from Quinnipiac University shows New Yorkers favoring State Attorney General Andrew Cuomo to be New York’s next senator over Caroline Kennedy 31 to 24. In mid-December, another poll showed Kennedy trailing Cuomo by only three points. Paterson’s expected to announce his decision when Hillary Clinton is confirmed as Secretary of State, which is expected in the next few days.

President Bush has said he's not one to sit back and reflect on the good ol' days. Indeed, he's already amassed a staff to run his post-presidency life—appropriately called the Office of George W. Bush—in Dallas, near his new library at the Southern Methodist University. "The president plans to write a book, give speeches, help build his presidential library and start a 'freedom institute' to prolong his legacy, with a special emphasis on his 'freedom agenda' of promoting democracy for the Middle East," Politico's Mike Allen reports. Power attorney/consultant Michael E. Meece and close advisors Blake Gottesman and Jared Weinstein have already signed on to the president's next stage.

Just two days after Prince Harry was widely criticized for calling an Army colleague a "Paki" on a video tape, the British press reported that Prince Charles has a nickname for an Asian friend: "Sooty." After the revelation, the friend, Kolin Dhillon, spoke out in defense of Charles, declaring him to have "zero prejudice." Dhillon added: "I enjoy being called Sooty by my friends who I am sure universally use the name as a term of affection with no offence meant or felt."

Literati who are dissatisfied with incessant talking-head inauguration coverage should take a gander at the novella of best-selling author Curtis Sittenfeld. The author of Prep and American Wife is writing a five-part fiction piece for Slate entitled All Along, This Was What Was Supposed to Happen. In the novel, Philadelphia-dwelling Patrice is accompanying her 77-year-old aunt to Washington D.C. for the January 20 festivities—family tensions, and maybe a few tears, are sure to ensue. The series concludes Tuesday.

"If a black president represents change, a dark-skinned first lady is straight-up revolutionary." That's the premise of a piece by The Root's Vanessa Williams, who writes that Michelle Obama's dark-skin color will change perceptions of black women and reduce prejudices. "The lingering effects of racism and sexism... has rendered dark-skinned women nearly invisible in mainstream media," Williams says.

Was the local Barnes & Noble fresh out of baby name books? Three-year-old Adolf Hitler Campbell and his two younger sisters, JoyceLynn Aryan Nation Campbell and Honszlynn Hinler Jeannie Campbell, were removed from their New Jersey home this week. The Division of Youth and Family Services seized the children, but spokeswoman Kate Bernyk said, "DYFS would never remove a child simply based on that child's name.” Last month the family attempted to buy a cake with their tot’s name on it, but was refused by the supermarket. Last year, Heath Campbell, their father, told the Easton-Express Times that he liked the name Adolf Hitler and "no one else in the world would have that name." Well, that’s not entirely true.

Jennifer Hudson’s comeback begins on Super Bowl Sunday. The singer, who has not been seen since her mother, brother, and nephew were murdered in October, will perform the national anthem at the February 1 event. Hudson released a self-titled album shortly before the murders. She is nominated for four Grammy Awards, which air a week later on February 8.

Somehow we missed this yesterday: Jennifer Garner and Ben Affleck have named their daughter Seraphina Rose Elizabeth Affleck. She was born January 6 in Los Angeles, joining the couple's three-year-old, Violet. Although the Afflecks won't reveal the reason for the choice, baby name experts say Seraphina refers to the highest order of angels. One site claims the name is of Hebrew origin, and means "feiry ones."

Whatever his faults, Russian President Vladimir Putin is well-rounded. His hobbies include fishing, judo, oil, secrecy, despotism, and now, we learn from The Telegraph, painting. A canvas by Putin, which “pays tribute to Ukrainian folklore,” will be auctioned off for charity this weekend. “Painted with pastels, it depicts a wintery night sky seen through a peasant's window framed by traditional lace curtains embroidered with beads and red stitching. The word ‘pattern’ is daubed underneath the bottom lattice, while Mr. Putin has signed his name over the pelmet.” The expected price of Putin’s painting is unknown, but last year, a painting by Saint Petersburg’s mayor fetched over $300,000.

Even at this late date, if you really, really want to go to Obama’s inauguration, all you have to do is cough up $500 on Craigslist. That’s what Politico is reporting, anyway. It seems the free distribution of 240,000 tickets has gone awry, with “a thriving gray market” springing up as dozens of entrepreneurial types sell their passes and try to elude congressional staffers. “You can’t stop supply and demand,” a professor of economics at George Mason University tells Politico. “Furthermore, I suspect most of these people don’t really feel they are doing anything wrong in reselling the tickets. It’s not as if they are condemning orphans to starvation.”

Google Earth unveiled 14 high-res photos of some of the world’s finest masterpieces yesterday in a collaboration with Spain’s Prado museum, the Independent reports. The collaboration is the first between Google and an art museum, and features memorable works such as Velasquez’s Las Meninas, Goya’s Third of May, and Rubens’ The Three Graces. The 14 paintings were photographed section by section for a total of 8,200 times, with the results stitched together to form images 1,400 times clearer than anything a tourist’s 10-megapixel camera could capture. A spokesman for Google Spain said, “In the museum we cannot get this close to a painting; if we did we’d need a three-meter-high ladder to get these views.”

Slumdog Millionaire has earned raves just about everywhere except for the country where it takes place, where it has not yet opened. The film premieres in India on January 23 and has been generating a lot of buzz, according to USA Today, since it won four Golden Globes on Sunday. It's difficult to tell how the film will be received, especially since it has not yet been cleared by India's censors, which have butchered previous Oscar bait like Brokeback Mountain, which became in India a story about friends on a camping trip. No matter what the final outcome, it seems unlikely that the film will be shown in the same slums where it is set, where the theaters are tiny, illegal, and usually show films from VHS or DVD.

The markets have been comparatively stable the past few weeks, but the days of bank bailouts are not over. Both The Wall Street Journal and The New York Times run stories today saying that, as The Times puts it, "the banks need more taxpayer money." Citigroup, which has already received a $45 billion bailout, is now considering breaking up into separate banks and wants, according to another Journal article, to shrink by a third. In a speech yesterday, Fed Chairman Ben Bernanke said, "More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets." Barack Obama has requested the second half of the $700 billion TARP funds. Policy makers are considering reviving those funds' original purpose—to buy up bad securities from banks.

Back during the primaries, Hillary Clinton may have mocked Barack Obama's intention to hold talks with America's enemies, but, as his Secretary of State, she's on board. "The elections should not prevent us from starting a dialogue if we determine that there is a genuine intent to engage," Clinton said at her confirmation hearing yesterday, specifically citing Iran and Syria as countries we should engage. Clinton said she hopes to use "soft power"—diplomacy, commerce, and economic aid—in order to repair the United States' standing in the world.

The D.B. Cooper of the recession has been arrested: Marcus Schrenker, the Indiana financial advisor who faked his own death in an attempt to escape federal authorities, was apprehended last night at a campground in Quincy, Florida. On Sunday, as he flew his private plane from Florida to Indianapolis, Schrenker phoned air-traffic control to say that his plane's windshield was broken and that he was bleeding profusely. When officials found the crashed plane hours later, however, the windshield was intact and there was no body. Turns out Schrenker had parachuted out and then escaped back to Florida. He had apparently tried to commit suicide in Florida by slitting one of his wrists, but authorities said the wound was not life-threatening.

Osama Bin Laden has reared his head again. The Al Qaeda chief has released a new audiotape in which he calls for—any guesses?—a jihad against Israel to stop its Gaza offensive. He also condemns Arab governments for failing "to liberate Palestine."

Bush may be out of office next week, but the torture issue isn't going away. In an interview with Bob Woodward, Susan J. Crawford, the official charged with deciding whether to bring Guantanamo Bay detainees to trial, says that the United States tortured Mohammed Al Qahtani, the so-called "20th hijacker" from September 11. "His treatment met the legal definition of torture," she says. The techniques used against Al Qahtani included sustained isolation, sleep deprivation, sexual humiliation, and prolonged exposure to cold. Twice, he was hospitalized with bradycardia, a potentially deadly condition where the heart rate falls below 60 beats per minute. "The techniques they used were all authorized, but the manner in which they applied them was overly aggressive and too persistent," Crawford said. "You think of torture, you think of some horrendous physical act done to an individual. This was not any one particular act; this was just a combination of things that had a medical impact on him, that hurt his health. It was abusive and uncalled for."

So you've decided to skip the inauguration and stay in the friendly confines of Park City, Utah. Don't be ashamed! The Los Angeles Times has your viewing guide to this year’s must-see Sundance films. Brief Interviews With Hideous Men, from John Krasinski, is the first adaptation of a David Foster Wallace story. In Good Hair, Chris Rock explores African-American hairstyles. There’s the James Toback documentary Tyson, about the former heavyweight champ; the Anna Wintour doc The September Issue; and, for those who love to mix genres, the Nazi zombie flick Dead Snow. The paper describes it thusly: “cabin, skis, snowmobile, toboggan, copious amounts of beer, and a fertile mix of the sexes.” You can’t get that in Washington, D.C.

What’s next for Citigroup? An editorial today in The Wall Street Journal recommends the bank be dismantled. “A bank that consistently has to be rescued by taxpayers lest it take down the entire financial system is too big to succeed. The only way to protect taxpayers is to reduce the size and scope of the bank so that it no longer poses a systemic risk.” At Portfolio, Felix Salmon writes, “The problem, of course, is how on earth to get there from here.” The present idea seems to be to spread the bad debt across the many divisions, which will be sold off, but Salmon suggests that Citi keep the debt and spin off its divisions without any debt. “If you are going to create a bad bank, though, putting the dodgy assets in Citicorp seems to me to be much more sensible than trying to attach them to anything else. After all, Citicorp was insolvent once before, during the debt crisis of the 1980s, and it managed to emerge from that crisis, thanks partly to [John] Reed's leadership. Maybe he could manage the same feat again.”