France and Germany have joined forces in London at the Group of 20 summit and are threatening to abandon the global economic recovery deal if it doesn’t meet their specifications for tougher financial regulations. French President Nicolas Sarkozy and German Chancellor Angela Merkel say they won’t budge on tax havens, hedge fund regulation, banker pay caps, and several other financial regulations. “The crisis didn’t spontaneously erupt in Europe, did it?” Sarkozy asked, suggesting that Europe would not be taking orders from the U.S. on financial matters. Sarkozy warned earlier of his intentions to walk out of the summit if his demands were ignored, but with Merkel on his side the threat carries much more weight. Earlier Wednesday, British Prime Minister Brown spoke of the agreement being “within hours.” President Obama had a threat of his own: “If there’s going to be renewed growth it can’t just be the United States as the engine,” he said. “Everybody is going to have to pick up the pace.”

Is this the start of a beautiful friendship? President Obama met with Russian President Dmitry Medvedev today in London, and the two world leaders pledged to renew negotiations on a new nuclear arms treaty. Both committed to reducing their nuclear arsenals to levels lower than those required by the START treaty, which mandates both nations to have between 1,700 and 2,200 warheads by December 31, 2012. Obama also met with Chinese President Hu Jintao today and announced plans to visit China during the second half of this year.

Can we now expect to see Queen Elizabeth puttering around Buckingham Palace, rocking out with some white earbuds? Coming up with a gift for royalty is certainly no picnic, and the Obama team settled on a video iPod, which the president and first lady presented to the queen today. The iPod contained video of the queen’s visit to the U.S. in 2007, as well as preloaded songs (perhaps a little Stevie Wonder?). The Obamas also gave the queen “a rare musical songbook signed by American composer Richard Rodgers.” After Obama’s gift to Prime Minister Gordon Brown—a set of classic American DVDs—fell flat last month, the Internet is abuzz with speculation that today’s gift is some sort of April Fools’ Day prank, but it actually seems better than what the queen gave the Obamas: a picture of herself and her husband.

President Obama’s got his hands full in London, and now Israel’s newly sworn in government is piling more on his plate. Foreign Minister Avigdor Lieberman—he of the hard-line Yisrael Beiteinu Party—said today that Israel will ignore the fast-tracked Israeli-Palestinian peace process, known as the Annapolis plan for the summit held there in 2007. Instead, he said, Israel will follow the guidelines set down by the “road map,” sponsored by the Bush administration in 2002, which lays out clear, specific goals required for a Palestinian state. Lieberman has been criticized by Palestinian officials for his positions on Israeli-Palestinian matters; today Palestinian President Mahmoud Abbas said Israel’s new prime minister, Benjamin Netanyahu, “does not believe in peace.”

We already know Americans are struggling and pinching pennies wherever possible. But a new ABC News/Washington Post poll shows just how many people are being affected by the economic turmoil. The survey finds that 63 percent of Americans are cutting back on spending, with three in 10 saying they have drastically changed their habits. Across the country, parents are cutting back on extracurricular activities for their children, and adults are canceling or putting off checkups at the doctor, and going out to eat less—or even moving in with family. Sixty percent of people living in households with incomes of more than $50,000 are also cutting back on expenses. Scariest for restaurant workers: One person is quoted as saying he’s stopped tipping.

Out of sight, out of mind? While President Obama was in London on Wednesday, Congress roundly rejected his plan to fast-track a bill that would launch a carbon emissions cap-and-trade program. The Senate passed an amendment, 67-31, barring Congress from forcing the cap-and-trade through during the budget “reconciliation” period, when bills need only a majority to pass. The law would set a limit on carbon emissions and provide financial disincentives to increasing pollution. The amendment isn’t binding on a final House-Senate agreement, but senators say it means the window has closed for climate change legislation to be pushed through during the budget reconciliation process. Some say the bill will never pass, now that it’s missed its chance; a gleeful Senate Minority Leader Mitch McConnell said the vote “slammed the door shut” on cap-and-trade law.

Well, it’s not like Bernie Madoff was going to be using his Florida mansion, 55-foot yacht, or 24-foot motorboat anyway. Hours after seizing the two boats, beginning the process of reimbursing all the thousands of investors Madoff swindled in what is likely the biggest Wall Street scandal ever, federal marshals seized his $11 million Florida mansion. A fleet of officers descended on the house at 6 p.m. on the first day of an effort seize as many of his assets as possible. “We are seizing the house, we’re going to secure the premises,” said a spokesman for the U.S. Marshal Service. “We have a locksmith on hand, all the locks will be changed, the house will be alarmed and monitored.” The next targets: Madoff’s $7 million Manhattan penthouse, $3 million Montauk home, and $1 million apartment on the French Riviera.

Looks like reality TV is even more dramatic when the cameras aren’t rolling: Project Runway, the cutthroat fashion reality program that pits wannabe designers against each another, has finally extricated itself from a yearlong legal deadlock that left loyal viewers bereft. The show’s sixth season will air this summer on Lifetime, the cable channel for women, and leave Bravo, which is owned by NBC Universal. NBC sued the show’s producer, The Weinstein Company, when it announced it would be moving the popular show, but Weinsteins countersued, saying NBC didn’t properly promote the show’s fifth season. Not to be outdone, Lifetime sued both parties. The Weinstein Company will now have to pay NBC for moving the show, and Lifetime will also be home to spinoff shows Models of the Runway and Project Pygmalion.

Former Alaska Senator Ted Stevens is getting the last laugh this morning. NPR broke news that U.S. Attorney General Eric Holder is dropping all charges against the 85-year-old--he was convicted last year for seven counts of lying to cover-up gifts totaling $250,000--because of "persistent problems stemming from the actions of prosecutors." Holder seems to be cutting his losses after prosecutors were held in contempt. "With more ugly hearings expected, Holder is said to have decided late Tuesday to pull the plug," Nina Totenberg reports. Not that it matters much, he was already defeated at the polls.

The same immigration judge who ordered President Obama’s Kenyan aunt deported twice before now says Zeituni Onyango can remain in the United States until February, when her case will be heard again. Onyango, half-sister of Obama’s deceased father, applied for asylum in 2002, citing political violence in Kenya. She was first ordered deported in 2003, and when her appeals failed, she was again ordered to leave the country in 2004. Defying the order, she continued living in public housing in South Boston, not attracting much attention until a few weeks before the presidential election, when news of her illegal residency broke. The then-senator claimed he didn’t know his aunt was living in the country illegally, but activists against illegal immigration were outraged, saying she wasn’t deported because she was related to Obama.

Your grandma is going to wish this was an April Fools’ joke. CBS announced today that Guiding Light, the once unstoppable television soap opera, will air its last episode in September. The show made its debut on NBC radio in 1937, produced more than 15,700 episodes, and is in the Guinness Book of World Records as the longest-running drama ever. Over the years the show expanded from radio to serials to color television and covered hot-button issues to the tune of 69 Daytime Emmy awards.

An mix of communists, anarchists, and environmentalists have hit the streets in the heart of London in protest of the G-20 summit. Protesters have smashed the windows of the Royal Bank of Scotland and spraypainted the anarchist symbol on the side of the building, CNN reports. Eleven other troublemakers were busted with police uniforms; what scheme they were hatching is not clear. Some protesters have lunged at police lines, but nothing has been too out of control. "On the whole, it's not been too bad," a police spokesman said. Later, one man was found dead after he collapsed at a camp of protesters close to the Bank of England. According to police, demonstrators hurled bottles at officers as they carried the dead man away.

As if all the talk of bankruptcy wasn't enough, now the dismal sales of cars in March have been released. General Motors' stats are the most bleak, with a 45 percent decline from last March. Japanese cars sales also stunk: Toyota's sales dropped 39 percent and Honda's by 36 percent. Typically, an increase in sales occurs in March, as warmer weather lures buyers to showrooms. In an effort to boost sales, Ford has unveiled its "Advantage Program" which will pay customer's monthly payments for a year if they lose their job. There is one nugget of good news in the miserable data: "Despite the declines, GM, Ford and Toyota all posted double-digit improvements from February."

Watch your back, Apple: Research In Motion, maker of the BlackBerry, has launched its own online app store. The move into online applications, The Wall Street Journal reports, “is part of a larger push by the Canadian company to appeal to more customers.” “It’s a one-stop device shop,” Co-Chief Executive Mike Lazaridis said today. While Apple’s app store offers more than 15,000 applications for its iPhone, RIM expects about 1,000 new applications to be posted by partners for the BlackBerry this week, including business programs for customer management, social-networking services, and the music service Shazam.

After a private meeting at Buckingham Palace with Queen Elizabeth II, President Obama and the first lady returned to 10 Downing Street for a state dinner, where he and the other G-20 leaders planned to hammer out a final agreement ahead of the formal summit Thursday. Earlier today, as the presidential armored limo passed through the gates to the palace, thousands of people on the street waved and tried to catch a glimpse of the president and the first lady. This morning, Obama and British Prime Minister Gordon Brown pledged cooperation among the G-20 and said a consensus on an economic plan was within reach. Obama has promised to "listen, not lecture" at the summit.

When Barack Obama et al. were proposing their budget for 2009, Republicans naysayed but failed to propose an alternative, earning them the reputation as “the party of no.” Now GOP leaders have come forward with their own budget—and it’s starkly different from the one being debated in the House and Senate. Some of its main elements are large tax cuts, a radical simplification of the tax code, and an overhaul of Medicare. The proposal has no chance of becoming law, but it does help establish Republicans’ role in the debate. Wisconsin Rep. Paul Ryan, the architect of the proposal, calls the Obama plan “little more than a thinly veiled attempt by Washington to spend its way into prosperity, tax its way into tax relief, and borrow its way into debt reduction.”

Maybe he got tired of the turrets? Knowing star Nicolas Cage has just proved he’s still a box office draw, so he might be in the market for an upgrade from Schloss Neidstein, the worn-down German castle he bought in 2006. The estate, which sits on 395 acres and is an astonishing 9,688 square feet, was sold to a property lawyer after the star paid for extensive renovations. The actor still has homes in Los Angeles and Louisiana, and another castle on the outskirts of Bath, England. For what it’s worth, the locals appear sad to see him go: “He didn’t have his heart in it,” said Mayor Roman Berr.

Take a look at Gerald Gallant, a plain guy with an affinity for cycling, and you’d never guess that he was an assassin for hire whose quarry were the feared biker gangs of Quebec. Now, as part of a plea deal, Gallant has admitted to killing 27 people and snitched on the men that hired him. His information led to 10 arrests last week across Quebec. Gallant's line of work did not distinguish between the innocent and the guilty. In one case, he shot a waitress who was being used as a human shield by a Hell's Angels member. Gallant was on the lam for five years before being busted in Europe, and has apologized to the families of his victims.

RNC head Michael Steele's first electoral test came last night in New York's special election to replace Sen. Kristen Gillibrand's seat. According to famed GOP operative Roger Stone, he failed so badly that he should resign. While the results have not been finalized in the ultra-close election, Stone says that RNC incompetence turned what should have been a blowout in the GOP-leaning district into a nail-biter. “While saying the race was a priority, Mr. Steele provided neither the financial support nor campaign co-ordination needed for victory,” Stone said in a radio appearance on The Fred Dicker Show in Albany. Stone is best known in political circles for his notorious dirty tricks—he was an organizer of the Brooks Brothers riot during the 2000 Florida recount.

The Obamas are indulging in quite the feast at Downing Street today. Celebrity chef Jamie Oliver is offering G-20 dignitaries "a starter of organic Scottish salmon served with samphire and sea kale," The Guardian reports. And for the main course, "slow-roasted shoulder of lamb from the Elwy Valley in north Wales, with Jersey Royal potatoes, wild mushrooms and mint sauce." The menu, which excludes pork, also includes a vegetarian alternative. Dessert is bakewell tart and custard. Though Oliver's wife is about to give birth, he's looking forward to the chance to serve his creations at Downing Street for the third time: "I'm very, very proud of my country and its food traditions and I know that the guests at Downing Street will be in for a real treat."

Just because John McCain isn’t president doesn’t mean he can’t seek pardons: The Arizona senator is lobbying for a pardon for the late boxer Jack Johnson. In 1908 Johnson, also known as the "Galveseton Giant," was the first African American boxing heavyweight champion of the world. Not surprisingly, his dominance in the squared circle made him public enemy number one in the minds of racists all over the nation. In 1913 Johnson was unjustly convicted of "transporting women across state lines for immoral purposes" because his girlfriend was white. As Ken Burns put it in his documentary Unforgivable Blackness, Johnson's enemies "failed to beat him in the ring, (so) his enemies took him to court."  Burns has joined McCain and Representative Peter King in pushing in pushing for the pardon that would right "a grave injustice."

Depending on your affinity for unfiltered angst, this news could be exciting or horrifying. Josh Schwartz, producing wunderkind and creator of Gossip Girl and The O.C., is transitioning to theaters with an adaptation of Bright Lights, Big City, Variety announced today. Although set in the '80s, the Jay McInerney novel about a failed magazine writer who dabbles in sex, drugs, and alcohol could feel especially timely since, well, isn't everyone disillusioned now? Schwartz can look for guidance in the 1988 film starring Michael J. Fox and Kiefer Sutherland as he tries to decide in which era the film will take place.

A shocking documentary shown on South Africa's state broadcaster last night showed the wretched conditions inside Zimbabwe's prisons, in which dozens of prisoners die each day from hunger and lack of medical care, The Times of London reports. The 55 prisons, meant to contain 17,000, house 35,000 in reality. Starvation is a problem not only for the prisoners, but also for the staff. The horrors don't stop there. In the film, Hell Hole, prisoners describe the dead rotting on the ground, and cells that became makeshift "hospital wards" where the sick and health slept side by side, packed like sardines, among those who died during the night.

Welcome, Simpson family, to the Pantheon: Reuters reports that the U.S. Postal Service plans to issue stamps featuring the Simpsons later this year. The 44-cent first-class mail stamps will feature the nuclear family—Homer, Marge, Bart, Lisa, and Maggie—and will be designed by the show’s creator and executive producer, Matt Groening. The Simpsons is currently primetime’s longest-running comedy and will celebrate its 20th anniversary this year. The stamps will be unveiled on April 9.

Does Paul Krugman need a tag-team partner? In a New York Times op-ed Nobel Prize winner Joseph E. Stiglitz slams Timothy Geithner’s and President Obama’s $500 billion bank rescue plan, saying it recreates the situation that led to the financial crash—it uses "overleveraging in the public sector, excessive complexity, poor incentives and a lack of transparency." In the Geithner plan, the government essentially takes on banks' losses by overpaying for toxic assets, a system Stiglitz calls "far worse than nationalization." In fact, he argues, nationalizing the banks would be preferable to the Geithner plan, which essentially privatizes gains and socializes losses.

The special election for the vacated House seat of New York Senator Kirsten Gillibrand yesterday was considered a crucial test for the Republican Party, whom voter registration in the district heavily favors. How’d it go? The results seem headed for Al Franken-Norm Coleman territory. After 154,000 people voted, Democrat Scott Murphy leads Republican James Tedisco 77,344 to 77,279. But up to 10,000 absentee ballots remain to be counted, and the counting may take several weeks. The race is considered a referendum on embattled RNC chairman Michael Steele, who pumped money into the race. Politico notes, “a few things are clearer after Tuesday’s contest, none of it welcome news to the Republican Party.”

A strange life comes to an end. Eric van Reid spent the last 19 years in prison for rape and burglary charges and, after five rejections, finally made parole last November. Just five months later, he was dead. Parole officers killed van Reid yesterday after he held another officer hostage with a steak knife. One witness describes the scene in the office: “It was crazy. Everybody was running.” When he was a teenager, van Reid served time for robbing a 71-year-old woman in her home. He later shot a police officer in the stomach and escaped from Rikers Island before being captured again. His longest sentence came in 1987 after raping a woman and burglarizing her home.

It’s not all gloom and empty bills on Broadway these days: Spurred by last summer's outdoor success at the Delacorte Theater in Central Park, Diane Paulus's rendition of Hair has opened on Broadway. “‘It’s not so much what Ms. Paulus brings to Hair,” Ben Brantley writes in The New York Times. “It’s what she brings out of it, vital elements that were always waiting to be rediscovered.” The show's strengths, according to Brantley, are "the illusion it sustains of rawness and immediacy" of being young and its "seamless spontaneity.”

Here’s a frightening announcement: The leader of the Taliban in Pakistan, Baitullah Mehsud, says he’s plotting an attack on Washington that will “amaze everyone in the world.” Mehsud, for whom the U.S. has offered a $5 million reward, also says he’s responsible for the attacks on a Lahore police academy that killed seven officers, which he characterized as retaliation for U.S. drone assaults in northern Pakistan. “We wholeheartedly take responsibility for this attack and will carry out more such attacks in future,” he said in a phone call to Western news organizations from an undisclosed location. Even scarier, the Pakistani Taliban is mending fences with the Afghan Taliban, apparently in response to Obama’s AfPak strategy, which calls for more U.S. troops in Afghanistan and treating both countries as a single military stage.

As if losing $7 billion of your clients’ money weren’t already bad enough for business: Bernard Madoff may be in jail, but the case isn’t closed. According to The Wall Street Journal, “Massachusetts securities regulators charged Fairfield Greenwich Group, a major feeder fund for Bernard Madoff, with fraud, saying the company breached its fiduciary duty to clients by failing to provide promised due diligence on its investments.” In 2005, Madoff coached Fairfield officials on how to respond to questions from SEC attorneys who were looking into questions raised by Harry Markopolis. Bernie, however, shouldn’t look forward to having any friends join him in jail: The charges are not criminal.