While the relationship between the U.S. and Pakistan appears to be getting better, there’s still a long way to go. A new report released Monday by the Pentagon blames Pakistan for undermining security in Afghanistan. The country is at fault for permitting safe havens for insurgents, and for failing to interdict explosive materials, the report claims. But as the U.S. prepares to pull troops out of Afghanistan by the end of 2014, officials say the U.S. and its allies have succeeded in controlling Taliban advances and keeping casualties to a minimum. The report also praised the recent progress made with Pakistan, after the country agreed to reopen Western forces’ supply routes into Afghanistan.

Maybe the holiday spirit—or a sense of impending doom—is finally getting through to them. Budget talks between House Speaker John Boehner and President Obama have taken a promising turn, sources close to the process tell The Wall Street Journal.  Apparently, negotiations between the leaders have become more serious in recent days, as both Boehner and the White House are reportedly beginning to feel increasing pressure over the impending fiscal cliff. Another big change? Both sides have agreed to stop tattling on each other. A strict public moratorium on public commenting is now being followed on both sides—a sign experts say means the bargaining is only just beginning.

For one man it is not a happy Chanukah. A religious counselor in New York’s ultra-Orthodox Jewish community was found guilty Monday of “sustained sexual abuse” of a girl who initially approached him with questions about her faith. Nechemya Weberman, 54, looked down silently as the guilty verdict convicting him on 59 counts of sexual abuse of a child and endangering the welfare of a child was read. Weberman faces 25 years in prison. The accuser—now 18 years old—detailed how the counselor molested her behind a locked office door from the age of 12 to 15. The verdict is a much-anticipated end to a controversial trial that has rocked the tight-knit ultra-Orthodox community.

Michelle Obama, for one, must be ecstatic. For the first time in decades, several American cities are reporting declines in childhood-obesity rates. The trend included several of the country’s biggest cities, like New York and Los Angeles, as well as some smaller metro areas like Anchorage, Alaska, and Kearney, Neb. The drops aren’t huge—just 5 percent in Philadelpha and 3 percent in Los Angeles—but, as Dr. Thomas Farley, the health commissioner in New York City says, “It’s been nothing but bad news for 30 years, so the fact that we have any good news is a big story.” It’s not clear what’s behind the declines.

From the decree rescinding to the tax-hike revoking, we're getting dizzy. One day after Egyptian President Mohamed Morsi authorized soldiers to arrest civilians, a spokesman is attempting to clarify the order. The spokesman, Khaled Al-Qazzaz, said Morsi's purpose in issuing the decree was simply to protect polling stations ahead of Saturday's vote. Al-Qazzaz assured Egyptians that unlike the arrests which occurred under the ruthless dictator Hosni Mubarak, any civilian arrested would be referred to "a normal civilian court." The crisis over Egypt's draft Constitution continued to intensify Monday, with estimates of 700 already injured in the fighting.
 

At least one legal nightmare is over for Dominique Strauss-Kahn. On Monday the disgraced former International Monetary Fund chief settled the civil lawsuit with a hotel maid who accused him of sexually assaulting her last year. Nafissatou Diallo, the accuser, settled for an undisclosed sum. A sexual-assault case against Strauss-Kahn was dismissed last year, but his legal troubles aren’t over. He’s still awaiting a decision by a French court to stop an inquiry that will determine whether he must stand trial for pimping charges related to sex parties he attended with prostitutes.

Would you like that in jacksons or benjamins? HSBC will be forced to pay an astounding $1.9 billion to settle a money-laundering probe by federal and state authorities in the U.S., sources revealed Monday. The probe stemmed from the transfer of billions of dollars by HSBC on behalf of countries like Iran, which were under economic sanctions. Also involved was the transfer of money through U.S. financial systems by Mexican drug cartels. The breakdown of the settlement includes $1.25 billion in forfeiture, the largest ever in a case involving a bank, and an additional $655 million in civil penalties. HSBC was accused of violating the Bank Secrecy Act and the Trading With the Enemy Act.

In Kathryn Bigelow’s upcoming chronicle of the nearly decade-long hunt for Osama bin Laden, Zero Dark Thirty, the real-life CIA agent at the center of the film has led a more complicated career than the one portrayed. The operative, a bullheaded agent in her 30s, played a crucial role in the capture of bin Laden. Yet shortly after the mission she was passed over for a promotion many adamantly believed she deserved. While colleagues say Jessica Chastain, who plays the character Maya (not the agent's real name), accurately captured her “dedication” and “combative temperament,” jealousy over her fame led to internal friction within the agency. The woman, still undercover, is not allowed to talk to journalists. The CIA declined to comment.

The Pentagon has identified the member of SEAL Team 6 who was killed in a rescue mission over the weekend as Petty Officer 1st Class Nicolas D. Checque. A Defense Department statement confirmed that Checque, 28, was killed during efforts to save Dr. Dilip Joseph of Colorado Springs, Colo., who was being held by Taliban militants in eastern Afghanistan. Six people were reportedly killed in the course of the mission, and two Taliban leaders captured.

Pepsi just got a lot more bootylicious. Beyoncé has signed a massive advertising deal with Pepsi. The multi-year deal will fund commercials and print ads, as well as Beyoncé’s fee for supporting “the singer’s chosen creative projects.” Sources say the deal is unusual: Pepsi will will provide money for events, photo shoots, or “almost anything else” that B feels is a creative partnership opportunity. One expert said, “They’re betting a lot on Beyoncé—so it’s no wonder they’re looking for her input on how to make it work.”

He wants to be like you! A simian sartorialist with a taste for minimalist interior design has swept the Internet since photos of the curious branch swinger were snapped in the parking lot of a Canadian IKEA. The hipster rhesus macaque was wearing a tiny shearling coat when he escaped from a crate in his owner’s parked vehicle. The monkey—for whom door-buster deals are likely low-hanging fruit—had shoppers going ape as they quickly formed a crowd. And the monkey, which was reclaimed by its owner, is not all about clothes—“it’s a smart monkey,” one police spokesperson said.

Worried were we when Miley Cyrus arrived pantless at the Billboard Music Awards. Fretful did we grow when shutterflies snapped her jogging sans bra. Apoplectic now will be mothers everywhere at the cleavage-baring, tattoo-revealing, S&M-themed getup Cyrus sported at a Hollywood venue for the dubiously named Christmas Creampies concert Satuday. And if there wasn’t enough chest on view for the onetime tween idol’s fans, Cyrus was joined by a topless stripper for one of her numbers. Cyrus reportedly also engaged in some risqué dance moves with another performer, DJ Borgore.

Japan moved into a recession Monday after revised numbers for the year’s second quarter were released. The updated government data showed that the country’s economy shrunk for the second straight quarter over the period of July to September. Analysts said that slow exports will do little to invigorate the economy in the third quarter, and they expect to see another period of contraction through December. Japan’s GDP contracted 0.9 percent over the second quarter, according to the revised numbers.

At least they brought enough to share. Two students from the University of Colorado at Boulder may face felony charges after feeding their classmates THC-laced brownies without telling them—landing three people in the hospital. Their professor was reportedly among the woozy, saying he was dizzy before being taken away for medical care. The 2 students were held without bail, according to a campus police spokesman, and 8 of the 12 people in their history class reported feeling unwell after eating the brownies.

The hotel maid who accused DSK of sexually assaulting her may sign a multimillion-dollar settlement package Monday. The deal would bring an end to Nafissatou Diallo’s civil suit against the once-unstoppable Dominique Strauss-Kahn. An interpreter has been ordered for Diallo, but DSK himself will not be at the settlement, according to an official from the Bronx Supreme Court. The criminal charges that first arose from Diallo’s accusations were eventually dropped by Manhattan District Attorney Cyrus Vance.

Psy says the years since he sang graphic lyrics that called for the killing of American soldiers have changed him. And before performing for the U.S. commander in chief at Sunday’s Christmas in Washington concert, he said “I deserve it” if past misdeeds brought down his recent stunning success. The “Gangnam Style” artist became a sudden and unexpected subject of controversy last week—but it seems the Beltway crowd showed the remorseful pop star some Christmas charity. “I really, fully regret the using of [those] kinds of words,” Psy said in a preshow interview. Then it was time to perform: “Oppan Christmas style!”

The wreckage of the aircraft believed to be carrying reality TV star and singer Jenni Rivera has been found with no survivors, according to authorities. The small plane—which was discovered in Nuevo Leon state—went missing early Sunday morning after it took off from the Monterrey, Mexico airport at 3:30 a.m. Aviation authorities lost contact with the Learjet about 10 minutes after takeoff. Rivera was traveling with a handful of other people, including her lawyer, makeup artist, and publicist. Born in California, Rivera has sold 15 million records worldwide and is known for her starring role on I Love Jenni, a reality show on the Mun2 network. 

The mother of the Nigerian finance minister was taken from her home Sunday, according to officials. Kamene Okonjo, a professor, had been threatened recently, according to a spokesperson for her daughter, finance minister and anti-corruption crusader Ngozi Okonjo-Iweala. She was one of the top contenders for the position of managing director of the World Bank before Jim Yong Kim was appointed. Now officials fear her mother may have become the latest victim of the country’s multimillion-dollar kidnapping industry. At 82, Okonjo is a medical doctor and retired professor.

The isolated communist country has decided to prolong the agony surrounding the planned launch of a long-range rocket. North Korea’s decision to carry out the test at all has drawn international condemnation, but now they seem to want to keep everyone on tenterhooks just a little longer, pushing the launch period back through Dec. 29. A spokesman for the hermit kingdom’s Committee of Space Technology said there was a “technical deficiency in the first-stage control engine module of the rocket.”

Morsi's big mouth means big problems. In an official Facebook message issued early Monday, the Egyptian president put on hold the measures of raising sales taxes on a wide range of consumer goods and services that were made public Sunday afternoon. Earlier in the day, opposition groups rejected the president’s attempt to rescind his near-absolute authority decree, calling it “relatively meaningless.” As protests outside the palace raged on, Morsi order the military to "keep order" and protect the state institutions. The fighting—which has already killed 8 and wounded up to 700—is likely to continue until the Dec. 15 vote on the new referendum.

President Obama will address Michigan autoworkers Monday, imploring them to support his plan to pull the country back from the fiscal cliff. The stop in Redford, Mich., is an attempt by the president to gather popular support behind his plan to deal with the looming combination of spending cuts and tax increases. A main sticking point in negotiations with Republican lawmakers so far has been the president’s request to make the top 2 percent of America’s wealthy pay more into the public coffers.

That’s the ticket—for 47 percent of Americans. The number that has come to hang spectral over the grave of Mitt Romney’s presidential bid struck again, this time in a new poll by Politico and George Washington University. The study found that 47 percent of Americans—precisely the number that the onetime presidential hopeful had said were dependent on the government—look upon Romney and former running mate Paul Ryan favorably. “The Republicans are in real need of a leader,” said Celinda Lake, a Democratic pollster who worked on the study. Fifty-two percent of Americans said President Obama is doing A-OK.

The two Australian DJs whose bad imitation of the queen led to the world’s most disastrous prank call said they were “gutted, shattered, and heartbroken” in their first interview since. Jacintha Saldanha, a London nurse, was found dead shortly after the two pranksters phoned in to her hospital and fooled her into thinking they were the queen. “If we played any involvement in her death, then we’re very sorry,” said presenter Mel Grieg, 30. “We couldn’t foresee what was going to happen.”

Ice-T and Coco Austin are reportedly having marital problems after Austin was photographed dancing and face-kissing a rapper named AP.9. Austin sought to reassure her fans, calling the photos “harmless.” But Ice-T was not ready to cool off, tweeting, "Don't get it twisted, I'm not happy about this s**t. Most of (the pictures) are disrespectful and in bad taste. She's made me look and feel like s**t.” Coco then realized Ice-T was steamed and apologized via Twitter, admitting the pictures were in “poor taste,” adding, “The bottom line is I love Ice & I can understand why he's upset theres no excuse for my actions.I'm so sorry baby & to evryone (sic)."

Planes could get a lot noisier soon. Julius Genachowski, chairman of the Federal Communications Commission, sent a letter to the Federal Aviation Administration asking that the agency “enable greater use of tablets, e-readers, and other portable devices.” The FAA has recently agreed to review its electronics policies during all portions of the flight, and pilots are now allowed to use iPads instead of paper flight manuals. In the letter to Michael Huerta, acting administrator of the FAA, Genachowski writes, “This review comes at a time of tremendous innovation, as mobile devices are increasingly interwoven in our daily lives.”

In areas hardest hit by Hurricane Sandy, residents in buildings operated by the New York City Housing Authority suffered without power and sometimes without aid for weeks. After the storm, stories emerged of elderly and incapacitated residents stranded in the high-rise buildings—and those stories continued, in some cases, for close to a month. Looking back, it now seems clear that NYCHA was caught unprepared as basic utilities were cut to more than 75,000 residents in more than 400 buildings across the boroughs.

Those Tickle Me Elmo toys just seem dirty now. A fourth man has accused former Elmo puppeteer Kevin Clash of sexual abuse, filing a lawsuit Monday in Miami. Under the name John Doe, the accuser claims Clash befriended him in the mid-1990s, when Doe was 16 or 17, and that Clash paid for him to fly from Miami to New York “for the purpose of satisfying his sexual interests.” The lawyer of the latest accuser also represents Clash’s second accuser, Cecil Singleton, and his third accuser, another “John Doe.” Clash’s reps have not commented on this latest sexual harassment suit. Though Clash resigned from Sesame Street roughly a month ago, his voice will still stick around for another two years, as he has already taped episodes to air through 2014.

Isn’t it about time these two learn to speak the same language? Aides to President Obama and House Speaker John Boehner say the stalemate over the fiscal cliff hinges on specifics. Obama wants Boehner and Republicans to be more precise about higher taxes on wealthy Americans, and Boehner wants more details from Obama on spending cuts. Looking for support from Michigan autoworkers Monday, Obama told them he’s “willing to compromise a little bit” but won’t give an inch on higher tax rates for the wealthiest 2 percent of Americans. Some Republican senators have said they would consider supporting higher tax rates if they come with significant spending cuts to Medicare and Medicaid.

Holiday shoppers had a scary experience Monday when a man was shot and killed in Midtown Manhattan, by Columbus Circle. The gunman walked up to the victim, a 31-year-old man, and shot him in the head at 58th Street and Seventh Avenue, according to NYPD. Police believe the suspec may have fled in a gray Lincoln MKZ and are currently searching for him. It is not yet clear whether the crime was premeditated.