Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

Read More..

Wall Street Week Ahead: "Cliff" worries may drive tax selling

NEW YORK (Reuters) - Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual.

Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it's still up nearly 32 percent for the year.

Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one's tax bill is going to jump sharply just because the calendar changes.

"Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a lot of high-net-worth individuals in taxable accounts, and that could be what's affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual."

Of this year's top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.

The rush to avoid higher taxes on portfolio gains could cause additional weakness.

The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.

A PAIN PILL FROM THE FED?

Next week's Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting - the Fed's last one for the year.

Friday's jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard.

"After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

"I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year," he said.

MORE VOLUME AND VOLATILITY

Volume could increase as investors try to shift positions before year end, some analysts said.

While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade's chief derivatives strategist.

Volatility could pick up as well, and some of that is already being seen in Apple's stock.

"The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple's volatility to carry over into the market volatility," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.

Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38.

"There's a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple," Aama said.

While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.

To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.

Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there's a decent chance that the market could rally before year end.

"Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it's hung in there in anticipation of something coming," he said.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com)

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; Multimedia versions of Reuters Top News are now available for:; 3000 Xtra: visit Reuters Top News; BridgeStation: view story .134; For London stock market outlook please click on .L/O; Pan-European stock market outlook .EU/O; Tokyo stock market outlook .T/O; Wall St Week Ahead runs every Friday.)

Read More..

Egyptian opposition to shun Mursi's national dialogue

CAIRO (Reuters) - President Mohamed Mursi was expected to press ahead on Saturday with talks on ways to end Egypt's worst crisis since he took office even though the country's main opposition leaders have vowed to stay away.

Cairo and other cities have been rocked by violent protests since November 22, when Mursi promulgated a decree awarding himself sweeping powers that put him above the law.

The upheaval in the most populous Arab nation, following the fall of Hosni Mubarak last year, worries the West, in particular the United States, which has given it billions of dollars in military and other aid since Egypt made peace with Israel in 1979.

Mursi's deputy raised the possibility that a referendum set for December 15 on a new constitution opposed by liberals might be delayed. But the concession only goes part-way towards meeting the demands of the opposition, who also want Mursi to scrap the decree awarding himself wide powers.

On Friday, large crowds of protesters surged around the presidential palace, breaking through barbed wire barricades and climbing on tanks guarding the seat of Egypt's first freely elected president, who took office in June.

As the night wore on, tens of thousands of opposition supporters were still at the palace, waving flags and urging Mursi to "Leave, leave".

"AS LONG AS IT TAKES"

"We will stay here for as long as it takes and will continue to organize protests elsewhere until President Mursi cancels his constitutional decree and postpones the referendum," said Ahmed Essam, 28, a computer engineer and a member of the liberal Dostour party.

Vice President Mahmoud Mekky issued a statement saying the president was prepared to postpone the referendum if that could be done without legal challenge.

Mursi's planned dialogue meeting was expected to go ahead on Saturday in the absence of most opposition factions. "Everything will be on the table," a presidential source said.

Mursi could be joined by some senior judiciary figures and politicians such as Ayman Nour, one of the candidates in Mubarak's only multi-candidate presidential race, in 2005, in which he was unsurprisingly trounced.

The opposition has demanded that Mursi rescind the decree giving himself wide powers and delay the vote set for December 15 on a constitution drafted by an Islamist-led assembly which they say fails to meet the aspirations of all Egyptians.

EXPAT VOTE DELAYED

The state news agency reported that the election committee had postponed the start of voting for Egyptians abroad until Wednesday, instead of Saturday as planned. It did not say whether this would affect the timing of voting within Egypt.

Ahmed Said, leader of the liberal Free Egyptians Party, told Reuters that delaying expatriate voting was intended to seem like a concession but would not change the opposition's stance.

The opposition organized marches converging on the palace which Republican Guard units had ringed with tanks and barbed wire on Thursday after violence between supporters and opponents of Mursi killed seven people and wounded 350.

Islamists, who had obeyed a military order for demonstrators to leave the palace environs, held funerals on Friday at Cairo's al-Azhar mosque for six Mursi partisans who were among the dead.

"With our blood and souls, we sacrifice to Islam," they chanted.

A group led by leftist opposition leader Hamdeen Sabahy has called for an open-ended protest at the palace.

Some pro-Mursi demonstrators gathered in a mosque not far from the palace, but said they would not march towards the palace to avoid a repeat of the violence that took place on Wednesday night.

In a speech late on Thursday, Mursi had refused to retract his decree or cancel the referendum on the constitution, but offered talks on the way forward after the referendum.

The National Salvation Front, the main opposition coalition, said it would not join the dialogue. The Front's coordinator, Mohamed ElBaradei, a Nobel peace laureate, dismissed the offer as "arm-twisting and imposition of a fait accompli".

ElBaradei said that if Mursi were to scrap the decree with which he awarded himself extra powers and postpone the referendum "he will unite the national forces".

Murad Ali, spokesman for the Muslim Brotherhood's Freedom and Justice Party, said opposition reactions were sad: "What exit to this crisis do they have other than dialogue?" he asked.

(This story corrects Mursi's title to president in paragraph 1)

(Additional reporting by Omar Fahmy; Writing by Giles Elgood; Editing by Michael Roddy and Paul Tait)

Read More..

Susan Powell's Father-in-Law Secretly Took 4,500 Pictures of Her

12/07/2012 at 07:30 PM EST

Wrapping up a year that has brought unimaginable frustration and heartbreak, Susan Powell's family marked the three-year anniversary of her disappearance at a ceremony this week near where her two sons are buried.

"It's a hard time of year," Susan's father, Chuck Cox, tells PEOPLE. "Our daughter's still missing. Someday, we will find out what happened to her."

He added that he is not sure what to make of a West Valley City, Utah, police announcement Thursday that their investigation into Susan's Dec. 6, 2009 disappearance remains active but "has been scaled down," with a reduction in the number of full-time investigators working the case.

The announcement came at the same time that more evidence emerged of the alleged obsession Susan's father-in-law, Steven Powell, had toward her. Authorities released nearly 4,500 pictures that they say he secretly took of her at home and elsewhere.

Cox says he's hopeful that the police are still doing everything possible to solve Susan's case, but he hasn't ruled out suing the department for failing to arrest Susan's husband, Josh Powell, for her murder.

More than two years after Susan's disappearance, Josh on Feb. 5 murdered the couple's two sons and committed suicide by blowing up his house.

Cox's lawyer, Anne Bremner, says Cox "goes back and forth" over whether to sue West Valley City. "He wants them to find her. A lawsuit can have a chilling affect on things."

Cox and Bremner say they do plan to file a lawsuit against the state of Washington for continuing to give Josh visitation with his children despite what they claim were mounting concerns regarding his mental stability.

Although Cox and the police believe that Josh Powell knew more than anyone what happened to Susan, they also strongly suspect that his father, Steven Powell, should still be looked at more closely.

Steven Powell

Ted S. Warren / AP

The Coxes hoped Steve Powell's voyeurism trial in May would unearth some answers but it did not. Powell invoked his Fifth Amendment right against self-incrimination when asked in jail about Susan.

In numerous interviews with PEOPLE, Steve and Josh Powell denied any involvement in Susan's disappearance and have suggested that she ran off with another man.

Steve Powell was prosecuted for surreptitiously photographing his neighbor's young daughters (and is serving a 30-month sentence), but the investigation also unearthed journals in which Powell described his interest in his daughter-in-law, as well as the thousands of photos, which were released Thursday to the Associated Press.

In a journal entry, Steven Powell recalls a sexually charged dream in which Susan asks him, “Do you think I would make a good wife for you?” None of the pictures show Susan naked, although there are images of her crotch and backside.

"We think he knows exactly where our daughter is," Cox says.

Once Susan disappeared, Josh sold the family's home in Utah and moved with the boys into Steven Powell's house in Puyallup, Wash., only about two miles from the Cox family.

On Thursday, families streamed to Puyallup’s Woodbine Cemetery to remember the Powell boys and other children who died tragically and to dedicate a memorial: a bronze angel inspired by the novella The Christmas Box, in which strangers learn the value of love following a child’s death.

The novella's author, Richard Paul Evans, also attended the dedication. The memorial is on a hill overlooking the boys' gravesites 75 yards away.

"We get a lot of support from a lot of people and we're going to make it through," Cox says.

Read More..

Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

Read More..

Wall Street Week Ahead: "Cliff" worries may drive tax selling

NEW YORK (Reuters) - Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-loss selling even more appealing than usual.

Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it's still up nearly 32 percent for the year.

Apple dropped 8.9 percent in this past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one's tax bill is going to jump sharply just because the calendar changes.

"Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a lot of high-net-worth individuals in taxable accounts, and that could be what's affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual."

Of this year's top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.

The rush to avoid higher taxes on portfolio gains could cause additional weakness.

The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.

A PAIN PILL FROM THE FED?

Next week's Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. on Wednesday after the conclusion of the meeting - the Fed's last one for the year.

Friday's jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that Superstorm Sandy had hit the labor market hard.

"After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

"I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year," he said.

MORE VOLUME AND VOLATILITY

Volume could increase as investors try to shift positions before year end, some analysts said.

While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade's chief derivatives strategist.

Volatility could pick up as well, and some of that is already being seen in Apple's stock.

"The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple's volatility to carry over into the market volatility," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.

Shares of Apple, the largest U.S. company by market value, registered their worst week since May 2010. In another bearish sign, the stock's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38.

"There's a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple," Aama said.

While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.

To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.

Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there's a decent chance that the market could rally before year end.

"Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it's hung in there in anticipation of something coming," he said.

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com)

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; Multimedia versions of Reuters Top News are now available for:; 3000 Xtra: visit Reuters Top News; BridgeStation: view story .134; For London stock market outlook please click on .L/O; Pan-European stock market outlook .EU/O; Tokyo stock market outlook .T/O; Wall St Week Ahead runs every Friday.)

Read More..

Egypt struggle seen costing Mursi, even if he wins

CAIRO (Reuters) - The crisis unleashed by President Mohamed Mursi's bid to wrap up Egypt's transition on his own terms has eroded his nation's faith in their nascent democracy and will complicate the already unenviable task of government.

His effort to drive through a constitution against the wishes of major sections of society, including a Christian minority, has damaged prospects for building consensus needed to tackle challenges ahead, such as fixing a broken economy.

Having promised to be a president for all, Mursi stands accused of putting the interests of his group, the Muslim Brotherhood, ahead of others who say their aspirations are not reflected in the draft to be put to a December 15 referendum.

On the other side, suspicions harbored by Islamists towards their secular-minded opponents have only deepened as a result of the turmoil ignited by Mursi's effort to fast-track the final stage of the transition from Hosni Mubarak's rule.

With the more extreme among them opposed to the very notion of democracy, the Islamists say their rivals are not respecting the rules of the game that put them in the driving seat by winning free and fair elections.

People anxious to see Egypt recover from two years of turbulence fear bad blood could persist and squash hopes for cooperation needed to help Mursi rule smoothly and deliver much-needed reforms.

"If they succeed in the referendum, they will see that as a step forward, but not without cost," said a Western diplomat.

Though Mursi won international praise for mediating a truce in Gaza, the violence on his own streets worries the West and particularly the United States, which has given Cairo billions of dollars in military and other aid since Egypt made peace with Israel in 1979. U.S. President Barack Obama told Mursi on Thursday of his "deep concern" about casualties during protests.

A victim of the polarization could be the Brotherhood's plans to forge electoral alliances with liberals in forthcoming parliamentary polls. The head of the Brotherhood's Freedom and Justice Party told Reuters this week he saw such alliances as preferable to an ideological tie-up with other Islamists.

The divisions are now playing out in the streets. Seven people were killed and hundreds wounded this week in clashes between Islamists and their rivals. A call by Mursi for dialogue was rebuffed by activists who are to protest again on Friday.

"We said that this state of polarization, if it was not dealt with properly, would reach this point, and it has," said Ayman Al-Sayyad, who quit his post as a Mursi adviser on Wednesday following an eruption of violence.

"This was the scene that we were trying to avoid," he added in an interview with al-Hayat television.

The inclusive image Mursi had tried to build around his administration was one of the first victims of the crisis that mushroomed following a November 22 decree that expanded his powers and protected his decisions from judicial review.

RESIGNATIONS

A Christian and a woman were among the first to resign from his staff, as surprised by the decree as most Egyptians. Despite an early bout of violence, Mursi showed no sign of wavering and appeared to brush off his critics.

"I see things more than they do," he told Time.

With speculation swirling around how he took the decision, Egyptians long suspicious of the Brotherhood have concluded Mursi is running the country at the group's command.

In response, the Islamists complain that many of Mursi's attempts at outreach were rebuffed early on. Their view of the opposition has grown dimmer through the crisis. Brotherhood members have started to dismiss opponents as "feloul", meaning "remnants" - a pejorative implying loyalty to Mubarak.

"The really unfortunate side effect of the last two weeks is the political atmosphere has become really toxic. I fear that could endure long past the current crisis," said Elijah Zarwan, a fellow with the European Council on Foreign Relations.

"The next government is going to have to move very quickly to address many problems and it will need cooperation. In the current atmosphere, it is hard to imagine others cooperating."

Such cooperation will be at a premium for introducing policies aimed at reining in a crushing budget deficit and staving off a balance of payments crisis. Egypt's economy has lost $70 billion to $80 billion of economic output since Mubarak was ousted, in one economist's estimate.

Top of the economic to-do list are measures to cut back on fuel subsidies - one of the biggest drains on state finances. Tweaks to such support are bound to be unpopular in a nation where both rich and poor have grown used to cheap petrol.

"He has inherited an economy that is weak and needs serious surgery, so he is going to have to make controversial decisions over the next year or so," said Simon Kitchen, strategist at EFG-Hermes, an Egyptian investment bank.

"Ideally you want to do that in an environment where you have some sort of political consensus," he said.

"THEY BURNED THEIR BRIDGES"

Some subsidy reform and other steps to cut waste are part of a program agreed in principle with the International Monetary Fund for $4.8 billion loan designed to support the budget.

The IMF board meets on December 19 to discuss approval of the loan, which would be seen by investors as a seal of approval for the government's reform program.

Besides the economy, Mursi needs wider backing to tackle other problems including a judiciary which his opponents agree needs overhaul. But even when he sacked the unpopular, Mubarak-era prosecutor general, Mursi was criticized for showing an autocratic streak in the way he went about it.

In the new system of government outlined in the draft constitution, Egypt's next parliament will have a say over the shape of government. A parliamentary election would go ahead some two months later if the constitution is approved in the referendum.

With that in mind, the Freedom and Justice Party is already eyeing alliances to fight the parliamentary election.

FJP leader Saad al-Katatni said in an interview his preference was for an alliance with liberals, not the hardline Islamists whose backing has helped Mursi through the crisis. "Our preferred option is that the alliance not be ideological so that we don't have a split in the nation," he said.

The Brotherhood had kept the nascent hardline Salafi parties at arm's length as they emerged after Mubarak's political demise. That trend has gradually been reversed as the Brotherhood has looked to fellow Islamists for support.

"They burned their bridges with the secular camp and relied heavily on the Salafi camp. We don't feel that is where they naturally want to be right now," said the Western diplomat, speaking on condition of anonymity.

Sentiment from liberal parties suggests the Brotherhood will struggle to convince liberals that it is a trustworthy partner.

"I don't think the man realizes the degree of rebellion and rage the people have," said Ahmed Said, head of the liberal Free Egyptians Party, referring to Mursi. "The country is totally divided and polarized. You have two nations now."

(Writing by Tom Perry; Editing by Peter Graff)

Read More..

The X Factor Reveals Its Four Semi-Finalists

TV Watch

The X Factor

By Aaron Parsley

12/06/2012 at 09:20 PM EST

There were tears on The X Factor Thursday night.

With only four spots in next week's semi-finals, the six acts who performed two songs each Wednesday night were a tense bunch. Especially after last week's shocking elimination that sent home fan favorite Vino Alan.

A majority of PEOPLE.com readers picked Demi Lovato's only remaining contestant, CeCe Frey, as the singer who most deserved elimination. Was she able to make it through one more week? Keep reading for all the results ...

CeCe Frey was the first to go.

"I'm proud of everything that I've done on this show," she said. "I hope I've taught everyone at home that you need to love who you are, because the more you love who you are, the less you're going to need anybody else to."

Her coach tried to avoid tears but shed a few anyway. "I've grown so close to you," Demi said. "And I'm just so proud of you."

Three acts were then declare safe: Simon Cowell's boy band, Emblem3; Britney Spears's frontrunner, Carly Rose Sonenclar; and L.A. Reid's country singer, Tate Stevens, also a frontrunner.

That left Team Britney's Diamond White and Simon's other group, Fifth Harmony, to sing for survival.

Fifth Harmony sang Mariah Carey's "Anytime You Need a Friend," and Diamond sang Lee Ann Womack's "I Hope You Dance."

As expected, Simon and Britney voted to send home each other's acts. But it was the end of the road for Diamond, after L.A. and Demi both voted to send her home as well.

"I'm just thinking of Cher Lloyd right now," she said of the "Want U Back" singer. "She came in fifth and look where she is."

Here's how the top four ranked:
1. Tate Stevens
2. Carly Rose Sonenclar
3. Emblem3
4. Fifth Harmony

Read More..

Stock index futures fall, focus on jobs data

LONDON (Reuters) - Stock index futures pointed to a lower open on Wall Street on Friday, with futures for the S&P 500, the Dow Jones and the Nasdaq 100 falling 0.1 to 0.2 percent.

U.S. non-farm employment, due at 8.30 a.m. EST, is forecast to have risen by 93,000 jobs last month after gaining 171,000 in October, according to a Reuters survey. The unemployment rate is seen holding steady at 7.9 percent.

Superstorm Sandy likely put a dent in U.S. jobs growth in November, temporarily interrupting a recently established trend of modestly rising payrolls.

Amarin Corporation was down 18.4 percent in late trading on Thursday after the bio-pharmaceutical company said it raised $100 million in non-equity financing that will help it form a sales force to launch its heart drug Vascepa, but disappointed investors hoping for a sale or partnership.

Smith & Wesson Holding Corp was up 5.8 percent, after the bell on Thursday following the release of its results, while GEO Group was up 6.2 percent after the company announced a special dividend.

Brent crude steadied above $107 per barrel, but prices were headed for their biggest weekly loss in more than a month on worries about the euro zone economy and a looming fiscal crisis in the United States, the world's top oil consumer.

European shares <.fteu3> were down 0.2 percent, pressured by lower German and Italian shares, after Germany's central bank cut its growth outlook for Europe's largest economy next year, and on political uncertainty in Italy.

U.S. stocks closed modestly higher on Thursday, a day ahead of the key monthly jobs report, as a rebound in shares of Apple helped boost technology shares.

The Dow Jones industrial average <.dji> rose 39.55 points, or 0.30 percent, to 13,074.04 at the close. The Standard & Poor's 500 Index <.spx> added 4.66 points, or 0.33 percent, to 1,413.94. The Nasdaq Composite Index <.ixic> gained 15.57 points, or 0.52 percent, to close at 2,989.27.

(Reporting by Atul Prakash)

Read More..

Tanks outside Mursi's palace, streets calmer

CAIRO (Reuters) - Egyptian army tanks deployed outside the presidential palace on Thursday in streets where supporters and opponents of President Mohamed Mursi had clashed into the early hours of the morning in violence that killed five people.

Armored troop carriers also moved into the roads around the palace, in what Egypt's state news agency said was a measure to secure the palace. The area had become a chaotic battleground between Mursi's Islamist backers and their opponents.

The soldiers' badges identified them as members of the Presidential Guard and Republican Guard, whose duties include guarding the presidency. At least five tanks and nine armored personnel carriers were seen near or around the palace.

The health ministry said five people had been killed and 350 wounded in bloodshed that has exacerbated the worst crisis since Mursi took office as Egypt's first president since a popular uprising overthrew Hosni Mubarak in February, 2011.

The military played a crucial role in ending Mubarak's 30-year rule by taking over from him to manage a transitional period, but it has stayed out of the latest crisis.

Mursi's opponents accuse him of seeking to create a new autocracy by awarding himself extraordinary powers in a decree on November 22 and were further angered when an Islamist-dominated assembly pushed through a draft constitution that opponents said did not properly represent the aspirations of the whole nation.

The president has defended his decree as necessary to prevent courts still full of judges appointed by Mubarak from derailing a constitution vital for Egypt's political transition.

Around the palace, traffic was moving through streets strewn with rocks thrown during violence in which petrol bombs and guns were also used. Hundreds of Mursi supporters were still in the area, many wrapped in blankets and some reading the Koran.

"We came here to support President Mursi and his decisions. He is the elected president of Egypt," said demonstrator Emad Abou Salem, 40. "He has legitimacy and nobody else does."

MUTUAL ACCUSATIONS

An opposition group called for more protests at the palace later on Thursday, setting the stage for further confrontation.

Mursi's opponents say the Muslim Brotherhood, the group that propelled the president to power in a June election, is behind the violence. The Brotherhood says the opposition is to blame and that the five dead were all Mursi supporters. The United States, worried about the stability of an Arab state which has a peace deal with Israel and which receives $1.3 billion in U.S. military aid, urged dialogue. Britain also called for restraint and an "inclusive" political process.

A presidential source said Mursi, silent in the last few days, was expected to make a statement later on Thursday.

Vice President Mahmoud Mekky proposed "personal ideas" for a negotiated way out on Wednesday, saying amendments to disputed articles in the constitution could be agreed with the opposition. A written agreement could then go to parliament, to be elected after a referendum on the constitution on December 15.

"There must be consensus," he told a news conference in the presidential palace as fighting raged outside on Wednesday. But the opposition stuck by its demand for Mursi to cancel the November 22 decree and postpone the referendum before any dialogue.

Protests spread to other cities, and offices of the Muslim Brotherhood's political party in Ismailia and Suez were torched.

But Mursi has shown no sign of buckling under pressure from protesters, confident that the Islamists, who have dominated both elections since Mubarak was overthrown, can win the referendum and parliamentary election to follow.

As well as relying on his Brotherhood power base, Mursi may also draw on a popular yearning for stability and economic revival after almost two years of political turmoil.

Opposition coordinator Mohamed ElBaradei said on Wednesday the street action and the polarization of society were pushing Egypt into violence and "could draw us to something worse".

The Egyptian pound plunged 4 percent on Thursday to its lowest level in eight years, after previously firming on hopes that a $4.8 billion IMF loan would stabilize the economy. The Egyptian stock market fell 4.4 percent after it opened.

(Additional reporting by Reuters TV; Tamim Elyan, Yasmine Saleh and Tom Perry, Writing by Edmund Blair and Tom Perry; Editing by Alistair Lyon and Giles Elgood)

Read More..