With record highs in sight, stocks face roadblocks

NEW YORK (Reuters) - If Wall Street needs to climb a wall of worry, it will have plenty of opportunity next week.

Major U.S. stock indexes will make another attempt at reaching all-time records, but the fitful pace that has dominated trading is likely to continue. Next Friday's unemployment report and the hefty spending cuts that look like they about to take effect will be at the forefront.

The importance of whether equities can reach and sustain those highs is more than Wall Street's usual fixation on numbers with psychological significance. Breaking through to uncharted territory is seen as a test of investors' faith in the rally.

"It's very significant," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"The thinking is, there's just not enough there for an extended bull run," he said. "If we do break through (record highs), then maybe the charts and price action are telling us there's something better ahead."

Flare-ups in the euro zone's sovereign debt crisis and next Friday's report on the U.S. labor market could jostle the market, though U.S. job indicators have generally been trending in a positive direction.

Small- and mid-cap stocks hit lifetime highs in February. Now the Dow Jones industrial average <.dji> and the S&P 500 <.spx> are racing each other to the top. The Dow, made up of 30 stocks, is about 75 points - less than 1 percent - away from its record close of 14,164.53, which it hit on October 9, 2007. The broader S&P is still 3 percent away from its closing high of 1,565.15, also reached on October 9, 2007.

The advantage may be in the Dow's court. So far in 2013, it has gained 7.5 percent, beating the S&P 500 by about 1 percent.


The Dow's relative strength owes much to its unique make-up and calculation, as well as to investors' recent preference for buying value stocks likely to generate steady reliable gains, rather than growth stocks.

But the more defensive stance illustrates how stock buyers are getting concerned about this year's rally. While investors don't want to miss out on gains, they're picking up companies that are less likely to decline as much as high-flying names - if a market correction comes.

The Russell Value Index <.rav> is up 7.6 percent for the year so far, outpacing the Russell Growth Index's <.rag> 5.7 percent rise. Within the realm of the S&P 500, the consumer staples sector led the market in February, gaining 3.1 percent.

There is some concern that growth-oriented names are being eclipsed by defensive bets, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.

"This isn't a be-all and end-all sell signal by any means, but we would feel much more comfortable if some of the more aggressive areas, like technology and small caps, would start to gain some leadership here," Detrick said.

Signs that investors are becoming concerned about the rally's pace is evident in the options market, where the ratio of put activity to call activity has recently shifted in favor of puts, which represent expectations for a stock to fall.

"We are seeing some put hedging in the financials, building up for the past month," said Henry Schwartz, president of options analytics firm Trade Alert in New York.

The put-to-call ratio representing an aggregate of about 562 financial stocks is 1:1, when normally, calls should be outnumbering puts.

Investors have no shortage of reasons to crave the relative safety of blue chips and defensive stocks. Although markets have mostly looked past uncertainty over Washington's plans to cut the deficit, fiscal policy negotiations still pose a risk to equities.

The $85 billion in spending cuts set to begin on Friday is expected to slow economic growth this year if policymakers do not reach a new deal. Markets so far have held firm despite the wrangling in Washington, but tangible economic effects could pinch stock prices going forward.

The International Monetary Fund warned that full implementation of the cuts would probably take at least 0.5 percentage point off U.S. growth this year.


Investors will also take in a round of economic data at a time when concerns are percolating that the market is being pushed up less by fundamentals and more by loose monetary policy around the world.

The main economic event will be Friday's non-farm payrolls report for February. The U.S. economy is expected to have added 160,000 jobs last month, only a tad higher than in January, in a sign the labor market is healing at a slow pace. The U.S. unemployment rate is forecast to hold steady at 7.9 percent.

While lackluster data has been a catalyst in the past for stock market gains as investors bet it would ensure continued stimulus from the Federal Reserve, that sentiment may be wearing thin.

Markets stumbled last week following worries that the Fed might wind down its quantitative easing program sooner than expected.

"It shows the underpinning of the market is being driven at this point by monetary policy," Hellwig said.

With investors questioning what is behind the rally, it will make a run to record highs even more significant, Hellwig added.

"There's smart people that are in the bull camp and the bear camp and the muddle-through camp," Hellwig said. "The fact that you can statistically, using historical evidence, make a case for going higher, lower, or staying the same makes this number very important this time around."

(Wall St Week Ahead runs every Friday. Comments or questions on this column can be emailed to: leah.schnurr(at)thomsonreuters.com)

(Reporting by Leah Schnurr; Additional reporting by Doris Frankel in Chicago; Editing by Jan Paschal)

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No. 10 Louisville beats No. 12 Syracuse 58-53

SYRACUSE, N.Y. (AP) — When Louisville coach Rick Pitino threw off his coat, it was game-on.

Miffed by two straight fouls against Luke Hancock when the 10th-ranked Cardinals trailed No. 12 Syracuse by a point with time running out, Pitino stomped on the sidelines as he altered his courtside wardrobe and his team responded with a late spurt for a 58-53 victory Saturday, silencing another huge Carrier Dome crowd.

"We had a couple of real tough calls go against us and veteran teams don't let it bother you," Pitino said. "They dig in. It bothered me, but it didn't bother the players."

Cool under fire despite the two quick fouls, Hancock hit a 3-pointer from the left corner to break a 48-all tie with 50 seconds left as the Cardinals exacted a measure of revenge for a loss to the Orange earlier this season.

"It's big," said Hancock, who hit 4 of 5 from behind the arc for all of his points in the game. "This was like a tournament game. It was that kind of atmosphere. This prepares us well. It definitely gives us confidence going into the end of the season. We want to win out the rest of our games and this was another step."

It was the third straight loss for Syracuse (22-7, 10-6 Big East), which was humbled 57-46 in a loss to No. 7 Georgetown a week ago before a record Carrier Dome crowd of 35,012. That snapped the Orange's 38-game home winning streak, and they were beaten again, 74-71, at No. 22 Marquette on Monday night to drop into a tie in the Big East with Notre Dame behind the league-leading Hoyas, Louisville and Marquette.

Louisville (24-5, 12-4) snapped a three-game losing streak against Syracuse, and the Cardinals did it before a stunned crowd of 31,173. The victory moved Louisville into a tie with Marquette (21-7, 12-4), which beat Notre Dame, one-half game behind the Hoyas (22-4, 12-3), who played later Saturday.

Russ Smith led Louisville with 18 points and Gorgui Dieng finished with 11 points and 14 rebounds as the Cardinals overcame a poor offensive performance by point guard Peyton Siva. Siva failed to score, missing eight 3-pointers, but had four assists and no turnovers.

C.J. Fair had 19 points to lead the Orange, James Southerland added 13 and point guard Michael Carter-Williams 11.

Syracuse, which trailed 23-19 at halftime, its fewest points in a first half this season, outrebounded Louisville 41-36 but was victimized by eight 3s and shot poorly again (20 of 56 for 35.7 percent). Senior guard Brandon Triche, one of the heroes in the win over Louisville in mid-January with 23 points, had just eight on this day, going 2 for 11 from the field and missing all three of his tries from long range. Syracuse's starting guards finished 5 of 21 overall and 1 of 7 on 3-pointers, while Triche had a game-high seven turnovers.

"We can't have him (Triche) play this way," Syracuse coach Jim Boeheim said. "He works his tail off. He's a good teammate. He wants to win, but I don't like the way he's playing right now. I don't like the way we're playing. We need to get something offensively."

After Hancock swished a straight-on 3 for Louisville, Fair hit a spinning layup as Dieng fouled him but missed the free throw and Syracuse trailed 41-40 with 7:34 to go.

Louisville began to press and the strategy paid off with two straight turnovers. Southerland lost the ball off the dribble and Triche mishandled an inbounds pass. The Cardinals took advantage as Dieng sank two free throws and Hancock hit a 3 from the wing for a 47-40 lead at 5:35, the biggest edge by either team in the game.

Carter-Williams scored six straight points in a span of just over a minute to rally the Orange, hitting four free throws and a shot off the glass as Syracuse trailed 47-46 with 4:27 left. Fair's baseline jumper gave Syracuse the lead and Smith's free throw tied it at 48-all with 1:39 to go.

After Triche missed a baseline layup against Dieng, Hancock stole Triche's ensuing inbounds pass and Hancock drained his fourth 3 off a slick pass to the corner from Smith to break the tie. Smith then hit two free throws and Triche's turnover sealed the Orange's fate as the Cardinals hit 7 of 8 free throws in the final seconds.

"We had the lead. We just lost it at the end," Southerland said. "We just have to have the mentality that when we have the ball, we're not going to lose it. Unfortunately, we had some tough turnovers at the end of the game that definitely changed the outcome.

"We just have to forget about this game and move forward. This is stuff teams go through. The best thing about it is it's better to go through it now than in the tournament because you only have one chance then."

Syracuse beat Louisville 70-68 in mid-January in the final seconds when Carter-Williams stole a pass at the top of the key and raced the length of the court, slamming home a two-hander that Dieng couldn't contest and landing hard on his back underneath the backboard. A record crowd of 22,814 at the KFC Yum! Center saw Syracuse beat a No. 1 team for fourth time, and the Cardinals are still the only top-ranked team to lose at home this season.

The Louisville players said they weren't thinking revenge. They're just happy to be playing at a high level after their fifth straight win.

"It wasn't a revenge game. We did what we were supposed to do," Dieng said. "Anyone can beat anybody in the Big East. We need to win all the games (left) and do what we're supposed to do, and the rest is going to take care of itself."

Syracuse, which trailed 23-19 after a poor first half, briefly found a way to foil Dieng, Louisville's shot-blocking defensive ace, early in the second half. Carter-Williams fed Rakeem Christmas for a slam dunk and less than a minute later Southerland slammed another home to complete a three-way passing play in the lane with Christmas and Triche to move Syracuse within 28-27.

With Dieng on the bench, Southerland, who had just one basket in the first half, then drained a 3 from the top of the arc to give Syracuse just its second lead of the game. It was short-lived as Kevin Ware hit a 3 from the top of the key 24 seconds later.

"It's March," Ware said. "Tournament time is right around the corner. We told ourselves yesterday every game is like an NCAA game. We don't want to lose. We want to keep this win streak going."

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U.S. evolves on same-sex marriage


  • The president and the nation have shifted perspectives on same-sex marriage

  • Supreme Court ruling on California's same-sex marriage ban a critical test

  • Growing public support for gay marriage give proponents hope for change

Washington (CNN) -- The nation's growing acceptance of same-sex marriage has happened in slow and painstaking moves, eventually building into a momentum that is sweeping even the most unlikely of converts.

Even though he said in 2008 that he could only support civil unions for same-sex couples, President Barack Obama nonetheless enjoyed strong support among the gay community. He disappointed many with his conspicuously subdued first-term response to the same-sex marriage debate.

Last year, after Vice President Joe Biden announced his support, the president then said his position had evolved and he, too, supported same-sex marriage.

So it was no small matter when on Thursday the Obama administration formally expressed its support of same-sex marriage in a court brief weighing in on California's Proposition 8, which bans same-sex weddings. The administration's effort was matched by at least 100 high-profile Republicans — some of whom in elections past depended on gay marriage as a wedge issue guaranteed to rally the base — who signed onto a brief supporting gay couples to legally wed.

Obama on same-sex marriage: Everyone is equal

Then there are the polls that show that an increasing number of Americans now support same-sex marriage. These polls show that nearly half of the nation's Catholics and white, mainstream Protestants and more than half of the nation's women, liberals and political moderates all support same-sex marriage.

According to Pew Research Center polling, 48% of Americans support same-sex marriage with 43% opposed. Back in 2001, 57% opposed same-sex marriage while 35% supported it.

In last year's presidential election, same-sex marriage scarcely raised a ripple. That sea change is not lost on the president.

"The same evolution I've gone through is the same evolution the country as a whole has gone through," Obama told reporters on Friday.

Craig Rimmerman, professor of public policy and political science at Hobart and William Smith colleges says there is history at work here and the administration is wise to get on the right side.

"There is no doubt that President Obama's shifting position on Proposition 8 and same-sex marriage more broadly is due to his desire to situate himself on the right side of history with respect to the fight over same-sex marriage," said Rimmerman, author of "From Identity to Politics: The Lesbian and Gay Movements in the United States."

"I also think that broader changes in public opinion showing greater support for same-sex marriage, especially among young people, but in the country at large as well, has created a cultural context for Obama to alter his views."

For years, Obama had frustrated many in the gay community by not offering full-throated support of same-sex marriage. However, the president's revelation last year that conversations with his daughters and friends led him to change his mind gave many in that community hope.

Last year, the Obama administration criticized a measure in North Carolina that banned same-sex marriage and made civil unions illegal. The president took the same position on a similar Minnesota proposal.

Obama administration officials point to what they see as the administration's biggest accomplishment in the gay rights cause: repealing "don't ask, don't tell," the military's ban on openly gay and lesbian members serving in the forces.

Then there was the president's inaugural address which placed the gay community's struggle for equality alongside similar civil rights fights by women and African-Americans.

"Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law, for if we are truly created equal, then surely the love we commit to one another must be equal, as well," Obama said in his address after being sworn in.

In offering its support and asserting in the brief that "prejudice may not be the basis for differential treatment under the law," the Obama administration is setting up a high stakes political and constitutional showdown at the U.S. Supreme Court over a fast-evolving and contentious issue.

The justices will hear California's Proposition 8 case in March. That case and another appeal over the federal Defense of Marriage Act will produce blockbuster rulings from the justices in coming months.

Beyond the legal wranglings there is a strong social and historic component, one that has helped open the way for the administration to push what could prove to be a social issue that defines Obama's second term legacy, Rimmerman said.

The nation is redefining itself on this issue, as well.

Pew survey: Changing attitudes on gay marriage

The changes are due, in part, to generational shifts. Younger people show a higher level of support than their older peers, according to Pew polling "Millennials are almost twice as likely as the Silent Generation to support same-sex marriage."

"As people have grown up with people having the right to marry the generational momentum has been very, very strong," said Evan Wolfson, president of Freedom to Marry, a gay rights organization.

That is not to say that there isn't still opposition.

Pew polling found that most Republicans and conservatives remain opposed to same-sex marriage. In 2001, 21% of Republicans were supportive; in 2012 that number nudged slightly to 25%.

Conservative groups expressed dismay at the administration's same-sex marriage support.

"President Obama, who was against same-sex 'marriage' before he was for it, and his administration, which said the Defense of Marriage Act was constitutional before they said it was unconstitutional, has now flip-flopped again on the issue of same-sex 'marriage,' putting allegiance to extreme liberal social policies ahead of constitutional principle," Family Research Council President Tony Perkins said in a statement.

But there are signs of movement even among some high profile Republican leaders

Top Republicans sign brief supporting same-sex marriage

The Republican-penned friend of the court brief, which is designed to influence conservative justices on the high court, includes a number of top officials from the George W. Bush administration, Mitt Romney's former campaign manager and former GOP presidential candidate Jon Huntsman.

It is also at odds with the Republican Party's platform, which opposes same-sex marriage and defines marriage as a union between a man and a woman.

Still, with White House and high-profile Republican support, legal and legislative victories in a number of states and polls that show an increasing number of Americans support same sex-marriage, proponents feel that the winds of history are with them.

"What we've seen is accelerating and irrefutable momentum as Americans have come to understand who gay people are and why marriage matters," Wolfson said. "We now have a solid national majority and growing support across every demographic. We have leaders across the spectrum, including Republicans, all saying it's time to end marriage discrimination."

CNN's Peter Hamby, Ashley Killough and Bill Mears contributed to this report.

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Sinkhole victim 'will be there forever,' brother says

SEFFNER, Fla.  Florida rescue personnel on Saturday searched for a man who disappeared into a sinkhole that swallowed his whole bedroom while he was asleep in his suburban Tampa home.

Jeff Bush, 36, who is presumed dead, was in bed when the other five members of the household who were getting ready for bed on Thursday night heard a loud crash and Jeff screaming.

The sinkhole has compromised the house next door, officials said Saturday.

Officials planned to let family members, accompanied by firefighters, into the threatened  home for about 20 minutes to gather some  belongings, Hillsborough County Fire Rescue spokesman Ronnie Rivera told reporters Saturday.

Bush’s body hadn’t been removed by Saturday afternoon and the ground near the home was still “very, very unsafe,” Rivera said at a televised press conference Saturday.

"At this time we did some testing and we determined that the house right next to the house that’s actually damaged is also compromised by the sinkhole,” Rivera said.

Jeff's brother, 35-year-old Jeremy Bush, jumped into the hole and furiously kept digging to find his brother.

"I really don't think they are going to be able to find him," Jeremy said on Saturday. He "will be there forever."

A small memorial of balloons and flowers for his brother had formed near the house on Saturday morning.

"I thank the Lord for not taking my daughter and the rest of my family," he said.

Jeremy himself had to be rescued from the sinkhole by the first responder to the emergency call, Douglas Duvall of the Hillsborough County Sheriff's Office. When Duvall entered Jeff Bush's bedroom, all he saw was a widening chasm but no sign of Jeff.

"The hole took the entire bedroom," said Duvall. "You could see the bed frame, the dresser, everything was sinking," he said.

Norman Wicker, 48, the father of Jeremy's fiancée who also lived in the house, ran to get a flashlight and shovel.

"It sounded like a car ran into the back of the house," Wicker said.

Authorities have not detected any signs of life after lowering listening devices and cameras into the hole.

"There is a very large, very fluid mass underneath this house rendering the entire house and the entire lot dangerous and unsafe," Bill Bracken, the head of an engineering company assisting fire and rescue officials, told the news conference late on Friday.

"We are still trying to determine the extent and nature of what's down there so we can best determine how to approach it and how to extricate," Bracken said.

After suspending the search overnight, it resumed at daylight on Saturday, with engineering consultants trying to determine the extent of the collapse so that a perimeter boundary can be established for setting up heavy equipment for future excavation.

Several nearby homes were evacuated in case the 30-foot (9-meter) wide sinkhole got larger but officials said Friday it only appeared to be getting deeper.

Soil samples showed that the sinkhole has compromised the ground underneath a home next door, engineers said Saturday.

The residents of that house were allowed 20 minutes in their home on Saturday to gather belongings. Firefighters and residents formed an assembly line to move items out of the house into SUVs and trucks.

Rescue officials said that in addition to soil samples, they were focusing on engineering analysis, ground penetration radar and other techniques to determine the extent of the ongoing collapse. Listening devices were being used to detect any evidence of life although Bush was presumed dead.

The Bush brothers worked together as landscapers, according to Leland Wicker, 48, one of the other residents of the house.

The risk of sinkholes is common in Florida due to the state's porous geological bedrock, according to the Florida Department of Environmental Protection. As rainwater filters down into the ground, it dissolves the rock, causing erosion that can lead to underground caverns, which cause sinkholes when they collapse.

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Wall Street advances as data outweighs budget cuts

NEW YORK (Reuters) - Stocks advanced modestly on Friday, leaving the S&P 500 with slight gains in a volatile week as strong economic data overshadowed growth concerns in China and Europe and let investors discount the impact of expected government spending cuts.

Stocks opened sharply lower for the session as Asian factories slowed and European output fell, but most of the losses evaporated after a report showed manufacturing activity expanded last month at its fastest clip in 20 months.

Consumer sentiment also rose in February as Americans turned more optimistic about the job market.

With $85 billion in government budget cuts set to begin, President Barack Obama blamed Republicans for failure to reach a compromise to avert the cuts, known as sequester. But the stock market appeared to have already priced in the failure by legislators to reach an agreement.

"We were able to dig out of that hole, but not make any great strides on it either," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "We will probably be in a holding pattern pending some big development on a broader budget deal."

The Dow Jones industrial average <.dji> gained 35.17 points, or 0.25 percent, to 14,089.66 at the close. The Standard & Poor's 500 Index <.spx> added 3.52 points, or 0.23 percent, to 1,518.20. The Nasdaq Composite Index <.ixic> advanced 9.55 points, or 0.30 percent, to 3,169.74.

For the week, the Dow rose 0.6 percent, the S&P 500 edged up 0.2 percent and the Nasdaq gained 0.3 percent.

The slight gains for equities came during a volatile week that saw markets decline on Monday after uncertain Italian elections, only to rebound in the next two sessions as Federal Reserve Chairman Ben Bernanke defended the central bank's stimulus measures.

The low interest rates due to the Federal Reserve's accommodative monetary policy have helped equities continue to attract investors. The Dow is less than 1 percent away from its all-time intraday high of 14,198.10. Declines have been shallow and short-lived, with investors jumping in to buy on dips.

Intuitive Surgical jumped 8.5 percent to $553.40 after Cantor Fitzgerald analyst Jeremy Feffer upgraded the stock, saying the stock's slide of more than 11 percent on Thursday was a gross overreaction to a news report.

Groupon Inc surged 12.6 percent to $5.10 a day after the online coupon company fired its chief executive officer in the wake of weak quarterly results.

Gap Inc rose 2.9 percent to $33.87 after the clothing retailer reported fourth-quarter earnings that beat expectations and boosting its dividend by 20 percent, while Salesforce.com Inc posted sales that beat forecasts, driving its stock up 7.6 percent to $182.

Chesapeake Energy Corp fell 2.4 percent to $19.67 after the U.S. Securities and Exchange Commission escalated its investigation into the company and its Chief Executive Aubrey McClendon for a controversial perk that granted him a share in each of the natural gas producer's wells.

Volume was modest with about 6.72 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, slightly above the daily average of 6.5 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 17 to 13, while on the Nasdaq, seven stocks rose for about every five stocks that fell.

(Editing by Jan Paschal)

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Syria war is everybody's problem

Syrians search for survivors and bodies after the Syrian regime attacked the city of Aleppo with missiles on February 23.


  • Frida Ghitis: We are standing by as Syria rips itself apart, thinking it's not our problem

  • Beyond the tragedy in human terms, she says, the war damages global stability

  • Ghitis: Syria getting more and more radical, jeopardizing forces of democracy

  • Ghitis: Peace counts on moderates, whom we must back with diplomacy, training arms

Editor's note: Frida Ghitis is a world affairs columnist for The Miami Herald and World Politics Review. A former CNN producer and correspondent, she is the author of "The End of Revolution: A Changing World in the Age of Live Television." Follow her on Twitter: @FridaGColumns

(CNN) -- Last week, a huge explosion rocked the Syrian capital of Damascus, killing more than 50 people and injuring hundreds. The victims of the blast in a busy downtown street were mostly civilians, including schoolchildren. Each side in the Syrian civil war blamed the other.

In the northern city of Aleppo, about 58 people -- 36 of them children -- died in a missile attack last week. Washington condemned the regime of Bashar al-Assad; the world looked at the awful images and moved on.

Syria is ripping itself to pieces. The extent of human suffering is beyond comprehension. That alone should be reason enough to encourage a determined effort to bring this conflict to a quick resolution. But if humanitarian reasons were not enough, the international community -- including the U.S. and its allies -- should weigh the potential implications of allowing this calamity to continue.

Frida Ghitis

Frida Ghitis

We've all heard the argument: It's not our problem. We're not the world's policeman. We would only make it worse.

This is not a plea to send American or European troops to fight in this conflict. Nobody wants that.

But before we allow this mostly hands-off approach to continue, we would do well to consider the potential toll of continuing with a failed policy, one that has focused in vain over the past two years searching for a diplomatic solution.

U. S. Secretary of State John Kerry has just announced that the U.S. will provide an additional $60 million in non-lethal assistance to the opposition. He has hinted that President Obama, after rejecting suggestions from the CIA and previous Secretary of State Hillary Clinton to arm Syrian rebels, might be ready to change course. And not a day too soon.

The war is taking longer than anyone expected. The longer it lasts, the more Syria is radicalized and the region is destabilized.

If you think the Syrian war is the concern of Syrians alone, think about other countries that have torn themselves apart over a long time. Consider Lebanon, Afghanistan or Somalia; each with unique circumstances, but with one thing in common: Their wars created enormous suffering at home, and the destructiveness eventually spilled beyond their borders. All of those wars triggered lengthy, costly refugee crises. They all spawned international terrorism and eventually direct international -- including U.S. -- intervention.

The uprising against al-Assad started two years ago in the spirit of what was then referred to -- without a hint of irony -- as the Arab Spring. Young Syrians marched, chanting for freedom and democracy. The ideals of equality, rule of law and human rights wafted in the air.

Al-Assad responded to peaceful protests with gunfire. Syrians started dying by the hundreds each day. Gradually the nonviolent protesters started fighting back. Members of the Syrian army started defecting.

The opposition's Free Syrian Army came together. Factions within the Syrian opposition took up arms and the political contest became a brutal civil war. The death toll has climbed to as many as 90,000, according to Kerry. About 2 million people have left their homes, and the killing continues with no end in sight.

In fairness to Washington, Europe and the rest of the international community, there were never easy choices in this war. Opposition leaders bickered, and their clashing views scared away would-be supporters. Western nations rejected the idea of arming the opposition, saying Syria already has too many weapons. They were also concerned about who would control the weaponry, including an existing arsenal of chemical and biological weapons, after al-Assad's fall.

These are all legitimate concerns. But inaction is producing the worst possible outcome.

The moderates, whose views most closely align with the West, are losing out to the better-armed Islamists and, especially, to the extremists. Moderates are losing the ideological debate and the battle for the future character of a Syria after al-Assad.

Radical Islamist groups have taken the lead. Young people are losing faith in moderation, lured by disciplined, devout extremists. Reporters on the ground have seen young democracy advocates turn into fervent supporters of dangerous groups such as the Nusra Front, which has scored impressive victories.

The U.S. State Department recently listed the Nusra Front, which has close ties to al Qaeda in Iraq and a strong anti-Western ideology, as a terrorist organization.

Meantime, countries bordering Syria are experiencing repercussions. And these are likely to become more dangerous.

Jordan, an important American ally, is struggling with a flood of refugees, as many as 10,000 each week since the start of the year. The government estimates 380,000 Syrians are in Jordan, a country whose government is under pressure from its own restive population and still dealing with huge refugee populations from other wars.

Turkey is also burdened with hundreds of thousands of refugees and occasional Syrian fire. Israel has warned about chemical weapons transfers from al-Assad to Hezbollah in Lebanon and may have already fired on a Syrian convoy attempting the move.

Lebanon, always perched precariously on the edge of crisis, lives with growing fears that Syria's war will enter its borders. Despite denials, there is evidence that Lebanon's Hezbollah, a close ally of al-Assad and of Iran, has joined the fighting on the side of the Syrian president. The Free Syrian Army has threatened to attack Hezbollah in Lebanon if it doesn't leave Syria.

The possible outcomes in Syria include the emergence of a failed state, stirring unrest throughout the region. If al-Assad wins, Syria will become an even more repressive country.

Al-Assad's survival would fortify Iran and Hezbollah and other anti-Western forces. If the extremists inside the opposition win, Syria could see factional fighting for many years, followed by anti-democratic, anti-Western policies.

The only good outcome is victory for the opposition's moderate forces. They may not be easy to identify with complete certainty. But to the extent that it is possible, these forces need Western support.

They need training, funding, careful arming and strong political and diplomatic backing. The people of Syria should know that support for human rights, democracy and pluralism will lead toward a peaceful, prosperous future.

Democratic nations should not avert their eyes from the killings in Syria which are, after all, a warning to the world.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Frida Ghitis.

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Florida man swallowed by sinkhole feared dead

Brother of sinkhole victim talks to reporters at the scene.


A Florida man was missing and feared dead on Friday after a sinkhole suddenly opened up under the bedroom of his suburban Tampa home, police and fire officials said.

Rescuers responded to a 911 call late on Thursday after the family of Jeff Bush, 36, reported hearing a loud crash in the house and rushed to his bedroom.

"All they could see was a part of a mattress sticking out of the hole," said Hillsborough County Fire Rescue Chief Ron Rogers. "Essentially the floor of that room had opened up."

A sheriff's deputy rescued Bush's brother, Jeremy, who had jumped in the sinkhole to try find him. Three other adults and a 2-year-old child were in the house at the time the sinkhole opened up.

"I feel in my heart he didn't make it," Jeremy Bush, 35, told Tampa TV station WFTS. "There were six of us in the house, five got out."

The entire household except Jeff Bush went out to eat ice cream on Thursday night and when they got home, Jeff was in his room sleeping. They were getting ready for bed when they heard a huge crash and Jeff screaming.

"It sounded like a car ran into the back of the house," said Norman Wicker, 48, the father of Jeremy's fiancee who also lived in the house.

Jeremy jumped into the hole as Wicker ran to the shed for a shovel and flashlight. When he returned, Wicker said he yelled for Jeremy to get out but the brother furiously kept digging until a deputy arrived and pulled him out.

Authorities had not detected any signs life after lowering listening devices and cameras into the hole and rescue efforts were suspended after the site was deemed to unsafe for emergency personnel to enter.

The evacuation of several nearby homes was ordered due to concerns the sinkhole was growing.

The Bush brothers worked together as landscapers, according to Leland Wicker, 48, one of the other residents of the house.

Fire Rescue spokeswoman Jessica Damico said the sinkhole appeared to be as wide as 30 feet, 30-feet deep, and an estimated 100 feet wide down below.

"It started in the bedroom and it has been expanding outward and it's taking the house with it as it opens up," said Bill Bracken, the head of an engineering company assisting rescuers.

The risk of sinkholes is common in Florida due to the state's porous geological bedrock, according to the Florida Department of Environmental Protection. As rainwater filters down into the ground, it dissolves the rock causing erosion that can lead to underground caverns, which cause sinkholes when they collapse.

Florida suffered one of its worst sinkhole accidents in 1994 when a 15-story-deep chasm opened up east of Tampa at a phosphate mine. It created a hole 185 feet deep and as much as 160 feet wide. Locals dubbed it Disney World's newest attraction - 'Journey to the Center of the Earth.'

In 1981 in Winter Park near Orlando, a sinkhole was measured as 320 feet wide and 90 feet deep, swallowing a two-story house, part of a Porsche dealership, and an Olympic-size swimming pool. The site is now an artificial lake in the city.


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Rodman tells Kim Jong Un he has 'friend for life'

SEOUL, South Korea (AP) — Ex-NBA star Dennis Rodman hung out Thursday with North Korea's Kim Jong Un on the third day of his improbable journey with VICE to Pyongyang, watching the Harlem Globetrotters with the leader and later dining on sushi and drinking with him at his palace.

"You have a friend for life," Rodman told Kim before a crowd of thousands at a gymnasium where they sat side by side, chatting as they watched players from North Korea and the U.S. play, Alex Detrick, a spokesman for the New York-based VICE media company, told The Associated Press.

Rodman arrived in Pyongyang on Monday with three members of the professional Harlem Globetrotters basketball team, VICE correspondent Ryan Duffy and a production crew to shoot an episode on North Korea for a new weekly HBO series.

The unlikely encounter makes Rodman the most high-profile American to meet Kim since the young North Korean leader took power in December 2011, and takes place against a backdrop of tension between Washington and Pyongyang. North Korea conducted an underground nuclear test just two weeks ago, making clear the provocative act was a warning to the United States to drop what it considers a "hostile" policy toward the North.

Kim, a diehard basketball fan, told the former Chicago Bulls star he hoped the visit would break the ice between the United States and North Korea, VICE founder Shane Smith said.

Dressed in a blue Mao suit, Kim laughed and slapped his hands on the table before him during the game as he sat nearly knee to knee with Rodman. Rodman, the man who once turned up in a wedding dress to promote his autobiography, wore a dark suit and dark sunglasses, but still had on his nose rings and other piercings. A can of Coca-Cola sat on the table before him in photos shared with AP by VICE.

"The crowd was really engaged, laughed at all of the Globetrotters antics, and actually got super loud towards the end as the score got close," said Duffy, who suited up for the game in a blue uniform emblazoned with "United States of America. "Most fun I've had in a while."

Kim and Rodman chatted in English, but Kim primarily spoke in Korean through a translator, Smith said after speaking to the VICE crew in Pyongyang.

"They bonded during the game," Smith said by telephone from New York after speaking to the crew. "They were both enjoying the crazy shots, and the Harlem Globetrotters were putting on quite a show."

The surprise visit by the flamboyant Hall of Famer known as "The Worm" makes him an unlikely ambassador at a time when North Koreans are girding for battle with the U.S. Just last week, Kim guided front line troops in military exercises.

North Korea and the U.S. fought on opposite sides of the three-year Korean War, which ended in a truce in 1953. The foes never signed a peace treaty, and do not have diplomatic relations.

Thursday's game ended in a 110-110 draw, with two Americans playing on each team alongside North Koreans, Detrick said. The Xinhua News Agency first reported on the game, citing witnesses who attended.

After the game, Rodman addressed Kim in a speech before a crowd of tens of thousands of North Koreans, telling him, "You have a friend for life," Detrick said.

At a lavish dinner at Kim's palace, the leader plied the group with food and drinks as the group made round after round of toasts.

"Dinner was an epic feast. Felt like about 10 courses in total," Duffy said in an email to AP. "I'd say the winners were the smoked turkey and sushi, though we had the Pyongyang cold noodles earlier in the trip and that's been the runaway favorite so far."

Duffy said he invited Kim to visit the United States, a proposal met with hearty laughter from the North Korean leader.

"Um ... so Kim Jong Un just got the (hash)VICEonHBO crew wasted ... no really, that happened," VICE producer Jason Mojica wrote on Twitter.

Rodman's trip is the second attention-grabbing U.S. visit this year to North Korea. Google's executive chairman, Eric Schmidt, made a four-day trip in January to Pyongyang, but did not meet the North Korean leader.

In Washington, the State Department refused comment on Rodman's visit or his meeting with Kim. "Private, individual Americans are welcome to take actions they see fit," spokesman Patrick Ventrell said.

He said the Obama administration wasn't in touch with Rodman and wasn't making an effort to contact him.

The administration had frowned on the trip by Schmitt and former New Mexico governor Bill Richardson, but has avoided criticizing Rodman's outing, saying it's about sports.

North Korea's invitation to a man known as much for his piercings, tattoos and bad behavior as for his basketball may seem inexplicable. But Kim is known to love the NBA, and has promoted sports since becoming leader.

"We knew that he's a big lover of basketball, especially the Bulls, and it was our intention going in that we would have a good will mission of something that's fun," Smith said. "A lot of times, things just are serious and everybody's so concerned with geopolitics that we forget just to be human beings."

Rodman's agent, Darren Prince, said Rodman wasn't concerned about criticism about making a visit to an enemy nation.

"Dennis called me last night and said it's been a great experience and he made this trip out of the love of the USA ," he said. "It's all about peace and love."


Associated Press NBA writer Brian Mahoney in New York and writer Bradley Klapper in Washington contributed to this report. Follow AP's Korea bureau chief Jean Lee at twitter.com/newsjean.

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Syria war is everybody's problem


  • NEW: France considers sending Syrian rebels night-vision gear and body armor, a source says

  • Britain's foreign secretary says the UK will announce new aid soon

  • The statements after European Union loosens restrictions to allow nonlethal aid to rebels

  • The U.S. will also send non-lethal aid to rebels for first time, plus $60 million in administrative aid

Rome (CNN) -- The United States stepped further into Syria's civil war Thursday, promising rebel fighters food and medical supplies -- but not weapons -- for the first time in the two-year conflict that has claimed more than 60,000 lives and laid waste to large portions of the country.

Meanwhile, European nations began to explore ways to strengthen rebel fighters that stop short of arming them after a European Council decision allowing such aid to flow to Syria.

U.S. Secretary of State John Kerry said the aid would help fighters in the high-stakes effort to topple Syrian President Bashar al-Assad, a conflict that has already spawned an enormous humanitarian crisis as refugees flee the fighting.

The ongoing fighting also poses the persistent threat of widening into a destabilizing regional crisis, including concerns that Hezbollah, Iran or others could gain control in Damascus after al-Assad's government falls.

"The United States' decision to take further steps now is the result of the continued brutality of a superior armed force propped up by foreign fighters from Iran and Hezbollah, all of which threatens to destroy Syria," Kerry said after meeting opposition leaders in Rome.

Kerry didn't say how much that aid would be worth, but did announce that the United States would separately give $60 million to local groups working with the Syrian National Council to provide political administration and basic services in rebel-controlled areas of Syria.

READ: U.S. weighing nonlethal aid to Syrian opposition

That's on top of $50 million in similar aid the United States has previously pledged to the council, as well as $385 million in humanitarian assistance, Kerry said.

"This funding will allow the opposition to reach out and help the local councils to be able to rebuild in their liberated areas of Syria so that they can provide basic services to people who so often lack access today to medical care, to food, to sanitation," he said.

Islamist Influence

That aid is partly an effort to hem in radical Islamist groups vying for influence in Syria after the fall of al-Assad, a senior State Department official told CNN.

"If the Syrian opposition coalition can't touch, improve and heal the lives of Syrians in those places that have been freed, then extremists will step in and do it," the official said.

Sheikh Ahmed Moaz al-Khatib, president of the Syrian National Council, said concerns about Islamist influence had been overstated.

"We stand against every radical belief that aims to target Syria's diverse social and religious fabric," he said.

READ: Inside Syria: Exclusive look at pro-Assad Christian militia

U.S. officials hope the aid will help the coalition show what it can do and encourage al-Assad supporters to "peel away from him" and help end the fighting, the official said.

The opposition council will decide where the money goes, Kerry said.

But the United States will send technical advisers through its partners to the group's Cairo headquarters to make sure the aid is being used properly, the senior State Department official said.

Additional aid possible

The European Council carved out an exception in its sanctions against Syria on Thursday to allow for the transfer of nonlethal equipment and technical assistance for civilian protection only.

The council didn't specify what kind of equipment could be involved.

British Foreign Secretary William Hague said Friday on Twitter that his country would be pledging new aid because "we cannot stand still while the crisis worsens and thousands of lives are at stake."

A diplomatic official at the French Foreign Ministry told CNN that France is studying the possibility of supplying night-vision equipment or body armor.

"It is in the scope of the amendment," the official said.

In the United States, President Barack Obama is thinking about training rebels and equipping them with defensive gear such as night-vision goggles, body armor and military vehicles, according to sources familiar with the discussions.

The training would help rebels decide how to use their resources, strategize and maybe train a police force to take over after al-Assad's fall, one of the sources said.

READ: Syrian army in Homs is showing strains of war

Kerry did not announce that sort of aid Thursday, but said the United States and other countries backing the rebels would "continue to consult with each other on an urgent basis."

An official who briefed reporters said the opposition has raised a lot of needs in the Rome meetings and the administration will continue to "keep those under review."

"We will do this with vetted individuals, vetted units, so it has to be done carefully and appropriately," the official said.

Humanitarian crisis

The conflict began with demands for political reform after the Arab Spring movement that swept the Middle East and Africa, but descended into a brutal civil war when the al-Assad regime began a brutal crackdown on demonstrators.

At least 60,000 people have died since the fighting began in March 2011, the United Nations High Commissioner for Human Rights said in early January.

Another 940,000 had fled the country as of Tuesday, while more than one in 10 of Syria's 20 million residents have been forced to move elsewhere inside the country because of the fighting, the Office of the United Nations High Commissioner for Refugees said.

The situation is nearing crisis proportions, with the dramatic influx of refugees threatening to break the ability of host nations to provide for their needs, Assistant High Commissioner Erika Feller told the U.N. Human Rights Council on Tuesday

"The host states, including Jordan, Lebanon, Turkey, Iraq, Egypt and the North African countries, have been exemplary in their different ways, but we fear the pressure will start to overwhelm their capacities," she told the council, according to a text of her remarks posted on the United Nations website.

Al-Khatib said it's time for the fighting to stop.

"I ask Bashar al-Assad for once, just once, to behave as a human being," he said. "Enough massacres, enough killings. Enough of your bloodshed and enough torture. I urge you to make a rational decision once in your life and end the killings."

READ: Syrian war is everybody's problem

Jill Dougherty reported from Rome, and Michael Pearson reported and wrote from Atlanta. CNN's Nick Paton Walsh and Elise Labott also contributed to this report.

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Benedict's reign ends with promise of 'obedience' to next pope

VATICAN CITY (Reuters) - Pope Benedict ended his difficult reign on Thursday pledging unconditional obedience to whoever succeeds him to guide the Roman Catholic Church at one of the most crisis-ridden periods in its 2,000-year history.

The papacy became vacant at 8 p.m. (1900 GMT/2PM ET), marking the first time in six centuries a pope has resigned instead of ruling for life.

In a symbolic gesture, the Swiss Guards who stood sentry at the papal summer residence south of Rome, where the pope flew by helicopter less than three hours earlier, quit their posts and the massive wooden doors of the hilltop residence were closed.

At the same time, the papal apartments in the Vatican were locked and will not be opened until a new pope is elected.

As he left the Vatican several hours earlier by helicopter, he sent his last Twitter message: "Thank you for your love and support. May you always experience the joy that comes from putting Christ at the center of your lives."

Bells rang out from St Peter's Basilica and churches all over Rome as the helicopter circled Vatican City and flew over the Colosseum and other landmarks to give the pontiff one last view of the city where he is also bishop.

"As you know, today is different to previous ones," he told an emotional, cheering crowd holding balloons and banners after he arrived in the small town of Castel Gandolfo, where the summer residence it located.

He told the crowd, many of whom were crying, that he would soon become "simply be a pilgrim who is starting the last phase of his pilgrimage on this earth".

He then turned and went inside the villa, never to be seen again as pope.

"I wanted to see him for the last time. I hope his successor follows in his footsteps. I feel very moved to be here," said Giuseppe Ercolino, a 19-year-old student from a nearby town.

In an emotional farewell to cardinals on Thursday morning in the Vatican's frescoed Sala Clementina, Benedict appeared to send a strong message to the top echelons of the Church as well as the faithful to unite behind his successor, whoever he is.

"I will continue to be close to you in prayer, especially in the next few days, so that you are fully accepting of the action of the Holy Spirit in the election of the new pope," he said. "May the Lord show you what he wants. Among you there is the future pope, to whom I today declare my unconditional reverence and obedience."

The pledge, made ahead of the closed-doors conclave where cardinals will elect his successor, was significant because for the first time in history, there will be a reigning pope and a former pope living side by side in the Vatican.

Some Church scholars worry that if the next pope undoes some of Benedict's policies while his predecessor is still alive, Benedict could act as a lightning rod for conservatives and polarize the 1.2 billion-member Church.

Before boarding the helicopter, Pope Benedict said goodbye to monsignors, nuns, Vatican staff and Swiss guards in the San Damaso courtyard of the Holy See's apostolic palace. Many of his staff had tears in their eyes as the helicopter left.

Benedict will spend the first few months of his retirement in the papal summer residence, a complex of villas boasting lush gardens, a farm and stunning views over Lake Albano in the volcanic crater below the town.

Benedict will stay until April when renovations are completed on a convent in the Vatican that will be his new home.


With the election of the next pope taking place in the wake of sexual abuse scandals, leaks of his private papers by his butler, falling membership and demands for a greater role for women, many in the Church believe it would benefit from a fresh face from a non-European country.

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Wall Street gains on Bernanke comments, S&P above 1,500

NEW YORK (Reuters) - Stocks rose on Wednesday, with major indexes posting their best daily gains since early January, as Federal Reserve Chairman Ben Bernanke remained steadfast in supporting the Fed's stimulus policy and data pointed to economic improvement.

In a second day before a congressional committee, Bernanke defended the Fed's buying of bonds to keep interest rates low to boost growth. The market's jump of more than 1 percent also came on better-than-expected data on business spending plans and the housing market.

Bernanke's remarks helped the market rebound from its worst decline since November and put the S&P 500 index back above 1,500, a closely watched level that has been technical support until recently. The Dow Jones industrial average <.dji> closed at a level not seen since 2007 as it again pulled within striking distance of an all-time high.

Speaking before the House Financial Services Committee, Bernanke downplayed signs of internal divisions at the Fed, saying the policy of quantitative easing, or QE, has the support of a "significant majority" of top central bank officials.

Bernanke removed a headwind from markets arising from concerns the Fed's quantitative easing might end earlier than anticipated. Doubts about the Fed's intentions had broken a seven-week streak of gains by stocks.

"The Fed continues to encourage risk-taking in markets, which is a powerful tool that makes the danger not being long stocks, not in being too long," said Tom Mangan, a money manager at James Investment Research Inc in Xenia, Ohio.

The Dow Jones industrial average <.dji> was up 176.32 points, or 1.27 percent, at 14,076.45. The Standard & Poor's 500 Index <.spx> was up 19.07 points, or 1.27 percent, at 1,516.01. The Nasdaq Composite Index <.ixic> was up 32.61 points, or 1.04 percent, at 3,162.26.

Pending home sales jumped 4.5 percent in January, three times the rate of growth that had been expected. While orders for durable goods fell more than expected in January, non-defense capital goods orders excluding aircraft - a closely watched proxy for business spending plans - showed the biggest gain since December 2011.

About 74 percent of stocks traded on the New York Stock Exchange closed higher while 64 percent of Nasdaq-listed shares closed up.

The S&P turned very slightly higher on the week, recovering from the index's biggest daily drop since November on Monday. That drop came on concerns over Italy's election, as well as over sequestration - U.S. government budget cuts that will take effect starting on Friday if lawmakers fail to reach an agreement on spending and taxes.

The index had climbed 6.3 percent for the year before pulling back on concerns about Fed policy and inconclusive elections in Italy, which rekindled fears of a new euro zone debt crisis.

"While the rally remains intact and there are reasons to be long-term bullish here, there are also reasons to not be surprised if we get a correction," said Mangan, who helps oversee $3.7 billion.

In earnings news, Priceline.com gained 2.6 percent to $695.91 after reporting adjusted earnings that beat expectations. TJX Cos Inc jumped 2.5 percent to $44.75 after the retail chain operator posted higher fourth-quarter results.

The S&P retail index <.spxrt> climbed 1.6 percent.

Target Corp offered a cautious outlook for consumer spending in 2013 following a weak holiday quarter. The stock dipped 1.1 percent to $63.32.

First Solar Inc plunged 14 percent to $27.04 after failing to give a full-year earnings and sales outlook, though it also swung to a quarterly profit.

Groupon Inc plunged 21 percent to $4.70 after the bell after reporting its fourth-quarter results.

With 93 percent of the S&P 500 companies having reported results so far, 69.5 percent beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6.2 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

About 6.23 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, slightly below the daily average so far this year of about 6.48 billion shares.

(Editing by Nick Zieminski and Kenneth Barry)

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Why Italians keep voting for Berlusconi

Photos: Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years

Berlusconi through the years



















  • Scandal-plagued three time ex-premier Silvio Berlusconi finished second in Italy's election

  • Italians and non-Italians have very different views of Berlusconi, argues journalist Bill Emmott

  • For all his faults, Emmott says Berlusconi did better than most at listening to his voters

Editor's note: Bill Emmott is a British journalist and was the editor of The Economist from 1993 to 2006. His book "Good Italy, Bad Italy" was published in English in 2012, and he is the narrator of "Girlfriend in a Coma," a new documentary about Italy's current crisis.

(CNN) -- On the subject of Silvio Berlusconi Italians and non-Italians are, to paraphrase George Bernard-Shaw's famous quip about Britain and America, divided by a common political language.

We think we share the view that in a political world dominated by mass communications, there is little room for forgiveness about scandals, or other personal failures, or a poor record in office. Yet on those grounds, Berlusconi should have died a political death long ago, rather than coming a very close second in this week's Italian elections.

Bill Emmott

Bill Emmott

Foreigners, perhaps, will always remain baffled by Berlusconi's success in continuing to attract voters. But Italians, horrified by him though plenty of them are, tend to be a lot less surprised. That is because they think of him in context, rather than in isolation. In Italian politics, the context is all.

What this means, and what it meant for Berlusconi's remarkable feat in nearly doubling his share of the vote between his opinion poll ratings in November 2012 and the election itself, can be laid out in the following evidently misleading indicators:

He makes unbelievable promises. In part this is true: one of Berlusconi's traits is his willingness to say one thing today and the opposite tomorrow, to attract attention from different groups or on different occasions, totally without shame. Italians know this, and those who support him tend to see it as an endearing part of his character, part of his desire to entertain and to please. But also it is misleading: the key promise he made during the 2013 election campaign was entirely believable -- that he would cut or even abolish a dreaded property tax, known by its Italian initials as IMU.

His record makes him untrustworthy. Yes, on overall economic policy. But not on taxes. He has promised to cut them before, and has delivered on at least some of those promises. The promise to cut IMU was made in an incredibly artful way, as he wrote to voters saying he would pay them back for the tax from his own pocket, which very few will have believed. But that did not matter: it drew attention to the proposal in an eye-catching way, and reinforced the only important point -- that he would cut the tax.

Opinion: Italy's election leaves country, and eurozone, on financial high-wire

He is irresponsible. Yes, but so is almost everyone to the cynical Italian political mind. His plan for how to finance this tax cut had as many holes in it as a sieve, but that did not really matter. It would have to be financed by taxes on other people, or cuts in spending on other things. Fine, said his voters: at least this awful tax will go. In offering a relentless focus on that tax, he showed that he was listening to the pain of his voters and taking them seriously, rather than talking down to them like most other parties.

His trials and sex scandals make him a national shame. Not really, though at times his behavior has stretched even the Italian tolerance. But the context is important: plenty of people think the justice system works disastrously badly in Italy, so if Berlusconi is caught up in it -- like so many others -- then so what? And his sex scandals are really part of his own marketing plan: he cavorts with scantily clad young women in order to make himself look glamorous, young, entertaining and happy. Moreover, his antics with women act as a distraction from his other weaknesses, like a kind of tranquillizer for those who might otherwise get angry with him. A lot of Italians, especially young women, hate him for this. But enough either don't care or are sympathetic enough to him to mean that this does not harm him fatally in political terms.

His opponents are more statesmanlike and responsible. Yes, that is true of Mario Monti, the caretaker prime minister for the past year who then decided to run in the elections with a centrist list of candidates. But it is not particularly true of his big opponents -- including the left-wing Democratic Party, which has its own scandals, its own selfish interests and, during the election campaign, its own evidence of the abuse of political power in the case of Italy's third-largest (and oldest) bank, Monte dei Paschi di Siena, whose business was allegedly run and distorted in the interests of local Democratic Party politicians in that area. So the PD (by its Italian initials) is also viewed as selfish by the public, neutralizing Berlusconi's disadvantage on that measure. Since both the PD leader, Pier Luigi Bersani, and Monti are dull, leaden communicators who failed to offer any positive, hopeful message for their voters, the way was opened for Berlusconi.

News: Italy seeks way out of political chaos

Only one party in the election really stood for change: the Five Star Movement of Beppe Grillo. This meant that Berlusconi's old-fashioned, tax-cutting message, geared towards preserving his own political power, had plenty of space in which to operate. And although Berlusconi did not stand for change, he was at least cheerful, smiling and entertaining.

Politics is now all about personalities, as was shown by the rise of Grillo, but he and Berlusconi are opposites in this regard. It is true that the discrediting of traditional political parties, combined with the preeminence of television, has given personalities a huge advantage in Italian politics, even if neither the PD nor Monti seemed able to grasp this. Personalities and even personal stories breed attention and loyalty, even if from different groups. One of the last Italian politicians to understand and exploit this was, unfortunately, Benito Mussolini.

Oh, and did I forget to mention that Berlusconi owns Italy's three main commercial TV channels and its biggest advertising sales agency, and has billions of euros in cash to hand around to supporters and allies? Well, that isn't a misleading indicator. But it is a reason, perhaps too obvious to dwell upon, for Berlusconi's continuing success at the ripe old age of 76.

The opinions expressed in this commentary are strictly those of Bill Emmott.

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White House, Republicans dig in ahead of budget talks

Speaker of the House John Boehner tells Scott Pelley in a "CBS Evening News" interview that a budget deal is now out of his hands.


Positions hardened on Wednesday between President Barack Obama and Republican congressional leaders over the budget crisis even as they arranged to hold last-ditch talks to prevent harsh automatic spending cuts beginning this week.

Looking resigned to the $85-billion in "sequestration" cuts starting on Friday, government agencies began reducing costs and spelling out to employees how furloughs will work.

Expectations were low that a White House meeting on Friday between Obama and congressional leaders, including Republican foes, would produce any deal to avoid the cuts.

Public services across the country - from air traffic control to food safety inspections and education - might be disrupted if the cuts go ahead.

Put into law in 2011 as part of an earlier fiscal crisis, sequestration is unloved by both parties because of the economic pain it will cause, but the politicians cannot agree how to stop it.

A deal in Congress on less drastic spending cuts, perhaps with tax increases too, is needed by Friday to halt the sequestration reductions which are split between social programs cherished by Democrats and defense spending championed by Republicans.

Obama stuck by his demand that Republicans accept tax increases in the form of eliminating tax loopholes enjoyed mostly by the wealthy as part of a balanced approach to avoiding sequestration.

"There is no alternative in the president's mind to balance," White House spokesman Jay Carney told reporters.

Obama wants to end tax breaks for oil and gas companies and the lower "carried interest" tax rate enjoyed by hedge funds.

But Republicans who reluctantly agreed to raise income tax rates on the rich to avert the "fiscal cliff" crisis in December are in no mood for that.

"One thing Americans simply will not accept is another tax increase to replace spending reductions we already agreed to," said Senate Republican leader Mitch McConnell.

In one of the first concrete effects of the cuts, the administration took the unusual step of freeing several hundred detained illegal immigrants because of the cost of holding them.

Republicans described that move by Immigration and Customs Enforcement as a political stunt aimed at scaring them into agreeing to end the sequestration on Obama's terms.

Carney denied the White House had ordered the release.

Friday's White House meeting will include McConnell and the other key congressional leaders: Senate Democratic leader Harry Reid, House of Representatives Democratic leader Nancy Pelosi, and House Speaker John Boehner, the top U.S. Republican.


But the chances of success were not high.

One congressional Republican aide criticized the White House for calling the meeting for the day the cuts were coming into effect. "Either someone needs to buy the White House a calendar, or this is just a - belated - farce. They ought to at least pretend to try."

Unlike during other fiscal fights in Congress, the stock market is taking the sequestration impasse calmly.

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Iran upbeat on nuclear talks, West still wary

ALMATY (Reuters) - Iran was upbeat on Wednesday after talks with world powers about its nuclear work ended with an agreement to meet again, but Western officials said it had yet to take concrete steps to ease their fears about its atomic ambitions.

Rapid progress was unlikely with Iran's presidential election, due in June, raising domestic political tensions, diplomats and analysts had said ahead of the February 26-27 meeting in the Kazakh city of Almaty, the first in eight months.

The United States, China, France, Russia, Britain and Germany offered modest sanctions relief in return for Iran curbing its most sensitive nuclear work but made clear that they expected no immediate breakthrough.

In an attempt to make their proposals more palatable to Iran, the six powers appeared to have softened previous demands somewhat, for example regarding their requirement that the Islamic state ship out its stockpile of higher-grade uranium.

Iran's chief nuclear negotiator Saeed Jalili said the powers had tried to "get closer to our viewpoint", which he said was positive.

In Paris, U.S. Secretary of State John Kerry commented that the talks had been "useful" and that a serious engagement by Iran could lead to a comprehensive deal in a decade-old dispute that has threatened to trigger a new Middle East war.

Iran's foreign minister said in Vienna he was "very confident" an agreement could be reached and Jalili, the chief negotiator, said he believed the Almaty meeting could be a "turning point".

However, one diplomat said Iranian officials at the negotiations appeared to be suggesting that they were opening new avenues, but it was not clear if this was really the case.

Iran expert Dina Esfandiary of the International Institute for Strategic Studies said: "Everyone is saying Iran was more positive and portrayed the talks as a win."

"I reckon the reason for that is that they are saving face internally while buying time with the West until after the elections," she said.

The two sides agreed to hold expert-level talks in Istanbul on March 18 to discuss the powers' proposals, and return to Almaty for political discussions on April 5-6, when Western diplomats made clear they wanted to see a substantive response from Iran.

"Iran knows what it needs to do, the president has made clear his determination to implement his policy that Iran will not have a nuclear weapon," Kerry said.

A senior U.S. official in Almaty said, "What we care about at the end is concrete results."


Israel, assumed to be the Middle East's only nuclear-armed power, was watching the talks closely. It has strongly hinted it might attack Iran if diplomacy and sanctions fail to ensure that it cannot build a nuclear weapon. Iran denies any such aim.

Israeli Prime Minister Benjamin Netanyahu said economic sanctions were failing and urged the international community to threaten Iran with military action.

Western officials said the offer presented by the six powers included an easing of a ban on trade in gold and other precious metals, and a relaxation of an import embargo on Iranian petrochemical products. They gave no further details.

In exchange, a senior U.S. official said, Iran would among other things have to suspend uranium enrichment to a fissile concentration of 20 percent at its Fordow underground facility and "constrain the ability to quickly resume operations there".

The official did not describe what was being asked of Iran as a "shutdown" of the plant as Western diplomats had said in previous meetings with Iran last year.

Iran says it has a sovereign right to enrich uranium for peaceful purposes, and wants to fuel nuclear power plants so that it can export more oil.

But 20-percent purity is far higher than that needed for nuclear power, and rings alarm bells abroad because it is only a short technical step away from weapons-grade uranium. Iran says it produces higher-grade uranium to fuel a research reactor.

Iran's growing stockpile of 20-percent-enriched uranium is already more than half-way to a "red line" that Israel has made clear it would consider sufficient for a bomb.

In Vienna on Wednesday, a senior U.N. nuclear agency official told diplomats in a closed-door briefing that Iran was technically ready to sharply increase this higher-grade enrichment, two Western diplomats said.

"Iran can triple 20 percent production in the blink of an eye," one of the diplomats said.

The U.S. official in Almaty said the powers' latest proposal would "significantly restrict the accumulation of near-20-percent enriched uranium in Iran, while enabling the Iranians to produce sufficient fuel" for their Tehran medical reactor.

This appeared to be a softening of a previous demand that Iran ship out its stockpile of higher-grade enriched uranium, which it says it needs to produce medical isotopes.

Iran has often indicated that 20-percent enrichment could be up for negotiation if it received the fuel from abroad instead.

Jalili suggested Iran could discuss the issue, although he appeared to rule out shutting down Fordow. He said the powers had not made that specific demand.

The Iranian rial, which has lost more than half its foreign exchange value in the last year as sanctions bite, rose some 2 percent on Wednesday, currency tracking websites reported.

(Additional reporting by Fredrik Dahl and Yeganeh Torbati in Almaty, Georgina Prodhan in Vienna, Zahra Hosseinian in Zurich, Gabriela Baczynska in Moscow, Dan Williams in Jerusalem and Marcus George in Dubai; Writing by Timothy Heritage and Fredrik Dahl; Editing by Louise Ireland)

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Wall Street rebounds on Bernanke comments, data

NEW YORK (Reuters) - U.S. stocks rebounded from their worst decline since November on Tuesday after Federal Reserve Chairman Ben Bernanke defended the Fed's bond-buying stimulus and sales of new homes hit a 4 1/2-year high.

The S&P 500 had climbed 6 percent for the year and came within reach of all-time highs before the minutes from the Fed's January meeting were released last Wednesday. Since then, the benchmark S&P 500 has fallen 1 percent.

Bernanke, in testimony on Tuesday before the Senate Banking Committee, strongly defended the Fed's bond-buying stimulus program and quieted rumblings that the central bank may pull back from its stimulative policy measures, which were sparked by the release of the Fed minutes last week.

Bernanke's comments helped ease investors' concerns about a stalemate in Italy after a general election failed to give any party a parliamentary majority, posing the threat of prolonged instability and financial crisis in Europe, and sending the S&P 500 to its worst decline since November 7 in Monday's session.

Bernanke "certainly said everything the market needed to feel in order to get comfortable again," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

"The fear is we were going to see a rollover, and the first shot over the bow was what we saw out of Italy yesterday with the elections," Kenny said. "When it came to U.S. markets, we saw some of that bleeding stop because our focus shifted from the Italian political circus to Ben Bernanke."

Gains in homebuilders and other consumer stocks, following strong economic data, lifted the S&P 500, and a 5.7 percent jump in Home Depot to $67.56 boosted the Dow industrials. The PHLX housing sector index <.hgx> rose 3.2 percent.

Economic reports that showed strength in housing and consumer confidence also supported stocks. U.S. home prices rose more than expected in December, according to the S&P/Case-Shiller index. Consumer confidence rebounded in February, jumping more than expected, and new-home sales rose to their highest in 4-1/2 years in January.

However, the central bank chairman also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the economic recovery.

The Dow Jones industrial average <.dji> gained 115.96 points, or 0.84 percent, to 13,900.13 at the close. The Standard & Poor's 500 Index <.spx> rose 9.09 points, or 0.61 percent, to 1,496.94. The Nasdaq Composite Index <.ixic> advanced 13.40 points, or 0.43 percent, to close at 3,129.65.

Despite the bounce, the S&P 500 was unable to move back above 1,500, a closely watched level that was technical support until recently, but could now serve as a resistance point.

The CBOE Volatility Index <.vix> or the VIX, a barometer of investor anxiety, dropped 11.2 percent, a day after surging 34 percent, its biggest percentage jump since August 18, 2011.

The uncertainty caused by the Italian elections continued to weigh on stocks in Europe. The FTSEurofirst-300 index of top European shares <.fteu3> closed down 1.4 percent. The benchmark Italian index <.ftmib> tumbled 4.9 percent.

Home Depot gave the biggest boost to the Dow and provided one of the biggest lifts to the S&P 500 after the world's largest home improvement chain reported adjusted earnings and sales that beat expectations.

Macy's shares gained 2.8 percent to $39.59 after the department-store chain stated it expects full-year earnings to be above analysts' forecasts because of strong holiday sales.

Volume was active with about 7.08 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, above the daily average of 6.48 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, three stocks rose for every two that fell.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal; Editing by Jan Paschal)

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Experts: Pistorius violated basic firearms rules

JOHANNESBURG (AP) — Even if Oscar Pistorius is acquitted of murder, firearms and legal experts in South Africa believe that, by his own account, the star athlete violated basic gun-handling regulations and exposed himself to a homicide charge by shooting into a closed door without knowing who was behind it.

Particularly jarring for firearms instructors and legal experts is that Pistorius testified that he shot at a closed toilet door, fearing but not knowing for certain that a nighttime intruder was on the other side. Instead of an intruder, Pistorius' girlfriend Reeva Steenkamp was in the toilet cubicle. Struck by three of four shots that Pistorius fired from a 9 mm pistol, she died within minutes. Prosecutors charged Pistorius with premeditated murder, saying the shooting followed an argument between the two. Pistorius said it was an accident.

South Africa has stringent laws regulating the use of lethal force for self-protection. In order to get a permit to own a firearm, applicants must not only know those rules but must demonstrate proficiency with the weapon and knowledge of its safe handling, making it far tougher to legally own a gun in South Africa than many other countries where a mere background check suffices.

Pistorius took such a competency test for his 9 mm pistol and passed it, according to the South African Police Service's National Firearms Center. Pistorius' license for the 9 mm pistol was issued in September 2010. The Olympic athlete and Paralympic medalist should have known that firing blindly, instead of at a clearly identified target, violates basic gun-handling rules, firearms and legal experts said.

"You can't shoot through a closed door," said Andre Pretorius, president of the Professional Firearm Trainers Council, a regulatory body for South African firearms instructors. "People who own guns and have been through the training, they know that shooting through a door is not going to go through South African law as an accident."

"There is no situation in South Africa that allows a person to shoot at a threat that is not identified," Pretorius added. "Firing multiple shots, it makes it that much worse. ...It could have been a minor — a 15-year-old kid, a 12-year-old kid — breaking in to get food."

The Pistorius family, through Arnold Pistorius, uncle of the runner, has said it is confident that the evidence will prove that Steenkamp's death in the predawn hours of Feb. 14 was "a terrible and tragic accident."

In an affidavit to the magistrate who last Friday freed him on bail, Pistorius said he believed an intruder or intruders had gotten into his US$560,000 (€430,000) two-story house, in a guarded and gated community with walls topped by electrified fencing east of the capital, Pretoria, and were inside the toilet cubicle in his bathroom. Believing he and Steenkamp "would be in grave danger" if they came out, "I fired shots at the toilet door" with the pistol that he slept with under his bed, he testified.

Criminal law experts said that even if the prosecution fails to prove premeditated murder, firing several shots through a closed door could bring a conviction for the lesser but still serious charge of culpable homicide, a South African equivalent of manslaughter covering unintentional deaths through negligence.

Johannesburg attorney Martin Hood, who specializes in firearm law, said South African legislation allows gun owners to use lethal force only if they believe they are facing an immediate, serious and direct attack or threat of attack that could either be deadly or cause grievous injury.

According to Pistorius' own sworn statement read in court, he "did not meet those criteria," said Hood, who is also the spokesman for the South African Gun Owners' Association.

"If he fired through a closed door, there was no threat to him. It's as simple as that," he added. "He can't prove an attack on his life ... In my opinion, at the very least, he is guilty of culpable homicide."

The Associated Press emailed a request for comment to Vuma, a South African reputation management firm hired by the Pistorius family to handle media questions about the shooting.

The firm replied: "Due to the legal sensitivities around the matter, we cannot at this stage answer any of your questions as it might have legal implications for a case that still has to be tried in a court of law." Vuma said on Monday it referred the AP's questions to Pistorius' legal team, which by Tuesday had not replied.

Culpable homicide covers unintentional deaths ranging from accidents with no negligence, like a motorist whose brakes fail, killing another road user, "to where it verges on murder or where it almost becomes intentional," said Hood. Sentences — ranging from fines to prison — are left to courts to determine and are not set by fixed guidelines.

The tough standards for legally acquiring a gun were instituted in part because of a wave of weapons purchases after the end of racist white rule in 1994, said Rick De Caris, a former legal director in the South African police. Under South Africa's white-minority apartheid regime, gun owners often learned how to handle firearms during military service. Many of the new gun owners had little or no firearms training, which brought tragic results, De Caris said.

"People were literally shooting themselves when cleaning a firearm," said De Caris, who helped draft the Firearms Control Act of 2000.

Prospective gun owners must now take written exams that include questions on the law, have to show they can safely handle and shoot a gun and are required to hit a target the size of a glossy magazine in 10 of 10 shots from seven meters (23 feet), said Pretorius of the Professional Firearm Trainers Council.

In his affidavit, Pistorius said he wasn't wearing his prosthetic limbs "and felt extremely vulnerable" after hearing noise from the toilet.

"I grabbed my 9 mm pistol from underneath my bed. On my way to the bathroom, I screamed words to the effect for him/them to get out of my house and for Reeva to phone the police. It was pitch-dark in the bedroom and I thought Reeva was in bed," he testified.

Legal experts said they are puzzled why Pistorius apparently didn't first fire a warning shot to show the supposed intruder he was armed. Also unanswered is why, after he heard noise in his bathroom that includes the toilet cubicle, Pistorius still went toward the bathroom — toward the perceived danger — rather than retreat back into his bedroom.

"He should have tried to get out of the situation," said Hood, the attorney.

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