U.S. evolves on same-sex marriage

STORY HIGHLIGHTS

• 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.

Read More..

US Defence Secretary Hagel scolds budget cuts

WASHINGTON: Major budget cuts will endanger the US military's ability to conduct its missions, Pentagon chief Chuck Hagel warned.

His comments came hours before President Barack Obama authorized cuts in domestic and defence spending, following the failure of efforts to clinch a deal with Republicans on cutting the deficit.

Hagel, whose budget at the Pentagon is set to be slashed by roughly $46 billion, said earlier: "Let me make it clear that this uncertainty puts at risk our ability to effectively fulfil all of our missions."

In contrast with his predecessor Leon Panetta, who branded the cuts a "doomsday mechanism" and "fiscal castration," Hagel was more measured two days after taking office as defence secretary.

But he made clear his thoughts on the consequences of the so-called "sequester" on the military.

Defence officials say they will be forced to reduce the working week of 800,000 civilian employees, scale back flight hours of warplanes and postpone some equipment maintenance.

The deployment of a second aircraft carrier to the Gulf has also been cancelled.

The US Navy will gradually stand down several hundred planes starting in April, the Air Force will curtail flying hours and the Army will cut back training for all units except those deploying to Afghanistan.

"This will have a major impact on training and readiness," Hagel said. "Later this month, we intend to issue preliminary notifications to thousands of civilian employees who will be furloughed."

Hagel acknowledged that the budget cuts "will cause pain, particularly among our civilian workforce and their families."

"I'm also concerned, as we all are, about the impact on readiness that these cuts will have across our force," he added.

The Pentagon chief expressed "confidence" that the White House and President Barack Obama's Republican foes in Congress would eventually reach agreement.

But other officials laid bare the consequences.

"If you stop training for a while and you're a combat pilot, then you lose your rating and eventually can't fly at all, because we can't allow you to fly if you can't fly safely," said Ash Carter, Hagel's deputy at the Pentagon.

"You can't, you obviously can't fly proficiently, but you can't even fly safely. Then you have to go back to the long building-back process of getting your readiness back."

Obama was bound by law to initiate the automatic, indiscriminate cuts.

The hit to military and domestic spending, known as the sequester, was never supposed to happen, but was rather a device seen as so punishing that rival lawmakers would be forced to find a better compromise to cut the deficit.

But despite a looming reality that the nation would suffer, Democrats and Republicans remained far from compromise and were never close to agreement.

- AFP/fa

Read More..

Obama signs order activating 'dumb' spending cuts

STORY HIGHLIGHTS

• NEW: Obama signs order that is required by law


• "We will get through this," President Obama says of the forced spending cuts


• Obama, congressional leaders fail to bridge gaps on cuts, letting them take effect


• Speaker Boehner says the House will take up a government funding measure

Washington (CNN) -- Politics trumped progress on Friday as President Barack Obama and Republican leaders traded blame for $85 billion in forced spending cuts after they failed to come up with a compromise to avert the harshest impacts.

The president signed an order required by law that set in motion the automatic, government-wide cuts.

Obama and congressional leaders from both parties met for about 45 minutes at the White House, but no agreement emerged to avert the cuts that both sides oppose.

After weeks of campaign-style events intended to inspire public outrage over the cuts, Obama sought to temper his description of their impact while making clear he thinks Republican intransigence prevented a deal to avoid the economic harm they'll cause.

"We will get through this," he told reporters. "This is not going to be an apocalypse as some people have said. It's just dumb and it's going to hurt."

Full text of Obama order

Still, a White House budget office report sent to Congress and released with Obama's order said the cuts would be "deeply destructive to national security, domestic investments, and core government functions."

The action was described in the report as "a blunt and indiscriminate instrument" that was "never intended to be implemented and does not represent a responsible way" for the country to realize deficit reduction.

OMB report to Congress

In a sign of the potential impact, the Department of Justice sent furlough notices to employees that warned they may be forced to take days off without pay in coming months.

Similar furloughs, as well as reduced services, were expected at other agencies if the cuts don't get replaced or eliminated. Military leaders have warned of impaired readiness of U.S. forces.

Shame and blame: Why Washington needs couples therapy

However, the full impact of the cuts weren't expected until April at the earliest.

The cuts amount to roughly 9% for a broad range of non-defense programs and 13% for the Pentagon over the rest of the current fiscal year, which ends on September 30.

They were included in a 2011 deal to raise the federal borrowing limit as an unacceptable outcome if Congress failed to agree on a comprehensive deficit reduction plan.

Obama's press conference on spending cuts

However, election-year politics stymied progress on such a deal, leading to the situation Friday in which both sides acknowledged being unable to prevent something neither wanted.

"There are smarter ways to cut spending," said House Speaker John Boehner, R-Ohio, after the meeting with Obama.

Boehner repeated his past assertion that the GOP-led House has offered proposals to replace the forced spending cuts while the Democratic-led Senate has not, as well as his party's opposition to any increased tax revenue to offset the forced spending cuts.

Others who also took part in the White House gathering were Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell and House Minority Leader Nancy Pelosi.

In the White House briefing room, Obama told reporters that Republicans in Congress "allowed these cuts to happen because they refuse to budge on closing a single wasteful (tax) loophole to help reduce the deficit."

"As recently as yesterday, they decided to protect special interest tax breaks for the well off and the well connected and they think that that's apparently more important than protecting our military or middle class families from the pain of these cuts," Obama said.

He was referring to a procedural vote on Thursday in which Senate Republicans blocked a Democratic proposal that called for eliminating some tax loopholes as part of a package with spending cuts.

Boehner and Republicans say the president and Democrats have yet to propose a serious plan to reduce spending, including costly entitlement programs, on a scale necessary to bring chronic federal deficits and debt under control.

Both Obama and Boehner foreshadowed the next major spending showdown - a March 27 deadline for Congress to authorize funding to keep the government running for the rest of the fiscal year.

4 myths about the spending cuts

Boehner told reporters that the House will take up a measure next week to authorize federal funding beyond that deadline.

"The president and leaders agreed legislation should be enacted this month to prevent a government shutdown while we continue to work on a solution to replace the" forced spending cuts, said a statement by Boehner's office.

Although the funding measure is unconnected to the spending cuts, Obama indicated he was open to a broader agreement that would resolve both issues.

"I do know that there are Republicans in Congress who privately, at least, say that they would rather close tax loopholes then let these cuts go through," said Obama in response to questions from reporters.

"... In the coming days and the coming weeks, I'm going to keeping on reaching out to them -- both individually and as groups of senators or members of the House -- and say to them, 'Let's fix this, not just for a month or two, but for years to come,' because the greatest nation on Earth does not conduct its business in month-to-month increments or by careening from crisis to crisis," Obama said.

Spending cuts: When they'll really bite

CNN's Dana Bash, Deirdre Walsh, Ted Barrett and Terry Frieden contributed to this report.

Read More..

Fla. man presumed dead after sinkhole opens under his bed

SEFFNER, Fla. A man was missing and feared dead early Friday after a large sinkhole opened under the bedroom of a house near Tampa.

Jeff Bush is presumed dead after a sinkhole opened under his bed.

/

CBS

His brother says Jeff Bush screamed for help before he disappeared.

The 36-year-old man's brother, Jeremy Bush, told rescue crews he heard a loud crash around 11 p.m. Thursday, then heard his brother screaming for help.

"When he got there, there was no bedroom left," Hillsborough County Fire Rescue spokeswoman Jessica Damico said. "There was no furniture. All he saw was a piece of the mattress sticking up."

Jeremy Bush called 911 and frantically tried to help his brother Jeff. He said he jumped into the hole and dirt was quickly up to his neck.

"The floor was still giving in and the dirt was still going down, but I didn't care. I wanted to save my brother," Jeremy said. "But I just couldn't do nothing."

An arriving deputy pulled Jeremy Bush from the still-collapsing house.

28 Photos

Sinkholes

"I reached down and was able to actually able to get him by his hand and pull him out of the hole," Hillsborough County Sheriff's Deputy Douglas Duvall said. "The hole was collapsing. At that time, we left the house."

Engineers worked to determine the size of the sinkhole. At the surface, officials estimated it was about 30 feet across. Below the surface, officials believed it was 100 feet wide.

"The entire house is on the sinkhole," Damico said.

Hillsborough County Fire Chief Ron Rogers told a news briefing that extra-sensitive listening devices and cameras were inserted into the sinkhole. "They did not detect any signs of life," he said.

By early Friday, Hillsborough County Fire Rescue officials determined the home had become too unstable to continue rescue efforts.

Neighbors on both sides of the home have been evacuated.

Sinkholes are common in seaside Florida, whose underlying limestone and dolomite can be worn away by water and chemicals, then collapse.

Engineers condemned the house, reports CBS Tampa affiliate WTSP.

From the outside of the small, sky blue house, nothing appeared wrong. There wear no cracks and the only sign something was amiss was the yellow caution tape circling the house.

Hillsborough County Sheriff's Office spokesman Larry McKinnon said authorities asked sinkhole and engineering experts, and they were using equipment to see if the ground can support the weight of heavy machinery needed for the recovery effort.

Jeremy Bush stood in a neighbor's yard across the street from the house Friday and recounted the harrowing collapse.

"He was screaming my name. I could swear I heard him hollering my name to help him," he said of his brother Jeff.

Jeremy Bush's wife and his 2-year-old daughter were also inside the house. "She keeps asking where her Uncle Jeff is," he said. "I lost everything. I work so hard to support my wife and kid and I lost everything."

Janell Wheeler told the Tampa Bay Times newspaper she was inside the house with four other adults and a child when the sinkhole opened.

"It sounded like a car hit my house," she said.

The rest of the family went to a hotel but she stayed behind, sleeping in her car.

"I just want my nephew," she said through tears.

Read More..

Initiatives outlined to make it easier for public to get legal help

SINGAPORE: The overarching theme of the Subordinate Courts Workplan seminar this year is to make it easier for the public to get legal help and information.

In his first workplan keynote address, Chief Justice Sundaresh Menon outlined a slew of initiatives to resolve informational inadequacy and litigation costs.

These include the Primary Justice Project to have a team of lawyers who will provide basic legal services to the public, coming up with guide books on motor vehicle accident scenarios, and simplifying the process for minor civil cases.

The initiatives point towards one thing - settling disputes out of court so as to save time and costs.

- CNA/ck

Read More..

Racy mag cover features Kim, Kanye

on your computer or on the CNN Apps for iPhone® and iPad®.

iPhone, iPad and Mac are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

If you get CNN and HLN at home, you can watch them online and on the go for no additional chargeStart watching

Read More..

In sequestration's 11th hour, finger-pointing reigns in Congress

With less than 12 hours before sequestration becomes an official federal mandate, the prospects of lawmakers reaching a deal to avert sweeping, across-the-board spending cuts are virtually nonexistent. But as the so-called "sequestration" takes on a feel of increasing inevitability in Washington, politicians on both sides of the aisle are scrambling to assign blame for what many believe could lead to dire economic consequences.

In a series of press briefings and floor speeches today, lawmakers took to the microphone to blast their political counterparts for proposed theft, moral bankruptcy, and professional incompetence.

Play Video

Defense-related small businesses feel sequester pinch

"How much more money do we want to steal from the American people to fund more government?" asked House Speaker John Boehner, R-Ohio, in a press briefing this morning. "I'm for no more."

Boehner, towing the Republican line, assigned blame to the president for having allegedly "insisted" on the sequestration, and to Democrats for derailing Republican alternatives to avert it.

"It is the president's sequester," Boehner said. "The House has acted twice over the last 10 months to replace these cuts with smarter cuts. We've done our job... I'm happy to talk to the president, I'm happy to work with the president, but the House has done its job."

While the idea for sequestration did originate in the White House, both Republicans and Democrats supported the idea, with 174 House Republicans - including Boehner - voting in its favor. The House did pass two bills to avert the cuts, as Boehner said, but neither of them would have had any support from Democrats in the Senate, and White House would likely have vetoed them. Moreover, both are currently invalid because they were passed in the last congressional session.

House Minority Leader Nancy Pelosi, D-Calif., meanwhile, blasted Republicans for allegedly doing worse than just "kick the can down the road" on the issue.

"They're nudging the potato across the table with their noses," she accused. "We come to Washington to be legislators, representatives of our district and to be legislators. And somehow that piece is missing from what the Republicans are doing - they're just making noise... Either they don't want to legislate or they don't know how to legislate."

Senate Majority Leader Harry Reid, D-Nev., who earlier today was rebuffed in an offer to bring to the Senate floor both Republican and Democratic bills on averting sequester if the votes were held at majority thresholds, went after Republican motives for rejecting his idea.

"Are Republicans really filibustering a vote on replacing the sequester?" he asked on the Senate floor. Later, in a press briefing, he added: "The Republicans want the sequester to go forward!"

Reid will hold a vote for the Democratic proposal this afternoon, but that bill is not expected to garner the 60 votes needed to overcome a filibuster, and is expected to go nowhere.

Senate Minority Leader Mitch McConnell, R-Ky., argued that Reid and fellow Democrats want their bill to fail - "so they can go around the country blaming Republicans for a sequester the president himself proposed.

"They're so concerned about preventing anything from actually passing the Congress that they've limited the ability of senators on both sides to debate this issue openly and to offer different ideas," he contended.

In reality, both sides are refusing to compromise. President Obama is expected to sign a directive making sequestration official tomorrow, at which point he will meet with congressional leaders from both parties to discuss the way forward. The Office of Management and Budget (OMB) will also release a report detailing the specifics of sequestration tomorrow.

If a deal can be worked out before April, when some of the impacts of sequestration will begin to feel real, much of the potential damage will be averted. But there's a lot of ground to make up in the next 30 days: As of now, the two parties don't have a lot to say in agreement on the subject. Just this afternoon, the White House endorsed the Democratic Senate plan while threatening to veto a GOP proposal.

In the meantime, the blame game continues.

"House Republicans deserve to be called to task for leaving the American people in the lurch," said Sen. Dick Durbin, D-Ill., to reporters today.

Read More..

Arias Recounts Each Moment of Stabbing, Slashing

Accused murderer Jodi Arias was forced to recount today each detail of how she killed her ex-boyfriend, Travis Alexander, including re-enacting how he allegedly tackled her when she shot him, leaving her crying in her hands on the witness stand.

During hours of dramatic cross-examination by prosecutor Juan Martinez, Arias bawled as he asked her about stabbing, slashing and shooting Alexander on June 4, 2008.

"You would acknowledge that Mr. Alexander was stabbed, and that the stabbing was with the knife, and it was after the shooting according to you, right?" Martinez said in rapid succession.

"Yes, I don't remember," Arias said, covering her face with her hands.

"Do you acknowledge the stab wounds, and we can count them together, were to the back of the head and the torso?" Martinez said, flashing a photo of Alexander's bloodied body onto the courtroom projector. " Do you want to take a look at the photo?"

Arias, burying her face in her hands and shutting her eyes on the stand, mumbled, "No."

Alexander's sisters, seated in the front row of the gallery, also looked away, crying.

Arias, 32, is accused of killing Alexander on June 4, 2008 out of jealousy. He was stabbed 27 times, his throat was slashed and he was shot in the head twice.

Arias claims she killed in self-defense after Alexander had become increasingly violent with her. She could face the death penalty if convicted.

Martinez also forced Arias to demonstrate in court today how she claims Alexander lunged at her "like a linebacker," causing her to fire the gun at him. The pair argued over how exactly Alexander was positioned, and Martinez pushed her to explain what she meant.

"He lunges at me like a linebacker," Arias said.

"Like a linebacker, what does that mean?" Martinez asked.

Jodi Arias Under Attack in Third Day of Cross-Examination Watch Video

Jodi Arias, Prosecutor Butt Heads in Cross-Examination Watch Video

Jodi Arias Maintains She 'Felt Like a Prostitute' Watch Video

"He was low. It was almost like he dove," she said, and trying to explain it further, added, "He was like a linebacker is the only way I can describe it unless I get up to act it out which I'd rather not do."

Catching Up on the Trial? Check Out ABC News' Jodi Arias Trial Coverage

Timeline of the Jodi Arias Trial

"Go ahead and do it," Martinez said. "Just stand. Go ahead."

Judge Sherry Stephens initially cleared the court as Arias demonstrated and then Martinez had her do it again after the jury and spectators were allowed back into the courtroom.

Standing and moving away from the witness box, Arias bent at the waist and spread out her arms and meekly made a slight lunging motion.

According to her testimony, Arias fired the gun as Alexander rushed at her, tackling her to the ground. She said she does not remember how she stabbed or slashed him.

It was a day of dramatics and anger as the prosecution pressed Arias on the details of the killing, with Martinez ending the afternoon of questioning by accusing Arias of lying throughout her direct testimony.

At one point Arias dissolved into tears, unable to answer pointed questions when shown a photo of Alexander's body lying crumpled in the bottom of the stall shower.

After a short pause, Martinez asked dryly, "Were you crying when you were shooting him?"

"I don't remember," Arias moaned.

"Were you crying when you stabbed him?" he said. "How about when you slashed his throat?"

"I don't remember, I don't know."

Martinez pressed on, "You're the one that did this right? And lied about all this right?"

"Yes."

"So then take a look at it," he barked.

Arias did not answer Martinez's question, crying into her hands instead. The judge, after a moment, called for the lunch recess to take a break from the testimony. Arias' attorney walked over and consoled her, telling her to "take a moment."

Until that moment, Arias had given vague answers to Martinez as he asked about the hours leading up to the murder. Arias, 32, has testified that she drove to Alexander's house on June 4, 2008, for a sexual liaison, that she had sex with Alexander and the pair took nude photos before an explosive confrontation ended with her killing him. She claims she doesn't remember stabbing Alexander, but insists it was in self-defense.

Martinez questioned her claims, asking exactly what they argued about and who encouraged whom to take the nude photos. He pointed out that Arias told Detective Esteban Flores of the Mesa police department that she had to convince Alexander to take the nude photos in the shower, but that she testified on the stand that Alexander had wanted them.

Read More..

Italy left on financial high-wire

Prime Minister Silvio Berlusconi delivers a speech during a campaign rally in Rome on January 25, 2013.

STORY HIGHLIGHTS

• Brilliant minds are still trying to figure out the financial impact of Italy's election


• The lack of certainty is seen as a negative for Italy -- and the eurozone


• Instability could reignite the eurozone crisis


• But it depends on what deal will be done, and how the markets will respond

Editor's note: Louise Cooper is a financial blogger and commentator who regularly appears on television, radio and in print. She started her career at Goldman Sachs as a European equity institutional sales person and then become a financial and business journalist. She now writes CooperCity.

London (CNN) -- Brilliant minds across the financial world are still trying to work out the implications of the Italian election result.

For the time being, the best answer is that it is probably too soon to tell. After Tuesday's falls, a little stability has returned to markets, possibly because everyone is still trying to work out what to think.

Credit ratings agency Moody's has warned the election result is negative for Italy -- and also negative for other indebted eurozone states. It fears political uncertainty will continue and warns of a "deterioration in the country's economic prospects or difficulties in implementing reform," the agency said.

For the rest of the eurozone, the result risks "reigniting the euro debt crisis." Madrid must be looking to Italy with trepidation. If investors decide that Italy is looking risky again and back off from buying its debt, then Spain will be drawn into the firing line too.

Can the anti-Berlusconi save Italy?

Louise Cooper, of Cooper City

Standard & Poor's stated that Italy's rating was not immediately affected by the election but I think the key part of that sentence is "not immediately."

At the same time Herman Van Rompuy's tweets give an indication of the view from Brussels: "We must respect the outcome of democratic elections in Italy," his feed noted.

Really? That's a first. The democratically elected Silvio Berlusconi was forced out when he failed to follow through with austerity after the European Central Bank helped Italy by buying its debt in autumn 2011.

"It is now up to Italian political leaders to assume responsibility, compromise and form a stable government," Van Rompuy tweeted.

Did he see the results? The newcomer and anti-establishment comedian Beppe Grillo refuses to do a deal and yet he is the natural kingmaker, polling at 25%.

"Nor for Italy is there a real alternative to continuing fiscal consolidations and reforms," he continued.

Economically yes, but the Italian electorate disagree. And for the time being, Italy has a democracy (of sorts).

Finally: "I am confident that Italy will remain a stable member of the eurozone."

He hopes...

The key to whether the crisis reignites is whether investors begin to back away from lending to Italy. If so, this will be the big test of the ECB's resolve to save the euro.

Read more: Euro crisis coverage

The key thing to look at is Italian bonds, because if borrowing costs rise from 4.8% for 10-year money currently to nearer 6%, then Italy will start to find it too expensive to borrow.

The trillion euro question is if the ECB will step in to help even if it cannot get the reforms and austerity it demands (because of the political situation). That is the crux of the matter. And there will be many in the city today pondering that question.

Clearly in financial markets, taking on a central bank is a dangerous thing to do. Soros may have broken the Bank of England on Black Wednesday 1992, making billions by forcing sterling out of the EMU, but that was a long time ago.

Italy avoids panic at bond auction

What we have learnt from this crisis is not to "fight the Fed" (or the ECB). Last summer, the ECB's chief Mario Draghi put a line in the sand with his "whatever it takes" (to save the euro) speech.

But as part of that commitment he stressed time and time again that any new help from the ECB comes with conditions attached. And those conditions are what have proven so unpalatable to the Italians -- austerity and reform.

So we have two implacable objects hurtling towards each other. The political mess of Italy and the electorate's dislike of austerity and reform (incumbent technocrat Mario Monti only polled 10%).

So what happens next? The status quo can continue if Italian borrowing costs do not rise from here and therefore Italy does not need ECB help.

If markets continue to believe in Draghi and Brussels that the euro is "irreversible," then investors will continue to lend to Italy. Yes, markets will be jittery and fearful, but Italy will eventually sort itself out politically.

The big advantage for Italy is although it has a lot of debt, it is not creating debt quickly (like Greece, Spain or even the UK). And as I said yesterday on my CooperCity blog, the positive outcome from all this could be that Brussels backs off from austerity, which would be a good thing.

However, the basic rule of finance is that high risk comes with high return. Soros took a huge gamble against the British central bank but it reportedly made him a billionaire overnight.

There must be a few hedge funders looking at the Italian situation with similar greed in their eyes. If he wants to save the euro, it is time for Mario Draghi to put the fear of God back into such hearts.

Read More..

Asian markets rise on Wall St rally, ECB comments

HONG KONG: Asian markets rose Thursday after the Dow on Wall Street hit a more than five-year high, while the head of the European Central Bank soothed concerns over the eurozone.

A strong bond sale in Italy also helped the euro despite uncertainty after weekend polls, while the yen resumed its downward trend after Japan's government nominated a fan of aggressive easing as the new central bank governor.

Tokyo climbed 2.04 per cent as the yen sank on confirmation that Japan's government had put forward Haruhiko Kuroda to take over at the Bank of Japan.

Kuroda, the current Asian Development Bank chief, is known as an advocate of a looser monetary policy to overcome slow growth, in line with the views of Prime Minister Shinzo Abe.

The dollar bought 92.44 yen, compared with 92.16 yen in New York late Wednesday.

Hong Kong shares advanced 1.10 per cent, Sydney added 0.71 per cent, Seoul rose 1.02 per cent and Shanghai was up 0.39 per cent.

ECB President Mario Draghi said Wednesday the bank would preserve the integrity of the eurozone, reasserting its commitment to buy up bonds of under-pressure countries.

"We are committed to preserving the integrity of our currency, in the interests of all people of the euro area," he said.

The announcement, which came after US Federal Reserve Chairman Ben Bernanke said its own huge easing would stay in place, came as welcome relief to markets after Italy's poll deadlock raised fears of a return to Europe's debt crisis.

On forex markets the euro rebounded after being hammered in the wake of Sunday's inconclusive poll, which saw voters shun austerity policies and leave the country with a hung parliament.

The euro sat at $1.3150 and 121.56 yen in Tokyo, from $1.3136 and 121.07 yen -- and well up from the levels just above $1.30 and 119 yen seen earlier in the week.

The single currency was also given support from news that Rome had successfully sold 6.5 billion euros of treasury bonds, albeit at a higher price, providing evidence for now that it can borrow cash to pay its own bills.

On Wall Street the Dow ended at its highest level since October 2007 after reports showed US pending home sales rebounded sharply in January to the highest level in almost three years.

In other positive news, durable goods orders in January -- excluding volatile aircraft -- surged 1.9 per cent, with gains particularly strong in capital goods, suggesting business confidence in the economy in upcoming months.

The Dow jumped 1.26 per cent, while the S&P 500 rose 1.27 per cent and the Nasdaq added 1.04 per cent.

Oil prices rose, with New York's main contract, light sweet crude for delivery in April, gaining 34 cents to $93.10 a barrel and Brent North Sea crude for April delivery adding 35 cents to $112.22.

Gold was at $1,597.70 at 0220 GMT compared with $1,608.32 late Wednesday.

- AFP/ck

Read More..