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 RALLY AND THE REALITY CHECK

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.

EASY MONEY AND TEPID HIRING

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)

Read More..

Guinea says investigating shootings as protest death toll mounts

CONAKRY (Reuters) - At least one person was killed by gunfire and three others injured in ongoing street clashes in Guinea on Saturday, and the government said it was investigating whether security forces used live rounds against civilians.

Two civilians and one police officer have been killed and hundreds of people injured since tensions over upcoming legislative polls triggered unrest in the West African nation's capital Conakry last week.

Much of the violence has been between rock-throwing demonstrators and security forces using tear gas and wielding truncheons, though witnesses said police were also firing guns in an effort to disperse protesters.

"We have heard of four people injured by bullets today, and one of them has died," said government spokesman Damantang Camara. "We are now investigating where these shots came from."

Long-delayed elections due in May are meant to complete a transition to civilian rule after a 2008 coup, and could open the door to hundreds of millions of dollars in European aid.

But preparations for the legislative poll have been hampered by opposition claims the government is seeking to rig the outcome in advance, leading to a political impasse and sparking sporadic street protests that often turn violent.

Politics in Guinea, the top world supplier of bauxite, raw material of aluminum, are mainly drawn along ethnic lines. The opposition coalition is broadly supported by the Peul, the biggest ethnic group, and the government by the Malinke.

Guinea's notoriously ill-disciplined security forces have a history of brutal crackdowns on protests, though the government has launched a U.N.-backed effort to professionalize them..

One of the wounded told Reuters on Saturday he was shot by a member of the security forces while he was trying to run away.

"I tried to run and he fired," Ibrahima Diallo said at a private clinic where he was seeking treatment.

Security forces in riot gear patrolled in pickup trucks and deployed on street corners on Saturday.

The violence, which began on Wednesday after opposition supporters clashed with police, has left a wake of burned-out shops and vehicles and spent tear gas canisters. By Friday, rival ethnic gangs battled in the ramshackle city using machetes, knives and clubs, witnesses said.

Guinean President Alpha Conde appealed for calm late on Friday and urged opposition leaders to do the same.

"All sides must avoid provocation, personal vengeance and taking justice into their own hands," Conde said in a televised address. "I ask religious leaders, security forces, elected officials and political leaders to call for calm."

Conde narrowly won a 2010 presidential election - billed as the former French colony's first free poll since 1958 independence - promising to unite Guinea in the same way Nelson Mandela did after apartheid in South Africa.

(Writing by Richard Valdmanis; Editing by Jason Webb)

Read More..

Woods goes nowhere in Honda Classic

PALM BEACH GARDENS, Fla. (AP) — Instead of making a move, Tiger Woods was stuck in neutral Saturday at the Honda Classic.

Woods never found his tee shot that plugged into the bank below the par-3 17th green and eventually made double bogey. That ruined a good start and sent him to a third straight round of even-par 70 that left him in the middle of the pack.

"If you play well, you can shoot about 5- or 6-under par, there's no doubt," Woods said. "There are some accessible pins. The greens are perfectly smooth out there. They are not that fast, so you can be pretty aggressive."

In the third group off, it was the perfect time to post a low number and try to get into contention.

Woods, however, said his momentum was slowed by mud on his ball in the 10th fairway that caused his shot to wobble toward the green and fall short in a bunker. He missed about a 10-foot par putt, backing off when he heard someone in the gallery take his picture, and muttering under his breath as he walked off the green.

He only had a few reasonable looks at birdie the rest of the way, and then 17th was his undoing.

Woods stared for the longest time after his tee shot came up short. There was no splash, not even a ripple, and there was no signal from a marshal. He never found his ball, despite looking longer than five minutes. A rules official gave him a ride back to the other side of the lake. Woods started to get out by the drop area until realizing he had to go all the way back to the tee.

Because he never found the ball, Woods couldn't be sure where it landed. If the ball had been inside the red hazard line, he could have gone to the drop area.

"You don't know, and then it's a lost ball," he said.

He said another mud ball was the reason he hit what amounted to a foul ball into the stands left of the 18th green. It landed in the bleachers, bounced over the first row and a fan caught it on one hop. He waited for Woods to arrive, and then tossed it back to him. Woods hit wedge through the green and into a back bunker, the sixth time in the round he had to play out of the sand.

Not only did he fail to get in the mix, he finished before television coverage came on, and that might be the case on Sunday, too.

"Go out there and execute, simple as that, same thing I do every day," Woods said on his outlook for the final round. "Hopefully, I'll get it going early."

Woods was nine shots behind going into the final round last year at the Honda Classic, closed with a 62 and tied for second behind Rory McIlroy.

Read More..

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..

Man slain on way to dialysis treatment: police

WGN-TV: Man fatally shot while waiting for ride to dialysis treatment.

A 72-year-old man was shot and killed in his gangway on the Far South Side early Saturday morning as he left a home for dialysis treatment.

The man's grandson was inside and heard the shots that killed his grandfather, who was identified by family and the Cook County medical examiner's office as William Strickland, of the 400 block of East 95th Street.

The man was shot about 3:30 a.m. and pronounced dead about 4 a.m., according to authorities.

The motive appears to be robbery, police said, but detectives are still investigating.

Detectives remained at the scene, across from Chicago State University, into the morning.

Police taped off the northeast corner of 95th Street and Eberhart Avenue, surrounding the two houses between which the man was killed.

Neighbors said Strickland had lived in the neighborhood for more than 30 years. He was described as friendly and willing to lend a helping hand, neighbors and friends said.

"He was just there for us," said Theolene Shears, 84, who has lived in the area since 1965. "He was a very nice neighbor. We couldn't ask for a better neighbor."

Shears said she was inside her home when she heard the shots.

"All I heard was three shots. Bang, bang, bang," she said.

Strickland, who went to dialysis three times a week, had been undergoing treatment for about five years, Shears said.

"He seemed to be very happy about it. The way he talked it was like a little social club," Shears said, adding that he eased her own concerns about potentially having to receive treatment.

He preferred to go early on Saturdays to get it out of the way, she said.

Strickland leaves behind a daughter, three grandchildren and a pet Chihuahua, said Shears.

"He was a good man," said Joshua Miles, 14, a friend of the family "He would help you out if you needed help."

"He always kept you laughing," he said.

pnickeas@tribune.com
Twitter: @peternickeas

nnix@tribune.com
Twitter: @nsnix87.com

Read More..

Strong data lifts Wall Street, trumps sequester fears

NEW YORK (Reuters) - Stocks edged higher on Friday as strong economic figures more than offset growth concerns out of China and Europe and as investors shrugged off expected across-the-board U.S. goverment spending cuts.

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

U.S. consumer confidence also rose in February as Americans turned more optimistic about the job market.

With government budget cuts set to begin on Friday, President Barack Obama blamed Republicans for failure to reach a compromise to avert the cuts, known as sequester. Investors, who have had plenty of time to prepare, appeared not too worried about the immediate impact.

"Despite the headlines, the drama and the finger pointing, the U.S. economy can still expand and as long as you see expansion, (equity) markets can go higher," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

Krosby said the market was also looking ahead to next week's government payrolls report. A stronger jobs market points to stronger consumer spending, an important component for economic growth. Separately, a government report on Friday said consumer spending rose in January as Americans spent more on services.

The Dow Jones industrial average <.dji> rose 38.09 points or 0.27 percent, to 14,092.58, the S&P 500 <.spx> gained 3.4 points or 0.22 percent, to 1,518.08 and the Nasdaq Composite <.ixic> added 7.68 points or 0.24 percent, to 3,167.87.

For the week so far, the Dow is up 0.7 percent while the Nasdaq and S&P are up 0.2 percent.

Equities continue to attract investors in an environment of low interest rates due to an accommodative monetary policy. 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 8.3 percent to $552.18 after Cantor Fitzgerald analyst Jeremy Feffer upgraded the stock, saying the more than 11 percent slide in the stock on Thursday was a gross overreaction to a news report.

Groupon Inc surged 9 percent to $4.94 a day after the online coupon company fired its chief executive officer in the wake of weak quarterly results.

Gap Inc rose 2.7 percent to $33.81 after reporting fourth-quarter earnings that beat expectations and boosting its dividend by 20 percent, while Salesforce.com Inc posted sales that beat forecasts, sending shares up 7.2 percent to $181.41.

Chesapeake Energy Corp fell 1.7 percent to $19.81 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.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

Read More..

Turkish PM's Zionism comments "objectionable:" Kerry

ANKARA (Reuters) - Secretary of State John Kerry said on Friday the United States found a comment by Turkey's prime minister, likening Zionism to crimes against humanity, "objectionable", overshadowing their talks on the crisis in neighboring Syria.

Kerry, on his first trip to a Muslim nation since taking office, met Turkish leaders for talks meant to focus on Syria's civil war and bilateral interests from energy security to counter-terrorism.

But the comment by Turkish Prime Minister Tayyip Erdogan at a U.N. meeting in Vienna this week, condemned by his Israeli counterpart, the White House and U.N. Secretary-General Ban Ki-moon, has clouded his trip.

"We not only disagree with it, we found it objectionable," Kerry told a news conference with Turkish Foreign Minister Ahmet Davutoglu, saying he raised the issue directly with Davutoglu and would do so with Erdogan.

Kerry said Turkey and Israel were both key U.S. allies and urged them to restore closer ties.

"Given the many challenges that the neighborhood faces, it is essential that both Turkey and Israel find a way to take steps in order to bring about or to rekindle their historic cooperation," Kerry said.

"I think that's possible but obviously we have to get beyond the kind of rhetoric that we've just seen recently."

Washington needs all the allies it can get as it navigates the political currents of the Middle East, and sees Turkey as the key player in supporting Syria's opposition and planning for the era after President Bashar al-Assad.

But the collapse of Ankara's ties with Israel have undermined U.S. hopes that Turkey could play a role as a broker in the broader region.

Erdogan told the U.N. Alliance of Civilizations meeting in Vienna on Wednesday: "Just as with Zionism, anti-Semitism and fascism, it has become necessary to view Islamophobia as a crime against humanity."

Erdogan's caustic rhetoric on Israel has in the past won applause from conservative supporters at home but raised increasing concern among Western allies.

Ties between Israel and mostly Muslim Turkey have been frosty since 2010, when Israeli marines killed nine Turks in fighting aboard a Palestinian aid ship that tried to breach Israel's blockade of the Gaza Strip.

"If we must talk about hostile acts, then Israel's attitude and its brutal killing of nine of our civilian citizens in international waters may be called hostile," Davutoglu said, adding Turkey had always stood against anti-Semitism.

"No single statement carries a price higher than the blood of a person ... If Israel wants to hear positive statements from Turkey it needs to reconsider its attitude both towards us and towards the West Bank," he told the news conference.

Turkey has demanded a formal apology for the 2010 incident, compensation for victims and their families and for the Gaza blockade to be lifted. Israel has voiced "regret" and has offered to pay into what it called a "humanitarian fund" through which casualties and relatives could be compensated.

SUPPORT FOR SYRIAN OPPOSITION

Turkey's relations with the United States have always been prickly, driven more by a mutual need for intelligence than any deep cultural affinity. And Erdogan's populist rhetoric, sometimes at apparent odds with U.S. interests, is aimed partly at a domestic audience wary of Washington's influence.

But the two have strong common interests. Officials said Syria would top the agenda in Kerry's meetings with Erdogan and President Abdullah Gul, building on the discussions in Rome between 11 mostly European and Arab nations within the "Friends of Syria" group.

After the Rome meeting, Kerry said on Thursday the United States would for the first time give non-lethal aid to the rebels and more than double support to the civilian opposition, although Western powers stopped short of pledging arms.

"We need to continue the discussion which took place in Rome ... in terms of the main goals there is no daylight between us and the Americans," a senior Turkish official said.

"A broad agreement was reached on supporting the opposition. Now our sides need to sit down and really flesh out what we can do to support them in order to change the balance on the ground," he said.

Turkey has been one of Assad's fiercest critics, hosting a NATO Patriot missile defense system, including two U.S. batteries, to protect against a spillover of violence and leading calls for international intervention.

It has spent more than $600 million sheltering refugees from the conflict that began almost two years ago, housing some 180,000 in camps near the border and tens of thousands more who are staying with relatives or in private accommodation.

Washington has given $385 million in humanitarian aid for Syria but U.S. President Barack Obama has so far refused to give arms, arguing it is difficult to prevent them from falling into the hands of militants who could use them on Western targets.

Turkey, too, has been reluctant to provide weapons, fearing direct intervention could cause the conflict to spill across its borders.

(Additional reporting by Gulsen Solaker; Writing by Nick Tattersall; Editing by Michael Roddy)

Read More..

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.

STORY HIGHLIGHTS

• 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

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.

Read More..

Fiscal talks fail, U.S. stumbles toward steep cuts

The U.S. government stumbled headlong on Friday toward wide-ranging spending cuts that threaten to hinder the economic recovery, after President Barack Obama and congressional leaders failed to find an alternative budget plan.

The cuts, locked in during a bout of deficit-reduction fever in 2011, can only be halted by agreement between Congress and the White House.

A deal proved elusive in talks at the White House on Friday, meaning that government agencies will now begin to hack a total of $85 billion from their budgets between Saturday and October 1. Financial markets in New York shrugged off the stalemate in Washington.

Democrats predict these cuts could soon cause air traffic delays, furloughs for hundreds of thousands of federal employees and disruption to education and law enforcement.

The full brunt of the automatic cuts will be borne over seven months, and Congress can stop them at any time if the two parties agree on how to do so.

But Obama was resigned to budgets shrinking.

"Even with these cuts in place, folks all across this country will work hard to make sure that we keep the recovery going, but Washington sure isn't making it easy," he said after meeting Republican and Democratic congressional leaders.

Given the absence of a deal, Obama is required by midnight to issue an order to federal agencies to reduce their budgets in a process known as "sequestration." The White House budget office must send a report to Congress detailing the spending cuts.

The Dow Jones Industrials were up 45 points after midday, recovering from earlier losses on encouraging manufacturing data.

FURLOUGHS LOOM

In coming days, federal agencies are likely to issue 30-day notices to workers who will be furloughed.

"Not everyone will feel the pain of these cuts right away. The pain though will be real. Beginning this week, many middle class families will have their lives disrupted in significant ways," Obama told journalists in the White House.

"We will get through this. This is not going to be an apocalypse," he said.

Democrats insist that the solution include bringing in additional revenue through closing what they call tax loopholes that largely benefit the wealthy and U.S. corporations. Republicans reject this approach.

"The discussion about revenue, in my view, is over. It's about taking on the spending problem," House of Representatives Speaker John Boehner said on leaving the meeting.

Moving to head off a new budget crisis later this month, Boehner said the Republican-led House would move a "continuing resolution" to fund government through the rest of the fiscal year. "I'm hopeful that we won't have to deal with the threat of a government shutdown," he said.

The International Monetary Fund warns that the cuts could slow U.S. economic growth by at least 0.5 of a percentage point this year, hitting the global economy.

The non-partisan Congressional Budget Office predicts 750,000 jobs could be lost in 2013 and federal employees throughout the country are looking to trim their own costs.

"The kids won't go to the dentist, the kids might not go to the doctor, we won't be spending money in local restaurants, local movie theaters," said Paul O'Connor, president of the Metal Trades Council, which represents some 2,500 workers at the Portsmouth Naval Shipyard in Kittery, Maine.

In the absence of any deal at all, the Pentagon will be forced to slice 13 percent of its budget between now and September 30. Most non-defense programs, from NASA space exploration to federally backed education and law enforcement, face a 9 percent reduction.

Both sides still hope the other will either be blamed by voters for the cuts or cave in before the worst effects predicted by Democrats come into effect.

No matter how Obama and Congress resolve the 2013 battle, this round of automatic spending cuts is only one of a decade's worth of annual cuts totaling $1.2 trillion mandated by the sequestration law.

Read More..