Finance Blog number 1

+%3Cp%3E+Former+MF+Global+CEO+Jon+Corzine+returned+to+Capitol+Hill+Thursday%2C+where+he+rejected+allegations+aired+earlier+this+week+that+he+was+aware+of+fund+transfers+from+customer+accounts.%3C%2Fp%3E%3Cp%3ECorzine%27s+testimony+came+two+days+after+Terry+Duffy%2C+head+of+exchange+operator+CME+Group+%28%29%2C+suggested+in+a+separate+Congressional+hearing+that+Corzine+may+have+been+aware+of+unlawful+money+transfers+out+of+customer+accounts+in+the+days+before+MF+Global+filed+for+bankruptcy.%3C%2Fp%3E%3Cp%3E%3Cp%3E%3C%2Fp%3E%3Cp%3E%3Cp%3E%3C%2Fp%3E%3C%2Fp%3E%3C%2Fp%3E%3Cp%3ELawmakers+have+been+probing+the+brokerage%27s+collapse%2C+and+in+particular%2C+the+revelations+that+more+than+%241+billion+in+customer+funds%2C+mostly+from+commodities+accounts%2C+are+still+missing.%3Cbr%3E+%3Cbr%3E+Corzine+has+consistently+said+he+has+no+idea+how+the+money+went+missing%2C+never+ordered+that+customer+funds+be+misused+and+did+not+learn+of+the+massive+shortfall+until+less+than+24+hours+before+the+firm+filed+for+bankruptcy.+In+the+commodities+business%2C+customer+money+at+brokerages+like+MF+Global+%28%29+is+supposed+to+be+protected+at+all+times%2C+even+in+the+event+of+a+bankruptcy.+%3C%2Fp%3E%3Cp%3EBut+Duffy+claimed+Tuesday+that+Corzine+was+aware+that+the+firm+had+tapped+customer+accounts+for+its+own+use+in+its+final+days.+%3C%2Fp%3E%3Cp%3ESuch+a+transaction+could+be+legal+under+some+circumstances%2C+and+Duffy+did+not+specifically+say+that+Corzine+himself+had+authorized+illegal+money+transfers.+He+did+say%2C+though%2C+that+the+firm+had+made+at+least+some+transfers+from+customer+accounts+illegally.%3C%2Fp%3E%3Cp%3ECorzine+denied+Duffy%27s+allegations+Thursday%2C+saying+he+%26quot%3Bdid+not+in+any+way+know+about+the+use+of+customer+funds+on+any+loan+or+transfer.%26quot%3B+In+the+firm%27s+last+hours%2C+he+added%2C+he+learned+of+the+massive+hole+in+customer+accounts+but+did+not+know+how+it+was+formed.%3C%2Fp%3E%3Cp%3EInvestigators%2C+however%2C+have+been+developing+a+clearer+picture+of+just+what+went+wrong.+Rep.+Randy+Neugebauer+of+Texas+said+at+Thursday%27s+hearing+that+a+Congressional+investigation+had+shown+that+MF+Global+moved+at+least+%24700+million+out+of+customer+accounts+in+the+days+before+its+bankruptcy+%26quot%3Bto+meet+liquidity+needs+of+the+firm%26quot%3B.+%3C%2Fp%3E%3Cp%3EThis+was+apparently+done+without+putting+the+collateral+in+place+to+make+such+a+transaction+legal%2C+according+to+Neugebauer%27s+account.%3C%2Fp%3E%3Cp%3EThe+allegations+follow+on+similar+claims+from+CME+Group%2C+which+says+MF+Global+broke+the+law+in+using+customer+funds+for+its+own+benefit+%3Ca+href%3D%22http%3A%2F%2Fpayday-loans-cheap.com%22%3Epayday+loans+guaranteed+no+fax%3C%2Fa%3E%3C%21–+.+–%3E.+Duffy+also+claimed+Thursday+that+the+firm+had+falsified+accounting+statements+to+conceal+the+shortfalls+in+customer+accounts.%3C%2Fp%3E%3Cp%3ERegulators+under+scrutiny%3A+Witnesses+also+appeared+in+the+latter+half+of+Thursday%27s+hearing+from+the+New+York+Federal+Reserve+Bank+and+from+regulators+including+the+Securities+and+Exchange+Commission+and+the+Commodity+Futures+Trading+Commission.%3C%2Fp%3E%3Cp%3ELawmakers+quizzed+them+on+how%2C+in+an+era+following+the+global+economic+meltdown%2C+regulators+could+allow+another+big+financial+institution+to+fail%2C+and+lose+more+than+%241+billion+of+its+customers+money+in+the+process.+%3C%2Fp%3E%3Cp%3EThomas+Baxter%2C+general+counsel+of+the+Federal+Reserve+Bank+of+New+York%2C+testified+on+Thursday+that+his+agency+had+scrutinized+MF+Global+for+more+than+two+years+before+giving+it+the+green+light+to+trade+U.S.+securities.+%3C%2Fp%3E%3Cp%3EBut+there+were+some+major+compliance+issues+along+the+way+which+the+brokerage+eventually+fixed%2C+he+said.+%3C%2Fp%3E%3Cp%3EBaxter+said+the+U.S.+Commodity+Futures+Trading+Commission+found+that+the+company+failed+to+supervise+traders%2C+neglected+to+transmit+accurate+prices+of+its+natural+gas+options+and+didn%27t+maintain+written+records+of+at+least+one+of+its+clients.%3C%2Fp%3E%3Cp%3E%3C%2Fp%3E%3Cp%3E+%3C%2Fp%3E%3Cp%3EFurthermore%2C+MF+Global%27s+parent+company+was+based+in+Bermuda%2C+he+said%2C+noting+that+the+Fed+requires+its+primary+dealers+to+be+domiciled+in+the+U.S.%3C%2Fp%3E%3Cp%3EBut+MF+Global+fixed+all+of+these+issues%2C+said+Baxter%2C+and+that%27s+why+the+Fed+finally+approved+the+now-bankrupt+brokerage+to+trade+in+U.S.+securities.%3C%2Fp%3E%3Cp%3E%26quot%3BThe+New+York+Fed+designated+MF+Global+as+a+primary+dealer+to+meet+our+highly+specialized+needs%2C+and+we+followed+our+primary+dealer+policy+to+the+letter+without+fear+or+favor%2C%26quot%3B+said+Baxter%2C+in+prepared+testimony+to+a+Congressional+subcommittee.%3C%2Fp%3ELame+responses+from+CEOs%3Cp%3EThe+Fed+designated+MF+Global+as+a+primary+dealer+in+February+and+conducted+due+diligence+on+the+company+through+October%2C+%26quot%3Bwhen+its+financial+condition+deteriorated+abruptly+and+quickly%2C%26quot%3B+said+Baxter.%3C%2Fp%3E%3Cp%3EMoody%27s+downgraded+MF+Global+on+Oct.+24+and+the+following+day+the+brokerage+reported+its+%26quot%3Blargest+quarterly+earnings+loss+ever%2C%26quot%3B+said+Baxter.+At+that+point%2C+he+said+the+Fed+blocked+MF+Global+from+dealing+securities.%26nbsp%3B+%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fmoney.cnn.com%2F2011%2F12%2F15%2Fnews%2Fcompanies%2Fmf_global_fed%2Findex.htm%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+

+%3Cp%3ETORONTO%97The+Toronto+stock+market+opened+higher+as+oil+and+gold+prices+rose+and+traders+digested+positive+economic+news.%3C%2Fp%3E+%3Cp%3EThe+S%26P%2FTSX+composite+index+was+up+25.01+points+at+11%2C660.39.%3C%2Fp%3E+%3Cp%3EThe+Canadian+dollar+added+0.24+of+a+cent+to+96.67+cents+US%2C+with+gains+accelerating+after+the+release+of+statistics+showing+wholesale+trade+grew+more+than+expected+in+October.%3C%2Fp%3E+%3Cp%3EWall+Street+also+opened+higher%2C+with+the+Dow+Jones+up+46.7+points+11%2C913%2C+the+Nasdaq+ahead+12.4+points+at+2%2C567.73+and+the+broader+S%26P+500+up+4.7+points+at+1%2C224.34.%3C%2Fp%3E+%3Cp%3EAnd+commodities+were+mostly+higher%2C+with+the+January+oil+contract+up+85+cents+to+%2494.38.%3C%2Fp%3E+%3Cp%3EThe+February+gold+contract+added+US%245.70+to+US%241%2C603.60+per+ounce%2C+while+copper+shed+a+penny+to+US%243.32+per+pound.%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fwww.thestar.com%2Farticle%2F1104172%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+

+%3Cp%3E+What+fiscal+pact%3F+There+is+little+sign+that+last+week%27s+European+summit+even+happened%2C+judging+from+the+high+cost+of+sovereign+debt+and+the+weakness+in+European+markets.%3C%2Fp%3E%3Cp%3ELast+Friday%2C+European+leaders+–+with+the+exception+of+Britain%27s+David+Cameron+–+pledged+to+form+a+tighter%2C+more+deeply+integrated+fiscal+bond+among+member+states.+Of+course%2C+most+of+the+countries+still+need+to+get+parliamentary+approvals+before+moving+forward.%3C%2Fp%3E%3Cp%3E%3Cp%3E%3C%2Fp%3E%3Cp%3E%3Cp%3E%3C%2Fp%3E%3C%2Fp%3E%3C%2Fp%3E%3Cp%3EOne+of+the+most+crucial+aspects+of+the+fiscal+pact%2C+which+was+masterminded+by+Germany%27s+Angela+Merkel+and+France%27s+Nicolas+Sarkozy%2C+was+to+force+eurozone+members+to+maintain+responsible+budgets.+Countries+would+face+sanctions+if+they+allow+their+deficits+to+stray+above+3%25+of+their+gross+domestic+product.%3C%2Fp%3E%3Cp%3E%26quot%3B%5BThe+summit%5D+is+clearly+a+stepping+stone+to+fiscal+union+but+there+are+still+a+lot+of+hoops+to+jump+through%2C%26quot%3B+said+Nick+Stamenkovic%2C+fixed+income+strategist+at+RIA+Capital+Markets+in+Edinburgh%2C+Scotland.+%26quot%3BPeople+are+getting+more+and+more+nervous+for+the+outlook+of+Europe+and+the+lack+of+political+agreement.%26quot%3B%3C%2Fp%3E%3Cp%3EBond+buyers+showed+little+indication+that+they+felt+any+better+about+European+debt+in+Italy+on+Wednesday.+Italy%27s+%26euro%3B3+billion+auction+of+five-year+notes+met+with+relatively+strong+demand%2C+but+resulted+in+a+high+yield+of+6.47%25.%3C%2Fp%3EEuropean+debt+saga+far+from+over%3Cp%3EAnd+yields+on+Italy%27s+10-year+bonds+remain+closer+to+7%25+than+6%25.+That+7%25+level+is+closely+watched+since+it+typically+starts+to+flash+bailout+warning+signs.%3C%2Fp%3E%3Cp%3EGreece%2C+Ireland+and+Portugal+got+bailed+out+shortly+after+their+yields+crossed+that+mark%2C+though+the+bailouts+weren%27t+triggered+until+they+went+even+higher.+%3C%2Fp%3E%3Cp%3EItalian+bond+yields+have+risen+above+7%25+before.+While+many+experts+think+Italy+can+manage+those+levels+for+a+bit%2C+it+is+the+third-largest+economy+in+the+eurozone+and+third-largest+bond+issuer+in+the+world.+In+other+words%2C+it%27s+too+big+to+fail+but+also+too+big+to+bail+out.%3C%2Fp%3E%3Cp%3ELast+week%27s+formation+of+the+fiscal+union+was+supposed+to+keep+bond+yields+in+check.+But+the+only+thing+that+could+really+put+a+lid+on+rising+yields+would+be+a+promise+from+the+European+Central+Bank+that+it+will+step+in+to+buy+more+bonds.+But+that+didn%27t+happen.%3C%2Fp%3E%3Cp%3EThe+central+bank%27s+president%2C+Mario+Draghi%2C+has+stood+firm%2C+saying+the+ECB%27s+only+mandate+is+to+manage+inflation+%3Ca+href%3D%22http%3A%2F%2Fpay-day-loans-4all.com%22%3Echeap+pay+day+loans%3C%2Fa%3E%3C%21–+.+–%3E.%3C%2Fp%3EECB+willing+to+help+banks%2C+not+governments%3Cp%3E%26quot%3BThey%27re+not+going+to+intervene+on+behalf+of+Italy+because+they+believe+that+these+countries+should+get+their+fiscal+house+in+order+and+they+shouldn%27t+do+their+dirty+work+for+them%2C%26quot%3B+said+Stamenkovic.%3C%2Fp%3E%3Cp%3EOther+symptoms+of+European+economic+weakness+include+the+plunge+of+the+euro+to+its+lowest+level+since+mid-January+and+the+collective+decline+of+the+stock+markets.+Since+Friday%27s+summit%2C+London%27s+FTSE+%28%29%2C+the+DAX+%28%29+in+Frankfurt%2C+and+the+CAC+40+%28%29+in+Paris+have+all+dropped+between+1%25+and+4%25.%3C%2Fp%3E%3Cp%3EAdding+to+the+jitters+are+downgrade+worries.+Standard+%26amp%3B+Poor%27s+put+most+of+the+17+eurozone+members+on+notice+last+week+that+they+could+face+potential+downgrades.+The+ratings+agency+also+warned+the+EU%2C+several+banks+and+Europe%27s+rescue+fund+that+they+could+all+face+downgrades.%3C%2Fp%3E%3Cp%3EThe+warnings+all+came+ahead+of+last+Friday%27s+summit+and+the+S%26amp%3BP+has+said+it+hoped+to+complete+it%27s+decision-making+process+earlier+than+the+normal+90-day+window.%3C%2Fp%3E%3Cp%3E%3C%2Fp%3E%3Cp%3E+%3C%2Fp%3E%3Cp%3EMario+Monti%2C+the+newly-anointed+prime+minister+of+Italy%2C+was+clearly+annoyed+by+the+stigma+that%27s+been+attached+to+countries+relying+upon+economic+intervention%2C+when+the+purpose+of+that+intervention+is+to+avoid+international+contagion.%3C%2Fp%3E%3Cp%3E%26quot%3BIt+is+impossible+to+trace+a+border%2C+as+Germany+would+like+it%2C+between+the+virtuous+and+sinful+countries%2C%26quot%3B+he+told+Italian+senators+Wednesday.%3C%2Fp%3E%3Cp%3EMeanwhile%2C+German+Chancellor+Angela+Merkel+touted+the+plan+to+her+Parliament+Wednesday.+%26quot%3BWe+have+decided+to+correct+constructional+mistakes+that+were+made+at+the+beginning+of+the+economic+and+monetary+union%2C%26quot%3B+she+said.+%26quot%3BThe+answer+in+this+situation+could+not+be+to+do+nothing.%26quot%3B%3C%2Fp%3E%3Cp%3EYields+on+German+10-year+bonds+slipped+below+2%25%2C+once+again+cementing+their+Teutonic+reputation+as+a+bastion+of+economic+strength+and+stability.%3C%2Fp%3E%3Cp%3E%26quot%3BThe+whole+deal+seems+to+be+unraveling+in+our+faces%2C+and+that+is+clearly+benefiting+German+bunds+at+the+expense+of+peripheral+markets%2C+particularly+Italy%2C%26quot%3B+said+Stamenkovic.%3C%2Fp%3E%3Cp%3EThe+French+10-year+bond+yield+also+declined%2C+sliding+to+3.2%25.+%3C%2Fp%3E%3Cp%3E–+CNN%27s+Stephanie+Halasz+and+Hada+Messia+contributed%26nbsp%3B+%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fmoney.cnn.com%2F2011%2F12%2F14%2Fmarkets%2Feurope_debt%2Findex.htm%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+

Question

Covidien plc will spin off its Hazelwood-based drug business, turning it into an independent company that may restore the historic corporate name of Mallinckrodt.

Covidien, based in Dublin, makes medical devices and medical supplies in addition to drugs. The proposed spinoff also will have its legal headquarters in Ireland, largely for tax reasons, company executives said in a conference call.

But the spinoff’s U.S. operation will be based in Hazelwood, and its new CEO will work from here. Spokesman Steve Littlejohn said the company has not made a final decision on its name, “but chances are good that it will be Mallinckrodt.”

Covidien’s pharmaceutical business has $2 billion in sales, with two-thirds of that coming in the U.S. market. It turned an operating profit of $318 million this fiscal year.

The drug business is a large provider of acetaminophen, the ingredient in Tylenol, and the largest U.S. supplier of opioids; both are pain medicines. Other lines include contrast products used with medical imagery and nuclear medicine products.

The pharmaceutical operation currently employs about 2,500 people in metro St. Louis. A company spokesman said the move should have no immediate impact on jobs here. Some jobs might be added as the firm sets up its own administrative operation.

Analysts had speculated that Covidien might get rid of the drug operation. Although profitable, it is less lucrative than the rest of Covidien and demands a higher investment in research and development. The drug operation earns a 16 cent operating profit for every dollar of sales, compared with 28 cents for the rest of the company.

The drug operation has a “lumpy” revenue history, notes analyst Aaron Vaughn of Edward Jones in Des Peres. The division is largely a generic drugmaker, and that sector suffered through a price war in past years, he noted.

“We thought they would be getting the business right-sized so that they could spin it off and let it grow on its own,” he said.

Covidien Chief Executive Jose Almeida said the pharmaceutical drug division’s performance had improved in recent years.

“We’re confident the business can now stand on its own,” he said in a conference call Thursday morning.

He said the company had been thinking about shedding the business for several years, citing “major differences” between drugs and Covidien’s other medical products. The operations have different business models, sales channels, customers and capital requirements, and demand different talents, he said.

Separating the operations would allow both to focus on their own strategies, Almeida said. Shareholders also might get more value over the long term, he said.

The drug business “definitely needs some investment,” said analyst Jeff Jonas of Gabelli & Co. in an interview with Bloomberg News. “They need to find new products, invest in the pipeline. That’s a multiyear process.”

Research and development consumes 7 percent of revenue in the drug division, compared with 4 percent in the rest of Covidien.

The spinoff would be in the form of a stock distribution, tax-free to U.S. shareholders, the company said. That tax-free aspect made the option of a spinoff superior to the alternative of selling the unit, company officials said.

The spinoff could take 18 months to complete and would need approval of regulators.

Bloomberg News, citing unidentified sources, reported last summer that Covidien had tried to sell the unit, but talks broke down.

Almeida said he has picked a CEO for the new company, although he didn’t name the person. The person is a ’strong leader” with “broad pharmaceutical experience,” Almeida said, and will join the spinoff from another company.

The drug operation is now headed by Matt Harbaugh, the drug division’s chief financial officer serving as interim president. Based in Hazelwood, he has led the unit since the previous president left last year.

Besides its Hazelwood headquarters, the drug unit has a research operation in Webster Groves, a nuclear medicine facility in Maryland Heights and a plant just north of downtown St. Louis.

That plant sits on what was the Mallinckrodt family farm. G. Mallinckrodt & Co. was founded there in 1867 and grew up as a chemical and drug firm. It refined uranium for the Manhattan Project, which created the atomic bomb during World War II.

Avon Products acquired Mallinckrodt in 1982. Avon sold the company to International Minerals and Chemical Corp. in 1986, which later changed its own name to Mallinckrodt.

In 2000, Tyco bought the company. After Tyco went bankrupt amid scandals, its health care operations were spun off as Covidien in 2007.

Without the drug business, Covidien would have $9.6 billion in sales. Covidien’s remaining business makes trays, hypodermic needles, retractors, pumps for patient feeding and pain management, and other medical devices.

Covidien stock rose $1.39 to $43.55 on Thursday.

Source

Britain’s prime minister is threatening that he may not allow a group of 23 European Union states that plan to set up their own treaty to use EU institutions.

David Cameron says “The institutions of the European Union belong to the European Union, belong to the 27″ member states.

The 17 euro states and six other EU states early Friday agreed to create a new treaty that will allow them to introduce stricter fiscal rules in the hope of containing a worsening debt crisis payday loans.

They plan to rely on the European Commission and the European Court of Justice to enforce those rules.

Cameron said it was not in the U.K.’s interest to join the new treaty because he could not get special safeguards for the country’s financial center.

Source

Markets rose Monday on hopes that Europe’s leaders will agree on a plan to restore long-term confidence in the euro, saving it from collapse and averting global economic chaos.

A crucial week for the future of the euro kicks off later with a meeting of German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris. The two are expected to discuss how to achieve closer political and economic union of the 17 euro countries, including stricter budgetary oversight.

Merkel wants to change the basic EU treaty to reflect the tougher rules on euro countries and make them enforceable, while Sarkozy is resisting giving up more powers to Brussels, especially since he faces a tough re-election campaign in April. Sarkozy is thought to prefer an intergovernmental deal between the 17 euro countries.

The markets are hopeful that, given the gravity of the situation afflicting the eurozone, the two leaders will come up with a common proposal for tighter integration on budget matters. Analysts say that such a plan could lead to further emergency aid from the European Central Bank, possibly through the International Monetary Fund.

“Markets have gained ground ahead of a Franco-German summit which is supposed to resolve some long-standing issues between the two continental titans,” said Chris Beauchamp, market analyst at IG Index.

In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 5,582 while Germany’s DAX rose 0.9 percent to 6,133. The CAC-40 in France was 1.2 percent higher at 3,202.

The biggest gainer was Italy’s FTSE MIB, which was trading 2.2 percent higher, a day after the government led by Premier Mario Monti agreed big austerity and growth-boosting measures. They are to be presented to a skeptical Parliament later Monday.

Monti is to brief both Parliament chambers on the package, which includes euro30 billion ($27 billion) of spending cuts and tax hikes, euro10 billion of which will be reinvested to boost anemic growth instant payday loan.

His government agreed Sunday to slap taxes on property and luxury goods, increase the age at which retirees can draw pensions, trim the cost of Italy’s political class and give incentives to companies that hire women and young workers.

Significantly, the pressure on Italy eased in bond markets. The country’s ten-year bond yield was down 0.40 of a percentage point to 6.16 percent.

Italy is the eurozone’s third-largest economy and is considered too big to be bailed out. Its borrowing rates have in recent weeks hovered around the 7 percent mark, a level that eventually forced Greece, Ireland and Portugal to seek financial help. By comparison, bond yields in Germany, Europe’s largest and most stable economy, are roughly 2 percent.

Wall Street was poised for a stronger opening, too _ Dow futures were up 1 percent at 12,120 while the broader Standard & Poor’s 500 futures rose 1.1 percent to 1,257.

The upbeat tone in markets helped the euro advance 0.3 percent to $1.3448 and the main New York oil contract rise 83 cents a barrel to $101.79.

Earlier in Asia, Japan’s benchmark Nikkei 225 index added 0.6 percent to close at 8,695.98 while Hong Kong’s Hang Seng rose 0.7 percent to 19,179.69. South Korea’s Kospi ended 0.4 percent higher at 1,922.90.

Mainland Chinese shares lost ground on worries over the economic outlook. The benchmark Shanghai Composite Index lost 1.2 percent to 2,333.23.

____

Pamela Sampson in Bangkok contributed to this report.

Source

Anticipating a strong presence in the new Egyptian parliament, ultraconservative Islamists outlined plans Friday for a strict brand of religious law, a move that could limit personal freedoms and steer a key U.S. ally toward an Islamic state.

Egypt’s election commission announced only a trickle of results from the first round of parliamentary elections and said 62 percent of eligible voters cast ballots in the highest turnout in modern history.

However, leaked counts point to a clear majority for Islamist parties at the expense of liberal activist groups that led the uprising against Hosni Mubarak, toppling a regime long seen as a secular bulwark in the Middle East.

The more pragmatic Muslim Brotherhood is poised to take the largest share of votes, as much as 45 percent. But the Nour Party, which espouses a strict interpretation of Islam in which democracy is subordinate to the Quran, could win a quarter of the house, giving it much power to affect debate.

A spokesman, Yousseri Hamad, said his party considers God’s law the only law.

“In the land of Islam, I can’t let people decide what is permissible or what is prohibited,” Hamad told The Associated Press. “It is God who gives the answers as to what is right and what is wrong.”

The Nour Party is the main political arm of the hard-line Salafist Muslim movement, which espouses a strict form of Islam similar to that practiced in Saudi Arabia. Salafis, who often wear long beards and seek to imitate the life of the Prophet Muhammad, speak openly about their aim of turning Egypt into a state where personal freedoms, including freedom of speech, women’s dress and art, are constrained by Islamic law _ goals that make many Egyptians nervous.

Salafis object to women in leadership roles, citing Muhammad as saying that “no people succeed if led by women.” However, when election regulations forced all parties to include women, Salafi cleric Yasser el-Bourhami relented, saying that “committing small sins” is better than “committing bigger ones” _ by which he meant letting secular people run the government.

In the end, the party put women at the bottom of its lists, represented by flowers since women’s photos were deemed inappropriate.

This week, Salafi cleric and parliamentary candidate Abdel-Monem Shahat caused a stir by saying the novels of Egypt’s Nobel laureate Naguib Mahfouz, read widely in Egyptian schools, are “all prostitution.”

Salafis are newcomers on Egypt’s political scene. They long shunned the concept of democracy, saying it allows man’s law to override God’s. But they formed parties and entered politics after Mubarak’s ouster, seeking to enshrine Islamic law in Egypt’s new constitution.

By contrast, the Muslim Brotherhood, Egypt’s largest and best organized political group, was officially banned under Mubarak but established a nationwide network of activists who built a reputation for offering services to the poor. After Mubarak’s fall, the group’s Freedom and Justice Party campaigned fiercely, their organization and name-recognition giving them a big advantage over newly formed liberal parties.

Stakes are particularly high since the new parliament is supposed to oversee writing Egypt’s new constitution. The Supreme Council of the Armed Forces, which took control of the country when Mubarak fell, has tried to impose restrictions on membership in the 100-member drafting committee. The Muslim Brotherhood has said it will challenge the move, and a strong showing by Islamists in the elections could boost its popular mandate to do so.

Hamed, the Nour Party spokesman, said democracy can’t pass laws that contradict religion.

“We endorse Egyptian democracy,” he said. “However, I don’t give absolute freedom to people to legislate to themselves and decide on what is right or wrong.

“We have God’s laws that tell us that.”

He suggested, for example, that alcohol should be banned and that a state agency could penalize Muslims for eating during the day during the holy month of Ramadan, when the devout fast from dawn to dusk.

The Muslim Brotherhood and Salafis have both cooperated and disagreed in the past.

They tried to form an electoral alliance, which broke down over disagreements about including Christians and women in their electoral lists. However, the two parties campaigned together in some areas and declined to contest certain seats so as not to split the Islamist vote and allow liberal candidates to win.

The strong Islamist showing worries liberal parties who fear the two groups will work to push a religious agenda. It has also caused many youth activists who launched the anti-Mubarak uprising to feel that their revolution has been hijacked. Still, the liberal Egyptian Bloc coalition, which is competing with the Salafis to be the second-largest parliamentary bloc, could counterbalance hard-line elements.

Cooperation between the Brotherhood and Salafis in parliament isn’t guaranteed, said Shadi Hamid, Middle East expert with the Brookings Doha Center. The Brotherhood is a pragmatic organization that will work with other parties to achieve its goals, while the Salafis shun compromise.

Once the parliament is seated, Hamid expects the Brotherhood to focus on establishing a strong parliamentary system, reforming state institutions and boosting the economy _ goals they share with liberal groups.

“Banning alcohol or passing laws on women’s dress are not on their priority list, and they see these issues as a distraction from the issues at hand,” he said.

Still, a strong Salafist bloc in parliament will have a “massive effect,” he said, by giving the group a larger platform for its views.

“The Salafis are going to insert religion into the public debate in a way that would not have happened otherwise,” he said.

Many in Egypt’s Coptic Christian population, which makes up 10 percent of the country, fear the Salafis will push for laws that will make them second-class citizens.

Even some religious Egyptians see the Salafi as too extreme.

“I am religious and don’t want laws that go against my beliefs, but there shouldn’t be religious law,” said Ahmed Abdel-Rahman, a geography teacher. “I don’t want anyone imposing his religious views on me.”

The election commission said Friday that more than 8 million eligible voters _ 62 percent _ participated in the first round. But it announced final results in only a few races. It remains unclear when complete final results will be released.

This week’s vote, held in nine provinces, will determine about 30 percent of the 498 seats in the People’s Assembly, parliament’s lower house. Two more rounds, ending in January, will cover Egypt’s other 18 provinces.

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ST. LOUIS

The Robin Hoods in this northern Greek town sport rubber gloves, fuses and orange stickers.

Nearly two years of pay cuts, job cuts and tax hikes have pummeled living standards in debt-crippled Greece and the country is facing record unemployment and a fourth year of recession in 2012. On a personal level, that means many in Veria can’t pay for basic necessities such as electricity and end up getting cut off from the grid.

That’s where the “Citizens of Veria” activists step in.

The group illegally reconnects needy households back to the electric grid in a direct challenge to the country’s dominant power provider, the Public Power Corporation.

“By cutting off power, (PPC) punishes young children, elderly people and generally those who can’t cope without it,” said activist Nikos Aslanoglou. “We decided that we had to reconnect them. We’re not hiding, everybody knows who we are.”

He says the group has so far reconnected dozens of households, particularly in the villages and small towns outlying Veria.

Greece sank into a financial crisis in 2009 after it emerged that authorities had been falsifying financial data for years. The fallout from that blocked the country’s access to bond markets. Greece only escaped bankruptcy with a euro110 billion ($147 billion) international rescue loan in May 2010, and when that was not enough, a second, euro130 billion ($174 billion) rescue deal that awaits final approval.

In return, the government has promised to slash bloated budget deficits through harsh austerity measures.

As jobs become rarer and worse-paid, many in this northern farming region are falling through a weakening social safety net. In the village of Agia Marina, 9 miles (15 kilometers) from Veria, activists recently reconnected the house of a disabled, 34-year-old single mother, who lives with four of her five children.

As they left, they placed an orange sticker on the electricity meter that reads: “Citizens of Veria. Social solidarity. We are reconnecting the power.”

The woman’s eldest daughter, a 19-year-old student, said before the activists came her siblings _ aged from 6 to 18 _ had to study by candlelight or with oil lamps in an unheated house.

“Our only income is a euro400-euro500 ($535-$668) welfare payment every two months,” said the student, Vasso. “PPC disconnected us because we owed them money, and we were left in the dark for about a month, but then some gentlemen came and reconnected us. Now we have heating again.”

She didn’t want her full name used because she was afraid authorities would track down her family.

What the activists are doing is illegal and can be punished by more than ten years’ imprisonment depending on the size of the outstanding bills, although in most cases sentences do not exceed five years no fax payday loan.

“Greek law treats the theft of electricity like any other common theft,” University of Thessaloniki law professor Lambros Margaritis said.

Undeterred, a three-strong activist team recently reconnected a house in the small town of Meliki, where a 54-year-old woman lives with her two unemployed sons in their thirties. Working deftly, it took them 15 minutes.

“We’re not stealing, the electricity consumption is recorded,” Aslanoglou said. “The poor houseowners can’t face consequences, it’s us who do the reconnecting.”

Hence the stickers.

Veria activists claim their campaign is catching on in other parts of the country _ particularly since the introduction in September of a deeply resented new property tax levied through power bills. People who can’t pay the new tax face losing their power supply.

That prospect has enraged even PPC employees, who staged a sit-in at a company office in Athens to disrupt the collection of the new emergency tax.

While the Veria municipal authority says have-nots should not be disconnected over the new tax, Mayor Haroula Ousountzoglou says the activists are going too far.

“What the group is doing may be very romantic, it is, however, dangerous,” Ousountzoglou told the AP. “PPC just goes and cuts off the electricity again, and imposes additional charges.”

In cases of repeated illegal reconnection, homeowners can also face prosecution _ or have their link severed at the nearest electricity pole, a drastic move that activists are powerless to counter.

PPC public relations officer Kimon Stergiotis warned that the company is determined to protect its interests.

“To illegally reconnect cut power links poses severe threats to the life and property of unsuspecting citizens,” he said. “In any case, PPC will use the law to its utmost severity.”

Ousountzoglou said her town has about 330 families on a welfare program that sometimes includes assistance in paying power bills.

“But our funds are constantly dwindling, and I keep making the rounds of local firms to ask for contributions,” she added.

The Veria mayor has threatened to sue PPC if people who really can’t pay the property tax are left without power.

“We told them we’re not joking,” she said. “PPC can’t behave like that to needy people.”

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