Gaddafi, in meat locker, still divides Libya (Reuters)

MISRATA, Libya (Reuters) – Muammar Gaddafi's body lay in an old meat store on Friday as arguments over a burial, and his killing after being captured, dogged efforts by Libya's new leaders to make a formal start on a new era of democracy.

With a bullet wound visible through the familiar curly hair, the corpse seen by Reuters in Misrata bore other marks of the violent end to a violent life, still being broadcast to the world a day later on looping snatches of gory cellphone video.

The interim prime minister offered a tale of "crossfire" to explain the fallen strongman's death after he was dragged, still alive, from a storm drain in his home town of Sirte. But seeing him being beaten, while demanding legal rights, to the sound of gunfire, many assume he was simply summarily shot.

Gaddafi's wife, who found refuge in neighboring Algeria while her husband and several sons kept their word to fight to the death, was reported to have demanded an inquiry from the United Nations. The U.N. human rights arm said one was merited.

Controversy over the final moments of a man who once held the world in thrall with a mixture of eccentricity and thuggery raised questions about the ability of Libya's National Transitional Council to control the men with guns, and disquiet among Western allies about respect for human rights among those who claimed to be fighting for just those ideals.

The body appeared to be the latest object of wrangling among the factions of fighters who overthrew him -- along with control of weapons, of ministries and of Libya's oil wealth.

Libyans, and the Western allies who backed the revolt that ended Gaddafi's 42-year rule two months ago, have indicated their impatience to begin what the United States declared was a democratic "new era." NATO was expected to agree on Friday to start winding down its seven-month air campaign over Libya.

But regional and other rivalries have been holding up the disposal of the corpse of Gaddafi, who was seized by fighters on Thursday, and a formal declaration of Libya's "liberation."

BURIAL DISPUTE

"They are not agreeing on the place of burial. Under Islam he should have been buried quickly but they have to reach an agreement whether he is to be buried in Misrata, Sirte, or somewhere else," one senior NTC official told Reuters.

Others said talks were under way with members of Gaddafi's tribe to dispose of him in secret, avoiding creating a shrine.

In Misrata, a local commander, Addul-Salam Eleiwa, showed off the body, torso bare, on a mattress inside a metal-lined cold-store by a market. He said: "He will get his rights, like any Muslim. His body will be washed and treated with dignity. I expect he will be buried in a Muslim cemetery within 24 hours."

But amid the rumor and counter-rumor swirling between Sirte, Gaddafi's last bastion, and Misrata, whose siege at his hands made it a symbol of resistance, nothing was certain.

Interim oil minister Ali Tarhouni said he urged colleagues to hold off burying Gaddafi for several days. Dozens of people, many with cellphone cameras, filed in to see that he was dead.

"There's something in our hearts we want to get out," said Abdullah al-Suweisi, 30, as he waited. "It is the injustice of 40 years. There is hatred inside. We want to see him."

In a small triumph for those who were inspired by Arab Spring uprisings elsewhere to launch the rebellion in February in Benghazi, the eastern city was chosen as the venue for NTC chairman Mustafa Abdel Jalil to announce that the whole country was liberated. But the planned announcement was delayed from Saturday to Sunday.

That will set a clock ticking on a tentative timetable for a transitional government and for drafting a constitution, under which full elections would, Libyans hope, take place within a year or two.

There has been tension between the easterners and leaders from Misrata, Tripoli and other western cities, who take credit for overrunning the capital in August and complain they are under-represented in an interim government which has yet to move fully to Tripoli. Under the post-liberation plan, that is supposed to happen within weeks, though some in Benghazi, home to much of the oil industry, are keen to decentralize power.

RISKS OF DIVISION

As shown by the delay over burying Gaddafi, differences of opinion in a country that spent 42 years obeying the whims of one man take time to work out - time that worries some observers in light of the heavy weaponry that abounds in Libya.

The uncertain whereabouts of Saif al-Islam, Gaddafi's son and heir-apparent, believed by NTC officials to have escaped from besieged Sirte and be heading for a southern border, may also distract from the process of switching from war to peace.

And without the glue of hatred for Gaddafi and his clan, some fear a descent into the kind of strife that bedevils Iraq after Saddam Hussein, even if Libya lacks its sectarian divide. Optimists point to how, in two months of controlling Tripoli, the Libyan factions have argued but, so far, not fought.

"Can an inclusive, effective national government be formed? Yes, if factions can avoid fighting," Jon Marks, chairman of Britain's Cross Border Information consultancy said. "So it's all about the politics, and the $64,000 question is whether the new polity can retain the overall consensual feel you had during the revolution, or whether dangerous splits will occur."

Long-standing regional rivalries in a country only put together under Italian colonial rule in the 1930s are part of a complex of tribal, ethnic and other divisions which Gaddafi exploited at times to control the thinly populated country of six million and its substantial oil and gas resources.

U.S. Secretary of State Hillary Clinton received first news of Gaddafi's capture in a phone message. "Wow," she exclaimed, looking into a phone handed to her by an aide in Kabul.

Speaking in Islamabad on Friday, Clinton said Gaddafi's death marked the start of a "new era" for the Libyan people.

Nabil Elaraby, chief of the Arab League which in March had given NATO actions a regional seal of approval, called for unity: Libyans should "overcome the wounds of the past, look toward the future away from sentiments of hatred and revenge."

China echoed calls for unity. It said there was a need for "an inclusive political process."

OIL INTERESTS

Russia, which like China was cool to NATO's help for the rebels, may share its concern for investments after a senior Libyan oil official said representatives of Moscow's Gazprom had been summoned to Tripoli to explain what he called breaches of commitments made in contracts it signed under Gaddafi.

Companies from France and Britain, which drove the initial Western support for the rebellion, hope that will stand them in good stead as Libya's new leaders start allocating new deals.

Among those disappointed by his death were advocates of the International Criminal Court, which had hoped to try him for crimes against humanity, and relatives of those who died in the Lockerbie airliner bombing, still looking for answers more than two decades after a presumed Libyan bomb downed the jumbo jet.

"Investigating whether or not his death was a war crime might be unpopular," Amnesty International's Claudio Cordone said. "However, the NTC must apply the same standards to all, affording justice even to those who categorically denied it to others. Bringing Gaddafi to trial would have finally given his numerous victims answers as to why they were targeted and an opportunity for justice and reparations."

GORY END

As his gory end invigorated new protests in Syria, where President Bashar al-Assad has tried to crush protests against his family's similarly lengthy monopoly on power, the precise circumstances of his death remained unclear.

Looking dazed with blood streaming down his face, Gaddafi can be heard in one video saying "God forbids this."

"This is for Misrata you dog," said one man hitting him.

"Do you know right from wrong?" Gaddafi says.

"Shut up you dog," someone replies as more blows rain down.

"Keep him alive, keep him alive!" someone shouts.

Interviews conducted separately with those who say they were present offer a picture Gaddafi's final hours, and with the video footage, give clues about his last stand and demise.

"He called us rats, but look where we found him," said Ahmed al-Sahati, a 27-year-old fighter, standing next to two stinking drainage pipes under a six-lane highway near Sirte.

Elsewhere trucks and cars, probably from among a convoy of about 75 targeted by French NATO jets, lay burned out. Many of their occupants sat charred inside, others, dozens of them, strewn dead across nearby fields as the diehards who had held out in Sirte for weeks raced for a getaway in all directions.

Government fighter Saleem Bakeer recounted to Reuters a version of Gaddafi's capture that was corroborated by others, including one man who had what he said was Gaddafi's golden pistol: "At first we fired at them with anti-aircraft guns, but it was no use," said Bakeer, being feted by comrades near the road and the drainage pipes. "Then we went in on foot."

After confronting pro-Gaddafi gunmen who said their "master" was wounded and inside, he went on: "We went in and brought Gaddafi out. He was saying 'what's wrong? What's wrong? What's going on?'." He said Gaddafi was then put in a vehicle.

Mahmoud Hamada, a fighter clearly recognizable from the films as being present at the time, said Gaddafi was already barely able to walk but alive when put into an ambulance.

The doubts befitted a man who retained an aura of mystery in the desert as he tormented Western powers by sponsoring bomb-makers from the IRA to the PLO then later embraced Tony Blair, Barack Obama, Nicolas Sarkozy and Silvio Berlusconi in return for investment in Libya's oil and gas fields.

Some NTC officials insisted the fighters had tried to get Gaddafi to hospital but he was hit in crossfire. But another, speaking to Reuters anonymously, said simply: "They beat him very harshly and then they killed him. This is a war."

(Additional reporting by Taha Zargoun and Tim Gaynor in Sirte, Barry Malone, Yasmine Saleh and Jessica Donati in Tripoli, Brian Rohan in; Benghazi, Jon Hemming and Andrew Hammond in Tunis, Samia Nakhoul in Amman, Christian Lowe in Algiers, Shaimaa Fayed in Cairo, Sami Aboudi in Dubai and Andrew Quinn in Islamabad; Writing by Alastair Macdonald)

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Job gains ease recession fears but still weak (Reuters)

WASHINGTON (Reuters) – Employers hired more workers than expected in September and job gains for the prior two months were revised higher, easing recession fears.

But the unemployment rate remained stuck at 9.1 percent for a third straight month, keeping pressure on President Barack Obama and the U.S. Federal Reserve to do more to spur the recovery.

Nonfarm payrolls rose 103,000 in September, the Labor Department said on Friday, but that included the return of 45,000 striking communications workers. Excluding those workers, employment increased by a meager 58,000.

"It underscores the belief that the economy has skirted a recession, but that's not to say it's out of the danger zone because there are significant risks out there," said Millan Mulraine, senior macro strategist at TD Securities in New York.

Job growth is still falling short of the pace needed to pull down unemployment, though the report had a firmer tenor than economists had expected. Hourly earnings rebounded, the length of the average work week rose, and revisions showed 99,000 more jobs were added in July and August than initially reported.

The unemployment rate also managed to hold steady despite a surge of new workers into the labor force.

U.S. stocks snapped a three-day rally as a downgrade of Spain and Italy's credit ratings overshadowed the jobs report. Treasury debt prices fell for a fourth straight day, while the dollar rose marginally against a basket of currencies.

Economists had expected payrolls to increase 60,000 last month, with the jobless rate steady at 9.1 percent. Employment growth has decelerated sharply from the first quarter of the year, when payroll growth averaged more than 165,000 a month.

The weak labor market poses a critical challenge for Obama, who faces a tough battle to win reelection in November 2012.

Obama has proposed a package of measures to spur jobs growth, but the plan has run into stiff opposition from Republicans, raising the prospect Washington will be unable to take decisive action.

"It's anemic growth at best, and you don't see anything from this administration that's going to turn it around," Rick Santorum, a former senator and a former Republican presidential hopeful, said on CNBC.

White House officials conceded the jobs growth was not good enough.

"I would not say that we are satisfied in the slightest," National Economic Council Director Gene Sperling told Reuters Insider. "There still is a risk that this economy could stall out or even have a double-dip recession."

The U.S. economy needs to grow by at least a 2.5 percent annual rate, with payrolls expanding by around 125,000 positions a month, just to keep the jobless rate from rising.

RECESSION WATCH

Health care, construction, retail, and professional and business services all contributed to the rise in payrolls, while manufacturing was a drag for a second straight month.

The closely watched report was the latest sign to suggest the world's largest economy was likely to skirt a recession despite weakness over the summer, although prospects for the nation's 14 million unemployed remained grim.

Private employment increased 137,000 last month, an acceleration from August's mere 42,000. But government payrolls fell 34,000 as employment at the local government level fell 35,000 and the Postal Service shed 5,000 positions.

The drop in local government payrolls included a loss of 24,400 education jobs.

Recent reports on manufacturing, business spending and auto sales suggest the economy fared better in the third quarter after growing at an anemic 1.3 percent annual pace in the April-June period, although job growth did not pick up.

Analysts warn that the economy is still not out of the woods, with Europe's debt crisis posing a threat that could derail the U.S. recovery. Industrial output in Germany -- Europe's biggest economy -- fell in August.

PUSHING ON A STRING

The Federal Reserve last month announced new steps to breathe life into the recovery by pushing long-term borrowing costs lower, but economists do not expect the effort to bear much fruit at a time many Americans are unable to access credit.

U.S. consumer credit fell by the most in nearly 1-1/2 years in August, the Fed said in a separate report, confirming the retrenchment by households whose confidence was damaged by a wrenching political fight over the U.S. deficit and steep stock price drops.

Uncertainty over the economic outlook has made businesses reluctant to hire aggressively.

"One of the main problems in the economy is the lack of confidence in economic policies here and in Europe," said Sung Won Sohn, an economics professor at California State University in the Channel Islands. "Most of the cards have been dealt and the politicians have been squabbling among themselves."

While the jobless rate held steady last month, other measures of unemployment grew darker.

The average duration of unemployment hit a record high of 40.5 weeks. and almost 45 percent of the 14 million jobless Americans had been out of work for six months or more, up from 42.9 percent in August.

In addition, a broader measure of unemployment that includes people who want to work but have given up looking for jobs and those working only part time for economic reasons rose to 16.5 percent from 16.2 percent.

But there were also some bright spots.

Hourly earnings rose 4 cents after falling in August; the length of the work week rose to 34.3 hours from 34.2 hours; and job gains were widespread.

Health care and social services payrolls increased by 40,800 jobs, construction added 26,000 workers -- possibly due to rebuilding after Hurricane Irene -- and temporary employment rose 19,400. Temporary hiring is sometimes seen as a harbinger of permanent hiring.

But manufacturing, which has been the pillar of the economy, shed 13,000 jobs, the second straight monthly decline.

(Additional reporting by Mark Felsenthal in Washington; Editing by Andrea Ricci and Leslie Adler)

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Chris Christie sources say he still may run (The Christian Science Monitor)

Oh, dear. After issuing all but Shermanesque statements about not running for president – “I will not accept if nominated and will not serve if elected,” as Civil War General William Tecumseh Sherman put it back in 1884 – it looks like New Jersey Governor Chris Christie still may enter the rocky race for the Republican nomination.

That, at least, is what “several people close to the governor with knowledge of his thinking” tell the Associated Press.

Christie reportedly is being urged by senior establishment Republicans (including George H.W. Bush, Henry Kissinger, and Nancy Reagan) who see him as the best bet to beat President Obama in 2012. Former New York governor George Pataki has just endorsed him.

The Monitor's Weekly News Quiz for Sept. 25-30, 2011

“He’s definitely our strongest candidate in November,” US Rep. Peter King (R) of New York told the New York Post. “He’s the closest we have to putting together the old Reagan Democratic coalition.” Of course, no one close to Christie says anything definitive on the record. Who’d want to get out front of a man of Christie’s Falstaffian heft?

Speaking of which, columnists (including the Monitor’s) have felt free in recent days to comment on Christie’s ample (and perhaps unhealthy) girth as a factor in whether he’s qualified to be president. Christie himself has spoken of his weight problem.

But therea€?s been pushback to that line of thinking.

Writing in New York magazine (under the headline “Chris Christie Is Fat. So What?”) Jonathan Chait argues that “the American overclass prizes thinness to a degree that is actually unhealthy, and the disgust privileged Americans feel toward fat people, who are more likely to be poor and middle-class, dresses itself up as medical advice.”

“Why does his weight matter at all?” Chait asks. “The only real reasoning I see here is that American elites view obesity with disgust, and they’re repulsed at the notion that a very fat guy could rise to a position of symbolic leadership. It’s not a very attractive sentiment.”

Believe it or not, some see the issue as one of civil rights. The National Association to Advance Fat Acceptance (whose slogan is “We come in all sizes”), for example.

Peggy Howell, the organization’s public relations director, is quoted as saying, "I see it as a tactic to try and take attention away from his accomplishments and instead focus on his body size.”

"Do people have a bias against President Obama because he smokes?” she asks. “Why should there be any difference in supporting a leader who smokes cigarettes or a leader who has a little extra weight on his body? Neither are perceived to be healthy choices."

On the New York Daily News opinion page, David Swerdlick even suggests that Christie’s heftiness is a “winning trait” for many Americans.

“It's precisely because of Christie's husky stature – combined with his blunt-talking, Jersey-guy attitude – that makes him such an appealing candidate to those in the GOP who have been begging him to get in the race,” he writes. “Why? His size, style and every-guy persona are the perfect contrast to President Obama. Where Obama is slim, Christie is beefy. Obama is reflective and Christie shoots from the hip.”

No, it won’t be Christie’s weight but his less-than-tea-party background that could make it hard for him to win the GOP nomination.

Dan Amira, who writes on politics for New York magazine, has a recent article titled “Five Things Conservative Voters Would Hate About Chris Christie.”Among them:

He’s said there needs to be “a clear path to citizenship” for immigrants (what hardliners call “amnesty”).

He’s for “common sense” guns laws “to make sure that we don't have an abundance of guns out there” – the kind of position that makes National Rifle Association members double-bolt their gun cabinets.

He’s said that "climate change is real" and "human activity plays a role in these changes." (Among the declared GOP candidates, only former Utah Governor Jon Huntsman has not waffled on or denied global warming.)

New Jersey under Christie’s leadership is participating in the Race to the Top federal education program, and he’s called Obama’s Education Secretary Arne Duncan “a great ally to try to reform education for kids across America … an extraordinary leader on this issue.” (Most of the declared GOP candidates would can Race to the Top.)

While most conservatives were decrying plans for an Islamic mosque and cultural center near 9/11’s ground zero, Christie said both supporters and critics were using it as a political football.

So if Christie does get into the race, it won’t be his physical size but the nature and dimension of his record that tips the political scale.

The Monitor's Weekly News Quiz for Sept. 25-30, 2011

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Recovery still on the ropes in late summer: Fed (Reuters)

WASHINGTON (Reuters) – The sluggish recovery failed to gain any speed in recent weeks and softened in some areas with factory activity sputtering and retail sales under pressure, the Federal Reserve said on Wednesday.

"Economic activity continued to expand at a modest pace, though some Districts noted mixed or weakening activity," the Fed said in its Beige Book collection of anecdotal reports of economic conditions in the 12 Fed districts.

Growth was modest or slight in five districts through late August, while the remaining seven described activity in terms such as "very subdued" or "more slowly." In the Fed's last Beige Book covering the period into early July, eight regions characterized growth as having slowed.

A steady drip of news suggesting the weak recovery is stalling is pushing the Fed closer to a further easing of monetary policy. Some analysts think the U.S. central bank could take action at its next meeting on September 20-21.

A report on Friday showed employers added no new jobs on net in August, leaving the unemployment rate stuck at a lofty 9.1 percent more than two years after the end of the recession.

The Beige Book, which was prepared for the next Fed meeting, said consumer spending increased in most districts, but spending on items besides cars was flat or down in several places. Manufacturing conditions were mixed across the country and had slowed in many districts, the central bank said.

Hard-hit residential real estate markets remained weak overall. A separate report on Wednesday showed demand for U.S. home loans fell for a third straight week last week although mortgage rates fell to or near record lows.

The Fed said price pressures edged lower in recent weeks, although retail prices rose in some districts. Labor markets were generally stable and some districts reported modest gains.

(Editing by Andrea Ricci)

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Service sector picks up, jobs still a worry (Reuters)

By Steven C. Johnson Steven C. Johnson – 54?mins?ago

NEW YORK (Reuters) – The dominant services sector picked up steam unexpectedly last month, snapping a three-month streak of slower growth, though the pace of hiring eased slightly, underscoring broader job market concerns.

The surprise jump in the Institute for Supply Management's non-manufacturing index was cause for some encouragement, analysts said, as it suggested consumers were holding up better than thought in what appears to be a stalling U.S. economy.

Yet it probably will not be enough to relieve pressure on President Barack Obama to spur more job creation. Obama is due to detail a new jobs plan in a national speech on Thursday.

Last week, government data showed the economy added no new jobs in August, leaving the jobless rate at or above 9 percent for a fifth consecutive month.

"The unexpected rebound (in the ISM report) will help to ease recession fears following last week's news that payroll employment stagnated," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

But he said the ISM reading of 53.3 in August, while up from July's 17-month low of 52.7, "is consistent with only muted economic growth of about 1.5 percent."

Economists polled by Reuters had expected a 51.0 reading. A reading above 50 indicates expansion.

While new orders rose, suggesting continued demand, the employment index slipped to 51.6, its lowest since September 2010, underscoring the difficulties facing the roughly 14 million Americans who are out of work.

Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, said the ISM employment reading indicates payroll growth "of only about 50,000," well below what would be needed to make a dent in the jobless rate.

He also warned that the report is "little more than a lagging indicator of the rate of growth of core retail sales, which have held up well in recent months."

"There are signs that the economy continues to be under stress," Lockheed Martin Corp Chief Executive Robert Stevens said on Tuesday.

Speaking at the Reuters Aerospace and Defense Summit in Washington, Stevens cited high U.S. unemployment and weak economic growth. But he added, "It's not clear to me whether that conveys a sense of a double-dip recession."

ALL ABOUT JOBS

The poor U.S. jobs outlook, along with a prolonged debt crisis in Europe, helped spark a stock market sell-off last month that has battered business and consumer confidence.

That has increased pressure on the Obama administration, particularly with the 2012 election just over a year off.

"Jobs growth is far below the level needed to bring the unemployment rate lower on a sustained basis," said Michael Woolfolk, currency strategist at BNY Mellon in New York.

Political clashes over the U.S. budget and debt burden, which led Standard & Poor's to strip the country of its AAA credit rating, also unnerved investors and consumers alike.

Stocks pared some losses Tuesday after the better-than-expected report but were still down more than 1.5 percent, while buying of safe-haven U.S. government debt faded slightly.

EUROPE, ASIA STRUGGLE, FED IN FOCUS

Firmer growth in the U.S. service sector was at odds with readings from beyond U.S. borders. Data on Monday showed service sector growth slowed sharply in the euro zone, Britain and China, boosting fears of global recession.

If the United States, the world's largest economy, can keep out of recession, that outlook may improve, analysts said.

Wall Street increasingly expects the Federal Reserve, which already warned it may hold interest rates near zero until 2013, to pour more money into the financial system to boost growth.

"At the margin, (Tuesday's ISM data is) an argument against any further accommodation at this point, but this doesn't necessarily countervail the whole bulk of the other data," said Bill Jordan, economist at Ried Thunberg, a unit of ICAP.

Fed Chairman Ben Bernanke is scheduled to speak in Minnesota on Thursday about the U.S. economic outlook. The Fed's entire policy-setting committee will meet September 20-21.

(Additional reporting by Mike Miller in Washington and Emily Flitter in New York; Editing by James Dalgleish)

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6 years after Katrina, Lower 9th Ward still bleak (AP)

NEW ORLEANS – In New Orleans' Lower 9th Ward, the grasses grow taller than people and street after street is scarred by empty decaying houses, the lives that once played out inside their walls hardly imaginable now.

St. Claude Avenue, the once moderately busy commercial thoroughfare, looks like the main street of a railroad town bypassed long ago by the interstate. Most buildings are shuttered, "For Sale" signs stuck on their sides. There aren't many buyers. And the businesses that are open are mostly corner stores where folks buy pricey cigarettes, liquor and packaged food.

Six years after Hurricane Katrina slammed into the Gulf Coast, the New Orleans neighborhood that was hardest hit still looks like a ghost town. Redevelopment has been slow in coming, and the neighborhood has just 5,500 residents — one-third its pre-Katrina population.

But politicians, investors and celebrities continue to promise a better future. City leaders recently announced plans to rebuild a high school and pave the neighborhood's roads. And actor Wendell Pierce, who stars in an HBO series about New Orleans, is backing a new supermarket for an area that hasn't had one in 20 years.

While residents welcome the news, they remain skeptical. Promises have been dashed too many times.

"Look around you at the Katrina houses!" said Robert Stark, a 54-year-old disabled veteran, sweating in stifling August heat on a porch looking onto Flood Street. He waved at two vacant crumbling houses, like so many that dot the Lower 9th Ward.

He shook his head and added: "Look at the grass." In many lots, fields of high grass grow in place of houses. "There ain't nothing new down here. Nothing new ... nothing new."

That's not completely true.

Since Katrina, the predominantly black neighborhood has been the site of rebuilding by environmental groups and thousands of volunteers. There's now an eco-friendly community center and a cluster of more than 50 modernistic houses, built with the help of actor Brad Pitt. It sits near where the floodwall toppled on Aug. 29, 2005, killing dozens of people and swamping thousands of homes with floodwaters that reached rooftops.

Also, a charter school has been rebuilt and many of the shotgun-style homes and Creole cottages in the older part of the neighborhood, Holy Cross, are a display of bright New Orleans colors and cheery yards.

But residents of the Lower 9th Ward, downriver from the French Quarter, nevertheless feel left behind.

Other parts of New Orleans have flourished thanks to federal recovery dollars that have brought new businesses, schools and streets.

Entrepreneurship and civic engagement is up, city schools have shown test-score gains and the middle class is growing, according to a new report by the Greater New Orleans Community Data Center, a group tracking the city's recovery. Even crime — still nearly twice the national average — is being held in check and falling, the report said. Meanwhile, the Army Corps of Engineers is getting closer to finishing $14 billion in work to better shield the city from future hurricanes.

"Some of the data shows that New Orleans is rebuilding better than before," said Allison Plyer, deputy director of the Greater New Orleans Community Data Center.

Still, Plyer said the Lower 9th Ward is among a number of low-income communities that have had difficulty rebuilding since Katrina's flooding.

In the Lower 9th Ward, the fire station for Engine 39 hasn't been rebuilt. Instead, the firefighters use a trailer. Schools and churches are boarded up. Scores of houses still bear the markings of search-and-rescue crews — the now familiar "X" spray painted on doors and the front of houses to designate whether a building had been searched, by whom and whether any bodies had been found inside. The only difference is they are faded now.

The lack of people makes those who've come back feel that their neighborhood has been forgotten, even though a steady stream of politicians came to promise to help after Katrina and millions of dollars flowed in.

Now there's a new push to revive the neighborhood.

In recent days, city leaders have put forward plans to rebuild the Alfred Lawless High School and spend $45 million repaving most of the streets where the heaviest damage took place.

A group of investors that includes Pierce, a New Orleans native starring on the HBO show "Treme," has announced plans to build a full-scale grocery store on the grounds of a former baseball field by 2013. Developers hope to get federal hurricane recovery low-interest and forgivable loans. If built, the 25,000-square-foot store would represent one of the first pioneering commercial investments for the Lower 9th Ward since Katrina.

Pierce said big-chain supermarkets are unable to see the potential for profit in a place like the Lower 9th Ward, where his parents lived before he was born.

"Corporate America only sees the risk side of the ledger," he said. "I'm tired of industry standing on the sidelines. There is value here, there is wealth here... It's pent-up demand and I feel as though it is something that can be mined."

Not everyone is convinced.

David J. Livingston, a Wisconsin-based grocery consultant who's studied the New Orleans market, said the Lower 9th Ward is too depopulated to support a supermarket. He questioned whether the Lower 9th Ward, cut off by an industrial canal from the rest of New Orleans, can ever be a lively spot for commerce despite the best efforts of actors Pitt and Pierce.

"All the work that Brad Pitt has done, has it really made a significant difference? Glad he did it, better than it was. But it's still not the garden spot of New Orleans," Livingston said, referring to the cluster of eco-friendly homes built by the Pitt-backed foundation Make It Right.

But local residents and merchants hold out hope the supermarket can help turn things around.

"Maybe some of the folks going to the supermarket would come here," said April Lawrence, the owner of a beauty salon who took a chance and opened in 2009 on Dauphine Street. "Today, I have just one client," she said glumly. Unless business picks up, she said, she will have to close.

Down the street, regulars sat outside on the sidewalk in front of Mercedes' Place, a bar and video poker spot, chatting, drinking and smoking. For them, anything would be better than the options they have now: Drive miles to get something decent to cook up at home.

"It's needed!" Lynette Gibson said emphatically and loudly. She helps her 72-year-old mother, Mercedes, run the bar.

She shook her head at the thought of the handful of gas stations and convenience stores on the main streets. "It's limited," she said. "They only satisfy neighborhood people who drink."

Roosevelt Johnson Sr., a 51-year-old disabled veteran, stood outside his house and looked at the empty grass field where the grocery store would be built.

"With them bringing a supermarket, it might increase property values," he reasoned. "It might bring some normalcy back here. Make it like any other neighborhood where you go 10 minutes to the supermarket."

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Civil suit against Strauss-Kahn still seen viable (Reuters)

NEW YORK (Reuters) – The question has floated in the background for nearly two months, ever since police arrested Dominique Strauss-Kahn on charges of sexually assaulting a New York hotel maid: Would his accuser pursue a civil suit against him?

The answer has changed little since serious doubts about the woman's credibility put in jeopardy the criminal case against the former International Monetary Fund chief.

A successful civil case could bring a multimillion-dollar judgment against Strauss-Kahn, if a jury finds his accuser's story persuasive.

Civil litigators say the accuser would still have viable civil claims against Strauss-Kahn even if criminal charges against him are dismissed. But any judgment against him would prove difficult to enforce if the prosecution ends and he returns home to France.

"A civil case could certainly still succeed on the merits," said Meg Garvin, the executive director of the National Crime Victim Law Institute at Lewis & Clark University Law School in Oregon.

Civil lawsuits do proceed after criminal prosecutions fail. The former American football player O.J. Simpson, charged with killing his ex-wife and her friend, was acquitted in 1995 but later found liable in a wrongful-death civil suit brought by the victims' families and ordered to pay more than $30 million in damages.

In 2004, prosecutors dropped rape charges against Kobe Bryant, the basketball star, when his accuser refused to testify, but she filed a lawsuit against him and settled the case out of court for an unspecified amount.

The lawyers for the accuser in the Strauss-Kahn case have said they are not considering a lawsuit and did not respond to requests for comment.

BURDEN OF PROOF

Criminal and civil trials have significantly different burdens of proof required to prevail.

In a criminal case, where a guilty verdict can result in imprisonment, prosecutors must prove the defendant's guilt beyond reasonable doubt, the law's strictest standard.

In civil cases, where the loser is liable for money damages, the standard is a "preponderance of the evidence" -- essentially, that it was more likely than not that the defendant was responsible.

This distinction can be particularly appealing to a witness who, like Strauss-Kahn's accuser, has credibility problems.

Prosecutors revealed she had told authorities numerous lies, including fabricating a story about being gang-raped in Guinea in order to gain U.S. asylum. She also changed details of her story about what happened after her encounter with Strauss-Kahn in his luxury hotel suite, though her account about what took place in the room has remained steadfast.

"There's nothing from what I've heard about the alleged problems with the case that would make me immediately shy away," said John Clune, the lawyer who represented the accuser in the Bryant case.

Unlike in a criminal case, where a jury may not draw any conclusions from a defendant's decision not to testify, civil defendants typically must give their side during depositions and at trial. There is no Fifth Amendment protection against self-incrimination, and if a defendant refuses to answer, the jury is permitted to make inferences from that refusal.

In Strauss-Kahn's case, a civil suit could shift the focus from her credibility to his own record of honesty, given reports about his past infidelities.

"This is exactly why civil defendants settle all the time," said Julie Suk, a professor at Cardozo School of Law. "They may not think there's a winnable case against them, but it's often much more costly, both in terms of lawyer fees and personal, psychic cost."

Given Strauss-Kahn's wealth, his accuser still risks being perceived as having financial motives in going after him.

According to the woman's lawyers, prosecutors said they turned up a recorded conversation between her and a man detained in an Arizona jail in which she said "words to the effect" that "this guy has a lot of money. I know what I am doing."

RETURN TO FRANCE

If criminal charges are dropped and Strauss-Kahn heads home to France, collecting damages from him might prove difficult.

While the United States and France do not have an extradition treaty, which would prevent Strauss-Kahn from being forcibly returned here for a criminal trial, the two countries have treaties that would probably ensure that he could be served with a civil complaint and a subpoena to testify, international law experts say.

If Strauss-Kahn chose not to appear, a New York court could enter a judgment against him. But collecting damages would likely require the cooperation of a French court.

Paul Cohen, an attorney who specializes in international law for Thompson & Knight in New York, called the chances of extracting money from Strauss-Kahn if he is back in France "extraordinarily low."

"It has nothing at all to do with the merits -- it's all to do with the geography and the jurisdictional issues that come with it," he said. "The French courts may not appreciate a civil complaint like this that is in effect a proxy for criminal prosecution."

(Editing by Sandra Maler)

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Taxes still a stumbling block in debt talks (Reuters)

WASHINGTON (Reuters) – After months of effort, President Barack Obama and congressional Republicans are right back where they started as they try to avert a looming debt default: arguing over taxes.

With a "grand bargain" to tame the national debt seemingly off the table, Obama, House of Representatives Speaker John Boehner and other leaders will try for a more modest deal when they resume discussions at the White House Monday afternoon.

But negotiators will have to confront a divide over taxes that has prevented them from reaching a deal so far. Democrats say new tax revenues need to be part of the equation, while Republicans say they won't back any increase in taxes.

A highly anticipated Sunday meeting broke little new ground. Obama and his fellow Democrats repeated the need for a "balanced" approach, while Republicans restated their position that tax increases would further burden the already shaky economy. Senate Democratic Leader Harry Reid lectured Republicans for backing away from tough decisions, sources said, while Boehner was largely silent.

A source familiar with the meeting described it as a "frank exchange of views" -- Washington-speak for "acrimonious."

The post-meeting rhetoric seemed to bear this out.

"It's baffling that the President and his party continue to insist on massive tax hikes in the middle of a jobs crisis," said Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell.

Reid's spokesman, Adam Jentleson, said: "The stakes are too high for Republicans to keep taking the easy way out."

Time is running short to break the impasse.

The Treasury Department has warned that it will run out of money to cover the country's bills if Congress does not raise the $14.3 trillion debt limit by August 2. Failure to do so could push the country back into recession, send shock waves through global markets and threaten the dollar's reserve status.

The real deadline is even closer. Participants say a deal should be in place July 22 to ensure Congress has time to act. Obama told lawmakers to be ready to meet every day this week.

But Senator Jim DeMint, a Republican aligned with the fiscally conservative Tea Party movement, said the threat of default was overblown.

"We're not going to default. We've got enough tax revenue to pay our bills," DeMint told NBC's "Today Show" on Monday.

"We don't need to panic and rush into a deal," he added.

If White House talks produce no plan this week, DeMint said Republicans would introduce a bill to raise the debt ceiling in exchange for "reasonable" spending cuts, caps and movement toward a balanced budget amendment.

TAXES SCUTTLE 'GRAND BARGAIN' AND SMALLER DEAL

Aides to Boehner and Obama had spent much of the past week discussing an ambitious budget deal that would have reformed the tax code and popular social spending programs and scaled back annual defense and domestic spending.

The goal was the $4 trillion in budget savings, measured over 10 years, that budget experts say is needed to keep the national debt at a sustainable level.

Obama wanted between $1.3 trillion and $1.7 trillion of that total to come from new tax revenue, according to a Republican source. That would have come in part by allowing the current lowered tax rate for the highest earners to rise back to its 1990s levels in 2013, while keeping the lower rates in place for middle- and low-income earners.

Republicans felt that what Democrats offered in return -- a promise to lower tax rates across the board while closing a range of tax breaks -- was not enough.

On Sunday, Obama and other Democrats pressed for the "grand bargain" but Republicans said they wanted a smaller deal.

With savings of around $2 trillion, that would cover the nation's borrowing needs through the November 2012 elections.

Many elements of that deal have already been hammered out in talks led by Vice President Joe Biden, but taxes proved to be a stumbling block in those sessions as well.

Representative Eric Cantor, the No. 2 House Republican, walked out June 23 after Democrats insisted on closing $400 billion worth of tax breaks that largely benefit the wealthy.

There could be a way out.

Last week, Cantor said he could support closing some tax breaks if they were offset with tax cuts elsewhere.

Democrats have proposed a range of tax cuts to boost the economy, including an extension of the current payroll tax cut and a permanent credit for research and development costs.

That approach would allow both sides to declare victory -- Republicans would get a deal that doesn't raise taxes overall, and Democrats could say they raised taxes on the rich and helped bring down the 9.2 percent unemployment rate.

(Additional reporting by David Morgan; Editing by Eric Beech)

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Obama: Still differences on debt, new talks Sunday (AP)

WASHINGTON – Beset by a weak jobs report, President Barack Obama on Friday called for swift action by Congress to raise the nation's borrowing limit, saying the uncertainty over the debt ceiling has hindered hiring in the private sector.

In remarks in the White House Rose Garden, the president linked two of the most high profile issues facing his presidency — the weak economy and a massive budget deal to meet an Aug. 2 deadline to increase the debt limit.

"The sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised and that we have a serious plan to deal with our debt and deficit, the sooner that we give our businesses the certainty that will need in order to make additional investments to grow and hire," Obama said.

He made his remarks just hours after the government reported anemic job growth for June and a new, higher unemployment rate of 9.2 percent.

Obama said uncertainty over raising the debt ceiling — currently capped at $14.3 trillion — was one of several factors that have contributed to an economic slowdown and weaker job creation. He also listed natural disasters, high gas prices, state and local budget cuts and the fiscal crisis in Greece.

"The economic challenges we face weren't created overnight and they're not going to be solved overnight," he said.

Obama met Thursday with the top eight leaders of Congress and has called them back for a rare weekend meeting on Sunday. He met privately Friday morning with the top House Democrat, Nancy Pelosi, amid Democratic concerns over proposals to cut spending for Social Security, Medicare and Medicaid as part of the budget deal.

Obama and congressional negotiators are looking at closing some tax loopholes and cutting popular social benefit programs as they struggle to reach an agreement between Republicans and Democrats, but Pelosi and many House Democrats oppose cutting the benefit programs. Pelosi was getting an opportunity to air her views as she met privately with Obama.

"We are not going to balance the budget on the backs of America's seniors," Pelosi said Thursday.

The endgame on the debt talks was approaching as the Labor Department reported hiring slowed to a near-standstill in June. Employers added the fewest jobs in nine months and the unemployment rate rose for the third month in a row, climbing to its highest point this year.

That gave Republicans fresh ammunition to attack Obama's handling of the economy even as the shape of an agreement remained in doubt. All the while the nation is moving closer to an Aug. 2 deadline to raise the government's debt ceiling or face an unprecedented default on U.S. obligations that the administration warns could add a perilous new crisis on top of the already quavering economy.

Obama was pushing for an ambitious deficit reduction plan of roughly $4 trillion, the biggest of three options he laid on the table. It would require sizeable tax revenues, which many Republicans oppose, and spending reductions for entitlement programs, opposed by many Democrats. But the idea of a potentially historic deal was well received by the meeting participants, officials said later, even though the details remained in dispute.

After Thursday's 90-minute session, Obama said Democrats and Republicans should be prepared to show their bottom-line demands when they return to the bargaining table Sunday.

The negotiating stakes are high. Without a deal on deficit reduction, Republican leaders say they don't have enough GOP votes to increase the nation's borrowing authority, raising the danger of the first ever U.S. default on its debts when the current $14.3 trillion debt ceiling is tapped out.

"Everybody acknowledged that we have to get this done before the hard deadline of Aug. 2 to make sure that America does not default for the first time on its obligations," Obama said. "And everybody acknowledged that there's going to be pain involved politically on all sides."

That leaves little time to agree on 10-year deficit reductions of $2 trillion to $4 trillion.

The major clash centers on how to reduce spending on major entitlement programs such as Medicare, Medicaid and Social Security, all prized by Democrats, and on tax changes that would close loopholes and end certain corporate breaks. Republicans insist that any tax changes be used to lower rates on corporations and individuals; Obama wants them also to generate more tax revenue.

Increasing the debt ceiling through the end of 2012 — a date favored by the White House — would require authorizing about $2.4 trillion in additional borrowing. House Speaker John Boehner has insisted on a 10-year deficit reduction figure that, at a minimum, matches the amount of additional borrowing. One aide to a lawmaker in Thursday's meeting said Obama made it clear he wouldn't sign a budget and debt agreement that didn't extend the debt ceiling until after the November 2012 presidential election.

In the meeting, Obama told the leaders that they faced three options — a small deficit reduction plan, a medium plan that would reduce deficits by $2 trillion over 10 years or a big agreement that would shoot for up to $4 trillion in deficit reductions over the next decade. Obama indicated he preferred the largest number.

In the meeting, Boehner and Senate Minority Leader Mitch McConnell of Kentucky backed Obama's bigger, more ambitious goal, said Democratic officials familiar with the talks. Their lieutenants, Senate GOP Whip Jon Kyl of Arizona and House Majority Leader Eric Cantor of Virginia, indicated they believed the medium-size option was more realistic. Both Cantor and Kyl had participated in talks led by Vice President Joe Biden that had already identified about $2 trillion in deficit reduction.

The negotiations are politically difficult for both parties.

Raising the debt ceiling is unpopular with voters, especially those who vote Republican, increasing concern among GOP lawmakers that they could be challenged by fellow Republicans in primaries across the country.

The big entitlement programs such as Social Security, Medicare and Medicaid have long been protected by Democrats in Congress.

Underscoring the political stakes, the Pew Research Center reported Thursday that in a recent poll it found that six of 10 of those surveyed believe it is more important to maintain Social Security and Medicare benefits than to reduce the budget deficit.

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Associated Press writers Ben Feller, Andrew Taylor, Alan Fram, Ricardo Alonso-Zaldivar, Erica Werner and Laurie Kellman contributed to this report.

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Obesity rates still rising in many states (AP)

By MARY CLARE JALONICK, Associated Press Mary Clare Jalonick, Associated Press – Thu?Jul?7, 10:16?am?ET

WASHINGTON – In 1995, no state had an obesity rate above 20 percent. Now, all but one does.

An annual obesity report by two public health groups looked for the first time at state-by-state statistics over the last two decades. The state that has the lowest obesity rate now — Colorado, with 19.8 percent of adults considered obese — would have had the highest rate in 1995.

"When you look at it year by year, the changes are incremental," says Jeffrey Levi, executive director of the Trust for America's Health, which writes the annual report with the Robert Wood Johnson Foundation. "When you look at it by a generation you see how we got into this problem."

The study, based on 2010 data, says a dozen states top 30 percent obesity, most of them in the South. Mississippi topped the list for the seventh year in a row, with Alabama, West Virginia, Tennessee and Louisiana close behind. Just five years ago, in 2006, Mississippi was the only state above 30 percent.

No state decreased its level of obesity, which is defined as a body mass index of 30 or more. The body mass index is a measurement based on weight and height.

There was a bit of good news in the report: Sixteen states reported increases in their obesity rates, down from 28 states that reported increases last year. Levi says those increases have been gradually slowing, most likely due to greater public awareness of health issues and government attempts to give schools and shoppers better access to healthier foods.

"We're leveling off to some degree at an unacceptably high level," Levi said.

First lady Michelle Obama has tackled the issue with her "Let's Move" campaign, pushing for healthier school lunches, more access to fruits and vegetables and more physical activity. Republicans in Congress have pushed back somewhat against some of those programs, however, saying a rewrite of school lunch rules is too costly and questioning an Obama administration effort to curb junk food marketing aimed at children.

As in previous years, the study showed that racial and ethnic minorities, along with those who have less education and make less money, have the highest obesity rates. Adult obesity rates for African-Americans topped 40 percent in 15 states, while whites topped 30 percent in only four states. About a third of adults who did not graduate from high school are obese; about a fifth of those who graduated from college are considered obese.

Dr. Mary Currier, Mississippi's state health officer, says her state has struggled to drop its No. 1 status and it has been challenging because much of the state is poor and rural.

"We live in an area of the country where eating is one of the things we do, and we eat a lot of fried foods," she said. "Trying to change that culture is pretty difficult."

She says the state has had some success by making school lunches healthier, taking high-calorie foods and drinks out of school vending machines and trying to find more low-cost exercise facilities for residents of rural areas.

"It is frustrating, but we've had some progress," Currier said. "We just have to continue to work at this. It's not something that's going to change overnight."

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Calculate your body mass index: http://www.nhlbisupport.com/bmi

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