Asian shares hit new highs, Fed outcome pressures dollar

TOKYO (Reuters) - Asian shares rose on Wednesday buoyed by strength in global equities markets, hopes of a deal from U.S. budget talks and expectations for more stimulus from the Federal Reserve when it ends its two-day policy meeting later in the day.

Oil, copper and gold prices were also underpinned while the dollar remained broadly pressured, but the yen weakened against the dollar on expectations the Bank of Japan will take additional easing steps at its policy meeting next week.

European shares were expected to climb, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> will open as much as 0.4 percent higher. But a 0.1 percent drop in U.S. stock futures hinted at a soft Wall Street open. <.l><.eu><.n/>

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> gained 0.5 percent to a 16-month peak. The index has hit successive 16-month highs since December 5.

Australian shares <.axjo> were up 0.2 after touching a nearly 17-month peak, as higher commodities prices lifted the resources sector.

London copper steadied at $8,103.50 a metric ton (1.1023 tons), near two-month highs, while spot gold inched up 0.1 percent to $1,710.65 an ounce. U.S. crude futures were little changed at $85.81 a barrel and Brent rose 0.2 percent to $108.25.

"No doubt about it, the liquidity from the U.S. Fed is a good driver for prices," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong, adding that copper is also supported by a recovery in China and the United States.

While mainland markets remained sluggish, Hong Kong shares <.hsi> rose to a 16-month high, underpinned by foreign investors' optimism on China.

In China, "it's tough to get a clear picture of what's happening on the ground but you can infer that domestic investors remain relatively pessimistic," a Hong Kong-based fund manager said.

South Korean shares <.ks11> added 0.6 percent, shrugging off news that North Korea launched the second rocket this year earlier on Wednesday.

Japan's Nikkei share average <.n225> rose 0.6 percent to end at its highest in nearly eight months, led by gains in tech shares and other exporters on the weak yen. <.t/>

The euro popped back above $1.3000, pulling away from a two-week low of $1.2876 plumbed on Friday.

The Fed is expected to announce a fresh round of bond buying as part of its efforts to support a fragile economic recovery threatened by political wrangling over the government's budget. The central bank looks certain both to extend its purchases of mortgage-backed debt and replace another expiring stimulus program with a new bout of money creation.

Against the yen, the dollar rose 0.2 percent to 82.65 yen.

Data on Wednesday showed Japan's core machinery orders rose 2.6 percent in October from the previous month, up for the first time in three months but below a 3 percent rise forecast, highlighting how uncertainty over the global outlook continued to weigh on business investment and the broader economy.

India's industrial production, in contrast, soared by 8.2 percent in October from a year earlier, government data showed on Wednesday, well above a 4.5 percent rise forecast.

Investors also closely followed developments in U.S. budget talks to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January, which economists have warned could send the U.S. economy into recession and drag down the fragile global economy.

Negotiations to avert the "fiscal cliff" ahead of a year-end deadline intensified as President Barack Obama and U.S. House of Representatives Speaker John Boehner spoke by phone on Tuesday after exchanging new proposals, in a possible sign of progress ahead of the end-of-year deadline [ID:nL1E8NB6UF]

A group of high-profile chief executives urged President Barack Obama and Republican congressional leaders on Tuesday to strike a deal, reflecting mounting urgency to resolve the issue with time running out.

"Definitely the momentum is to the upside," said Stan Shamu, a market analyst at IG Markets. "Everyone seems to be pricing in a fairly positive outcome to the fiscal cliff negotiations as well."

(Additional reporting by Maggie Lu Yueyang in Canberra and Vikram Subhedar in Hong Kong and Melanie Burton in Singapore; Editing by Jacqueline Wong)

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IHT Rendezvous: IHT Quick Read: Dec. 12

NEWS North Korea launched a long-range rocket on Wednesday morning that appeared to reach as far as the Philippines, an apparent success for the country’s young and untested new leader, Kim Jong-un, and a step toward the nation’s goal of mastering the technology needed to build an intercontinental ballistic missile. Choe Sang-hun reports from Seoul, and David E. Sanger from Washington.

Soldiers carried out a late-night arrest of Mali’s prime minister at his home in Bamako, forcing his resignation early Tuesday and casting new doubt on plans to chase out radical Islamists who control much of this troubled West African nation. Adam Nossiter reports from Bamako.

On Tuesday, the European Parliament adopted a uniform patent system for Europe. If the plan goes into effect as expected by early 2014, it would try to remedy the country-by-country approach whose time and costs have long been an impediment to innovation across the European Union. James Kanter reports from Brussels.

The competing business dealings of former high-ranking United States officials in Kosovo may present a special ethical quandary. So many former American officials have returned to Kosovo for business — in coal and telecommunications, or for lobbying and other lucrative government contracts — that it is hard to keep them from colliding. Matthew Brunwasser reports from Pristina, Kosovo.

According to the European Commission president, José Manuel Barroso, an independent Scotland would have to apply for membership in the European Union. Stephen Castle reports from London.

Three weeks into an impasse over who won a leadership vote in France’s center-right opposition party, François Fillon — who was declared the loser, though he has refused to concede — proposed on Tuesday that a new election be held next spring in which he most likely would not run. Nicola Clark reports from Paris.

ARTS An all-female version of “Julius Caesar” in at the Donmar Warehouse packs a believable wallop, while two other London shows stretch credibility to breaking point and beyond. Matt Wolf on theater.

A disappointing and oddly chosen “Lohengrin’’ opens the season at La Scala, while in Rome, a fine Verdi opera is presented in regal style by Riccardo Muti. George Loomis reviews.

SPORTS There would be lots of hurdles if the 2020 European Championship soccer tournament were to be expanded to six host countries, but previous events have shown that soccer is capable of overcoming such challenges. Rob Hughes reports from London.

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Panasonic may sell Sanyo digital camera business: source

TOKYO (Reuters) – Panasonic Corp may sell its Sanyo digital camera business to Japanese private equity fund Advantage Partners by the end of March, a source familiar with the plan said.

A final decision on the sale will be made by the end of the year, the source said on condition he was not identified.

Advantage Partners will pay several hundreds of millions of yen for the business, which makes digital cameras for other companies, including Olympus Corp, the Nikkei business daily reported earlier.

Panasonic declined to comment saying it had not announced the plan.

The Japanese company aims to sell 110 billion yen ($ 1.34 billion) of assets, including buildings and land by the end of March to boost free cashflow to 200 billion yen for the business year. The company expects an annual net loss of close to $ 10 billion as it writes off billions in deferred tax assets and goodwill.

Panasonic acquired rival Sanyo, a leading maker of lithium ion batteries and solar panels, in 2010. Sales of compact digital cameras are under pressure from increasingly powerful smartphones.

Panasonic’s shares gained as much as 4 percent in early trading in Tokyo, compared with a 0.5 percent rise in the benchmark Nikkei 225 index. ($ 1 = 82.3900 Japanese yen)

(Reporting by Reiji Murai; Writing by Tim Kelly; Editing by Jeremy Laurence)

Gadgets News Headlines – Yahoo! News

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Hayden Panettiere Splits with Scotty McKnight

12/10/2012 at 07:50 PM EST

Hayden Panettiere and Scotty McKnight

Splash News Online

Is there a tear in her beer?

Nashville star Hayden Panettiere has broken up with her boyfriend of more than a year, New York Jets wide receiver Scotty McKnight, a source confirms to PEOPLE.

But the split doesn't appear to be the stuff of a sad country song. The actress, 23, is still friends with McKnight, 24, and one source tells TMZ that their pals wouldn't be surprised if they got back together.

This is Panettiere's second go at a relationship with an athlete. Before dating McKnight she was with Ukrainian boxer Wladimir Klitschko for about two years.
– Julie Jordan

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Surprise: New insurance fee in health overhaul law

WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.

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Asia shares up despite Fed uncertainty, fiscal fears

TOKYO (Reuters) - Asian shares edged up to a 16-month high on Tuesday and the euro firmed, but prices were capped as investors waited for the U.S. Federal Reserve's policy decision this week and any progress in U.S. budget talks.

European shares were likely to crawl higher too, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> will open as much as 0.3 percent higher. But a 0.2 percent drop in U.S. stock futures hinted at a soft Wall Street open. <.l><.eu><.n/>

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> nudged up 0.3 percent to a 16-month high. The index has hit successive 16-month highs since December 5.

Australian shares <.axjo> gained 0.4 percent to a seven-week high, supported by higher commodities prices on bets that the Fed will adopt fresh economic stimulus measures.

"It seems the Christmas rally (in commodities prices) is about getting ahead of the FOMC meeting and staying ahead of any potential Chinese stimulus early next year," said Ben Taylor, sales trader at CMC Markets.

Hong Kong shares <.hsi> added 0.2 percent, after earlier hitting a 16-month high. Shanghai shares <.ssec> were little changed as investors turned cautious ahead of the Fed and also took profits from Monday's rally, partly in response to data showing China's banks lent more slowly than expected in November and the pace of total financing eased.

Japan's Nikkei share average <.n225> was the region's laggard, closing down 0.1 percent but staying above a key 9,500 level. Investors booked profits on signs that the market is overbought after a 10 percent rally in the past month. <.t/>

"The 9,500-level is still an important psychological line for both support and resistance purposes," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

After a two-day meeting ending Wednesday, the Fed is expected to announce it will buy $45 billion per month of longer-dated Treasuries beginning in January on top of the $40 billion in mortgage-backed security purchases it announced in September. The new buying will replace the Fed's current program, Operation Twist, which expires at the end of December.

Under Operation Twist, the Fed sells shorter-dated U.S. government debt and buys longer-dated Treasuries to extend the duration of its balance sheet.

The prospects of Fed stimulus weighed on the dollar and helped to underpin the euro, which traded up 0.1 percent at $1.2956, following a Monday low of $1.2880.

The dollar steadied at 82.32 yen. The yen has also been pressured by expectations for more easing from the Bank of Japan, which meets next week.

The euro rose from Monday's lows after Italian Prime Minister Mario Monti played down market fears over his decision to resign. He said there was no danger of a vacuum ahead of an election in the spring.

"I think people at this point are not sure whether there really will be the risk of Italy not pursuing its fiscal reforms pursued under Monti. So it's hard to really price that news in yet," said Takao Hattori, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

FISCAL WORRIES

European partners urged the next Italian government on Monday to stick to Monti's reform agenda, after his decision to resign early and Silvio Berlusconi's return to frontline politics rattled financial markets.

Monti had earned market confidence over the past year in indebted Italy, as he spearheaded a reform agenda to rescue the euro zone's third-largest economy from the threat of a Greek-style collapse.

The prospects that Italy's reform agenda could move off track in the absence of Monti at the helm have weighed on markets. Investors also worry about the impact on neighboring Spain, which is struggling with high debt and studying the need for outside help.

Economists have warned that a failure by the U.S. Congress to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January, could send the economy into recession and weigh on the fragile global economy.

The White House and House of Representatives Speaker John Boehner's office held more negotiations on Monday on ways to break the budget stalemate. The talks picked up pace after Boehner met with President Barack Obama on Sunday, raising hopes of progress.

U.S. crude futures inched up 0.1 percent to $85.65 a barrel and Brent also rose 0.1 percent to $107.40.

(Additional reporting by Ayai Tomisawa in Tokyo and Victoria Thieberger in Melbourne; Editing by Jacqueline Wong)

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Euro Watch: Bonds in Spain and Italy Shaken by Italian Politics

ROME — Italian stock and bond prices fell on Monday after a weekend of political turmoil in Italy gave rise to fears that the country was headed for renewed instability.

Shares of Italian banks, which are big holders of the government’s bonds, were among the hardest hit.

The action occurred in the first day of trading after Prime Minister Mario Monti said over the weekend that he would soon step down after his predecessor, Silvio Berlusconi, withdrew his party’s support from Mr. Monti and said he would again seek election as prime minister.

Mr. Berlusconi, who was elected prime minister three times, left office a year ago as markets pushed Italy to the brink of financial collapse. Mr. Monti, an economist who was appointed as his temporary successor, has restored Italy’s credibility with investors, who have given the country a break on its borrowing costs. But those gains have come at the cost of painful austerity measures that have worsened the country’s economic situation and given Mr. Berlusconi an opening to attack.

The Milan benchmark index, MIB, fell more than 2 percent on Monday. Italian banks, which remain sensitive to declines in the country’s bond prices, were among the big losers. Intesa Sanpaolo, the most active stock, fell 5.2 percent, as did UniCredit.

Mr. Monti, who joined other leaders in Oslo on Monday to receive the Nobel Peace Prize awarded to the European Union, said at a news conference that the market reactions “need not be dramatized.”

“I am confident,” he said, that the Italian elections would result in a government “that will be responsible and oriented toward the E.U. and this will be in line with efforts the Italian government has made so far.”

The decline in bond prices sent their yields, or interest rates, higher — an indicator of the Italian government’s borrowing costs. The spread between interest rates on Italian 10-year sovereign bonds and equivalent German securities, the European benchmark for safety, grew to 3.5 percentage points on Monday. That was up from 3.25 percentage points late Friday, suggesting that investors were growing more wary of holding Italian debt.

The yield on Italian 10-year bonds, which breached 7 percent this year, ended trading on Monday at 4.8 percent, up 29 basis points. A basis point is one-hundredth of a percent.

Bonds of Spain, which is the other big economy of concern in the euro zone, also came under renewed pressure on Monday after Mr. Monti’s announcement.

The spread between Spanish 10-year bonds and equivalent German bonds widened to 4.27 percentage points from 4.16 points on Friday. The yield on the benchmark Spanish 10-year rose 10 basis points, to 5.5 percent; it reached 7.1 percent in July amid concerns that Spain would be forced into a full bailout after having to negotiate a 100 billion euro, or $129 billion, rescue package for its banks in June.

Luis de Guindos, the Spanish economy minister, warned that Italy’s political turmoil would affect his country.

“When doubts emerge over the stability of a neighboring country like Italy, which is also seen as vulnerable, there’s an immediate contagion for us,” he said Monday morning on Spanish national radio.

Asked whether Spain would itself seek further European rescue funding, he instead said, “The help that Spain needs is that the doubts over the future of the euro be removed.”

Speaking before the Nobel ceremony on Monday, the European Commission president, José Manuel Barroso, said Italy must “continue on the road of structural reforms.” The elections, Mr. Barroso said on Sky News, “must not be used to postpone reforms.”

A dismal economic report on Monday served as a reminder that despite Mr. Monti’s success with investors, the real economy continues to suffer. Italian industrial production fell a seasonally adjusted 1.1 percent in October from September, and by 6.2 percent from a year earlier, Istat, the national statistics agency, said.

Some analysts said they thought that Mr. Berlusconi’s re-emergence as a political leader was as responsible for unnerving investors as Mr. Monti’s unexpected decision to resign. Nicholas Spiro, managing director of Spiro Sovereign Strategy, a research firm, wrote on Monday in a note that Mr. Berlusconi remained “the boogeyman of investors,” who “epitomizes the dysfunctional nature of Italian politics.”

Angela Merkel, the German chancellor, was to meet on Monday with Mr. Monti on the sidelines of the Nobel ceremony, said Georg Streiter, a spokesman for the chancellor.

Ms. Merkel pushed to have Mr. Monti succeed Mr. Berlusconi. But she ended up facing Mr. Monti’s own ideas for economic change, which focused more on growth and job creation than on the austere fiscal discipline championed by Ms. Merkel.

As a rule, the German government does not comment on its partners’ domestic politics, but Foreign Minister Guido Westerwelle warned that an attempt to scale back Italy’s reform push could result in further destabilization in the euro zone.

“Italy cannot remain stagnant on two-thirds of its reform process,” Mr. Westerwelle said through a spokesman. “This would throw not only Italy but the rest of Europe into turbulence.”

Elisabetta Povoledo reported from Rome and David Jolly from Paris. Raphael Minder contributed reporting from Madrid and Melissa Eddy from Berlin.

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Google’s Gmail service suffers disruption

SAN FRANCISCO (Reuters) – Several Google Inc Web products, including the popular Gmail service, appeared to go dark for users on several continents on Monday.

Google confirmed that “service disruptions” had affected Gmail and Google Drive, its online storage service. The two products are part of Google’s Apps suite, a Microsoft Office rival that caters to both consumers and businesses.

By 10:10 a.m. Pacific Time (1.10 p.m. EST), Google’s Apps Dashboard monitoring service reported that Gmail and Drive service had resumed. The company did not specify how many users were affected, or where, but the outage prompted widespread complaints on social media on both coasts in the U.S. and other major markets, from the United Kingdom to Brazil.

Some users additionally reported that the outage had affected Google Docs, the company’s word-processing and spreadsheet programs, while Chrome, Google’s Internet browser, also crashed unexpectedly.

“We are currently experiencing an issue with some Google services,” Google spokeswoman Andrea Freund said in a statement. “For everyone who is affected, we apologize for any inconvenience you may be experiencing.”

Firmly entrenched in the consumer market, Gmail is one of Google’s most popular and important product offerings. The search giant, which has been pushing a corporate version of the email service and its Apps suite to businesses to compete with Microsoft, said this month that the package will no longer be free to business customers.

(Reporting By Gerry Shih; Editing by Andrew Hay and Nick Zieminski)

Tech News Headlines – Yahoo! News

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Tim McGraw and Faith Hill Kick Off Special Series of Las Vegas Shows

By Mark Gray

12/09/2012 at 05:00 PM EST

Tim McGraw and Faith Hill

Denise Truscello/WireImage

Tim McGraw and Faith Hill looked at each other, their hands on each others knees and shared a passionate kiss just after midnight Sunday morning.

The moment was a long time coming – it capped off their first weekend as a Las Vegas headlining act.

Earlier in the 90 minute show, McGraw told the crowd at the Venetian that he and his wife were going to "have fun tonight" and it genuinely seemed like they did, singing with each other for several songs while still letting the other perform their solo hits. Though the show – called the Soul2Soul series – is technically not the same "residency" show Las Vegas is known for, the couple will perform for 10 weekends through April.

At a press conference several months ago, McGraw and Hill promised a "personal" show, and they delivered in a big way. In fact, it got very personal as McGraw complimented his wife on her flowing black dress, saying, "It's gonna look good on the floor later."

The duo also took a moment to sit down and speak with the crowd. Though they didn't field any questions, they spoke about the most common questions they get asked. "We always get asked what was the music we heard first, who influenced us," Hill said.

Rather than answer it, the duo then sing a few of their main influences – Hill sang George Strait; McGraw sang The Eagles.

"I love doing other people's music, better than my own," McGraw joked.

With few bells and whistles, the show puts the focus squarely on it's two superstars, and considering the rousing ovations McGraw and Hill received Saturday, that's perfectly fine with their fans.

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

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