Deadly protests roil Egypt on anniversary of revolution

CAIRO — At least five people were killed and hundreds were injured Friday as protests swept across Egypt over the Islamist-led government's failure to fix the besieged economy and heal the politically divided nation two years after the overthrow of Hosni Mubarak.

The anniversary of the revolution that led to Mubarak's downfall was marked more by bloodshed than joy as familiar and troubling scenes played out amid the widening despair. Gunshots echoed through cities, rock-throwing youths lunged at police through clouds of tear gas, and peaceful demonstrators waved banners and shouted epithets against those in power.

Five people, including police officers, were killed by unknown gunmen in the port city of Suez, according to state media. Unconfirmed reports from a private television station said nine people had died throughout the country. Nearly 400 people, including scores of police officers, were injured, with many of the wounded treated in mosques and alleys.

President Mohamed Morsi has been engulfed for months by anger from secularists, who claim he and his Muslim Brotherhood party have turned increasingly authoritarian in a bid to advance an Islamist state at the expense of social justice. The protests were the latest reminder of the volatile politics and persistent mistrust that threaten Egypt's transition.

"Morsi is finished," said Tarik Salama, an activist. "A big part of the population hates him now. It's too late for him to turn around and say, 'Hey guys, I love you.' He's in the same place as Mubarak was two years ago. Morsi's biggest problem is that he failed to unify the country. A lot of people voted for him, but he failed."

One banner raised in Cairo's Tahrir Square read, "Two years since the revolution, and Egypt still needs another revolution." Protest chants that harked back to the 18-day revolt that toppled Mubarak were now directed at Morsi: "Leave, leave."

The days ahead may prove more violent. Many of the youths clashing with police in Cairo, Alexandria and other cities are angry about an economy that offers little hope. They have been joined by hard-core soccer fans, known as Ultras, demanding that police officials be held accountable for the deaths of 74 soccer fans killed last year in a stadium riot.

A court verdict in that case is expected Saturday. In recent days, youths in Cairo have battled police with stones and gasoline bombs around the high concrete barricades that block streets leading from Tahrir Square to parliament and the Interior Ministry.

Young men pulled part of the barrier down but police drove them back, firing steady volleys of tear gas that cloaked the square and drifted over the Nile.

"These young men and kids have no jobs," said Salama. "The young in Egypt feel there is no future for them. This is the big danger."

By dusk Friday, youths with rags and scarves over their faces hurled stones and rushed the barriers, preparing for another night of clashes. The unrest spurred the emergence of an anarchist group, known as the Black Bloc, whose masked and black-clad members threw Molotov cocktails and attempted to overrun the presidential palace and the Shura Council, the upper house of parliament.

Protesters attacked offices of the Muslim Brotherhood and blocked highways and rail lines. To avoid adding to the violence, the Brotherhood ordered its followers to stay away from Tahrir and instead participate in community programs, such as planting trees and handing out food to the poor. A militant arm of the Brotherhood was blamed last month for deadly attacks against anti-Morsi protesters.

The backlash against Morsi intensified in November when he expanded his presidential powers and, sidestepping the courts, pushed through a referendum on an Islamist-backed constitution. The liberal opposition, which has long been disorganized, denounced him for ruining the promise of democracy that inspired the 2011 revolution.

Morsi has said his actions were an effort to root out Mubarak-era loyalists from the government and propel the country toward parliamentary elections in the spring.

But his biggest problem perhaps is Egypt's troubled economy, which has lost more than half its foreign reserves and worsened conditions for the approximately 40% of Egyptians who live on $2 a day.

jeffrey.fleishman@latimes.com

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Game|Life Podcast: Nintendo Goes for Broke, THQ and Atari Just Go Broke

Some weeks, there’s not a whole lot to talk about on the ol’ podcast. Not this week! I pretty much sit Wired senior editor Peter Rubin down in the studio, turn the microphones on, pretend he is the internet and start yelling at him for a good hour. He gamely sits through it.

Topics of discussion this week: The THQ and Atari bankruptcies and the aftermath of the THQ auction, Nintendo’s plans for Virtual Console on Wii U, and Nintendo’s massive announcement of Wii U games that some might call vap– ah, I’m not even going to say it again.

Game|Life’s podcast is posted on Fridays, is available on iTunes, can be downloaded directly and is embedded below.

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Brooke Shields signs up for a hitch on Lifetime’s “Army Wives”

LOS ANGELES (TheWrap.com) – Brooke Shields has signed up for the Air Force – or at least the Air Force as it’s portrayed on “Army Wives.”

“Pretty Baby” star Shields will join the cast of the Lifetime series for its seventh season, the network said Thursday.

Shields will play Katherine “Kat” Young, a brash, brilliant Air Force colonel and crack C-17 pilot who clashes with Gen. Michael Holden (Brian McNamara) shortly after arriving at Joint Base Marshall Bring.

But after Young and Holden’s Air Force-Army rivalry gets underway, Holden discovers that Young has a tragic past — and more in common with him than he first thought.

The ABC Studios-produced “Army Wives” returns for its seventh season March 10 at 9 p.m. with a drastically revamped cast. In addition to Shields, singer/actress Ashanti, Torrey DeVitto of “Pretty Little Liars,” Bring It On” alum Elle McLemore and singer Jesse McCartney have joined the cast. Meanwhile, Kim Delaney has departed the series, and former series regular Sally Pressman will only appear “in several episodes” of the new 13-episode season.

“We’re all very excited about season seven, in which a new tribe emerges from the shadow of tragedy,” executive producer Jeff Melvoin said of the upcoming season on Wednesday.

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40 Years After Roe v. Wade, Thousands March to Oppose Abortion

Drew Angerer/The New York Times

Pro-life activists made their way down Constitution Avenue toward the Supreme Court during the March for Life in Washington on Friday.

WASHINGTON — Three days after the 40th anniversary of the decision in Roe v. Wade, the landmark Supreme Court case that legalized abortion, tens of thousands of abortion opponents from around the country came to the National Mall on Friday for the annual March for Life rally, which culminated in a demonstration in front of the Supreme Court building.

On a gray morning when the temperature was well below freezing, the crowd pressed in close against the stage to hear more than a dozen speakers, who included Tony Perkins, the president of the Family Research Council; Representative Diane Black, Republican of Tennessee, who recently introduced legislation to withhold financing from Planned Parenthood, and Senator Rand Paul, Republican of Kentucky; Cardinal Seán Patrick O’Malley of Boston; and Rick Santorum, the former senator from Pennsylvania and Republican presidential candidate.

Mr. Santorum spoke of his wife’s decision not to have an abortion after they learned that their child — their daughter Bella, now 4 — had a rare genetic disorder called Trisomy 18.

“We all know that death is never better, never better,” Mr. Santorum said. “Bella is better for us, and we are better because of Bella.”

Jeanne Monahan, the president of the March for Life Education and Defense Fund, said that the march was both somber and hopeful.

“We’ve lost 55 million Americans to abortion,” she said. “At the same time, I think we’re starting to win. We’re winning in the court of public opinion, we’re winning in the states with legislation.”

Though the main event officially started at noon, the day began much earlier for the participants, with groups in matching scarves engaged in excited chatter on the subway and gaggles of schoolchildren wearing name tags around their necks. Arriving on the Mall, attendees were greeted with free signs (“Defund Planned Parenthood” and “Personhood for Everyone”) and a man barking into a megaphone, “Ireland is on the brink of legalizing abortion, which is not good.”

The march came two months after the 2012 campaign season, in which social issues like abortion largely took a back seat to the focus on the economy. But the issue did come up in Congressional races in which Republican candidates made controversial statements about rape or abortion. In Indiana, Richard E. Mourdock, a Republican candidate for the Senate, said in a debate that he believed that pregnancies resulting from rape were something that “God intended,” and in Illinois, Representative Joe Walsh said in a debate that abortion was never necessary to save the life of the mother because of “advances in science and technology.” Both men lost, hurt by a backlash from female voters.

Recent polls show that while a majority of Americans do not want Roe v. Wade to be overturned entirely, many favor some restrictions. In a Gallup poll released this week, 52 percent of those surveyed said that abortions should be legal only under certain circumstances, while 28 percent said they should be legal under all circumstances, and 18 percent said they should be illegal under all circumstances. In a Pew poll this month, 63 percent of respondents said they did not want Roe v. Wade to be overturned completely, and 29 percent said they did — views largely consistent with surveys taken over the past two decades.

“Most Americans want some restrictions on abortion,” Ms. Monahan said. “We see abortion as the human rights abuse of today.”

Speaker John A. Boehner of Ohio, who spoke via a recorded video, called on the protest group, particularly the young people, to make abortion “a relic of the past.”

“Human life is not an economic or political commodity, and no government on earth has the right to treat it that way,” he said.

The crowd was dotted with large banners, many bearing the names of the attendees’ home states and churches and colleges. Gary Storey, 36, stood holding a handmade sign that read “I was adopted. Thanks Mom for my life.” Next to him stood his adoptive mother, Ellen Storey, 66, who held her own handmade sign with a picture of her six children and the words “To the mothers of our four adopted children, ‘Thank You’ for their lives.”

Mr. Storey said he was grateful for the decision by his biological mother to carry through with her pregnancy. “Beats the alternative,” he joked.

Last week, the Planned Parenthood Federation of America started a new Web site, and on Tuesday, its president, Cecile Richards, released a statement supporting abortion rights.

“Planned Parenthood understands that abortion is a deeply personal and often complex decision for a woman to consider, if and when she needs it,” she said. “A woman should have accurate information about all of her options around her pregnancy. To protect her health and the health of her family, a woman must have access to safe, legal abortion without interference from politicians, as protected by the Supreme Court for the last 40 years.”

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Court Rejects Recess Appointments to Labor Board

WASHINGTON — In a ruling that called into question nearly two centuries of presidential “recess” appointments that bypass the Senate confirmation process, a federal appeals court ruled on Friday that President Obama violated the Constitution when he installed three officials on the National Labor Relations Board a year ago.

The ruling was a blow to the administration and a victory for Mr. Obama’s Republican critics – and a handful of liberal ones – who had accused Mr. Obama of improperly claiming that he could make the appointments under his executive powers. The administration had argued that the president could decide that senators were really on a lengthy recess even though the Senate considered itself to be meeting in “pro forma” sessions.

But the court went beyond the narrow dispute over pro forma sessions and issued a far more sweeping ruling than expected. Legal specialists said its reasoning would virtually eliminate the recess appointment power for all future presidents when it has become increasingly difficult for presidents to win Senate confirmation for their nominees. In recent years, senators have more frequently balked at consenting to executive appointments. President George W. Bush made about 170 such appointments, including John R. Bolton to be ambassador to the United Nations and two appeals court judges, William H. Pryor Jr. and Charles W. Pickering Sr.

“If this opinion stands, I think it will fundamentally alter the balance between the Senate and the president by limiting the president’s ability to keep offices filled,” said John P. Elwood, who handled recess appointment issues for the Justice Department during the Bush administration. “This is certainly a red-letter day in presidential appointment power.”

The ruling, if not overturned, could paralyze the National Labor Relations Board, an independent agency that oversees labor disputes, because it would lack a quorum without the three Obama appointments in January 2012.

The ruling’s immediate impact was to invalidate one action by the board involving a union fight with a Pepsi-Cola bottler in Washington State, but it raises the possibility that all the board’s decisions from the past year could be nullified. The decision also casts a legal cloud over Mr. Obama’s appointment that same day of Richard Cordray as the director of the Consumer Financial Protection Bureau.

A White House spokesman said, “We disagree strongly with the decision” by the United States Court of Appeals for the District of Columbia Circuit, adding that it conflicted with other court rulings and well over a century of government practice. Administration officials did not immediately say whether they would appeal the ruling or wait for other appeals courts to issue decisions in similar lawsuits filed across the country challenging other labor board actions.

The three judges on the appeals court panel, all of them appointed by Republicans, rejected the Justice Department’s argument that Mr. Obama could make the labor board appointments by declaring the Senate’s pro forma sessions during its winter break — in which a single senator came into the empty chamber every three days to bang the gavel — a sham. The Republican-controlled House of Representatives had refused to let the Democratic-controlled Senate adjourn for more than three days.

“An interpretation of ‘the Recess’ that permits the President to decide when the Senate is in recess would demolish the checks and balances inherent in the advice-and-consent requirement, giving the President free rein to appoint his desired nominees at any time he pleases, whether that time be a weekend, lunch, or even when the Senate is in session and he is merely displeased with its inaction,” wrote Judge David B. Sentelle. “This cannot be the law.”

The panel went on to significantly narrow the definition of “recess,” for purposes of the president’s appointment power. The judges held that presidents may invoke their recess appointment power only between formal sessions of Congress – a brief period that usually arises only once a year – rather than during breaks that arise during a session, like lawmakers’ annual August vacations. Two of the three judges also ruled that the president may also only use that power to fill a vacancy that opens during the same recess.

The ruling also called into question nearly 200 years of previous such appointments by administrations across the political spectrum. The executive branch has been making intrasession appointments since 1867 and has been using recess appointments to fill vacancies that opened before a recess since 1823. Among other things, Mr. Elwood noted, it called into question every ruling made by several federal appeals court judges who were installed by recess power.

“You know there are people sitting in prisons around the country who will become very excited when they learn of this ruling,” he said.

Charlie Savage reported from Washington, and Steven Greenhouse from New York.

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Stock sell-off shows an emotional investment in Apple

A friend of mine, a weatherman for a local TV station, always greets me the same way: "Time to sell my Apple stock?"

And I always offer the same response: Do you still like the company?

"Yes."

Then don't sell it.

Investors were wringing their hands Thursday over Apple's prospects, even though the company reported record quarterly profit of $13.1 billion and said it sold 28% more iPhones and 48% more iPads.

Despite what for any other business would be regarded as a stellar performance, Apple's shares fell $63.51, or 12.4%, to $450.50.

This is what happens when our relationship with a company turns emotional. As in all relationships, we try to be understanding and reasonable, but it's hard to mask our disappointment when expectations aren't met.

And, ultimately, investors and consumers can be very fickle.

"A minor chink in your armor and out you go," said Brad Barber, a professor of finance at UC Davis who specializes in investor psychology.

He described the sell-off of Apple's stock as "awfully dramatic" but not surprising, given that people have such a visceral relationship with this company.

"Is this a rational response?" Barber asked. "That's hard to say."

Hard because it's difficult to gauge whether Apple's stock is fairly priced. If the company has more blockbuster products in the pipeline and if its market dominance is secure, then, yes, Apple probably is worth its $423.8-billion market valuation.

But what if, you know, there's someone handsomer or prettier waiting in the wings? Do you really want to tie yourself down?

American consumers generally keep the business world at a healthy distance, understanding that commerce isn't the same as personal commitment. If a company provides a bad experience, we don't hesitate to take our business elsewhere.

But from time to time, exceptional companies rise to a higher level in our esteem. In a 1953 congressional hearing, the former head of General Motors, Charles E. Wilson, made a statement that has long been taken out of context this way: "What's good for General Motors is good for the country."

What he actually said was that "for years I thought what was good for our country was good for General Motors and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country."

What's interesting, though, is that the misquoted sentiment went generally unchallenged at the time. GM was America. It was Chevrolet and Buick and Cadillac. As GM said of its 1955 Chevy Bel Air Sport Coupe, it "exuded American optimism."

In more recent years, think of Sony in the 1980s. Was there a more innovative company anywhere? The best VCR was a Betamax, the best TV was the Trinitron. Remember your first reaction to the Walkman, the notion of carrying a stereo in your pocket?

These days, Sony would be lucky to get a passing glance on eHarmony.

Remember when Microsoft unveiled Windows 95? The company spent about $300 million on a global party for its new operating system, and people lined up for hours outside retail shops to get their hands on the software.

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Architect Designs 3-D Printed, Mobius Strip-Inspired Landscape House

Architects have tossed around the idea of 3-D printing buildings, but Universe Architect’s first one could have a twist.

Inspired by the Mobius strip, Janjaap Ruijssenaars’ house design wraps around itself, twisting the interior to the exterior and back. Ruijssenaars and his collaborator, artist and mathematician Rinus Roelofs, call it the Landscape House because landscapes, too, are continuous.

Ruijssenaars started with a strip of paper, twisted into August Ferdinand Mobius’ famous band. But when he expanded the paper to have a thickness, and 3-D printed it, he saw in it the shape of a building. Even the 3-D printing was a nod to continuity.

“All other materials, when making models, had a visual beginning and an end,” says Ruijssenaars. “You have to cut a material and later tape it. With 3-D printing you can start at the bottom and end at the top resulting in an endless Mobius strip without a cut.”

The building itself could start construction as early as next year in two locations, one in the Netherlands and one in Brazil. Like the model, it will be 3-D printed as well, using the D-Shape, a stereolithographic printer, which binds layers of sand in structures as big as two-story buildings. D-Shape says the artificial sandstone is stronger than concrete, but the Landscape House calls for 20-foot by 30-foot hollow sandstone segments filled with reinforced concrete.

Images: Courtesy of Universe Architecture

Nathan Hurst is learning how to make some things, knows how to fix some others, and is already pretty good at breaking everything else. He has written for Outside and Wired, traveled in Africa, and tweets as @NathanBHurst.

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GLAAD protests Nat Geo’s collaboration with Boy Scouts

LOS ANGELES (TheWrap.com) – The advocacy group backed a Change.org petition started by Will Oliver, a 20-year-old gay Eagle Scout, that calls on Nat Geo to air a disclaimer clarifying the network’s views before each episode of its new series, “Are You Tougher than a Boy Scout.” It debuts this spring.

“That National Geographic would brush aside countless gay teens suffering at the hands of the BSA, shrugging off injustice as just another ‘point of view,’ is irresponsible,” GLAAD president Herndon Graddick said in a statement. “By airing this program, National Geographic is providing support and publicity to an organization that harms young people simply because of who they are. If the network is truly committed to standing by its non-discrimination practices, it should have no problem airing a disclaimer to that effect.”

Nat Geo did not immediately respond to calls from TheWrap requesting comment.

But in a statement to GLAAD, the network said the show has “nothing to do with this debate” over the Boy Scouts’ LGBT policies.

“As it relates to our upcoming show with the Boy Scouts, we certainly appreciate all points of view on the topic,” Nat Geo said in the statement, “but when people see our show they will realize it has nothing to do with this debate, and is in fact a competition series between individual scouts and civilians.”

GLADD pointed to the Boy Scouts’ October 2012 Progress Report of its National Council Strategic Plan 2011-2015. It cites the Nat Geo series as a “strategic partnership” aimed at promoting the idea that “scouting is ‘cool’ with youth.”

The report states that the Scouts will begin working on marketing plans with National Geographic for “leveraging the show with Scouting audiences and audiences outside of scouting.”

“It’s all too clear that this show is just a marketing ploy, crafted by the BSA to boost dwindling membership and distract Americans from the Scouts’ long history of discrimination,” Graddick said. “National Geographic Channel is the means to that end and must therefore make it clear where the network stands.”

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The New Old Age Blog: Grief Over New Depression Diagnosis

When the American Psychiatric Association unveils a proposed new version of its Diagnostic and Statistical Manual of Mental Disorders, the bible of psychiatric diagnoses, it expects controversy. Illnesses get added or deleted, acquire new definitions or lists of symptoms. Everyone from advocacy groups to insurance companies to litigators — all have an interest in what’s defined as mental illness — pays close attention. Invariably, complaints ensue.

“We asked for commentary,” said David Kupfer, the University of Pittsburgh psychiatrist who has spent six years as chairman of the task force that is updating the handbook. He sounded unruffled. “We asked for it and we got it. This was not going to be done in a dark room somewhere.”

But the D.S.M. 5, to be published in May, has generated an unusual amount of heat. Two changes, in particular, could have considerable impact on older people and their families.

First, the new volume revises some of the criteria for major depressive disorder. The D.S.M. IV (among other changes, the new manual swaps Roman numerals for Arabic ones) set out a list of symptoms that over a two-week period would trigger a diagnosis of major depression: either feelings of sadness or emptiness, or a loss of interest or pleasure in most daily activities, plus sleep disturbances, weight loss, fatigue, distraction or other problems, to the extent that they impair someone’s functioning.

Traditionally, depression has been underdiagnosed in older adults. When people’s health suffers and they lose friends and loved ones, the sentiment went, why wouldn’t they be depressed? A few decades back, Dr. Kupfer said, “what was striking to me was the lack of anyone getting a depression diagnosis, because that was ‘normal aging.’” We don’t find depression in old age normal any longer.

But critics of the D.S.M. 5 now argue that depression may become overdiagnosed, because this version removes the so-called “bereavement exclusion.” That was a paragraph that cautioned against diagnosing depression in someone for at least two months after loss of a loved one, unless that patient had severe symptoms like suicidal thoughts.

Without that exception, you could be diagnosed with this disorder if you are feeling empty, listless or distracted, a month after your parent or spouse dies.

“D.S.M. 5 is medicalizing the expected and probably necessary process of mourning that people go through,” said Allen Frances, a professor emeritus at Duke who chaired the D.S.M. IV task force and has denounced several of the changes in the new edition. “Most people get better with time and natural healing and resilience.”

If they are diagnosed with major depression before that can happen, he fears, they will be given antidepressants they may not need. “It gives the drug companies the right to peddle pills for grief,” he said.

An advisory committee to the Association for Death Education and Counseling also argued that bereaved people “will receive antidepressant medication because it is cheaper and ‘easier’ to medicate than to be involved therapeutically,” and noted that antidepressants, like all medications, have side effects.

“I can’t help but see this as a broad overreach by the APA,” Eric Widera, a geriatrician at the University of California, San Francisco, wrote on the GeriPal blog. “Grief is not a disorder and should be considered normal even if it is accompanied by some of the same symptoms seen in depression.”

But Dr. Kupfer said the panel worried that with the exclusion, too many cases of depression could be overlooked and go untreated. “If these things go on and get worse over time and begin to impair someone’s day to day function, we don’t want to use the excuse, ‘It’s bereavement — they’ll get over it,’” he said.

The new entry for major depressive disorder will include a note — the wording isn’t final — pointing out that while grief may be “understandable or appropriate” after a loss, professionals should also consider the possibility of a major depressive episode. Making that distinction, Dr. Kupfer said, will require “good solid clinical judgment.”

Initial field trials testing the reliability of D.S.M. 5 diagnoses, recently published in The American Journal of Psychiatry, don’t bolster confidence, however. An editorial remarked that “the end results are mixed, with both positive and disappointing findings.” Major depressive disorder, for instance, showed “questionable reliability.”

In an upcoming post, I’ll talk more about how patients might respond to the D.S.M. 5, and to a new diagnosis that might also affect a lot of older people — mild neurocognitive disorder.

Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

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This post has been revised to reflect the following correction:

Correction: January 24, 2013

An earlier version of this post misspelled the surname of a professor emeritus at Duke who chaired the D.S.M. IV task force. He is Allen Frances, not Francis.

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DealBook: In Davos, Merkel Presses Leaders to Keep Focus on Economy

DAVOS, Switzerland — Angela Merkel, the German chancellor, on Thursday warned her fellow euro zone leaders not to falter in their efforts to reinvigorate their economies now that they face less pressure from financial markets. She gave voice to widespread concern here that a tentative European recovery could be undercut by political complacency.

Measures in recent months by the European Central Bank to help banks and struggling euro zone countries have calmed markets but have not solved the euro zone’s underlying economic problems, Ms. Merkel said in a speech to participants at the World Economic Forum.

“The E.C.B. has done a lot,” she said. Now, she added, “there is a political duty for us to do our homework.”

Reprising the role of European taskmaster for which she is often resented, Ms. Merkel made her remarks shortly after Mario Monti, the prime minister of Italy, assured an audience at an auditorium in Davos that his country was making progress in efforts to reduce its debt load and streamline its economy. Italy is removing barriers to competition, rebuilding infrastructure and dismantling labor regulations that inhibit hiring and firing, Mr. Monti said.

But among big investors, many of whom are here, there is skepticism over whether Europe’s political leaders will follow through on such changes.

“These are fairly important measures,” said Olivier Marchal, managing director for Europe at Bain & Company, speaking on European reform efforts. But, he predicted, “apart from the psychological effect, there will not be any tangible impact before 2014.”

David Cameron, the British prime minister, has intensified pressure on the euro zone — the 17 European Union members that use the euro — with his announcement Wednesday that he would ask Britons to vote on European Union membership within five years. He amplified those remarks here Thursday, saying that Britain did not want to turn its back on Europe but wanted to make it “more competitive, open and flexible.”

The discussion about European competitiveness came after a business survey released in London on Thursday raised hopes that the euro zone could emerge from recession sooner than expected. But the survey of purchasing managers, by the data provider Markit, showed a sharp divergence among countries. While German managers became more optimistic, French sentiment slumped.

Separately, a report from Madrid on Thursday showed that Spanish unemployment rose to a record high of 26 percent at the end of 2012, with six million people out of work.

Mr. Marchal of Bain & Company said many of the businesspeople he had talked with remained cautious and reluctant to invest. “Many of them are either postponing strategic moves or preparing for things to get worse,” he said.

During her speech, Ms. Merkel described herself as “conditionally optimistic” and said, “The investment climate in Europe has improved.” But she went on to lament the high level of youth unemployment. The Spanish data released Thursday showed that the jobless rate among people from 16 to 24 years old was 55 percent in the last three months of 2012, up from 52 percent in the previous quarter.

“Our biggest burden is youth unemployment,” she said.

Europe needs to better exploit its status as the world’s largest market, Ms. Merkel said. “We can make a lot of that if we remain open, innovative and when we don’t take it for granted that Europe has a right to be the leading continent on the world.”

While Germany is considered healthier than other large economies in Europe, growth is hardly dynamic. Output shrank in the last three months of 2012. This year, the German economy will grow by about 1 percent, according to numerous forecasts.

“Things are better,” Thomas J. Donohue, president of the United States Chamber of Commerce, said in an interview here. “But there’s a big distance between things being better and having the growth we need to start hiring people.”

Mr. Donohue noted that the United States, Europe and China had become highly dependent on trade with one another. “If the E.U. has even a little bit of negative growth, that’s not going to be good for any of the three of us,” he said.

Ms. Merkel praised Mario Draghi, the president of the European Central Bank, for insisting that countries improve economic performance as a condition for his help containing market pressure.

But many of the business managers who predominate among the attendees in Davos are worried that progress will stall because of resistance from interest groups that stand to lose quasi-monopolies or other privileges ensured by government regulation. In addition, they say, European labor unions have held up changes in laws that make it nearly impossible to dismiss workers who are not needed or not performing.

Mr. Monti’s reform drive has helped Italy win back international respect, but there is considerable nervousness about what will happen after elections in February. Because Italian borrowing costs have retreated from alarming highs last year, political leaders feel more heat from voters than they do from bond investors.

Since Mr. Draghi promised last year to do whatever it took to preserve the euro, “I have seen in no country hard new measures,” Maximilian Zimmerer, chief financial officer of the German insurer Allianz, said in an interview.

Mr. Zimmerer expressed optimism that reforms would resume, but added, “You do not have the pressure of markets for now.”

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