Egypt's ruling class is circling the drain. President Mubarak has shut down the internet and cell phones and ordered the military to crack down on democratic reform protestors. Just a few minutes ago, Mubarak asked his government to resign and promised to appoint a new government within a few hours. Perhaps one of the fundamental problems with Mubarak is his ability to dissolve and reassemble governments at a whim.
Egypt joins Tunisia in facing public revolt over corruption at the highest levels. Is it coincidence that these nations are considered the most pro-American in the region, whereas anti-American countries such as Iran have thus far entirely failed to achieve political reform?
Obama's distance on this matter is understandable - Mubarak has been friendly toward the U.S., but his democratic credentials are suspect, at least. On the other hand, the democratic reformers could easily be usurped by the military or Islamic radicals if control of the government is up for grabs. Any formal endorsement of a specific outcome would embroil America far too deeply into Egyptians affairs.
UPDATE: While cautioning demonstrators to avoid violence, Obama has pretty clearly taken their side in the reform movement - without, however, advocating their greatest demand: the resignation of Mubarak. This speech was a pretty hardy and commendable pro-democracy speech for Obama.