Before I offer my thoughts on what is going on in Egypt and how it might progress, I must acknowledge my frustration with the convoluted web of popular myths about it in American public discourse. Almost everyone I talk to presupposes at least 1 item on the list of uncorroborated bullshit below, so I must begin by thrashing it. If you feel confident that you don't buy into any myths, scroll down to "reality".
Myth 1: Morsy is an Islamic extremist and his overthrow is hence a popular overthrow of Islamism.
Morsy did run for office on the ticket of a political party associated with the Muslim Brotherhood. However, this organization has been around for decades, operates in many countries, and has members and donors from a variety of Muslim sects with varying degrees of orthodoxy. Among its political objectives is having Islam be more of a consideration in the politics of Muslim majority countries and expelling western puppet dictators (like Mubarak) that barricade this. If that objective makes them extremists, then every American politician that believes Christianity deserves political consideration deserves that title also. There are some very extreme elements within the movement, and right-wing propaganda in the US likes to create the impression that they are representative of it and Morsy agrees with them. The reality is that these are a small minority, and while some of them endorse Morsy - his own belief in theocracy is on par with Mike Huckabee, and WAY less extreme than Rick Santorum or Tim Pawlenty.
Myth 2: A military coup is a novel development in Egypt.
Egypt's last 3 dictators - Nasser, Sadat, and Mubarak - were all generals that came to power by coups. The military was Mubarak's primary backbone of support for his 3 decades in charge, and the revolution of 2012 was successful primarily because they saw that his popularity had dried up and abandoned him. Morsy has always been inconvenient for the military and its associates, and they were merely waiting for the right time to stage a new coup and take back power.
Myth 3: US intervention orchestrated Morsy coming to power
This stems from the idiotic rhetoric that Obama is a Muslim and is by far the dumbest of the myths. There is 0 evidence of this whatsoever. The emotional conjecture of idiot Islamophobes who will call me a traitor for disagreeing with them does not warrant serious consideration. Obama and Hillary supported Mubarak until his last day in office - one of the reasons Hillary was booed and pelted with eggs during her visit to Egypt in late 2012 as she tried to create a relationship with Morsy's government.
Myth 4: The police and military are entirely anti-Morsy and/or anti-MB.
Less common, this myth is very misleading. It is true about of commanders; but many divisions and regional authorities are in fact sympathetic to varying degrees of Islamic law - and a chief complaint of many Egyptians has been that the police and military in some parts have refused to keep rogue, extremist elements under control. Morsy has been blamed for orchestrating this and the top command has used this to build a case against him, but again there is 0 evidence he actually controls them.
With that garbage thrown in the fire, let's examine the real situation. The Muslim Brotherhood and the military interests are two competing political powers in Egypt, each with their own foreign connections. Since his election to office a year ago in a contest riddled with fraud and unrest from all sides, Morsy has straddled the fence between them and invested heavily in eliminating the extreme elements on either side in an effort to avoid precisely the situation that is developing now. First he resigned from the MB's political party. Then he fired Mubarak's top generals who he knew were just biding their time to stage another coup. Then he ordered the military to brutally eradicate the Islamist infestation in the Sinai peninsula that had grown during the chaos of Mubarak's final days and was trying to start a war with Israel - an infestation orchestrated by the same Yemen-based Al Qaeda organizations that attacked the US embassy in Libya. Morsy managed to protect the embassy in Cairo from a similar attack; and used information from his busts to break up extremist organizations IN Egypt tied to these actions - some Islamist. THEN he dissolved Egypt's equivalent of the Supreme Court - which was a step too far in the eyes of many Egyptians and was hailed as authoritarian. However, the institution was a leftover den of Mubarak appointees that was unapologetically biased for military interests and doing everything within its power to illegitimize Morsy's Presidency. To put it simply - if he hadn't done it to them, they would have done it to him.
In addition to that dissolution being seen as authoritarian, Egypt's economy is in shambles, corruption reigns supreme, and extreme Islamist elements have run amok amid the chaos. It's difficult to blame Morsy for these developments as they are natural in a post-revolutionary state, but he has for all intents and purposes failed to maintain the balance and I hardly care about him in either direction. However, the military simply picked the right time of dissatisfaction with Morsy to stage a coup and take back power which they have held since the 1950s - their current popularity is merely the equivalent of them jumping in front of a well-organized parade and saying "follow us".
The military's promises of a new constitution and new elections are complete bullshit. Every past Egyptian strongman promised these while consolidating power and using various excuses such as "emergency law" to indefinitely delay them. The military will attempt to rule again using a new dictator they hope is slightly more palatable to younger Egyptians. However, the Muslim Brotherhood is not on board with this and too powerful to forcefully eradicate; and their leftover elements will unbalance the new military government the same way leftover Mubarak elements unbalanced Morsy's. In a best case scenario, the new government will last about a year until the moderate urban youth side AGAIN with the MB to topple it, and there may be a few more such cycles until the country is weary of unrest and the sides agree to actual compromise. In the worst case scenario, the current situation will deteriorate into a civil war - a prolonged and messy Syria-style one with lots of sectarian strife. Morsy's supporters are a minority, but they are far more numerous than Mubarak's were and have the powerful MB firmly behind them. Today's clashes have already established that neither can claim a monopoly on force, and if the military gets involved pro-MB divisions may defect and cause a stalemate.
While it sounds gloomy and apocalyptic, this situation resembles the historic birth pangs of democracy in many countries including the United States and most of Europe. No power elite can claim dominance and they must exhaust their resources in trying to crush each other by force before they agree to compromise. This, sadly, is the nature of human society, no matter how much we would like to think we are better than that as a species.