Greece is once again the focal point of efforts to stem the bleeding of investor confidence and save the eurozone. Intense negotiations continue on the precise terms of the restructuring of privately held debt in the struggling Mediterranean country. Agreement is a necessary condition for the approval of a second bailout package from Greece’s eurozone partners and the International Monetary Fund (IMF), which, at 130 billion euros or more, will exceed the first one.
Friday was another very bad day for Europe’s crisis managers. Within the space of a few hours, it was revealed that talks between Greece and its international creditors had reached a dead end and were being put on hold and that Standard & Poor’s had downgraded nine eurozone countries, including France and Austria, which formerly held AAA ratings. Both developments are alarming, but the Greek situation is the more immediately pressing.
Republicans are still huffing and puffing about President Barack Obama’s recess appointment of Richard Cordray to head the Consumer Financial Protection Bureau, but that hasn’t stopped the new director from getting right to work.
Cordray announced Thursday the launch of a nonbank supervision program to supplement the agency’s monitoring of banks. In layman’s terms, a "nonbank" is a business that doesn’t accept deposits but provides financial services that include pay day loans, credit ratings, debt collection and some mortgage lending.
Until now, most of these nonbanks have operated without federal regulation. The new supervision program will be equipped to investigate them and enforce rules.
Congress had debt on the brain in 2011—fights over the debt ceiling, the Supercommittee, the Bush tax cuts, and voucherizing Medicare—but it amounted to just talk. It was a weird issue to focus on in the year before a big election, since most voters find unemployment and the general economy more important problems to tackle than the federal deficit. And, it turns out that this obsession with the debt was a bad idea for more than Congress' approval rating.
On November 28, hundreds of students from Brauch College linked arms and protested outside a City College of New York board meeting in which members authorized, by a 15-to-1 vote, a $300 annual tuition increase until at least 2015. The protest was so disruptive that, according to The New York Times, Brauch canceled classes after 3 p.m. and stopped regular foot traffic going in and out of the building where the meeting was taking place. Three people were arrested.
The debt-ceiling debacle had Democrats and Republicans arguing over tax breaks and spending cuts on social programs like Medicare and Social Security. But, under the radar, both parties put higher education on the chopping block once again.
I'm obviously not an expert on the debate occurring over the debt ceiling, but I know enough to know that raising the debt ceiling has nothing to do with cutting spending. During last night's speech, House Speaker John Boehner repeated a whopper that is becoming a standard part of Republican talking points on the issue:
Bill Clinton offered his take Tuesday for how he would solve the debt ceiling: Oder the Treasury to keep issuing debt under the 14th Amendment, which states: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." Some have interpreted this Civil War-era language to mean the debt ceiling is unconstitutional, and that it is within Treasury Secretary Timothy Geithner's power to continue issuing debt to
Just in case Moody's and S&P didn't frighten you enough, Fitch credit agency has added itself to the list of groups planning to downgrade the United State's triple-A rating if the debt ceiling is not raised by August 2. PerThe Hill:
First, the rating would be placed on Credit Watch Negative -- a move already adopted by fellow rater Standard & Poor's. Two days after the deadline, the Treasury has a $90 billion bond due to mature. If the government does not pay in full that bond, Fitch would immediately knock the rating down several notches to B-plus -- the highest possible rating for a nation in default.
The argument that the debt ceiling is unconstitutional, coming just as the United States is inching closer to the possiblity of default due to a stalemate in negotiations, seemed a little too convenient for me at first. But Jack Balkin, who has been one of the more eloquent voices of a "liberal originalism" challenging conservatives' interpretation of the Framer's original intent, makes a compelling case that the entire point of the 14th Amendment was to avoid the sort of grandstanding we're seeing right now:
The public isn't very knowledgable about fiscal policy and doesn't have a firm understanding of debt as it relates to the federal government. As such, it's not a surprise to learn that the public has a contradictory view on the debt ceiling. According to the latest Washington Post-ABC News poll, 71 percent of Americans say that the U.S economy would suffer serious harm if Congress fails to lift the debt limit. Even still, 51 percent of Americans oppose a deal to lift the debt limit, even if it includes spending cuts.
If you've visited the Prospect's homepage recently, you'll have noticed a clock counting down to midnight today. By the end of the day the federal debt will reach its congressionally set limit of $14.294 trillion. Does that mean the government will default on its debt today? Not quite. Treasury Secretary Tim Geithner has a box of tools that allows him to reconfigure the government's books, temporarily keeping the lights on and still paying creditors interest on government bonds. Geithner has stated that he can continue tinkering with government operations until Aug.
