The much-heralded solution to the European debt crisis has been replaced -- quickly -- by a new impetus to dissolution. Less than two months ago, European officials were all abuzz with excitement about the July 21 EU pact, through which Greece would get its second bailout. The private sector (i.e., the banks) would take some losses on Greek bonds, but not in a way that would activate credit-default swap payments. The EFSF, the European Financial Stability Fund, would be allowed to buy bonds of troubled Eurozone countries in the secondary market so that the European Central Bank would no longer have to.
The Germans were happy enough. The banks -- and the Central Bank -- were happy enough. The Greeks were just plain happy. Little did they know.
(Flickr/Ijonas Kisselbach) An Iraq War protest in the U.K.
Japan's "lost decade" of the 1990s gave the world "zombie banks." A zombie bank is, in effect, bankrupt. It's made loans to companies that aren't going to be able to pay them back, and the total value of those bad loans exceeds its equity. Normally, a bank in that position has gone bust. Sometimes, when the government doesn't want to let the bank fail but also doesn't want to pay to bail it out, it simply agrees to pretend that the bank is still sound. A bank in that situation faces unusual incentives. The smart strategy is to just double down on bad bets and hope for the best.
(AP Photo/Geert Vanden Wijngaert) European Union Commissioner for Economic and Monetary Affairs Ollie Rehn
On Monday, Ollie Rehn, the dough-faced Finn who serves as the European Union economic and monetary affairs commissioner, briefed the European Parliament on the latest bad news about Europe's economy. Second-quarter growth fell to 0.2 percent in the Eurozone as a whole (compared to 0.8 percent in the first quarter). German quarter-to-quarter growth tumbled down from 1.3 percent to 0.1 percent. France's fell to zero. Eurozone manufacturing output contracted in August.
(AP Photo/Abdel Magid Al Fergany) A Libyan woman wears a cap with the colors of a pre-Gadhafi flag and the Arabic words, "Long live free Libya."
Remember the winter of 2001, when the Taliban halted the U.S.-allied Northern Alliance -- a collection of Afghan military groups -- on the road to Kabul and forced the country into a decade-long military standoff with the Afghan government? Recall 2003, when Saddam Hussein's Republican Guard fought off the Anglo-American invasion of Iraq and set the stage for extended battles between the American and Iraqi militaries? Me neither. Because, of course, neither of those things happened. Whatever you think of either war, in both Afghanistan and Iraq, the U.S. military proved capable of dislodging enemy forces from the capital and securing a tidy victory. The problems all came afterward.
This week, I took my second trip to Libya since the February revolution as director for the United States Institute of Peace's North Africa Programs. I had set up several meetings, but close to dawn on my first day, I woke to find a message saying that my meeting for the morning with a young activist was canceled because a cousin of hers had been killed in the storming of Bab al-Aziziya, Colonel Moammar el-Gadhafi's main military compound.
(AP Photo/Luca Bruno) A man passes close to a stock exchange board monitor inside a bank in Milan, Italy.
With America's debt-ceiling crisis resolved, the time is ripe for a brand-new set of financial calamities on the other side of the Atlantic. The "rescue" plan for Greece put forth by European leaders on July 22 is unraveling with surprising speed. The relatively narrow scope of the solution seems to underscore how little political will there is to resolve the underlying issues with the European economy.
(AP Photo/Amr Nabil) Egyptian protesters shout anti-military rulers slogans as they march at Tahrir Square on Monday, July 11, 2011.
Cairo, Egypt -- Five months ago, Egyptian President Hosni Mubarak was forced from power following 18 days of nationwide protest that claimed the lives of more than 800 Egyptians.
"Hold your head high; you're Egyptian," protesters chanted in the streets after Vice President Omar Suleiman announced Mubarak's resignation. In the Middle East's most populous nation, the moment's jubilation then seemed capable of wiping away decades' worth of humiliation under the U.S.-supported despot.
Giulio Tremonti is obviously a man who thinks highly of himself. This weekend, Italy's embattled minister of finance confided to the Corriere de la Sera newspaper that a political attack which resulted in his resignation "could bring down the euro."
(AP Photo/Thanassis Stavrakis) An elderly man watches the smoke of tear gas during clashes at the Athens' main Syntagma square.
Eurozone leaders and bankers sighed with relief and Greeks on the street groaned in disgust as debt-saddled Greece approved a new round of austerity measures Wednesday. Including 28 billion euros in spending cuts and tax increases through 2015, the concessions were a necessary condition for receiving the fifth tranche -- about 12 billion euros -- of last year's 110 billion euro loan from emergency lenders. Without it, the country would probably have defaulted in July.
(AP Photo/Kostas Tsironis)A young protester shouts slogans in front of the Greek parliament during a protest in Athens on Sunday, June 26, 2011.
The good news is that the Greek government survived a vote of confidence shortly after midnight last Tuesday, keeping the country from defaulting on its debts. But that's also the bad news, because it means the government will proceed with a vote this week on the stringent austerity program demanded by the European Central Bank and the International Monetary Fund. The draconian program is a condition of the next installment of the loan payment, money that is dribbling into the Greek republic only as long as it keeps cutting its budget.
(AP Photo/Hassan Ammar) A rebel fighter stands by as they fire a Grad rocket towards pro-Moammar Gadhafi forces at the front line west of Misrata, Libya.
America's many military commitments can produce a fair degree of agenda crowding -- this week's war, it seems, is Afghanistan. But last week, the White House finally produced a legal theory explaining why it was okay that our forces are still engaged in hostilities in Libya without congressional authorization, even though the 60-day window permitted by the War Powers Resolution has expired and his authority is now being challenged. This news served to obscure the genuinely more important question of the overall merits of the Libya intervention, an operation the case for which looks increasingly weak.
(AP Photo/Koen van Weel, Pool) Dutch anti-Islam politician Geert Wilders, is seen inside the courtroom in Amsterdam, Netherlands, March 30, 2011.
Last Friday, Geert Wilders, the far-right leader of the Dutch Freedom Party, made his way to the Greek Embassy in the Hague. He went to deliver a blunt message for the country: Leave the Eurozone. He read a letter to reporters outside the building urging the financially embattled Greeks to abandon the Euro -- for their own sake and the sake of the other countries in the monetary union. He was then photographed holding up a blown-up replica of a 1.000- drachma note, the old Greek currency, just in case anyone had failed to grasp his not-so-subtle exhortation.
Rep. Raul Grijalva (Photo by: Stephen J Boitano/NBC/NBC NewsWire via AP Images)
Much of the country is already in election-season mode, and it's time for Democrats to think about smart politics as well as smart policy. The enthusiasm gap that lost them the House in 2010 has to be addressed, and waiting much longer would be a disaster.
The White House knows this. It also knows what it has to do about it. Last year, when asked about a potential 2012 challenger to President Barack Obama from his base, Democratic pollster Stan Greenberg's answer came in two words: "Watch Afghanistan."
President Barack Obama speaks to troops as Vice President Joe Biden, left, listens at Fort Campbell, Kentucky. (AP Photo/Mark Humphrey)
President Barack Obama's Democratic base and a majority of Democrats in Congress are poised to revolt if the White House fails to order a sharp drawdown in the number of troops in Afghanistan this month.
Coverage of the killing of Osama bin Laden has splintered between kvelling and questions about the "how" -- Burial at sea! What did the Pakistanis know? How 'bout those Navy SEALS! -- and not-so-subtle attempts to seize the moment to advance certain policy positions. Torture worked, says John Yoo. The fight against terrorism continues, says the Council on Foreign Relations. Out of Afghanistan now, says Robert Greenwald.