The problems of the euro turned critical when the Greek government nearly defaulted in May 2010 and the International Monetary Fund and European Union agreed to a bailout. In truth, the 17-nation euro area had deep troubles long before that. Its oversized and undercapitalized banks, its common monetary policy but diverse and fragmented fiscal policies, the persistent economic imbalances among nations that use the euro, and a cumbersome decision-making structure all made the euro-area economy vulnerable. The crisis, which still bears the mark of the Greek tragedy that first set it off, has now spread far beyond Greece.
The stock market liked the European deal that was announced in the wee hours of Thursday morning. At this writing, the Dow is up 268 points. But the market, as is so often the case, could well be wrong.
For starters, this is not yet a done deal. The European leaders agreed that the banks will take "voluntary" losses of about 50 percent on their holding of Greek bonds, so that the Greek economy can gain some room to breathe—but the banks did not agree.
Once again, the Obama administration has announced a plan to shore up housing prices and underwater homeowners—and once again the plan is very likely to fail.
This latest effort will try to use Fannie Mae and Freddie Mac, now wards of the government, to help homeowners refinance mortgages at lower interest rates.
The premise is that with interest rates at record lows, homeowners can save hundreds of dollars a month in their mortgage payments by refinancing. For example, by refinancing a 5.5 percent mortgage to a 4.5 percent mortgage, a homeowner with a $300,000 loan could save about $250 a month.
That Senate Republicans used the filibuster to kill a Democratic stimulus bill isn’t a surprise – at this point, Republicans have all but announced their plan to keep the economy from significantly improving, and as a result, slash the tires on President Obama’s bid for re-election.
What comes as a surprise is the extent to which the press isn’t playing along. In the past, reporters would describe yesterday's event with “balanced” language that obscured Republican responsibility for the obstruction. For example, here’s how The New York Timesdescribed last week’s failed vote on the full American Jobs Act:
For last two months, we’ve been engaged in something of a natural experiment to see if presidential speechifying—in this case, a consistent focus on jobs—is enough to move public opinion in a progressive direction and create avenues for legislative success. So far, that hasn’t been the case. Instead, Republicans have taken their usual position of staunch opposition, and moderate Democrats have given them cover by opposing the administration’s modest efforts to raise taxes and offset the costs of new stimulus.
NYPD clashes with Occupy Wall Street protesters have made the demonstration a national story. AP Photo/Mary Altaffer
Tensions at Zuccotti Park in lower Manhattan mounted last week after New York City Mayor Michael Bloomberg announced that Occupy Wall Street activists would need to vacate the premises temporarily for cleaning. In response to the threat, occupiers cleaned the park themselves and said that, come morning, they would hold brooms, link arms, and peacefully refuse to leave. Bloomberg backed down, and once more, Occupy Wall Street confirmed that it could endure in the face of resistance from politicians and police. A better question is whether the movement could have endured without the attention and momentum it's gained from confrontation.
Medicare now faces a more uncertain future than at any time in its history. That’s not because it has lost popularity or failed to control costs as effectively as private insurance has. On the contrary, the program continues to enjoy overwhelming public support, and since the late 1990s, its costs per beneficiary have grown more slowly than those of private insurers. Nor does Medicare confront an imminent crisis; in fact, its costs have decelerated in the past year.
(Sipa via AP Images) President of France's far-right National Front party Marine Le Pen gives a press conference after protesting a French National Assembly vote that authorized a 15 billion euro aid package for Greece.
The epic financial crash of 2007–2008 should have produced a massive political defeat for the conservative ideology whose resurgence began three decades ago. Its signal achievement, liberated finance, did not reward innovation, enhance economic efficiency, or produce broad prosperity. Rather, the result was a speculative bubble followed by a severe crash. Along the way, the super-rich captured a disproportionate share of the economy’s gains, while other incomes stagnated. In the aftermath, ordinary people have suffered large losses of earnings, assets, social protections, and hopes for their children.
Last week, Ben Bernanke delivered a speech in which he agreed that the government should reduce the deficit. However, he cautioned, "a sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery."
Do Republican leaders in Congress answer to Tea Party activists or to Wall Street? That question will be answered in the next few weeks as the debt-ceiling fight comes to a head. The choice that GOP leaders make will influence more than fiscal policy or the financial markets; it will also shape the 2012 election and reveal the true identity of today's Republican Party.
When I saw that Rep. Paul Ryan, the GOP budget guru who's led the charge for Medicare repeal, was planning a major address on foreign policy, my hopes were not high. Indeed, the speech he delivered last Thursday offered its fair share of nonsense, partisanship, and ideological ax-grinding. But in some respects, Ryan's core ideas about international relations were refreshingly sensible.
For some time, liberals have felt that their messenger-in-chief has been AWOL. In the wake of President Barack Obama's acquiescence to $38 billion in spending cuts, many targeted at vulnerable populations, New York Times columnist Paul Krugman wrote of the president that "arguably, all he has left is the bully pulpit. But he isn't even using that -- or, rather, he's using it to reinforce his enemies' narrative."