Look Who's Downgraded Now

The reappraisal of Austria's and France's credit ratings shows that the Greek economic crisis is at high-risk of contagion.

AP Photo/Remy de la Maviniere
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. The Institute of International Finance, whose managing director, Charles Dallara—a former high-ranking Treasury official under Ronald Reagan and George H.W. Bush who has lately made Athens his home away from home—issued a statement Friday afternoon saying that “discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.” The main sticking point, according to people familiar with the talks, is the level of the interest rate to be paid on the new, lower-principal bonds that creditors will get in...

Hungary Games

The country is seeking help from the IMF even as its internal policies scare off investors.

Hungarian Prime Minister Viktor Orban. AP Photo/Tamas Kovacs
T amas Fellegi, Hungary’s chief negotiator with the International Monetary Fund, has a tough task this week. Fellegi, a minister without portfolio in Viktor Orban’s right-wing government, is in Washington for preliminary talks with the IMF, in the hopes of setting the foundations for a new package of financial support that will prevent the country’s descent into the Hades of default. This new package, which Orban had previously stated would not be needed, was made necessary in part because of the dramatic deterioration in the economic outlook of the whole of Europe as a result of the eurozone debt crisis and the inept way it has been handled. But the Hungarian government shares responsibility for its predicament: Through its policies in the last year and a half, it has made investors particularly jittery. Critics, whose ranks are rapidly swelling and which include the U.S. administration, argue that the problem is not just one of economic policy. In their view, Orban’s reforms,...

Mitt the Unassailed

AP Photo/Elise Amendola
Manchester, New Hampshire —Well, that was unremarkable. The last presidential debate until another begins ten hours from now saw none of Mitt Romney’s challengers actually challenge him. His toughest challenge probably came from George Stephanopoulos, who asked him if his assertions on Bain Capital’s job creation were really on the level—neither Newt, Ron, Jon nor the two Ricks, confronted Romney with anything as potentially threatening to his lead. Part of the problem, as my colleague Jamelle Bouie has pointed out, is that a number of these guys don’t really seem to be running for president. Ron Paul, who took off two-and-a-half days between the Iowa caucuses and his arrival in New Hampshire yesterday afternoon, is simply running to spread the libertarian word, and take shots at his inconstantly conservative rivals (focusing tonight on Rick Santorum—not Romney). Paul had a good night pitching to libertarians and anti-warriors. Santorum had a good night, too, but it’s not likely that...

Pruning the Pentagon

(AP Photo/Pablo Martinez Monsivais) President Barack Obama, center, shakes hand with Vice Chairman of the Joint Chiefs of Staff Adm. James A. Winnefeld Jr., left, and Sec. of Defense Leon Panetta, right, at a news briefing on the defense strategic guidance at the Pentagon, Thursday, Jan., 5, 2012. Looking on are Sec. of the Army John McHugh, far left, and Commandant of the Marine Corps Gen. James F. Amos, far right. Y esterday, President Barack Obama crossed the Potomac River to hold a press conference at the Pentagon, the first time a president has addressed reporters from the military’s headquarters. Flanked by Defense Secretary Leon Panetta, Joint Chiefs Chairman General Martin Dempsey, and other senior military leaders, the president introduced the findings of a nine-month review of U.S. military strategy that will guide how the Pentagon allocates defense dollars as military spending slows following a decade of war. The review, which calls for a leaner, more agile military and a...

Hitting the Ground Running

Richard Cordray wastes no time introducing a financial supervision plan with the Consumer Financial Protection Bureau.

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. After months of cooling his heels while Republicans blocked his nomination, Cordray can finally address some of the predatory lending and usury that led in part to the financial crisis.

Governing on Empty

(AP Photo/Evan Vucci) House Speaker John Boehner of Ohio walks of the floor of the House chamber on Tuesday, Dec. 20, 2011, in Washington. The House rejected legislation to extend a payroll tax cut and jobless benefits for two months, drawing a swift rebuke from President Barack Obama that Republicans were threatening higher taxes on 160 million workers on Jan. 1. T he Senate, having struck its compromise, has gone home. The House, controlled by delusional Republicans, has gone home. Payroll taxes are slated to rise, and unemployment insurance is set to expire before they return in January. The compromise wasn’t just between the two parties in the Senate, apparently. According to Wednesday’s Washington Post , House Speaker John Boehner and House Majority Leader Eric Cantor met with Senate GOP leader Mitch McConnell on Friday and told him they’d get the votes to pass the two-month extension deal he’d worked out with Harry Reid. Boehner and Cantor now say they made no promises, but...

Showdown at the Docks

Occupy Wall Street protesters celebrated the movement's three-month anniversary by taking the fight to major ports.

Protesters at the Port of Oakland Monday. Photo/Aaron Bady
On Monday, occupiers set out to shut down ports across the West Coast. Targets included SSA, which is largely owned by Goldman Sachs, and the Port of Longview, which multinational EGT is trying to operate as the West Coast’s only port without members of the International Longshore and Warehouse Union (ILWU). The actions, which shut down operations at Longview, Oakland, and Portland, were opposed by ILWU leadership. They led to intense debate among and between occupiers and unionists over tactics—who the blockades hurt, whether they’re worth the legal risks—and democracy, namely, how democratic the ILWU and the Occupy movement each are, and whether workers should have a veto over actions where they work. This week saw the continuation of two hunger strikes, one by occupiers in New York demanding an occupation space, and another by occupiers in DC demanding full congressional representation for the district. Activists continued taking foreclosed homes, including a “Home for the Holidays...

Legislative Legerdemain

AP Photo/Yves Logghe
So you think congressional Republicans are the only right-wingers who like to append their pet (and sometimes, wedge) issues—like the Keystone pipeline—to must-pass legislation like the payroll tax-cut extension? Guess again—it looks to be a trans-Atlantic syndrome. Turns out that David Cameron, Britain’s Tory prime minister, went to Brussels for the EU summit last week with exactly the same strategy. As the heads of government of the other 26 member states debated German Chancellor Angela Merkel’s proposal to regulate national budgets more tightly (itself a wildly irrelevant idea to the crisis of Greek, Italian and Spanish solvency, but that’s another story, which I wrote about in today’s Post ), Cameron cleared his throat and proposed a series of measures designed to protect the City—the London-based banks that dominate the British economy and helped bring about the crash of 2008. Cameron was operating under the theory that the Germans and the French so desperately needed unanimous...

Britain Hesitates

David Cameron's veto of an EU integration plan reveals England's deep skepticism about the union.

AP Photo/Yves Logghe
European leaders went one better this time. Not content with failing to resolve the debt crisis tearing through the eurozone and threatening a global recession, they have now managed to create a new source of instability: the rift between Britain and the rest of the European Union, whose consequences may prove to be momentous indeed. It was a long time coming. The tension between the eurozone “ins” and the ten non-Eurozone “outs” has been building throughout the debt crisis, which has forced the states belonging to the common currency to take extraordinary—and yet woefully insufficient—measures to keep the euro from spectacularly collapsing. In the Brussels summit that ended yesterday, France and Germany, drivers of the push toward an ever closer union, were unable to persuade British Prime Minister David Cameron to back their plan for greater fiscal integration. The deal-breaker was a demand by Cameron for special treatment for Britain’s lucrative financial-services industry. Though...

Crash Diet

Obama still has time to redeem his food-production policy.

AP Photo/Pablo Martinez Monsivais
I n October 2008, Michael Pollan, a food writer and critic of American agriculture policy, wrote a letter in The New York Times Magazine addressed to the president-elect, whom everyone then assumed would be Barack Obama, on how to make our food more healthful. Obama wouldn’t win the election for another month, but the lithe, urbane candidate had earned a reputation for eating well on the campaign trail; he eschewed hot dogs for salmon, arugula, and Honest Tea. Food policy had not been at the forefront of the campaign, Pollan argued, but was key to a number of policy goals Obama had raised: “Unless you [reform the food system], you will not be able to make significant progress on the health care crisis, energy independence or climate change. Unlike food, these are issues you did campaign on—but as you try to address them you will quickly discover that the way we currently grow, process and eat food in America goes to the heart of all three problems and will have to change if we hope to...

Republicans' Governing Glossary

AP Photo/Manuel Balce Ceneta
Agencycide noun – The effective killing of a statutorially established agency of government by legislative refusal to confirm the nominees required to lead that agency. The term dates from December 2011, when Senate Republicans killed (by exploiting Senate rules requiring a supermajority to bring up votes) President Barack Obama’s nomination of former Ohio Attorney General Richard Cordray for the position of director of the Consumer Financial Protection Bureau, which had been created by the Dodd-Frank Act passed by the previous Congress. Republicans stated that they had no objections to Cordray himself but didn’t wish to appoint a director so long as the agency possessed the autonomous power with which it was vested by Dodd-Frank, preferring that it be reconstituted as subordinate to other regulatory bodies charged with helping and sustaining banks. While this one episode of nominee-blocking was not sufficient to give rise to the neologism agencycide , it was to be followed in short...

Elizabeth Warren: Bailout Queen

Karl Rove’s latest ad has to set an all-time record for hypocrisy and factual inversion. The ad actually manages to blame Elizabeth Warren for the bank bailouts. As anyone who hasn’t spent the past three years in a cave must know, Warren has been the nation’s single most effective, relentless, and brave critic of the bailouts. It was that service as chair of the Congressional Oversight Panel that made her one of America’s most admired public leaders. The ad slyly begins with Warren speaking, leading the viewer to imagine that this is a Warren ad. Warren says, “The first thing I’m going to promise is that I’m going to be a voice in the room on behalf of middle-class families.” Then a sneering female voiceover cuts in, and asks, “Really? Congress had Warren oversee how your tax dollars were spent bailing out the same banks that caused the financial meltdown, bailouts that helped pay big bonuses to bank executives while the middle class lost out.” The ad concludes, “Tell Professor Warren...

The Wrong Fix

AP Photo/Bernd Kammerer
Yesterday, both Bob Kuttner, here in the Prospect , and I , in my Washington Post column , noted that the deal that German Chancellor Angela Merkel and French President Nicolas Sarkozy struck to save the Eurozone will inflict years of austerity on European nations that are already mired in depression. Spain, for instance, has an unemployment rate of about 20 percent and a youth unemployment rate that is approaching a mind-boggling 50 percent. It needs a massive Keynesian jolt to its economy, not budgetary constraints that will condemn it to a decade or quarter-century of penury. Both Bob and I also noted that the Merkel-Sarokzy solution was based on a misdiagnosis of Europe’s woes. Some of Europe’s current basket cases were actually running budget surpluses in the years before the Lehman meltdown. Ireland and Spain weren’t overspending at all—but the banks and investors speculating on their housing markets most certainly were. When their banks went under, their economies collapsed,...

GOP vs. Job Creators

In the ongoing battle over extending the payroll tax cuts that currently save the median American household about $1,000 a year, one salient point is commonly overlooked: The proposal that the Obama administration and congressional Democrats are championing also cuts in half the payroll tax for employers. Currently, employers are subjected to a payroll tax of 6.2 percent on every paycheck they write. The Democratic proposal would reduce that to 3.1 percent on the first $5 million in taxable payroll—that is, it would chiefly benefit small and middle-sized businesses. Yet every Senate Republican but one (Maine’s Susan Collins) voted against this proposal when it came to a vote on Thursday, complaining that it taxed job creators by proposing to off set the tax cut by raising taxes on individuals and couples for that portion of their annual income in excess of $1 million. Never mind that that the Treasury Department has concluded that only 1 percent of those taxpayers are small businesses...

Police Raze Occupy DC Shelter

Will resistance give the protest movement in the nation's capital the shot in the arm it needs?

After an extended showdown that began around noon Sunday, police in Washington, D.C., succeeded in destroying a wooden structure Occupy DC protesters had erected in McPherson Square to provide shelter throughout the winter. Police arrested 31 people in total—15 for crossing a police line and 16 for disobeying a lawful order, according to police spokesman Sergeant David Schlosser. The last protester, who climbed onto the top of the structure and held up an American flag, was forcibly removed by police in a cherry picker around 9 P.M. He faces additional charges for indecent exposure and public urination after urinating off the roof. "Who do you work for? Who do you serve?" chanted the crowd as officers placed the lone holdout in a harness. He was hailed on twitter as a hero: "When David relieved himself off the roof, he was simply showing how trickle down economics works," wrote Dave Storup, an Occupy DC sympathizer. Schlosser said the D.C. building inspector's office had determined...