Finance ministers from the 17 eurozone countries agreed this week that it's time to make contingency plans in case Greece drops out. While some leaders—like new French President François Hollande—have floated offering eurobonds to struggling member states like Greece and Spain, German Chancellor Angela Merkel is standing her ground. "We want Greece to remain in the eurozone," Merkel said after yesterday's European Union summit. "But the precondition is that Greece upholds the commitments it has made."
Europe’s leaders emerged far apart at their summit dinner in Brussels Wednesday night. They could not even agree on relatively easy measures to contain the escalating crisis, such as Eurobonds or a greater role for the European Central Bank (ECB).
But at the core of the crisis is an issue that Europe’s leaders are even more reluctant to take on—the ease with which hedge funds and other speculators can drive a small economy into the ground.
In an interview with Time’s Mark Halperin today, Mitt Romney elaborates on his goals for economic growth in his first term. In particular, he hopes to see an unemployment rate of six percent:
I can’t possibly predict precisely what the unemployment rate will be at the end of one year. I can tell you that over a period of four years, by virtue of the policies that we put in place, we’d get the unemployment rate down to 6 percent and perhaps a little lower. It depends in part upon the rate of growth of the globe, as well as what we’re seeing in the United States.
ATHENS—The European austerity caucus led by German Chancellor Angela Merkel is coming apart, but Germany retains the power to block the newly forming coalition for growth as a solution to the eurozone crisis. Tonight’s summit dinner in Brussels is unlikely to produce a breakthrough.
But what a difference an election makes. Since Francois Hollande was elected President of France less than three weeks ago, leaders that had been bullied into siding with the Germans are breaking loose.
Unless Congress and the White House work together to manage the budget sequestration and tax hikes scheduled for the end of the year, the economy could plummet into a mild recession—growth contracting by an estimated annual rate of 1.3 percent—according to the Congressional Budget Office.
In the eyes of most of the world and in our own, to be an American is to be an optimist—entrepreneurial, positive-thinking, and future-oriented. It is not surprising, then, that our politics has not come to grips with the question of national decline. Yes, our governing elites have long debated America’s power in the world and whether it’s eroding. But about the future of Americans, as opposed to the future of the geopolitical hegemon, America, our most important politicians and pundits have much less to say. Despite the bitter public arguments over tax and budget policies, they share the implicit assumption that even harder times are ahead for the majority of Americans—if not 99 percent then at least 75 percent to 80 percent.
Despite the Camp David G8 summit’s support for a shift from austerity to growth, there is no agreement among major western leaders on what growth requires.
Here is an idea whose time has come: a Financial Transactions Tax.
The tax would do two things urgently required by the crisis. It would take some of the profit out of the pure speculation that has created such hardship for countries like Greece, Portugal, Spain, and Ireland whose economies have already been pummeled by recession and by perverse demands for belt tightening.
And a tax on financial trades could raise some serious revenue, which could be put back into green investment and other forms of economic stimulus to help the economies of Europe revive.
Consistent in its suicidal tendencies, the Greek political system failed this week to come to an agreement on forming a coalition government. The leaders of Greece’s political parties—as we know from the published minutes of the meetings with the President of the Republic—showed themselves, with one or two dignified exceptions, tragically unable to rise to the occasion. New elections have now been called. The outcome on June 17, or even the mounting uncertainty of the pre-election period itself, could spell the end of Greece’s membership of the euro.
Facebook makes its blockbuster market debut today, and as The New York Timespoints out, "the trading on Friday is the the equivalent of a must-see Super Bowl Sunday showdown for people who don’t ordinarily watch a football game." The social network's stocks have been priced at $38 a pop, which means the company is valued at $104 billion, making it the second biggest initial public offering ever. If the company's first day on Wall Street follows the tech trend, it could be worth $137 billion by the end of the day.
The voters in France and Greece have rejected the parties of austerity. But it is not yet clear that the party of growth can deliver the recovery that the citizenry wants. On both sides of the Atlantic, the obstacles are more political than economic.
In Europe the conventional wisdom, enforced by Germany and the European Central Bank, still holds that the path to growth is budget restraint. Unfortunately, the more that budgets are tightened, the more economies shrink and the more revenues fall. No large economy has ever deflated its way to recovery.
In a 2009 poll conducted by the BBC, only one out of every four Americans thought that capitalism in its current form was working well. Then came Occupy Wall Street (OWS), a physical manifestation of the anger of millions of Americans at an economic system in which big banks are bailed out by taxpayers only to turn around and pay billions in bonuses while filing record home foreclosures. Between the second quarter of 2009 and the fourth quarter of 2010, our nation's total income rose by $528 billion, but of that economic growth, 88 percent went to corporate profits and just 1 percent—that's right, 1 percent—went to workers.
The House plans to vote today on a Republican plan to avoid the $110 billion in Pentagon sequestration cuts that would be triggered at the end of the year because of the failure of last year's supercommittee. "People know at the end of the day that this is not going to be all sunshine and cotton candy," said Representative Tom Cole, a Republican from Oklahoma.
There were 3.74 million job vacancies at the end of March, the highest level since July 2008. The rise was attributed to increased demand in construction and manufacturing, and could show that companies are gaining confidence in the recovery as the year goes on. The small business optimism index rose to 94.5, a high not seen since February 2011
Billionaire George Soros is jumping into the 2012 election funding race, donating $1 million apiece to pro-Democratic super PACs America Votes and American Bridge 21st Century. This cash infusion—much needed given how Democratic super PACs have struggled to match the fundraising pace of the conservativeAmerican Crossroads—may bring other liberal donors to the fray despite longstanding misgivings of the influence of super PACs from both the Obama camp and the pool of untapped liberal donors.