Europe Is Finished Unless It Changes The Rules Fast – The current Greek crisis has shown all too starkly the limits of the euro zone’s sanction and support mechanisms. If the monetary union is to have a future, it needs new rules to keep members in line and bail them out if necessary. Europe is in the worst crisis of the postwar era. For months, the governments of the European Union member states have proven to be incapable of developing a convincing solution for the serious debt problems of individual countries, as well as for the reduction of imbalances within the monetary union. Uncertainty among investors has grown in recent weeks, which is primarily attributable to the helplessness of political leaders, and only secondarily to the influence of speculators.
Merkel’s Cabinet Meets on Greece as Pressure for Action Grows – Chancellor Angela Merkel’s Cabinet met to debate help for Greece as Europe’s growing debt crisis tests her refusal to rush German approval of aid. Merkel is insisting Greece commit to several years of deficit reduction as a cut in the nation’s debt rating to junk yesterday drove up borrowing costs from Italy to Portugal and Ireland and boosted indicators of corporate credit risk around the world. Action “has to be done now, has to be done very fast,” Organization for Economic Cooperation and Development Secretary General Angel Gurria said in an interview today with Bloomberg television in Berlin before he was due to meet Merkel. “It’s not a question of the danger of contagion. Contagion has already happened. This is like Ebola. When you realize you have it you have to cut your leg off in order to survive.”
How the Greek crisis is the ECB’s fault – Peter Boone and Simon Johnson have a long and dense post on the eurocrisis today, which has a lot of different diagnoses and conclusions. I don’t agree with all of it, but I do think they touch on something important when they trace it all back to the way that the ECB became a quasi-fiscal agent: The underlying problem is the rule for printing money: in the eurozone, any government can finance itself by issuing bonds directly (or indirectly) to commercial banks, and then having those banks “repo” them (i.e., borrow using these bonds as collateral) at the ECB in return for fresh euros. The commercial banks make a profit because the ECB charges them very little for those loans, while the governments get the money – and can thus finance larger budget deficits. The problem is that eventually that government has to pay back its debt or, more modestly, at least stabilize its public debt levels. This same structure directly distorts the incentives of commercial banks: they have a backstop at the ECB, which is the “lender of last resort
17,000 NJ Students Use Facebook to Organize Statewide Walkout – Thousands of students across New Jersey walked out of class Tuesday to rally against school budget cuts brought fourth by Gov. Chris Christie. The students came together after organizing the state-wide protest on the social networking site Facebook. Over 17,000 students signed up to the event page on Facebook called "Protest NJ Education Cuts – State Wide School Walk Out," where thousands agreed to cut class to protest reductions in state aid.
The page was created by 18-year-old college student, Michelle Ryan Lauto, who attended high school in Bergen County. It was launched before voters rejected most school budgets, but after Governor Chris Christie announced he was slashing $820 million for next year
Clinton’s Niece Living on Food Stamps – Former President Clinton’s niece, Macy Clinton, said she is in such a rut, she uses a government benefit card to get food from her local grocery store. She blames her financial trouble on former President Clinton’s brother, Roger, who she says abandoned her. "It’s hard, because I’m a Clinton, too, but I have to be on food stamps, and I have to sacrifice everything just to make it day by day," Macy Clinton told "Inside Edition" in an interview that aired Tuesday. Clinton has an estranged relationship with her father, whom she has met only twice.
Russian PM Putin orders Arctic cleanup (Reuters) – Russian Prime Minister Vladimir Putin has ordered that a million abandoned barrels of Soviet-era fuel be removed from the Arctic because they are polluting the environment. Putin visited the Russian archipelago of Franz Josef Land, 1,000 km (600 miles) from the North Pole, as part of Russia’s drive to reassert its presence in the resource-rich region, now opening up to commercial exploration because of melting ice. Putin told state-run Rossiya 24 television in the Arctic he was shocked to see stocks of "abandoned barrels of fuel scattered all the way to the horizon." It was not immediately clear when Putin made the trip.