Merkel wins – slow motion train wreck can now proceed unhindered – EU leaders fail to take any measures to boost the EFSF, as Angela Merkel gets her way with an extremely limited, ultima ratio crisis management system; Barroso says the EU’s anti-crisis consists of economic growth, and low inflation; Moody’s downgrades Irish bonds by five notches; Lorenzo Bini Smaghi rails against the advocates of restructuring, citing social and historical reasons; ECB raises capital to protect against default of the bonds it bought; Thomas Mayer argues why a eurozone bond would not solve the problem, and might trigger a collapse of the eurozone; Germany’s FDP leader Guido Westerwelle is likely to be ousted as party leader; Ireland registers a small increase in quarterly economic growth; bond spreads, meanwhile, went up overnight, as the markets digested the impact of the European Counci’s non-decisions. [more]
Why won’t the GOP’s financial-crisis report follow the money? – Almost from day one, there have been rumors that the
Financial Crisis Inquiry Commission, which the government established in the spring of 2009, was plagued by infighting between Democrats and Republicans. Lo and behold, on Dec. 15, defecting Republicans broke ranks and released what they describe as their "preliminary findings and conclusions." This "primer" (in a blog, Wallison denied that it was either a "report" or a "response") put blame just where many Republicans would like to see it: on the government’s push for homeownership "There were three important ways that the government pushed investors toward investing in mortgage debt," the authors write. First, the regulatory capital requirements associated with mortgage debt were lower than for other investments. Second, the government encouraged the private market to extend credit to previously underserved borrowers through a combination of legislation, regulation and moral suasion. Third, and most important, during the bubble’s expansion, the largest investors in the mortgage market … Fannie Mae and Freddie Mac, were instruments of U.S. government housing policy.
Obama Health Law Should Be Completely Thrown Out, States Argue in Florida – The Obama administration’s health- care reform should be thrown out because it overreaches the federal government’s authority, opponents argued in a Florida lawsuit three days after a judge in Virginia ruled part of the law unconstitutional. “The entire act has to fall,” Deputy Florida Attorney General Blaine Winship told U.S. District Judge C. Roger Vinson in Pensacola yesterday. Vinson heard arguments from lawyers for 20 states and the U.S. government on whether the act exceeds legitimate federal power. Led by Florida Attorney General Bill McCollum, the states sued the day President Barack Obama signed the legislation in March, arguing it burdens state budgets and unconstitutionally compels people to buy coverage.