TOP NEWS: Economy: June 18, 2012
Excerpts and more top stories
Amy Gardner, Washington Post - President Obama’s effort to contain the European debt crisis is taking on greater economic and political urgency as Europe emerges as the greatest threat to the faltering U.S. recovery and, potentially, a significant hurdle to his reelection prospects. At the Group of 20 summit this week, the president is expected to press European leaders to do more to stabilize their banks, stimulate job growth and prevent debt-stricken Greece from dropping out of the euro zone.
Staff, NY Times - If Congress does nothing to soften the blow of automatically higher taxes and lower spending, the changes would further devastate the economy and provoke a recession in 2013, according to the Congressional Budget Office and private analyses. If lawmakers decided to undo or delay all of the scheduled changes — in effect, extending today’s policies indefinitely — there would be no progress toward long-term deficit reduction, and that would raise the risk of fiscal crisis in the future.
Daniel Kruger and Cordell Eddings, Bloomberg - Signs of faltering growth amid European debt turmoil, combined with inflation below the central bank’s 2 percent target, mean the Fed will announce new steps to boost the economy as soon as a meeting this week, according to 12 of the 21 primary dealers who trade with the central bank.
Rita Nazareth, Bloomberg - “Spain is the issue to worry about, not Greece,” said Michael Strauss, who helps oversee about $26 billion of assets as the chief investment strategist at Commonfund in Wilton, Connecticut. “Their debt issues are the real debt issues. Greece is the sideshow. We’re going to have some indigestion.”
Maria Bartiromo, USA Today - We have positive economic growth, but it’s below trend — barely 2%. Job creation is still anemic. The recovery is still anemic because the painful process of de-leveraging has not even started in the public sector. And next year there will be some fiscal drag because of the fiscal cliff that’s coming up.
Stephen Castle, NY Times - Early market relief at the future of the euro zone turned to negativity Monday, as stocks and the euro retreated and Spain’s borrowing costs pushed above the 7 percent barrier, seen by many as unsustainably high.
Niall Ferguson, Newsweek - The Arab Spring has plunged Syria into a bloody civil war. Now, with allegations flying that the Russians are supplying helicopters to the odious regime of Bashar al-Assad in Syria, a familiar debate is underway. Should we intervene? [...] But why should it be the United States that once again attempts to play the part of global cop?
Nicholas Wapshott, Politico - Obama acted and the policy worked. There was no Great Recession. Or, at least, the profound recession that we are now experiencing, longer and deeper than any in 80 years, would have been a Great Depression II had Obama not acted. But the president cannot expect to be given credit for doing the right thing…A disaster averted is a disaster forgotten.
Robin Harding, Financial Times - What the Fed might do depends on how it defines the danger to the economy. On one hand, if it thinks that domestic US growth is stalling the Fed could give the economy a direct but modest boost, most likely by switching more of its balance sheet into longer-term assets via an extended Operation Twist. On the other hand, if their main fear is a huge shock from the eurozone, Fed officials could offer some conditional assurance.
Tyler Cowen, NY Times – President Obama caused a stir recently when he said that “the private sector is doing fine” and pinned many of the nation’s economic troubles on a decline in public-sector employment. He cited some interesting numbers, but he didn’t draw the right lesson — namely, that America is witnessing a collapse of trust in politics, including the shaping of its broad economic policy.
Paul Begala, Newsweek - We define “middle class” as much by values as we do by economics. It means working hard, playing by the rules, and getting ahead. (But) have we reached a point where rich people no longer want to extend the winner’s circle? Has it gotten so bad that poor people cannot plausibly aspire to success?
Editorial Board, Washington Post -campaign speeches last week, President Obama portrayed himself as a defender of the middle class against Republican rival Mitt Romney’s unbridled free-market capitalism…This debate over first principles is, to some extent, a welcome development. But unless and until the two candidates get down to specifics, their general rhetoric about government vs. markets won’t be all that helpful.