News
MarketWatch | China debt woes point to bank bailout
China’s banking system will require an eventual bailout by the central government, according to some analysts, who said figures released last week on the size of local-government borrowings point to the need for a rescue.
WSJ | Minnesota Shutdown Continues; GOP Meets at Capitol
Minnesota prepared for what could be a lengthy government shutdown, as the holiday weekend passed without Democratic Gov. Mark Dayton or Republican lawmakers returning to the bargaining table.
Bloomberg | Cornyn Says Republicans May Accept ‘Mini’ Deal on Raising U.S. Debt Limit
The idea may delay politically difficult decisions if it’s structured to postpone action on a larger package of spending cuts or revenue increases until after the 2012 election cycle, an analyst said.
Econ Comments
FT | America and Europe sinking together
In Washington they are arguing about a debt ceiling; in Brussels they are staring into a debt abyss.
Daily Caller | Federal spending doesn’t work
Despite ongoing federal deficits of more than $1 trillion a year, many liberals are calling for more government spending to “create jobs.”
Cato Institute | Stealing from Future to Continue Borrowing
The negotiations must now be completed by those in the highest pay grades, including President Obama. But he has pledged not to increase taxes on 95 percent of Americans.
Blogs
Volokh Conspiracy | In Defense of the Debt Limit’s Constitutionality
The Honorable Michael McConnell responds to claims that the debt ceiling is unconstitutional and that Section 4 of the 14th Amendment authorizes the President to issue additional debt if necessary to meet existing debt obligations.
EconLog | Murphy to U.S. Government: Sell Assets
...there are many assets the federal government shouldn't own anyway and that now is an especially propitious time to sell them off. And the government doesn't even need to sell Yosemite.
Atlantic: McArdle | Debt Politics: The Lunatics Are Burning Down the Asylum
There is no scenario in which either the Republicans or the Democrats get to dictate terms and have everything their own way: all tax hikes, or all spending cuts. As I keep saying over and over, you cannot have a policy plan that assumes the opposition party out of existence.
FT: The A-List | A default deal is not enough to fix America’s fiscal problems
As the equanimity in financial markets is signalling, some deal to avoid default will probably be cobbled together; the consequences for America and for the world of failing are just too great.
