The dam is breaking in Europe. Interbank lending has seized up. Much of the financial system is paralysed, setting off a credit crunch just as Euroland slides back into slump.

The Euribor/OIS spread or`fear gauge’ is flashing red warning signals. Dollar funding costs in Europe have spiked to Lehman-crisis levels, leaving lenders struggling frantically to cover their $2 trillion (£1.3 trillion) funding gap.

America’s money markets are no longer willing to lend to over-leveraged Euroland banks, or only on drastically short maturities below seven days. Exposure to French banks has been slashed by 69pc since May.

Read it all.

Though it reached no agreement, the special Congressional committee on deficit reduction built a case for major structural changes in Medicare that would limit the government’s open-ended financial commitment to the program, lawmakers and health policy experts say.

Members of both parties told the panel that Medicare should offer a fixed amount of money to each beneficiary to buy coverage from competing private plans, whose costs and benefits would be tightly regulated by the government.

Republicans have long been enamored of that idea. In the last few weeks, two of the Republican candidates for president, Mitt Romney and Newt Gingrich, have endorsed variations of it.

The idea faces opposition from many Democrats, who say it would shift costs to beneficiaries and eliminate the guarantee of affordable health insurance for older Americans. But some Democrats say that ”” if carefully designed, with enough protections for beneficiaries ”” it might work.

Read it all.

Ms. [Nancy] Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials who give them a chance at early clues to the central bank’s next policy moves, according to interviews and hundreds of pages of documents obtained by The Wall Street Journal through open records searches. Ms. Lazar, an economist with International Strategy & Investment Group Inc., wouldn’t comment for this article.

The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008 spawned new regulations and a stronger hand by lawmakers in businesses.

Read it all.

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

Read it all.

We haven’t had the robust democratic debate about the role of government that lies at the heart of America’s budget stalemate. The truth is that most Democrats and Republicans want to avoid such a debate because it would force them into positions that, regardless of ideology, would be highly unpopular. This does not mean that the congressional supercommittee, charged with making modest cuts in deficits, need fail. There is a basis for honorable compromise; squandering it would confirm politicians’ preference for fighting over governing.

Contrary to much press coverage, the committee’s Republicans opened the door to compromise by abandoning — as they should have — opposition to tax increases. Sen. Pat Toomey of Pennsylvania proposed a tax “reform” that would raise income taxes by $250 billion over a decade. First, he would impose across-the-board reductions of most itemized deductions and use the resulting revenue gains to cut all tax rates. Next, he would adjust the rates for the top two brackets so that they’d be high enough to produce the $250 billion. All the tax increase would fall on people in the top brackets….

Read it all.

Committee members continued to meet on Capitol Hill to present legislation that could be voted on by the Congress to cut $1,200bn from the budget over 10 years.

But both sides had already begun to blame each other, with Republicans resisting tax rises in any form and Democrats demanding extra revenues be balanced against spending cuts on the grounds of fairness.

Read it all.

Conceding that talks on a grand budget deal are near failure, Congressional leaders on Sunday pointed fingers at each other as they tried to deflect blame for their inability to figure out a way to lower the federal deficit without having to rely on automated cuts.

The testy exchanges ”” which dominated the Sunday talk shows ”” made clear that leaders in both parties now see the so-called sequester ”” a term meaning an automatic spending cut ”” as the most likely solution to reduce the federal deficit by $1.2 trillion over 10 years, instead of a negotiated package of spending reductions and tax increases, something they have been unable to achieve over the last 10 weeks.

Read it all.

They drive cars, but seldom new ones. They earn paychecks, but not big ones. Many own homes. Most pay taxes. Half are married, and nearly half live in the suburbs. None are poor, but many describe themselves as barely scraping by.

Down but not quite out, these Americans form a diverse group sometimes called “near poor” and sometimes simply overlooked ”” and a new count suggests they are far more numerous than previously understood.

When the Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need. Perhaps the most startling differences between the old measure and the new involves data the government has not yet published, showing 51 million people with incomes less than 50 percent above the poverty line. That number of Americans is 76 percent higher than the official account, published in September. All told, that places 100 million people ”” one in three Americans ”” either in poverty or in the fretful zone just above it.

Read it all.

Under… [an income-contigent program]proposal, loans would be offered at a single interest rate for all borrowers; payments would be automatically withheld from the borrowers’ paychecks by their employers and would be managed by the IRS, just as income taxes are collected. As in the president’s proposal, 10% of a borrower’s earnings would go toward their student loans. The more they earn, the faster they would repay their debt. Such a system would not only help graduates manage their student loans, it would save the government money because it would drastically reduce delinquencies and be far easier and less expensive to administer….

income-contingent loans would be universal and automatic. Everyone who took out a student loan would be put into the program and, because their loans would be tied to their Social Security numbers, the repayments would come out of their paychecks, just as their income, Social Security and Medicaid taxes are withheld.

Australia and Britain have had great success with their income-contingent loan programs. In Britain, more than 98% of loans are repaid.

Read it all.

The European debt crisis is raising the odds of a U.S. recession, with economic contraction more likely than not by early 2012, according to research from the San Francisco Federal Reserve Bank.

While it is difficult to gauge the odds precisely, an analysis of leading U.S. economic indicators suggests a rising chance of a recession through the end of the year and into early next year, researchers at the regional Fed bank wrote on Monday. The risk of recession recedes after the second half of 2012, they found.

Read it all.

One objection that I often hear from evangelicals is that while aid is good, it is not the government’s job. Yes, individuals and churches play a vital role in aid and development. But governments play a unique and vital role that private organizations cannot. The poverty-focused programs in the foreign-aid budget are facing cuts of between $1.2 billion and $3.2 billion from 2010 levels. In comparison, the largest American Protestant denomination, the Southern Baptist Convention, has a budget of $308 million for its missionary and aid organization.

We cannot let others suffer simply because times are tough in the U.S. All Americans must understand the urgency of the human need and the effectiveness of our government’s aid programs.

Read it all.

A special U.S. committee charged with reducing the federal deficit is entering a critical week for reaching a deal but has not considered extending its Nov. 23 deadline, a panel member said Monday.

“Every member understands that time is running out,” House Democrat Chris Van Hollen, a member of the “super committee,” said in an interview with MSNBC’s “Morning Joe” program. “This is the moment to get it (a deal) done if we’re going to get it done.

“The clock’s ticking. We’ve got just a little over two weeks and that includes the time that it will take to put the final touches on any agreement that we might be able to reach,” he said.

Read it all.

The sharp rise in federal borrowing is offsetting efforts of consumers to reduce debt, leaving the economy deeper in debt than when the recession began in December 2007, a USA TODAY analysis finds.

The substitution of government debt for consumer debt helped end the recession and start a recovery, economists say, but it leaves the nation’s long-term economic health in peril.

Households have reduced debt by $549billion since 2007, mostly by cutting mortgages through defaults and paying down credit cards. During that time, the federal government has added more than $4trillion in debt, pushing the country’s total borrowing to a record $36.5trillion, excluding the financial industry, according to the Federal Reserve.

Read it all.

The chairman was asked if the outlook of the U.S. economy was so gloomy, why would the Fed wait to enact more monetary policy. Bernanke said the Fed has been very aggressive. He said what the Fed has are projections, so “it’s important to see what happens.” One thing economists have said over the past few months, is that the Fed is running out of economic tools. But Bernanke ruled that out, saying the Fed still has a “broad range of policies” to stimulate the economy.

However, he called on the political arm of the United States to help the Fed.

“I hope there will be a broad range of actions that complements” Fed policy, he said.

”” On Europe’s sovereign debt crisis, Bernanke said their woes have been drag on a U.S. recovery, but it’s up to Europe’s leaders to make the decisions.

Read it all.

Americans must not be smug about the suffering of Europeans””our financial system is thoroughly integrated with theirs. Moreover, the International Monetary Fund will most likely be involved in the event of future bailouts and will likely need large funds from its members, which ultimately means the taxpayers.

And, of course, the U.S. has its own large and growing public debt burden. We have not gone as far down the road to entitlements, but we are catching up. If you want to know how the debt crisis will play out here, watch the downward spiral in the EU.

Meanwhile, expect more volatility in financial markets. U.S. traders in particular simply have not grasped the enormity of the EU debt crisis.

Read it all.

The crisis of the euro zone has finally hit the potholed road of real politics, with the Greeks now openly questioning whether their commitment to Europe and its single currency still matters more to them than control over their own future and economic well-being.

During the two-year financial crisis, the wealthier countries of northern Europe, led by Germany, have insisted that their heavily indebted brethren in the south radically cut spending in return for emergency loans. They have stuck to that prescription even though austerity has undermined growth and increased unemployment in Greece, Spain, Portugal and now Italy, betting that people in those countries will swallow the harsh medicine because their only alternative is to default and possibly leave the euro zone altogether.

The turmoil in the government of Prime Minister George A. Papandreou means that Greece is about to call that bet. Many Greek politicians appear to be calculating, at this late stage, that they have more to lose by sticking to Germany’s terms than by risking a messy default, and even going it alone with their old currency, the drachma, outside the euro zone.

Read it all.

Medicare inspectors must do a better job of tracking reports of serious mistakes in care at the nation’s hospitals, as well as of informing rating agencies of the errors, according to a report released today by the agency’s inspector general.

Hundreds of serious errors go unrecorded, the report found, because the inspectors who find problems at hospitals don’t tell the national agencies that accredit hospitals. That means that those hospitals continue to participate in Medicare and that they don’t learn from their mistakes, Inspector General Daniel Levinson wrote.

Also, Levinson wrote, no one tracks the effectiveness of policy changes or how the hospitals actually correct mistakes.

Read it all.

For most of its 75-year history, the program had paid its own way through a dedicated stream of payroll taxes, even generating huge surpluses for the past two decades. But in 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s.

Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation’s budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.

But while talk about fixing the nation’s finances has grown more urgent, fixing Social Security has largely vanished from the conversation.

Read it all.

The report is expected to be made public ahead of an Oversight Health panel hearing on Thursday. The title of the hearing is “ObamaCare’s Hidden Marriage Penalty and its Impact on the Deficit.”

The report concludes that fewer than 2 million couples ”” out of 60 million nationwide ”” are projected to benefit from the insurance subsidies, while “almost half of the beneficiaries of the tax credit will be unmarried individuals without dependent children.”

“These numbers,” the report says, “suggest that an impact of the [law’s] health insurance tax credit will be to introduce a significant new marriage penalty into the tax code.”

Read it all.

…rare is the analysis that traces all these problems back to the structural change in money that was brought about in the early 1970s.

We went from a hard-money regime, in which there were restrictions on the power of central banks and financial institutions to create money and credit, to one where money became purely paper. There were no restrictions remaining on the power of governments to finance unlimited debt. Banks could create credit seemingly without limit. Central banks became the real power in the world economy.

None of this was true under a gold standard. That system limits the expansion of credit by an indelible physical fact. There was a limit, a check, a rule that went beyond the whim of financial masters and politicians. The Vatican seems to understand this.

Read it all.

After [Education Secretary Arne] Duncan’s visit there was some back and forth between the Obama administration and Oregon City on how the money should be spent. But ultimately, the Department of Education said it should be given to teachers as direct bonuses. It also said it wanted to restrict the funds to schools with lots of low-income students, which would have excluded half of Oregon City’s schools.

Oregon City wanted to put the money into a shared fund, possibly for teachers’ continuing education.

Nancy Noice, president of the Oregon City teachers union, said one solution the feds proposed was that employees hand their bonuses back to the district. But Noice says that didn’t seem workable.

Read or listen to it all.

Among the findings in this particular evaluation was that only 11 of the 35 cyber security weaknesses identified in a 2010 review had been fully corrected by the 2011 look-see.

Read it all.

Financial turmoil in global markets continues to play havoc with the value of the U.S. dollar, but technology continues to make the transfer of donor dollars to missionaries quicker and easier.

American missionary income in China has dropped 25 percent in recent years because of the dollar’s decline against the Chinese yuan, said a missionary leader who requested anonymity. “In 24 years of missionary ministry, I have never seen things as tough as they are now.”

“It’s a complaint we hear almost every day,” says Bill Bray of Christian Aid Mission, which supports indigenous missionaries in 122 nations. “They need more money because of the exchange rate.”

Read it all.

Federal regulators on Monday unveiled a major overhaul of an underused mortgage-refinance program designed to help millions of Americans whose home values have tumbled.

he plan is the latest White House effort to deal with one of the most critical impediments to economic recovery””a stagnant housing market caused in part by a surfeit of homeowners who are unable to refinance.

The overhaul will, among other things, let borrowers refinance regardless of how far their homes have fallen in value, eliminating previous limits. That could open up refinancing to legions of borrowers in Nevada, Arizona, Florida, California and elsewhere who are paying high interest rates and are deeply “underwater,” owing more than their houses are worth. President Barack Obama is expected to tout the program in Las Vegas on Monday.

Read it all.

The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.

The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.

Read it all.

The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.

Assumptions that the Great Republic must inevitably spiral into economic and strategic decline – so like the chatter of the late 1980s, when Japan was in vogue – will seem wildly off the mark by then.
Telegraph readers already know about the “shale gas revolution” that has turned America into the world’s number one producer of natural gas, ahead of Russia….

Read it all.

Just before the American-led strikes against Libya in March, the Obama administration intensely debated whether to open the mission with a new kind of warfare: a cyberoffensive to disrupt and even disable the Qaddafi government’s air-defense system, which threatened allied warplanes.

While the exact techniques under consideration remain classified, the goal would have been to break through the firewalls of the Libyan government’s computer networks to sever military communications links and prevent the early-warning radars from gathering information and relaying it to missile batteries aiming at NATO warplanes.

But administration officials and even some military officers balked, fearing that it might set a precedent for other nations, in particular Russia or China, to carry out such offensives of their own, and questioning whether the attack could be mounted on such short notice.

Read it all.

Surgery is surprisingly common in older people during the last year, month and even week of life, researchers reported Wednesday, a finding that is likely to stoke, but not resolve, the debate over whether medical care is overused and needlessly driving up medical costs.

The most comprehensive examination of operations performed on Medicare recipients in the final year of life found that nationally in 2008, nearly one recipient in three had surgery in the last year of life. Nearly one in five had surgery in the last month of life. Nearly one in 10 had surgery in the last week of life.

The very oldest patients were less likely to have surgery. Those who were 65 had a 38.4 percent chance of having surgery in the last year of life. For 80-year-olds, the chance was 35.3 percent, but the rates fell off more sharply from there, declining by a third by age 90.

Read it all.

[BETTY] ROLLIN: Our medical system can’t keep everyone healthy, but it excels at keeping people alive, which is expensive. Twenty-five percent of all Medicare spending is for the 10 percent of patients who are in their final year of life. For the year 2012 alone, that’s expected to be $137 billion. Most of the money is spent in the last 6 months of life, which is often of little benefit, if any, to the patient. And the conversations between patients and doctors and family members which might make a difference, Dr. Forrow says, aren’t happening, partly because people are afraid to talk about death and because the part of the Obama health care reform plan, which would have reimbursed doctors for these conversations, was shot down.

DR. [LACHLAN] FORROW: Cheap, political, inflammatory comments like “death panels” and “pulling the plug on grandma” for cheap political points have terrified the American people in a way that I think””I think that’s immoral.

ROLLIN: Dr. Susan Mitchell, who has studied advance dementia in nursing home patients, has found that even though these patients can be treated and kept more comfortable in a nursing home, they are often hospitalized where they receive aggressive and sometimes painful treatment that is covered by Medicare.

Read or watch it all.

The Social Security Administration has failed to inform tens of thousands of Americans that it accidentally released their names, dates of birth and Social Security numbers in an electronic database widely used by U.S. business groups.

The federal agency has kept silent about a potentially harmful security breach of the personal data of about 14,000 people each year, ignoring recommended reporting guidelines for such confidentiality breaches and violating the intent, at least, of the U.S. Privacy Act which protects personal information of private citizens.

Read it all.