Europe’s crisis took a dramatic turn for the worse with the sudden awareness, reflected by a steep increase in government bond yields, that the Italian economy may soon be on the financial chopping block alongside those of Greece, Portugal, and Ireland.

Italy, whose national debt is second only to that of Greece in the Eurozone as a percentage of GDP, was long assumed to be too big to fail. The fact that Italy’s more prudent lending practices have prevented a major real estate bubble was faint reassurance that somehow Italy would be immune to financial contagion.

According to House Minority leader Nancy Pelosi, “Nobody can out debate” President Obama in the debt ceiling debate. Why then has President Obama reportedly scolded congressional leaders during a debt meeting and then stormed out, contending, “Enough is enough?”

The meeting began to become contentious when House Majority Leader Eric Cantor told President Obama that “Congress should instead consider a series of debt ceiling votes based on spending cuts that already have been identified. Talks could then continue to identify additional cuts for subsequent voters.”

Grassroots concern over these budding partnerships between U.S. governors and Communist Chinese officials is increasing as the first U.S.-China Governors Forum convenes in conjunction with an annual meeting of the National Governors Association in Salt Lake City July 15-17.



When Donald Rumsfeld was Secretary of Defense, he coined some phrases about knowledge that apply far beyond military matters.

Secretary Rumsfeld pointed out that there are some things that we know that we know. He called those "known knowns." We may, for example, know how many aircraft carriers some other country has. We may also know that they have troops and tanks, without knowing how many. In Rumsfeld's phrase, that would be an "unknown known" — a gap in our knowledge that we at least know exists.

Finally, there are things we don't even know exist, much less anything about them. These are "unknown unknowns" — and they are the most dangerous. We had no clue, for example, when dawn broke on September 11, 2001, that somebody was going to fly two commercial airliners into the World Trade Center that day.

SEA ISLE, N.J. — Public-sector employees here now are regularly referring to Gov. Chris Christie as "Adolf Christie." Things got especially ugly when Christie signed legislation that requires each of the state's 500,000 teachers, police and other public workers to pay more for their pensions and health benefits and eliminates the issue for four years from collective bargaining.

In this traditionally Democrat state, Republican Christie was victorious in a legislature with solid Democrat majorities, successfully arguing that the current and projected pension and health benefits for public-sector employees are unaffordable and unsustainable.

Eighty-year-old Dottie Bell is a volunteer at the Community Market food bank in Opelika, Alabama, and every day she sees the impact of high food prices on people in her community.

In the last 12 months, more than 3,000 families have come to her food bank for food assistance. Michael Davis is just one of them. When Dottie asked him for his identification, he pulled out his driver’s license and Social Security card from a worn ZipLoc bag and handed them to her. When she asked when the last time was that he’d eaten anything, he said: "About two days. It’s not a good feeling. You have to think about it like fasting, like they did in the Bible, and pray for another blessing. That’s really the only way to get through it."

Ten minutes later Davis was approved for 75 pounds of food. He picked up his documents and headed for the shelves in the back.

There is a theme to news stories about the PIGS (Portugal, Ireland, Greece, and Spain) in the last few years: Rosy projections always turn out worse than expected. So it's of little surprise that Reuters announced on July 11 that the recession in Greece is worse than the “experts” had predicted.

The interim budget, upon which so much of the bailout of the nation rested, greatly understated the budget gap. (The underestimation of the budget shortfall over an earlier projection was by almost one-third.)

It seems President Obama is beginning to alienate his support base. First, the labor unions voiced their anger toward the administration for what they perceived to be its failure to stand up for them. Now, one of the top "progressive" organizations in the nation, the Progressive Change Campaign Committee, has issued a warning to the White House: If entitlements are cut, President Obama may not have their support in 2012.

According to CNN, nearly 200,00 of the organization's 700,000 members have pledged to withhold their support for Obama’s 2012 campaign if his administration concedes on cuts to Social Security, Medicare, and Medicaid.

Once the awful job numbers announced by the Bureau of Labor Statistics on Friday were digested, it was clear that the clairvoyant economists looking into their crystal balls were dead wrong — again.

Most economists were expecting a pickup from May, with job growth estimates ranging from 100,000 to 175,000, and an upward revision on the May numbers as well. Neither happened. A mere 18,000 jobs were created in June, and the May numbers were revised downward from 54,000 to 25,000. Economists tried to explain away the poor May numbers, blaming everything from the weather (too hot, too cold, too rainy, too windy) to the disruption caused by the tsunami in Japan. But with those excuses now counter-balanced by excellent weather, cessation of tornadoes, and the Japanese car makers coming back online, there weren’t any excuses this time.

Europe’s slow-motion economic collapse continues apace as Eurozone governments and banks continue to wring their hands over what to do to postpone the inevitable Greek default. And now there’s a new wrinkle: Italy, whose level of sovereign indebtedness relative to GDP is second only to that of Greece, has suddenly appeared on investors’ radar screens. If Italy — the second largest economy in the Eurozone — goes the way of Greece, Ireland, and Portugal, there will not be enough money in Europe’s rapidly-dwindling rescue fund (the European Financial Stability Facility or EFSF) to effect a bailout.

The impasse over Greece is bad enough. Several countries in the European Union, including the Netherlands and Germany, expect private holders — large European banks — of Greek bonds to share some of the burden for the next Greek bailout, reckoned at some €110 billion. But European megabanks, given the precedents set with numerous recent taxpayer-funded bailouts on both sides of the Atlantic, are refusing to consider losing any of their own money. And all sides are finally awakening to the realization that a Greek default in the form of some kind of debt restructuring is inevitable. As Julian Toyer and Dan Flynn of Reuters report:

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