Good morning. Here’s what you need to know:1. Senate Minority Leader Mitch McConnell (R-KY) yesterday moved to head off “a potentially disastrous U.S. default by offering President Obama new authority to raise the federal debt limit without cutting government spending.” The Washington Post reports that “senior Democrats privately embraced the idea, saying it could offer a detour around the looming crisis.”
2. The McConnell proposal was roundly criticised on conservative blogs and talk radio. But it won the endorsement of The Wall Street Journal’s editorial page.
3. Negotiations on reducing the deficit, meanwhile, are going nowhere. Senator McConnell said yesterday that no deal on cutting government spending was possible so long as President Obama was in office.
4. Any deal to reduce the US deficit (and increase funding for underfunded pension and healthcare plans) will necessarily hit the middle class (and hard). That’s where the tax revenue is.
5. Martin Wolf writes in the Financial Times: “These are dangerous times. The US may be on the verge of making among the biggest and least-necessary financial mistakes in world history. The eurozone might be on the verge of a fiscal cum financial crisis that destroys not just the solvency of important countries but even the currency union and, at worst, much of the European project.”
6. Italy’s borrowing costs yesterday soared to their highest level in over a decade. Market contagion from what everyone now assumes will be a Greek default forced Silvio Berlusconi to appeal for national unity and “sacrifices” to cut the nation’s debt mountain.
7. Moody’s Investors Services yesterday downgraded Ireland’s bonds to junk status, sending shudders through financial markets as European finance ministers grappled with the eurozone’s expanding debt crisis.
8. Israel’s gas supply deal with Egypt appears to be unravelling. Egypt supplies gas to Israel which powers about one-quarter of Israel’s electricity generation.
9. The assassination of legendary wheeler-dealer and power broker Ahmed Karzai is a major blow to southern Afghanistan’s stability and a setback for US plans to concentrate on defeating “militants” in the eastern part of the country. A fond remembrance of Mr. Karzai can be found here.
10. President Obama awarded Sgt. 1st Class Leroy Petry the Medal of honour on Tuesday at a White House ceremony. Sgt. Petry is currently on his eighth deployment in Afghanistan.
11. President Obama’s re-election campaign announced that it had raised $86 million as of June 30, 2011. That number is impressive by any measure.
12. The jobs crisis among African-Americans is bad and getting much worse. The unemployment rate among blacks is almost twice what it is for whites. Walter Mead argues that this crisis portends some “very hot times ahead.”
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.