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Here it is in a nutshell.

Boehner plan vote scheduled for 6 pm…

–Senate Majority Leader Reid: New House GOP Bill ‘Bizarre’
–Revised House Debt Bill Worse Than Earlier Bill
–’No Agreement’ If It Has Short-Term Debt Extension
–House Expected To Vote On Debt Ceiling Between 8-9 P.M. Friday

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid Friday said he
is ready to move his debt ceiling bill later today and implored Senate
Minority Leader Mitch McConnell to join him in crafting a bipartisan
budget accord.

In a briefing, Reid ripped into the new House Republican debt limit
plan, calling it a “right wing leading” bill that is unacceptable to all
Senate Democrats.

He ridiculed as “bizarre” the House Republican plan’s new
requirement that the second installment of the debt ceiling increase
would be conditioned on Congress passing and sending to the states a
balanced budget constitutional amendment.

The House is expected to vote on its revised debt ceiling bill
between 8 p.m. and 9 p.m. EDT Friday.

Reid also dismissed the GOP’s call for a two-step debt ceiling
increase, with the initial increase only extending until early 2012.

“There will be no agreement if there is a short-term extension,”
Reid said.

“We cannot be in this battle all the time,” Reid said.

Reid said he is “confident” McConnell will “come back” to talks. He
invited all Republican senators to “call me and see him” about modifying
his plan.

He made it clear he is very eager to begin working with McConnell.

“We need him to come back today,” Reid said.

Congressional staffers have said McConnell will not begin active
talks with Reid until after the House passes Boehner’s debt hike bill
late Thursday night.

Sen. Chuck Schumer, the third ranking Democrat, said the Senate
could hold a key procedural vote on the debt limit around midnight
Saturday.

He urged Senate Republicans to drop their support of the Boehner
debt limit plan. “The time for providing cover for the Speaker is over,”
Schumer said.

Reid’s plan would cut spending by $2.4 trillion over ten years and
allow for passage of a $2.4 trillion debt ceiling increase.

The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Tim Geithner has said that Congress must pass
legislation increasing the debt ceiling by August 2.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$,M$$CR$]

Live stream here.

BRUSSELS (MNI) – Strong exports could help lift economic growth in
Spain to 1.6% in 2012, but the Eurozone’s fourth largest economy faces
potentially severe risks, the International Monetary Fund said Friday.

Despite relatively positive developments, the economy still faces
significant risks of being engulfed by the Europe’s sovereign debt
crisis, the IMF warned in its annual Article IV review.

In the near term, financial conditions could deteriorate further,
reflecting rising concerns about sovereign risks in the euro area, it
warned.

While praising efforts by the current government to bring public
debt under control and strengthen the banking system, the Fund said that
more determined policy choices will be needed in the future.

Although Spain’s real financial exposure to Greece, Ireland and
Portugal is limited, the IMF warned that contagion may occur through
confidence effects that can affect perception of credit risk.

Spanish banks’ significant holdings of government’s debt could put
additional pressure on sovereign and bank funding costs for Spain, which
in turn could feed back to the real economy, said the report.

Spains financing needs also remain significant for the public
sector in coming months and for banks in early 2012, the report noted.

Spain is not yet out of the danger zone, said James Daniel, the
IMF’s top official for the country.

Moody’s has put the country’s debt rating on review and Spanish
Prime Minister Jose Luis Zapatero has called early elections for
November.

Should Spain be dragged into the Eurozone’s debt crisis, the effect
on the rest of the currency block would constitute a systemic event by
its magnitude, generating significant global ripples, said the IMF.

Bank exposures to Spain suggest that spillovers would be mainly
channeled by German and French banks, said the report.

While the Zapatero government has managed to bring down the public
sector deficit to 6% of GDP from 11% in 2009, there is still a long way
to go towards achieving fiscal balance by 2014, the IMF said.

Regional governments, which have authority over health and
education spending, may find consolidation difficult, as they have never
had to make such cuts in the past, it noted.

The IMF expects real GDP growth of 0.8% this year and said it could
rise to 1.6% in 2012, in line with the rest of the Eurozone, and to 1.8%
in 2013 and 1.9% in 2014.

Growth has picked up as strong exports outweighed weak domestic
demand, reducing the current account deficit, it noted.

Spain’s unemployment rate of 21%, however, remains unacceptably
high and the inflation rate of 3% is still above the Eurozone average,
the report said.

Labour market reforms, in particular, are needed to cut the
unemployment rate, which is roughly double the Eurozone average, said
the Fund.

The over-supplied housing market also remains a drag on the
economy, the IMF noted. House prices are down 12-26% from peak levels
and the stock of unsold new homes is estimated at 686,000 to 1.5 million
units.

[TOPICS: M$S$$$,M$X$$$,MT$$$$,MGX$$$,M$$CR$]

• Recovery likely to be modest
• Unwinding imbalances will take years
• Labor reform needs to be strengthened
• Financial sector reform key
• Fiscal adjustment is key
• Spain must consider further fiscal measures
• Fiscal targets based on optimistic assumptions

Yesterday they said they would brief after the market close today. Instead they will leave markets in the dark.

It is expected that bondholders will be paid first, the Street’s number one concern. Granny be damned…

That more or less sums up the Washington mind-set in one sentence.

President Palin will appreciate that…

By Ian McKendry

WASHINGTON (MNI) – President Barack Obama Friday said he is
confident a deal to raise the debt ceiling will get done by August 2,
the day it is estimated the U.S. will exhaust its borrowing authority,
and said there are multiple ways a deal can get done.

“There are plenty of ways out of this mess, but we are almost out
of time,” Obama said in prepared remarks to reporters from the
Diplomatic Room in the White House.

House Speaker John Boehner is modifying a bill proposal that would
raise the debt ceiling, and might try to introduce it to the House
Friday, however, Obama said it has “no chance of becoming law.”

“It’s a plan that would force use to relive this crisis in just a
few short months,” Obama said.

Obama said proposals by Senate Majority Leader Harry Reid and
Senate Minority Leader Mitch McConnell would both work if some
compromises were made.

“There are plenty of modifications we can make to either of these
plans in order to get them passed through both the House and Senate and
would allow me to sign them into law,” Obama added.

Obama said Republicans and Democrats are not “miles apart” in what
they want in a bill that would raise the debt ceiling, adding any
solution would have to be bipartisan.

“If we need to put in place some kind of enforcement mechanism to
make us all accountable for making these reforms I will support that
too,” Obama said.

He also said the U.S. is at risk of losing its prized ‘AAA’ credit
rating, not because of its ability to pay its bills, but because of
dysfunctional politics.

“That’s inexcusable,” Obama said, adding a downgrade of the U.S.
credit rating would be a tax on everyone in the form of higher interest
rates.

Obama urged the American public to put pressure on Congress to get
a deal done and said “I am confident we will solve this problem.”

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MGU$$$,MFU$$$,MT$$$$,M$$CR$]

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