Germany Opposes Larger Rescue Fund

BERLIN—Barely 12 hours after a reluctant European Central Bank breathed new life into the euro project, German politics dashed hopes that Europe would soon receive a bigger bulwark against a spreading government-debt crisis.

A spokesman for German Chancellor Angela Merkel, Christoph Steegmans, removed hopes of a more robust European Financial Stability Facility, saying the fund will stay as agreed at a July 21 European Union summit. “The EFSF will remain what it is, and keep the volume it had before July 21,” Mr. Steegmans said at a regular government press conference.

Debt Worries Roil Markets

By Tom Lauricella, Matthew Phillips and E.S. Browning

Worries about government debt rocked capital markets on both sides of the Atlantic Monday, as fears that the Greek crisis will spread combined with concerns at the standoff over the U.S. debt ceiling.

The selloff started in Europe, hitting bonds and stocks in countries regarded as vulnerable to contagion from Greece, and spread to the U.S. where the Dow Jones Industrial Average ended at its lowest level since late June after a wild session.

Sex, lies and the reckless choices of the powerful

(Reuters) – Sex and power are no strangers. History is littered with tales of the powerful and privileged felled by sex scandals.

But make no mistake. If IMF chief Dominique Strauss-Kahn is found guilty as charged of attempting to rape a hotel maid in New York City, he would be in a league virtually of his own.

Few have been accused of a violent crime like Strauss-Kahn. The world financier and French presidential hopeful was charged on Sunday with criminal sexual act, unlawful imprisonment and attempted rape in New York City after a hotel maid said she was assaulted.

In Greece, austerity kindles deep discontent

By Anthony Faiola

Athens — Already struggling to avoid a debt default that could seal Greece’s fate as a financial pariah, this Mediterranean nation is also scrambling to contain another threat — a breakdown in the rule of law.

Thousands have joined an “I Won’t Pay” movement, refusing to cover highway tolls, bus fares, even fees at public hospitals. To block a landfill project, an entire town south of Athens has risen up against the government, burning earth-moving equipment and destroying part of a main access road.

Middle East politics: End of an era

From The Economist Intelligence Unit

The Mubarak regime appears doomed, faced with the unambiguous demands of a broad swathe of the Egyptian population for the president to stand aside and for any notion that his son might succeed him to be abandoned. The longevity of the Egyptian regime and of many of its Arab peers had given a false impression of its strength. A stubborn refusal to countenance meaningful political reforms that could provide legitimate channels for the expression of grievances and for the advancement of new ideas has left the Mubarak regime vulnerable to the charge that it has forfeited its legitimacy. Egypt’s historic position at the heart of the Arab world means that these dramatic developments will have a powerful resonance across the region.

Inflation? Deflation? It’s All About ‘Meflation’

Pick your poison, says Wall Street. Either Uncle Sam’s borrowing binge will flood the system with money, leading to a replay of the 1970s as inflation eats away at your purchasing power. Or all that debt and the liquidation of distressed financial assets will paralyze the economy and send prices falling, like the deflation Japan has suffered for the past 20 years.

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Are You Being Served?

by James Surowiecki

American workers are mad as hell, and they’re not going to take it anymore. That’s the clear message of flight attendant Steven Slater’s emergence as a “working-class hero,” after he threw his job away with a tirade against passengers and a slide down an exit chute. Slater’s fifteen minutes of fame may be winding down, but his heady time in the spotlight—he was the subject of numerous tribute songs and his Facebook fan page drew more than two hundred thousand people—suggested just how frustrated employees are with stagnant pay, stressful working conditions, and obnoxious customers.

Investors Head for Bunkers, Driving Up ‘Shelter Shares’

By Jonathan Cheng

It is the ultimate bunker portfolio.

Amid the market tumult, a handful of stocks have seen their share prices ratchet up to record highs in recent weeks. And many of them are connected by a curious, if disconcerting, thread: Between them, they provide an investor with essentials for any respectable fallout shelter—makers of bottled water, canned goods, dehydrated broth, gas masks and auxiliary generators.

US: Flow of imports drags down economic growth

By Howard Schneider

A widening U.S. trade deficit has become a substantial drag on economic growth as the country’s exports struggle to keep pace with the swelling sums that Americans are again spending on imported goods. The rise in the trade deficit, including an abrupt 16 percent spike in June, is a chief reason economists are downgrading estimates for recent U.S. economic growth. Statistics to be released Friday are expected to show that the economy grew more slowly from April to June than initially thought, with a group of analysts polled by Bloomberg cutting their growth estimates to an annualized rate of 1.4 percent, down from 2.4 percent as reported by the government late last month.

Drought, Fire and Grain in Russia

“This report is republished with permission of Starfor”

By Lauren Goodrich

Three interlocking crises are striking Russia simultaneously: the highest recorded temperatures Russia has seen in 130 years of recordkeeping; the most widespread drought in more than three decades; and massive wildfires that have stretched across seven regions, including Moscow.

The crises threaten the wheat harvest in Russia, which is one of the world’s largest wheat exporters. Russia is no stranger to having drought affect its wheat crop, a commodity of critical importance to Moscow’s domestic tranquility and foreign policy. Despite the severity of the heat, drought and wildfires, Moscow’s wheat output will cover Russia’s domestic needs. Russia will also use the situation to merge its neighbors into a grain cartel.

A History of Drought and Wildfire

Flooding peat bogs appears to be bringing the fires under control. Smoke from the fires has kept Moscow nearly shut down for a week. The larger concern is the effect of the fires — and the continued heat and drought, which has created a state of emergency across 27 regions — on Russia’s ordinarily massive grain harvest and exports.

Russia is one of the largest grain producers and exporters in the world, normally producing around 100 million tons of wheat a year, or 10 percent of total global output. It exports 20 percent of this total to markets in Europe, the Middle East and North Africa.