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Under the European Commission proposal, banks that posed no systemic risk to the national or international economy would simply be allowed to fail. But those whose failure would pose too grave a threat to the stability of financial markets would be propped up in part by having unsecured creditors of the bank, such as bondholders and shareholders, take losses rather than having taxpayers give the institution rescue money.
"We don't want taxpayers to have to pay," said Michel Barnier, the European commissioner responsible for the internal market, as he outlined the proposals in Brussels on
Barnier was at pains to emphasize that he had been working on the proposal for years, and they were not a response to the banking crisis in Spain or other recent bank bailouts.
While Barnier said the centralized rules are necessary because so many banks operate across borders, he did not propose setting up a powerful central banking authority. Instead, his proposal would strengthen the ability of national authorities to -- hopefully -- head off bank failures before they happen and to deal with them decisively when they do.
- NY Times
The Congressional Budget Office (CBO) projected in 2001 that the federal government would erase its debt in 2006 and be $2.3 trillion in the black by 2011. The difference between projected and actual debt can be largely attributed to:
$3.6 Trillion – Economic changes (including lower than expected tax revenues due to recession)
$3.0 Trillion – Bush Tax Cuts
$1.4 Trillion – War in Afghanistan and Iraq
$1.4 Trillion – Stimulus spending in response to the 2008 Financial Crisis