More Talk of Greece Exiting the European Union after Not Meeting Austerity Benchmarks

An analyst for UBS succinctly described the Euro Zone as the Hotel California, a song by The Eagles in the 1970s. The song lyrics describe the hotel as a place where "you can check out anytime you like, but you can never leave." That description seems to be appropriate for the nations like Greece, Italy, Ireland, Portugal and Spain who are struggling to maintain their benchmark deficit reduction goals in order to maintain their inclusion in the European Union.

Unfortunately for Greece - and for all of the members of the Euro Zone, there is not structure in place for a country to leave the Euro, or to even be expelled from the Euro. Because of the common currency and the financial inter-dependence of all the nations of the Euro, if Greece were to exit, the strain would almost certainly force nations like Italy, Spain and the others to follow suit. That would essentially destroy the Euro Zone and its fragile economy and currency. And ultimately, that might be the best thing for the global economy.

The Euro Zone is essentially a loosely connected United States of Europe, except that it contains entire nations with deep historical and cultural foundations that make them much less connected then the United States of America, for example. As a result, there is much less true unity among the nations of the Euro. Their initial union was one borne of a desire for more financial and economic clout in trying to compete with the U.S. and China for global market share.

Now that the global economy is struggling, the Euro's weaknesses have been exposed and the entire experiment is facing a serious crisis. Because of inherent flaws in the structure of the Euro Zone, there is no real incentive for Greece - or any other member nation - to enforce the types of hard-line austerity measures required to get their deficit problems under control. In a matter of speaking, the weaker, poorer countries have nothing to lose in the game - their economies have essentially crumbled already.

If the big players like Germany and France decide to let them fail, it will be Germany and France who bear the financial brunt of Greece's exit from the Euro - but by continuing to carry them, the future consequences could be far greater.

House passes debt limit bill

The U.S. House Monday passed the deficit reduction bill and sent it to the Senate for consideration.

The vote was 269-161 with 95 Democrats joining 174 Republicans in voting in favor of the measure, and 95 Democrats voting with 66 Republicans against it.

The Senate is to vote on the measure Tuesday.

In a huge surprise, the "yes" votes included one cast by Rep. Gabrielle Giffords, D-Ariz., who is recovering from a bullet wound to her head, suffered during a shooting spree at a constituents' gathering in Tucson in January.

Giffords, in her first appearance in Capitol Hill since being wounded, waved to those gathered in the House chamber for the historic vote to avoid the risk of a first-ever default by the U.S. government and blew them kisses. She was greeted with a standing ovation.

After the vote, House Minority Leader Nancy Pelosi, D-Calif., said Giffords' "presence here in the chamber … brings honor to this chamber."

The debt reduction plan would cut deficits by at least $2.1 trillion over 10 years, the Congressional Budget Office said in a letter sent to House Speaker John Boehner, R-Ohio.

The CBO "estimates that the legislation … would reduce budget deficits by $917 billion between 2012 and 2021," in up-front savings and another $1.2 trillion in savings coming from work done by a special bipartisan, bicameral committee, the letter read.

The non-partisan office's review of the framework came a day after President Barack Obama and congressional leaders reached agreement to raise the federal debt limit that includes steep spending cuts but no new taxes, breaking an impasse that flung the country toward default. Tuesday is deadline for a deal to be struck before the country loses its borrowing authority and risks the possibility of defaulting on its obligations.

The agreement would raise the $14.3 trillion debt limit in two stages by as much as $2.4 trillion.

Senate Majority Leader Harry Reid's hope of quick passage in the Senate could threatened by South Carolina Republicans Lindsey Graham and Jim DeMint, who said they would not vote for the bill, The Hill reported.

"I'm not going to tell Americans that we're doing everything when we're not," he said. "We're planning on adding another $10 trillion in debt."

DeMint said he will not permit a Senate vote until he and his staff have reviewed the measure thoroughly.

"I'll be asking for the right to read it and go through it. That takes a while. They need to get us the bill so that we can print it out and start going through it," DeMint told The Hill. "This idea that you have to pass it to find out what's in it doesn't work. I'd like to read it to find out what's in it, and I think a number of Republicans feel that way."

Graham, in a statement, said he couldn't "in good conscience" vote for the bill.

"Simply stated, it locks us into more debt, bigger government and most devastating of all, a weakened defense infrastructure at a time when we face growing threats," Graham said.

Reid said neither side got what it wanted in the legislation, "but it's the nature of compromise."