While Treasury Secretary Timothy Geithner was on the talk shows reassuring America that the economy is healing, developments in Europe threatened to cut the legs out from under a U.S. recovery.

The short story is that Greece and a number of other European Union (EU) countries are in debt, deep in debt. EU rules say member countries cannot have budget deficits that exceed three percent of GDP. Greece’s debt is closer to 12 percent.

They have been hiding it for years, in part relying on major U.S. banks and so-called “cross-currency swaps,” complex financial instruments that allow governments to hide their debts and push their liabilities into the future. The German magazine Der Spiegel broke the story that Greece did a billion-dollar swap with Goldman Sachs in 2002 that did not show up on the nation’s books as debt.

Now the bill is coming due. Greece is in trouble and EU leaders are failing to take decisive action, roiling the markets. The Euro is trading near an eight-month low against the dollar and some are predicting another major shock to the global financial system.

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Sarah Palin's keynote speech was quite a hit at this weekend's Tea Party convention. She even took a shot at pinning responsibility for the deficit on the Obama administration.

It's too bad Palin didn't have proper notes on hand, as she did for the Q & A after her speech. Then again, the message that it was actually the Bush administration that left us more in debt and less secure, wouldn't go over well with her audience.

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Right now, we taxpayers give big banks billions to subsidize their student loans. Giving big banks money is decidedly unpopular after the TARP bailout, among liberals and conservatives. So you'd think there would be consensus to end the subsidies.

Apparently not.

After the House passed President Obama's proposal to end the subsidies, offer students direct government loans and save taxpayers $80 billion, the Senate has the bill in limbo while bank lobbyists swarm the Capitol.

And now, Sarah Palin and the Tea Party is taking all their anti-bank populist rhetoric, and using it to support ... the banks.

At last weekend's Tea Party conference, Palin deliberately conflated ending the bank subsidies with the bank bailout:

The list of companies and industries that the government is crowding out and bailing out and taking over, it continues to grow. First, it was the banks, mortgage companies, financial institutions, then automakers. Soon, if they had their way, health care, student loans.

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On Friday, when the Bureau of Labor Statistics released its report that another 20,000 Americans had lost their jobs in January, the right-wing spin machine immediately unleashed one of their tried-and-true talking points: that the reason the economy is not creating new jobs is "uncertainty" created by Democratic policymakers in Washington. But ask businesses themselves why they're not hiring, and they say their top uncertainty is whether they will have enough customers to stay in business, much less expand.

On Friday, House Minority Leader John Boehner released a statement that said, in part,

“Hiring grows from investment, and businesses and investors need clarity. Instead, the President, Speaker Pelosi, and Leader Reid perpetuate an environment of uncertainty with the threat of even more mandates and red tape, skyrocketing deficits, and tax increases that prevent job creation. Democrat controlled Washington’s ideological pursuits – like cap and trade, tax increases, the push for government health care, and card check – have created such great uncertainty that hiring is simply not a reality for businesses and entrepreneurs."

Likewise, the Heritage Foundation's daily Morning Bell email on Friday included this screed:

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• Spotlight Turned On Half-Baked Conservative Health Care Ideas
• Jobs Bill Talks Slog Through Second DC Snowstorm
• Sen. Ben Nelson Backs Becker Filibuster, As WH Amps Up Filibuster Attack
• Will Republicans Back Tax Increase To Fund Transportation?
• Elizabeth Warren Takes On Wall Street In Wall Street Journal
• Is Obama Failing or Succeeding?
• Rep. John Murtha Remembered

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Much of the public believes that tax cuts "create jobs." A recent Rasmussen poll found that 59% of voters believe cutting taxes is better than increasing government spending as a job-creation tool. This proves that repeating a slogan over and over can effect what people believe.

But here is some news: Corporate taxes are on profits. So a tax cut means that the more profitable companies -- the Wal-Marts, Exxons, and other giants -- benefit. They pay back less to the government for their use of the roads, schools, courts, police, fire & military protection and all the other services that helped them get so big and powerful. So the giant monopolistic corporations that are chewing up small businesses, destroying local and regional retailers, take those tax cuts and use them to turn themselves into even better small-business-destroying machines.

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This is something people should know about. Every effort to reform financial regulations is blocked by Senate filibusters. Maybe now we know why.

From last week: Republicans Chase Wall Street Donors

Last week, House Minority Leader John Boehner of Ohio made a pitch to Democratic contributor James Dimon, the chairman and chief executive of J.P. Morgan, over drinks at a Capitol Hill restaurant, according to people familiar with the matter.

Mr. Boehner told Mr. Dimon congressional Republicans had stood up to Mr. Obama's efforts to curb pay and impose new regulations.

Isaiah Poole wrote this morning,.

The bipartisan courtship rituals between big politics and big money in Washington are bad enough, but Republican leaders in Congress are in the process of taking the process to a new low by openly declaring, "Give us your money and we will do your bidding."

They do so in spite of the grassroots anger against the banking industry and polls that indicate majority support for the financial reforms that the banking industry vigorously opposes.

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The White House is trying to show it can still invest in its top priorities while also instituting a freeze on the overall level of non-defense discretionary spending. For example, the Energy Department budget for the next fiscal year is still getting a seven percent increase to help ramp up the clean energy economy.

But are such budget increases sufficient for us to real bring about such a dramatic transformation in how we power our economy?

In other words, is it even possible to move to a clean energy economy with a spending freeze in effect, no matter how flexible?

Consider that the Apollo Alliance previously concluded we need to invest $50 billion a year for 10 years in clean energy and energy-efficiency to be able to achieve sustainable energy independence.

The two-year Recovery Act investments were in the ballpark of that goal: $34 billion for energy efficiency, $8 billion for renewable energy, $11 billion for a smart electric grid, $8 billion for high-speed rail, $4.5 billion for clean energy research and development and $1 for green job training.

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I don't like to use the term "whore" lightly. But what else, in our current economic environment, would you call this?

Republicans are rushing to capitalize on what they call Wall Street’s “buyer’s remorse” with the Democrats. And industry executives and lobbyists are warning Democrats that if Mr. Obama keeps attacking Wall Street “fat cats,” they may fight back by withholding their cash.

... Senator John Cornyn of Texas, chairman of the National Republican Senatorial Committee, said he visited New York about twice a month to try to tap into Wall Street’s “buyers’ remorse.”

“I just don’t know how long you can expect people to contribute money to a political party whose main plank of their platform is to punish you,” Mr. Cornyn said.

Or this?

In discussions with Wall Street executives, Republicans are striving to make the case that they are banks' best hope of preventing President Barack Obama and congressional Democrats from cracking down on Wall Street.

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President Obama’s new federal budget plan won’t end plutocracy in America. But this second Obama budget, if adopted, might actually inconvenience it.

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• New Rules Needed So Senate Can Govern
• Bipartisan Health Care Meet. Calling Their Bluff?
• Snowstorm Buys Dems Time On Jobs Bill
• Wall Street Shifting Money To Republicans
• President Walking Fine Line On Trade
• Social Security Hysteria Redux
• Climate Roundup
• Palin Cheats To Pass Tea Party Test

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Dave Johnson wrote earlier about the Republican origins of our current deficits, but the next wave of deficits will probably come from the next wave of option ARM mortgage defaults. (via Atrios) That'll mean decreased local government revenues, more job losses, more unemployment expenditures.

More families will have a harder time paying for college, so fewer young people will get to go. More construction jobs will be lost, so those people who didn't get to go to college will have fewer living wage jobs to apply for.

The affected families will have less money to spend on goods and services, whether through increased debt or reduced income. They'll have fewer options and, because they're poorer, their economic activity will support fewer job opportunities for other Americans.

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If you've ever wondered where conservative economic policies like permanent tax cuts for the wealthy, slashed social services and government spending are supposed to lead us, look no further than Colorado Springs.

David Sirota's description of what's happening to that conservative stronghold should serve as a cautionary tale.

When the so-called tea party movement’s anti-tax activists refer to the abstract concept of conservative purity, we can turn to a microcosm like The Springs (as we Coloradoans call it) for a good example of what such purity looks like in practice—and the view isn’t pretty.

Thanks to the city’s rejection of tax increases—and, thus, depleted municipal revenues—The Denver Post reports that “more than a third of the streetlights in Colorado Springs will go dark; the city is dumping firefighting jobs, a vice team, burglary investigators, beat cops; water cutbacks mean most parks will be dead ... recreation centers, indoor and outdoor pools [and] museums will close for good; buses no longer run on evenings and weekends; [and] the city won’t pay for any street paving.”

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Yesterday I noted that we 402,000 new jobs a month, for three years if we are to simply return to the level of employment we had before the recession.

The latest monthly employment report showed a slight dip in the unemployment rate and underemployment rate, but also another loss of 20,000 jobs. (As Paul Krugman reminds, these are all rough estimates based on surveys: "When employment growth is near zero, on either side, it’s not that surprising that the surveys should point in opposite directions.")

We are nowhere near the rate of job creation needed to have a robust recovery.

Yet the Senate still has not produced a jobs bill proposal equal to the size of the problem.

The Senate is understandably struggling to pass anything of significance in the face of widespread obstruction from the conservative minority.

But the only way to change that dynamic and shame at least a few conservatives into getting out the way, is to speak up.

Click here to tell your Senators: pass a real jobs bill.

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