6 Monday news bites + American debt crisis cheat sheet

Pinch and a punch! And happy horse’s birthday.

We hope you’re all relaxed after the weekend and ready for Monday. If you’re not yet, might we suggest several coffees and a quick dose of the news to get you in the right frame of mind. Here’s what has been making us sit up and take note:

1. First asylum seekers soon to be sent to Malaysia under new deal

The first 54 asylum seekers to be sent to Malaysia as part of the Government’s new policy have been intercepted on a boat near Scott Reef. The 54 men, women and children will be taken to Christmas Island first while being assessed to fly and then flown to Malaysia. Delays in transit centres in Malaysia means this could take as long as a month. Mr Abbott said the arrival of the boat proved the policy would do nothing to ‘stop the boats’.

2. Queen’s eldest granddaughter Zara Phillips marries

It wasn’t quite the spectacle of the most recent Royal wedding in the United Kingdom, but Zara Phillips didn’t seem to mind. She married England Rugby captain Mike Tindall. She was set to keep her own name after the ceremony. The wedding was a private affair with the Queen and top royals present. Zara is the daughter of Princess Anne. She was recently barred by the Queen from selling her wedding photos on the day because it was distasteful.

3. ‘Fix’ for skin cancer could come within the year … but more money is needed

Professor Ian Frazer, the man who discovered the vaccine for cervical cancer, says he is close to making a stunning breakthrough in identifying the virus that leads to the development of skin cancer, and therefore being able to develop a vaccine that helps prevent it happening. His work in this respect, which would include helping to stamp out malignant melanomas, is similar to the work that led to the creation of the Gardasil vaccine.

4. World’s top beauty queen Eden Wood withdraws from child pageant as networks fight

Eden Wood, the six-year-old glitz and glamour performer from the United States, was in Australia to attend the Universal Royalty Pageant in Melbourne, the first of its kind. But she withdrew from the event at the last minute as her team cited ‘security concerns’. But there was a bigger battle raging. Channel 9’s A Current Affair had paid about $20,000 to secure the rights to broadcast the pageant while Channel 7’s Today Tonight apparently paid $70,000 for the star itself and reportedly confected the security scare to have the child, the major draw card, pull out. Competitors paid almost $300 for the right to compete.

5. South Australian Premier Mike Rann will resign soon

After pressure from within the Labor Party, Mike Rann has agreed to step aside as Premier in favour of Education Minister Jay Weatherill. Mr Rann said it would be better if there was a ‘transition period’ before the reins were handed over and said he wanted to finish a few key projects first. Mr Rann’s leadership had become exceedingly unpopular, with a recent poll suggesting 65 per cent in South Australia wanted him to resign within the next year.

6. Approaching 10th anniversary of September 11 attacks, George W Bush speaks

National Geographic are preparing a week of programming to mark the 10th anniversary of the September 11 terror attacks and have released this fascinating excerpt of a long interview it conducted with former American President George W Bush. He tells of that morning, how he found out and what happened next. Chilling. Check it out:

PLUS: The American Debt Crisis Cheat Sheet

UPDATE: A deal has now been reached, as at 11am Sydney time. President Obama said it was not the deal he had hoped for. The deal with cut $1 trillion in spending over 10 years but not where Obama wanted it in the key areas of tax reform and making the higher earners pay their fair share. It still has to pass through Congress and the Senate.

The American debt crisis has been the talk of world economies these past few weeks, mostly because of this little thing called a ‘debt ceiling’. That ceiling is just a fancy term for the United State’s effective credit card limit. You might have $4000 on yours, they have $14.3 trillion.

That’s as much as all the goods produced in the entire European Union in 2010. It’s a lot of money and if they don’t increase the amount of debt they can go into, the economy will cease to function as normal. They’d lose their AAA credit rating (issued by Standard and Poor) which could lead to a double dip recession as world financial markets get spooked.

America is the global weathervane of sorts in financial markets and another financial crisis there would have devastating flow-on effects for the rest of the world. Think Global Financial Crisis: The Sequel.

It’s either that or they run out of money to govern, stop paying social security cheques or the wages of federal government employees. That’s about as palatable a solution as another recession.

So what are they doing about it?

To outside observers, not a great deal! American politics is fractious as it is and even a doomsday-type scenario of ‘economic armageddon’ as President Barrack Obama is not quite enough to get them all to the negotiating table without fighting, backstabbing and showmanship.

The United States Congress makes these decisions and it is made up of both Republican and Democratic members. Not to mention the uber conservative Tea Party members who are like extreme caricatures of the Republicans and believe in smaller Government and less debt.

The members of Congress have been debating how to raise the debt ceiling in the best manner but an agreement still has not been made.

One needs to be made and passed through Congress within two days.

They sure like to leave these things until the last minute.

What are the options?

There have been many. The basic rundown is that the Government needs to borrow another $2.4 trillion to get it through until November 2012. Think of this like an emergency loan you get at Cash Converters if you need to pay a big bill. This would give Congress time to start imposing heavy budget cuts that would save anywhere between $4 trillion and $9 trillion from the budget deficit over coming years, to steady the rocky ship.

The Republicans want the spending cuts from welfare and the Democrats mostly want it in the form of ending tax breaks for high earners. The Republicans look set to have their way, mostly.

Lawmakers say a deal is ‘close’ but it is still possible they will miss the August 2 deadline and default for the first time in history.

That would cause chaos, as we mentioned.

President Obama was at the negotiating table last week and said his stance could cost him the Presidency but that he ‘would not yield’ before storming out. It was all very West Wing.

The President could still sign an emergency order to get the ceiling lifted and the deadline of August 2 could be extended by a few days but it doesn’t look like it will be enough to reassure Standard and Poor’s which is looking increasingly likely to downgrade America’s AAA credit rating.

That’s bad news for the markets. And for the credibility of the entire American financial system.

So, we wait.

PS: Fruitbowl reminded me in the comments below about this great West Wing clip which sums it all up very nicely, about why they grandstand so much. Brilliant writing, terribly accurate.