01/14/2013 07:30 am ET

There's No Backup Plan If Congress Doesn't Raise The Debt Ceiling: Seven And A Half Things To Know

Mark Gongloff is off the newsletter this morning so today's 7.5 Things are brought to you by Jillian Berman.

Thing One: There's No Plan B This Time: If congressional leaders decide to blackmail the U.S. into not raising its borrowing, the Obama Administration has no backup plan, and any of the possible options look like a disaster. Some of the possible alternatives that officials considered during the debt ceiling crisis in 2011 include delaying payments to government workers, Social Security recipients and others or cutting spending by 40 percent, according to the Wall Street Journal. Luckily, last time lawmakers managed to reach a deal before officials were forced to make a final decision on any backup plans.

But this time the American people might not be so fortunate. Paul Krugman argued recently that Republican leadership in Congress is using a “hostage taking” strategy in its approach to the debt ceiling talks -- threatening not to increase the country’s borrowing limit without major spending cuts they didn’t win in the fiscal cliff negotiations. If Congress does nothing, the government could lose its ability to meet its financial obligations as early as February 15, according to a report from the Bipartisan Policy Center. Democratic Senators urged Obama to sidestep Congress to avoid hitting the debt ceiling in a letter to the president Friday, according to the Financial Times.

Meanwhile, business leaders are continuing their self-interested push to get lawmakers to agree to a deal, ostensibly for America. The problem? They’re kind of divided. Some major corporate leaders are pushing politicians to agree to a deal that includes some tax increases and spending cuts, while other, more Tea Party-minded business groups are urging lawmakers to only agree to a deal if it includes major spending cuts, according to the Financial Times. Here’s hoping politicians don’t listen to any of them.

Thing Two: Dimon Hit By Whale: Looks like Jamie Dimon may have just been hit by that lack of regulation he loves so much and wishes there was more of. The JPMorgan Chase CEO famous for bemoaning any effort to rein in Wall Street could see his bonus docked because of hefty losses that a little regulation -- a strong Volcker Rule, specifically -- might have stopped, the Wall Street Journal reports. An internal report will partly blame Dimon, as well as two other senior executives, for the London Whale trading loss that cost the the bank about $6.2 billion, according to Bloomberg. JPMorgan’s board of directors will weigh this week whether to make the report public, according to the WSJ. If Dimon’s bonus is cut over the trading loss, he could be at risk of losing his title as the best paid banker. We can’t say we exactly feel sorry for him.

Thing Three: China Still Kind Of Scary, Not As Scary As It Used To Be: Good news, China is back on its path to taking over the world, just more slowly. The Chinese economy is growing again after a downturn last year, though the growth isn’t as fast as before the slowdown, according to the New York Times. While China’s economy is expanding at a relatively robust pace, it likely isn’t enough to boost economic growth around the world. But China’s economic growth is enough to scare its neighbors. Many of the countries surrounding the economic and military powerhouse are increasingly resentful of the country’s growth, as Chinese businesses take cheap resources from their countries and import cheap goods, according to the Wall Street Journal.

At the same time, American and European banks are growing disappointed with their investments in China. Global banks shed $44 billion worth of shares in Asian banks, according to the WSJ, as new capital rules and limited profits make it more expensive to hold onto their stakes.

Thing Four: European Debt Crisis Over, Except For the Ongoing Cris-y Stuff: The worst is over in the European debt crisis, according to leaders charged with solving the European debt crisis, Bloomberg reports. Now, they’re channeling their energy toward righting financial markets and trying to stop soaring unemployment. Meanwhile in economically ravaged Greece residents are getting so desperate that they’re damaging the environment in their search for jobs and basic needs. Greece has begun to readily accept the entry of mining operations in the country, largely because of the jobs they provide, and Greeks are raiding forests for firewood because they don’t have enough money to heat their homes. But the worst is over, really.

Thing Five: Internet Pioneer Remembered: MIT is opening an internal probe into the school’s role in the suicide of Aaron Swartz, an internet pioneer who was found dead Friday. Swartz was facing decades in prison and millions of dollars in fines over claims he illegally downloaded over 4 million articles from JSTOR using MIT’s computers. His death has reignited the debate over internet privacy. At a vigil Friday, supporters remembered Swartz as a provocative thinker, who represented a view that the Internet should be an open space providing access to knowledge, according to The New York Times. But his view was up against governments and corporations who argue that some information must be kept private, and his death has forced institutions to reevaluate how aggressively they should be in their push to punish internet activists for “freeing” information.

Thing SIx: Goldman Helps Bankers Protect Their Bonuses From Taxes: Those poor Goldman bankers. They get a huge bonus and then the government selfishly asks them to pay taxes on the money. But luckily for the bankers working in London, the bank is working to make their tax burden a little smaller. Goldman is considering delaying paying out bonuses to UK-based bankers until April 6, when the top income tax rate drops to 45 percent from 50 percent, according to the Financial Times. The tactic would also cover deferred bonuses from 2009, 2010 and 2011, according to Reuters. This isn’t the first time Goldman has tried to protect its bankers from higher taxes; the company pushed payments of deferred stock to U.S. executives in an aim to beat tax hikes scheduled to be implemented in 2013.

Thing Seven: Not Everyone Wants An iPhone 5: Apparently Apple’s shiny new toy isn’t as popular as the company expected. The technology giant cut orders for some of its iPhone 5 parts by about half, as sales of the new gadget haven’t been as strong as expected, the Wall Street Journal reports.

Thing Seven And A Half: Time For Your Close Up: In case you missed the Hollywood lovefest that was the Golden Globes last night, here is a review of the best appearances in extreme close ups courtesy of BuzzFeed.

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Calendar Du Jour:

Economic Data:

4:30 p.m. ET: Ben Bernanke speaks

Corporate Earnings:

Not much.

Heard On The Tweets:

-- Calendar and tweets rounded up by Mark Gongloff.



People Who Led Us To The 'Fiscal Cliff'