Debt Crisis

The European Central Bank unveiled an aggressive plan to buy the bonds of financially flailing countries such as Spain and Italy, its boldest step yet to stanch the continent's 3-year-old debt crisis and one that could lift the U.S. and the global economies. The bond-buying plan unveiled Thursday is intended to stimulate economic growth by reducing the borrowing costs for cooperating Eurozone governments. But its ultimate purpose is to set up a financially adequate and politically acceptable way of containing the crisis and maintaining the survival of the euro currency.

The European debt crisis is pushing the continent into recession and dragging down the global economy, according to a forecast released Thursday by the Organization for Economic Cooperation and Development. Growth in the world's seven major industrialized economies is expected to slow to just 0.3% in the third quarter of this year, and 1.1% in the fourth quarter, the group said. Deep problems in Europe are driving that slowdown, with the Eurozone's three largest economies -- Germany, France and Italy -- forecast to contract a combined 1% in the third quarter and 0.7% in the fourth quarter.

JERUSALEM - Israel's once-envied economy, which dodged the recent credit crunch and grew even amid the international recession, is heading toward choppier waters. The government is taking steps to avert a slump, and is already facing criticism over the moves. After assuring Israelis for nearly three years that their economy was outperforming the rest of the world, Prime Minister Benjamin Netanyahu surprised many this month by abruptly pushing through a platform of austerity measures, including higher income taxes for top earners, new levies on cigarettes and beer, and raising the VAT, a kind of sales tax, from 16% to 17%. "Israel's economy has handled the crisis pretty well up to this point, but there is a significant risk that things are not going as well as the government has tried to convince us," Hebrew University economist Omer Moav said.

NEW YORK -- Europe has yet to solve its debt crisis. Congress has yet to avert a plunge off the so-called fiscal cliff. The Federal Reserve may or may not inject another round of cheap money into the economy. But the Dow Jones industrial average has been creeping up in recent weeks, approaching a five-year high -- a level not seen since the Great Recession officially began in late 2007. The Dow lost 43 points, or 0.3%, to 13,233 in early trading on Wall Street on Monday. The broader Standard & Poor's 500 index lost 5 points, or 0.3%, to 1,413.

Stocks edged higher in early trading as Germany's chancellor reportedly voiced support for easing bailout terms for Greece and further action by the European Central Bank to help solve the Eurozone's debt crisis. Investors also received two upbeat U.S. economic reports shortly after the opening bell. The Dow Jones industrial average was up 15 points, or 0.1%, to 13,265 in early trading on Wall Street. The broader Standard & Poor's 500 index was up a point, or 0.1%, to 1,416. The Nasdaq was up 3 points, or 0.1%, to 3,065.

When Paul D. Ryan returns Wednesday for a campaign rally at his alma mater, Miami University of Ohio, he's expected to be welcomed back to campus by Rich Hart, an economics professor who was one of Ryan's first intellectual mentors. Ryan was already enamored of libertarian ideas when he arrived in Hart's macro-economics class, but his political thinking began to take more definite shape during long, after-hours conversations in Hart's office, the professor said in an interview. In those talks, it's safe to say, there wasn't much affection for the role of government in social programs.

Europe's financial crisis roiled General Motors' profit, which sank 41% as sales plunged in debt-burdened nations such as Greece, Portugal and Italy in the second quarter. The automaker continues to chug along in the U.S., though there were signs of slowing for the nation's biggest auto seller. GM said it earned $1.5 billion in the second quarter, down from $2.5 billion in the same period a year earlier. Revenue fell 4% to $37.6 billion. The company attributed the decline to the strengthening of the U.S. dollar against other currencies.

Treasury Secretary Timothy F. Geithnersaid Europe has the tools to fix its financial problems and its leaders remain committed to ending the continent's debt crisis. Speaking to the Los Angeles World Affairs Council on Tuesday, Geithner said that central bankers must act swiftly because the problems in Europe are slowing global growth. He had just returned from a trip to Europe where he met with politicians and policymakers. "This is completely within their financial abilities to solve," Geithner said.

WASHINGTON -- The European debt crisis could trigger the loss of 4.5 million more jobs over the next four years if national leaders don't take steps to repair the financial system and help job seekers, a United Nations agency is warning. The sharp rise in unemployment from already record-high levels would endanger not only Europe's economy but the rest of the world's as well, said the UN's International Labour Organization. The euro zone nations already have 3.5 million fewer jobs than they did before the financial crisis hit in late 2008, bringing the total number of unemployed to 17.4 million as of April, the organization said in a report issued Tuesday.

Bloomberg News U.S. stocks advanced, snapping a three-day decline in the Standard & Poor's 500 Index, as European officials took steps to protect Spanish banks. Bank of America Corp. and Citigroup Inc. increased at least 1.1% as Spanish bond yields fell. Alcoa Inc., the largest U.S. aluminum producer, lost 1.7% after reporting second- quarter results. Applied Materials Inc. tumbled 2.5% after cutting its forecasts. Advanced Micro Devices Inc., the second-biggest maker of processors for personal computers, slumped 6.2% after reporting an unexpected decline in sales.