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 Good morning. Here's what you need to know: 1. Reuters reports: "The European Central Bank would accept a selective default for Greece as part of the resolution of the country's debt woes, sources in the German government and financial sector said on Thursday." 2. The Wall Street Journal reports: "Eurozone leaders are debating a new bailout package for Greece that will likely include new rescue loans of roughly €70 billion ($99.51 billion) and a program to exchange much of Greece's outstanding bond debt for new, 30-year bonds, people familiar with the talks said." 3. The eurozone has now entered a real-time existential crisis. Wolfgang Munchau: "To arrive at such a stark conclusion, one has to understand the nature of the threat the eurozone is facing. The problem is not Greece, or some other small country on its periphery. The existential danger is the rise in market interest rates of Italy and Spain, two large countries in the eurozone’s core. To state the goal of today’s meeting in simple terms would be to say: the survival of the eurozone depends on whether its leaders will be able to take decisions that would allow Italy and Spain to remain inside the eurozone on a sustainable basis." 4. US budget negotiations intensified yesterday. President Obama said he would accept a short-term hike in the debt ceiling if it gave lawmakers time to finalize a comprehensive "Grand Bargain" deal. 5. The Federal Reserve is actively preparing for the possibility of US government default on August 2nd. Wall Street too has spent much of the last two months preparing for a "doomsday scenario." 6.What might happen is the US government defaulted on its obligations? "Think of the market meltdown following the Lehman Brothers bust--and then double it," says Sebastian Mallaby, a senior fellow at the Council on Foreign Relations. 7. The Wall Street Journal reports: "Companies are laying off employees at a level not seen in nearly a year, hobbling the job market and intensifying fears about the pace of the economic recovery." 8. U.S. manufacturing, which had been the world leader for a century, is in serious decline compared to the manufacturing of other advanced countries like Germany, Japan, and Switzerland whose wages and social expenditures are far above those of the United States, according to a new report released by the President's Council of Advisors on Science and Technology (PCAST). 9. Mitt Romney remains the uneasy front-runner for the 2012 GOP presidential nomination. His "play-it-safe" campaign has been effective to date. The next phase of the campaign will require a much more assertive and dexterous campaign. 10. Having emerged as the rising star of the Republican Party, Rep. Michele Bachmann has been getting much closer scrutiny from the press in recent days. She hasn't handled it particularly well. 11. The space shuttle Atlantis landed this morning at the Kennedy Space Center. It was the final flight of the space shuttle program and brought to an end a golden era in US aerospace operations. Please follow Politics on Twitter and Facebook. | 
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