Debt talks collapse

Very nasty stuff - House Speaker John Boehner pulled out of the debt ceiling talks, saying that the two sides were never really close to an agreement. President Obama just finished a news conference in which he lashed out at Congressional Republicans for their unwillingness to cut a deal - even one that some Congressional Democrats said was not acceptable to them. So now the president will try to work out a debt ceiling deal - minus any big deficit reduction - in order to avoid a default in early August. He does have one key condition: That the debt-ceiling extension last through the 2012 election. Hard to see how that happens in such a toxic atmosphere. From AP:

In a dramatic appearance in the White House briefing room Obama said it was up to congressional leaders to explain to him how they intend to avoid the default that is threatened after Aug. 2. "I expect them to have an answer in terms of how they intend to get this thing done in the course of the next week. The American people expect action," Obama said. Boehner, in a letter circulated to the House Republican rank and file, said he had withdrawn from the talks with Obama because "in the end, we couldn't connect.He said he would turn instead to negotiations with leaders of the Senate, which is controlled by majority Democrats.

Timing on this latest breakdown isn't great. Investors will now have the entire weekend to worry about the ramifications of a default (never good for bad news to break right before the weekend).