Axis of Depression

Posted by , 19th November 2010

Federal ReservePaul Krugman
11/19/2010

China, Germany, and the Republican Party are all trying to bully the Federal Reserve into calling off its job-creation efforts. Krugman says their motives are suspect. He calls the three the Axis of Depression. China and Germany don’t want the dollar to fall because it would make US goods more competitive, and a smaller US deficit would then cause them to run a deficit. Republicans’ reasons are odd and incoherent since the Fed is following the policies of none other than Milton Friedman. Krugman says Republicans are afraid that if the Fed succeeds and helps the economy, it would foul their election chances in 2012.

Krugman is a New York Times columnist.

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The trap of the Federal Reserve’s dual mandate

Posted by , 18th November 2010

Money printingGeorge F. Will
11/18/2010

In 1977 Congress gave the Federal Reserve a “dual mandate” to “promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.” Given this mandate, the Fed has begun to print $60 billion, essentially creating another stimulus under the name of “quantitative easing.” Will points out that “maximizing employment” is a political role that has expanded to include staving off all the social ills that come with unemployment, from low self-esteem to violent crime. A repeal of the dual mandate is essential to prevent the Fed from becoming ruinously intertwined with politics.

Will is a twice-weekly columnist for The Post, writing about foreign and domestic politics and policy.

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This Lame Duck Session Should Be the Last

Posted by , 18th November 2010

John BoehnerBetsy McCaughey
11/18/2010

In 1933, Americans ratified the 20th Amendment to eliminate lame duck Congresses. Yet McCaughey says Washington has been ignoring its intent for two decades, hurrying back to the capital after Election Day to deal with spending bills and controversial legislation they deliberately had avoided before the election. When John Boehner, the presumptive House speaker, takes charge in January, he should introduce a bill providing that Congress will not meet between the November 2012 election and Jan. 3, 2013. That simple change in the law will put the voters back where they always belong: in charge.

McCaughey, a former lieutenant governor of New York state, is the author of “Obama Health Law: What It Says and How to Overturn It” (Encounter Books, 2010).

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Investor Protection Money

Posted by , 16th November 2010

EuropeSyed Kamall
11/16/2010

Without risk capital, Europe will go nowhere, says Kamall. He regrets that stricter EU rules for hedge-fund and private-equity fund managers will be expensive for the economy. From 2018 fund managers for businesses in the EU will have to meet stricter guidelines monitored by the new European Securities and Markets Authority (ESMA). These fund managers will have to comply with strict disclosure rules about their business strategies and hold larger amounts of capital, which reduces their revenues. Kamall argues that European investors must not be isolated from the financial action in the rest of the world. While protection against default or negligence is desirable, nobody wants protection against risk itself.

Kamall is a conservative member of the European Parliament for London.

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Time for Bailout Transparency

Posted by , 28th October 2010

Swiss Federal BankMatthew Winkler
10/28/2010

Big banks don’t want you to know which of them went to the Fed for emergency help, writes Winkler. The Clearing House Association, which represents 20 of the country’s biggest commercial banks, is asking the Supreme Court to keep the bailout secret. Current law doesn’t require the Fed to disclose information about loans from its discount window. But such disclosure would show whether the central bank may have violated the law by lending to any insolvent banks for extended periods. Greater transparency would yield greater accountability–and more reason for taxpayers to trust the banks they helped save. Most importantly, it would give fragile markets a better chance to recover with new jobs financed by confident investors.

Winkler is the editor in chief of Bloomberg News.

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The Great Bailout Backlash

Posted by , 25th October 2010

Wall STRoss Douthat
10/25/2010

Rage about the Wall Street bailouts is what fueled the birth of the Tea Party and an anti-Obama movement. Douthat looks at what the bailout cost, however, and says it may actually cost the taxpayer less than $50 billion over all, rather than the $700 billion originally set aside to pay for it. The problem with the bailout wasn’t the end game, which may have saved America from 15 percent unemployment, but how it implicated the government in crony capitalism. Although it was necessary and it worked, it did damage to the credibility of Wall Street and Washington.

Douthat is a New York Times columnist.

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France goes on strike while Britain remains silent

Posted by , 22nd October 2010

The streets governAnne Applebaum
10/22/2010

It is generally thought that nations are becoming more globalized and therefore more alike, but the response of British and French citizens to their respective country’s economic situation is perfectly in tune with each country’s national character. Historical experience may play a role, as the British remember war-time rationing fondly, while the French have a history of getting much accomplished via street protests. Both country’s political scenes have an effect as well: French authorities spend money on expensive art and travel, while the British have a coalition government with a broad pool of citizenry with varying sympathies. Time will tell, but national character will determine how each nation deals with its problems.

Applebaum is a weekly columnist for The Post, writing on foreign affairs.

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The Biggest Race You Haven’t Heard Of

Posted by , 21st October 2010

Harry WilsonDaniel Henninger
10/21/2010

Henninger writes about what he calls a rare chance to defuse the pension bomb. New York, like many other once-important states, is sitting on a public pension debt bomb. If it blows, it will take great swaths of the productive American economy with it for years. Harry Wilson says he can defuse the New York bomb. If Harry Wilson can get the public-pension death spiral under control in New York–and he just might have the professional and intellectual tools to do it–it should be possible to reform pensions in any state. Henninger concludes that it should be possible for a Cuomo-Wilson alliance to fix another failing American state.

Henninger writes ‘Wonder Land’ for the Journal.

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Why a Foreclosure Moratorium Is a Bad Idea

Posted by , 18th October 2010

Real EstateBarbara Novick
10/18/2010

A special bankruptcy law could help borrowers while letting housing markets clear, says Novick. But any resolution of the housing crisis needs to respect the rights of everyone–investors, borrowers, lenders, and taxpayers. Foreclosure moratoriums, failed mortgage modifications, and principal forgiveness programs delay resolution. Worse, they create more losses for investors, homeowners, and taxpayers, yet fail to keep delinquent borrowers in their homes.

Novick is vice chairman of BlackRock, a global investment management firm based in New York City.

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