Goodbye to Berlin
August 30, 2010
In early February, the top financial officials of seven major industrialized countries gathered in Canada to mull the state of the world economy. To grease their interactions, the Canadians had created an intimate setting in Iqaluit, an Inuit town near the Arctic Circle. A planning document waxed on about fireside chats at a cozy inn and decreed that the attire would be casual.
Let Them Eat Credit
August 27, 2010
By most counts, the U.S. economy started growing in the middle of last year. For many Americans, though, it does not feel as if the Great Recession has ended—unemployment and underemployment are still alarmingly high, and job growth is weak. Many causes have been suggested for both the economic collapse and mediocre recovery, but one that is hardly ever mentioned is income inequality. This is a mistake. Growing income inequality in the United States and the policy responses it has spawned have done tremendous damage to our economy.
Number of the Day
August 26, 2010
Extending the Bush tax cuts for high-earners would cost an additional $680 billion over 10 years. I've taken a look at some of the sweet stuff millionaires could buy with the average $128,000 they would save each year. But what if the government didn't cut taxes for millionaires and spent the money on state aid instead? Each millionaire's higher tax bill could pay for... three teachers Even with $10 billion in federal funding to avert teacher layoffs, state budgets are in bad shape, and the forecast for next year doesn't look much better. Three teachers or 24 pounds of caviar?
Two Critiques of Obama I Don't Understand
August 24, 2010
[Guest post by Noam Scheiber:] I'm coming a little late to yesterday's Politico piece about how Obama suffers from the absence of a well-articulated worldview, which is probably true to some extent, but I think overstated in the piece. (I'm in the camp that thinks 9.5 percent unemployment is, overwhelmingly, Obama's biggest political problem...) Whatever you think of that argument, though, the piece highlighted two smaller critiques I find mystifying. The first comes from Eric Alterman, who wrote a much-discussed piece in The Nation last month about liberal disappointment with Obama.
Am I Too Hard on Hedge Funds?
August 23, 2010
[Guest post by Noam Scheiber:] Felix Salmon is chiding me for an "unconvincing" critique of Sebastian Mallaby's recent book on hedge funds, More Money Than God. He says shifting risk from banks to hedge funds would in fact make the system safe for failure: Scheiber is worried that people like Morgan Stanley’s Howie Hubler — who lost $9 billion at what was essentially an in-house hedge fund — will simply now repeat their failures at standalone funds, if banks are barred from taking those kind of bets. But that misses the point.
A Political Upside for Obama on the Islamic Center?
August 19, 2010
[Guest post by Noam Scheiber:] I largely agree with Chait's take on the Park51 controversy--in speaking out for the right to build the mosque, I think Obama was being presidential in the best sense of the word. Which is to say, taking a principled position despite the political fallout or any parochial concerns. But I think Chait may have been too pessimistic about the short-term political consequences. That's not just because, as Nate Silver has pointed out, public opinion actually backs the right to build the mosque/Islamic center near Ground Zero.
Does Benefiting from Government Make You Hate It?
August 19, 2010
[Guest post by Noam Scheiber:] Michael Powell has an interesting piece in today's New York Times probing Alaskans' paradoxical contempt for government spending--paradoxical because they benefit from it more than citizens of any other state. (Our own Frank Foer also wrote a great piece along these lines several years ago.) Reading Powell's piece gives you insight not just into the incoherence of the average Alaskan, but some insight into why the stimulus may be so unpopular, even if, as many economists believe, it's worked pretty well.
Are the Big Banks Surrendering on Elizabeth Warren?
August 18, 2010
[Guest post by Noam Scheiber:] That's been my expectation all along--for the simple reason that Wall Street opposition to Warren as head of the consumer financial protection agency would only make it politically more attractive (or at least politically necessary) for the White House to nominate her and Senate Democrats (even some Republicans) to support her.
More on Why Elizabeth Warren Would Be Confirmed
August 17, 2010
[Guest post by Noam Scheiber:] There's an interesting new development on the Elizabeth Warren front today. But, before I get to that, some backstory. I've written before about why Warren is likely to be confirmed as head of the Bureau of Consumer Financial Protection if the president nominates her. Basically, some key Republicans, like Chuck Grassley and Olympia Snowe (and even Jim Bunning), seem to like her.
The Roadmap to a High-Speed Recovery
August 12, 2010
Speaking at a health care reform rally in Raleigh, North Carolina, in July 2009, President Obama declared that the worst of the recession was over. “We have stopped the free-fall. The market is up and the financial system is no longer on the verge of collapse,” he said proudly. A year or so later, with midterm elections looming and an electorate that is as fearful and angry as any in memory, the stock market has risen, but even a breath of bad news can send it tumbling. As dismal as housing prices continue to be, they have yet to hit bottom in some places.