June 18, 2009
What is the essence of the problem with our financial system--what brought us into deep crisis, what scared us most in September/October of last year, and what was the toughest problem in the early days of the Obama administration? The issue was definitely not that banks and non-banks could fail in general. We're good at handling some kinds of financial failure. The problem was: a relatively small number of troubled banks were so large that their failure could imperil both our financial system and the world economy. And--at least in the view of Treasury--these banks were so large that they cou
New Polling On Obama
The political story of the day is two new polls showing that public support for President Obama's agenda trails support for him in general. The New York Times writes: A distinct gulf exists between Mr. Obama’s overall standing and how some of his key initiatives are viewed, with fewer than half of Americans saying they approve of how he has handled health care and the effort to save General Motors and Chrysler. There's also a new NBC/Wall Street Journal poll, of which NBC writes: Obama remains a popular figure in the poll.
He shares my queasiness about the absence of structural reform--and is probably less comforted by some of the steps I see as improvements. He also has some concrete ideas about what structural reform should look like, beyond doing something about bigness. This proposal in particular is a very good idea: In a recent speech in China, the former Federal Reserve chairman — and current Obama adviser — Paul Volcker called on the government to limit the functions of any financial institution, like the big banks, that will always be reliant on the taxpayer should they get into trouble.
One of the interesting parts of that Brookings feature Zubin linked to earlier is a detailed ranking of metro areas by economic performance. The results are mostly intuitive--the areas doing the best have a strong government presence (like Washington, DC), or major industries that are countercyclical (like education, which is why New Haven is doing well).* As it happens, one of the other metro areas doing very well is McAllen, Texas--which, as you'll recall from this excellent New Yorker article, is the healthcare-cost capital of the United States.
June 17, 2009
The Iranian regime is currently facing one of the greatest challenges of its 30-year history. Supreme Leader Ali Khamenei--whose rule has been absolute and whose words have been the law of the land--is facing the most public challenge to his authority. His two decades since succeeding Ayatollah Khomeini have been defined by a tendency to keep his options open, a verbal dexterity that allowed him to skirt tough political positions, and an appearance of impartiality in Iran's fierce factional feuds.
Plan of Attack
In early May, White House Counsel Greg Craig circulated a memo inside the West Wing. Part of a series of memos on protocol, it explained how to deal with writers researching books and articles on the White House.
The Liberal Response
I am a statist in many ways and in many areas. I believe that government has an important role to play in the economy, in health care, in protecting the environment, and certainly in foreign policy. But reading about the mass demonstrations in Iran, my first thought isn’t about what the U.S. government should do or what President Obama should say. It is about what the rest of us should do and say. We boast of our lively civil society, and those of us on the liberal left call ourselves internationalists.
Jonathan Chait: Carrie Prejean and the definitive case for gay marriage.
How To Fix Securitization
Yesterday, I wrote approvingly of the administration's plan to force loan originators to hold onto some of the risks they create via the mortgage securitization process. But Paul Krugman, channeling Princeton colleague Hyun Song Shin, makes the good point that big banks did hold onto plenty of risk during the subprime crisis. In fact, most of their problems stemmed from this tactic. Here is Shin: ...in reality, securitisation worked to concentrate risks in the banking sector. In a paper published this week (Shin 2009)), I argue that there was a simple reason for this.
Is it important to make health care legislation bipartisan? You can't answer that question without knowing what bipartisan health care would look like. And thanks to a quartet of former senators, we now have some idea. Sort of. For the last year, Howard Baker, Tom Daschle, Bob Dole, and George Mitchell have been working to hammer out a common health reform vision through what's called the Bipartisan Policy Center. (Mitchell dropped out when he joined the administration.) Assisting them in this effort were two of the top health policy minds from each party, Mark McClellan and Chris Jennings.