Paul Krugman's Take on the Financial Meltdown
http://www.nytimes.com/2010/03/08/opinion/08krugman.html
Excerpt:
What really mattered was free-market fundamentalism. This is what led Ronald Reagan to declare that deregulation would solve the problems of thrift institutions — the actual result was huge losses, followed by a gigantic taxpayer bailout — and Alan Greenspan to insist that the proliferation of derivatives had actually strengthened the financial system. It was largely thanks to this ideology that regulators ignored the mounting risks.
So what can we learn from the way Ireland had a U.S.-type financial crisis with very different institutions? Mainly, that we have to focus as much on the regulators as on the regulations. By all means, let’s limit both leverage and the use of securitization — which were part of what Canada did right. But such measures won’t matter unless they’re enforced by people who see it as their duty to say no to powerful bankers.
That’s why we need an independent agency protecting financial consumers — again, something Canada did right — rather than leaving the job to agencies that have other priorities. And beyond that, we need a sea change in attitudes, a recognition that letting bankers do what they want is a recipe for disaster. If that doesn’t happen, we will have failed to learn from recent history — and we’ll be doomed to repeat it.
Up-or-Down Vote on Obama's Presidency
I don't think Obama knows how to be an effective leader; I agree with much of what Frank Rich says:
http://www.nytimes.com/2010/03/07/opinion/07rich.html
Excerpts:
...the buck stops with the president, not his chief of staff. And if there’s one note that runs through many of the theories as to why Obama has disappointed in Year One, it cuts to the heart of what had been his major strength: his ability to communicate a compelling narrative. In the campaign, that narrative, of change and hope, was powerful — both about his own youth, biography and talent, and about a country that had gone wildly off track during the failed presidency of his predecessor. In governing, Obama has yet to find a theme that is remotely as arresting to the majority of Americans who still like him and are desperate for him to succeed.
The problem is not necessarily that Obama is trying to do too much, but that there is no consistent, clear message to unite all that he is trying to do. He has variously argued that health care reform is a moral imperative to protect the uninsured, a long-term fiscal fix for the American economy and an attempt to curb insurers’ abuses. It may be all of these, but between the multitude of motives and the blurriness (until now) of Obama’s own specific must-have provisions, the bill became a mash-up that baffled or defeated those Americans on his side and was easily caricatured as a big-government catastrophe by his adversaries.
Obama prides himself on not being ideological or partisan — of following, as he put it in his first prime-time presidential press conference, a “pragmatic agenda.” But pragmatism is about process, not principle. Pragmatism is hardly a rallying cry for a nation in this much distress, and it’s not a credible or attainable goal in a Washington as dysfunctional as the one Americans watch in real time on cable. Yes, the Bush administration was incompetent, but we need more than a brilliant mediator, manager or technocrat to move us beyond the wreckage it left behind. To galvanize the nation, Obama needs to articulate a substantive belief system that’s built from his bedrock convictions. His presidency cannot be about the cool equanimity and intellectual command of his management style.
That he hasn’t done so can be attributed to his ingrained distrust of appearing partisan or, worse, a knee-jerk “liberal.” That is admirable in intellectual theory, but without a powerful vision to knit together his vision of America’s future, he comes off as a doctrinaire Democrat anyway. His domestic policies, whether on climate change or health care or regulatory reform, are reduced to items on a standard liberal wish list. If F.D.R. or Reagan could distill, coin and convey a credo “nonideological” enough to serve as an umbrella for all their goals and to attract lasting majority coalitions of disparate American constituencies, so can this gifted president.
He cannot wait much longer. The rise in credit-card rates, as well as the drop in consumer confidence, home sales and bank lending, all foretell more suffering ahead for those who don’t work on Wall Street. But on these issues the president, too timid to confront the financial industry backers of his own campaign (or their tribunes in his own administration) and too fearful of sounding like a vulgar partisan populist, has taken to repeating his health care performance.
And so leadership on financial reform, as with health care, has been delegated to bipartisan Congressional negotiators poised to neuter it. The protracted debate that now seems imminent — over whether a consumer protection agency will be in the Fed or outside it — is again about the arcana of process and bureaucratic machinery, not substance. Since Obama offers no overarching narrative of what financial reform might really mean to Americans in their daily lives, Americans understandably assume the reforms will be too compromised or marginal to alter a system that leaves their incomes stagnant (at best) while bailed-out bankers return to partying like it’s 2007. Even an unimpeachable capitalist titan like Warren Buffett, venting in his annual letter to investors last month, sounds more fired up about unregulated derivatives and more outraged about unpunished finance-industry executives than the president does.
This time Obama doesn’t have a year to arrive at his finest hour. Not to put too fine a point on it, but the clock runs out on Nov. 2.