The Great Debate

Time to stand up to the banking lobby

Christopher Swann– Christopher Swann is a Reuters columnist. The views expressed are his own —

The crusading spirit that at one stage threatened to lead to the nationalization of U.S. banks and the downfall of their top executives now seems like ancient history.

Banks are again flexing their muscles and have turned the tables on America’s politicians. Remarkably, policy makers now seem to be struggling to secure even a modicum of needed change in the regulatory system.

The winter’s paroxysm of public anger has dissipated with astonishing speed. This is in spite of the fact that economic recovery still seems a distant goal and the woes of CIT Group suggest that even the financial system is not out of the woods. As a result there is now a real danger that the administration and Congress will fail to live up to Rahm Emanuel’s famous injunction never to let a crisis go to waste.

The ability of the financial lobby to hold onto its political power has been one of the great mysteries of the crisis. Few special interest groups have shown such  flexibility in their logic.

It’s tough to modify your way out of a hole

jamessaft1(James Saft is a Reuters columnist. The opinions expressed are his own)

If you thought the U.S. housing crash could be blunted if only lenders would cut delinquent borrowers a break, it is perhaps time to move on to another vain hope.

That’s right, the loan modification movement – pushed by the U.S. administration and others as a means of keeping non-paying borrowers in their houses, keeping those same houses from flooding the market as foreclosures, and even helping beleaguered lenders – is running into a reality-shaped wall.

An exhaustive study of loan modifications by economists at the Boston Federal Reserve, under which delinquent borrowers are given lower rates, more time, or even cuts in the principal amount owed, showed fundamental problems with the way that idea works when put into practice.

The healthcare disconnect

Darrell West– Darrell West is vice president and director of governance studies at the Brookings Institution and the author of Digital Medicine: Health Care in the Internet Era. The views expressed are his own. —

It is not the first time Washington has been disconnected from the general public, but recent discussions over healthcare reform reveal a D.C. establishment fixated on arguments not central to the general public.

The air waves are filled with clashing claims over the so-called public option whereby Medicare would be expanded to include more Americans. Proponents claim this is the best way to cover most Americans currently without coverage and drive down costs by creating competition for private insurance companies.

For Palin, rules have never applied

Palin supporter

politicoMatthew E. Berger covered Palin’s vice presidential campaign as an embedded reporter for NBC News and National Journal. He is the author of a book on Palin’s campaign and political future, scheduled for release in the fall by Wiley.  The article originally appeared on Politico.com. The views expressed are his own.

Standard Washington political rules state that any presidential aspirants must finish out their term, write a book, travel to Iowa and New Hampshire, and start talking policy. Any deviation from the norm suggests political suicide, and many analysts have spent the past few days writing Sarah Palin’s political obituary.

But Palin never learned the rules, and she certainly doesn’t play by them. Palin has her own set of rules, which minimizes the expertise of political veterans and relies almost entirely on her gut. As times got tough during her vice presidential campaign, Palin began to ignore the advice of those around her and started doing the things she relied on to win in Alaska, specifically directly attacking her critics and speaking more to local media. Whether her small-town politics translated well to the national stage didn’t seem to register with her.

Gender equality: From sports to math and science

diana-furchtgottroth–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

The Obama administration is considering a proposal to use federal regulations to expand women’s participation beyond college athletics to the selection of courses, especially in mathematics, science and engineering.

The proposal to apply so-called Title IX gender-equality to selection of courses and majors was discussed at a White House conference on June 23, and endorsed by Valerie Jarrett, senior adviser and assistant to the president, and Russlynn Ali, assistant secretary of education for civil rights.

Spare a thought for Hugo Chavez

Bernd Debusmann- Bernd Debusmann is a Reuters columnist. The opinions expressed are his own –

Spare a thought for Hugo Chavez, the larger-than-life Venezuelan leader who flourished in the role of Latin America’s defender against an evil empire led by a devil who smelt of sulphur and was named George W. Bush.

Those were the easy days for Chavez. Now he has become a dragon-slayer without a dragon, an actor on a stage without the most important prop. It was one thing to rally the Latin masses against the widely-detested Bush, it is another to deal with Barack Obama, “the first (U.S.) president who looks like us,” in the words of Brazilian President Luiz Inacio Lula da Silva.

Healthcare reform and my expensive education in economics

morici– Peter Morici is a professor at the Smith School of Business, University of Maryland School, and the former Chief Economist at the U.S. International Trade Commission. The views expressed are his own. –

America’s healthcare system is broken, but President Obama inspires little confidence with his fix.

Healthcare absorbs 18 percent of GDP—about 50 percent more than in other wealthy countries. Prices are too high and are a terrible burden on jobs creation.

Africa at the threshold

john-simon– John Simon was recently U.S. Ambassador to the African Union and former Executive Vice President of the Overseas Private Investment Corporation.  He is currently a Visiting Fellow at the Center for Global Development in Washington DC. The views expressed are his own. —

President Obama’s trip to Ghana highlights one of Africa’s leading success stories – a country that has held five consecutive democratic elections, recently transferring power peacefully to the opposition after it won a razor thin victory.

Ghana is not alone. Sub-Saharan countries made tremendous progress in the past decade. Freedom House ranks seven out of ten of Sub-Saharan countries as free or partly free. Through 2007, Africa experienced 10 years of uninterrupted economic growth, the last five at rates above 5 percent. Foreign capital inflows increased from only $7 billion in 2002 to $53 billion in 2007.

The dollar’s Tinkerbell moment

James Saft (James Saft is a Reuters columnist. The opinions expressed are his own.)

Repeat after me: “I believe in a strong dollar as the primary global reserve currency, I believe in a strong dollar as the primary global reserve currency.”

Better hope it works, because the current debate over a far-in-the-future new monetary system may bring on a here-and-now dollar selloff and a whole new leg of the crisis.

Sadly, what worked when the children espoused their faith in Tinkerbell may not for a currency backed by the full faith and credit of a debtor nation which has socialised its banking system’s risk and needs to sell trillions in further debt to pay that and other bills.

Stress test the consumer

Christopher Swann– Christopher Swann is a Reuters columnist. The views expressed are his own –

People can be divided into three classes, it has been said: the haves, the have-nots and the have-not-paid-for-what-they-haves. The prevalence of the third category may be the biggest single source of vulnerability for the U.S. recovery.

A stress test of the consumer could reveal more distressing results than the one conducted on the banking system.