“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.
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Paul Krugman: Detroit, the New Greece
When Detroit declared bankruptcy, or at least tried to – the legal situation has gotten complicated – I know that I wasn’t the only economist to have a sinking feeling about the likely impact on our policy discourse. Was it going to be Greece all over again?
Clearly, some people would like to see that happen. So let’s get this conversation headed in the right direction, before it’s too late.
O.K., what am I talking about? As you may recall, a few years ago Greece plunged into fiscal crisis. This was a bad thing but should have had limited effects on the rest of the world; the Greek economy is, after all, quite small (actually, about one and a half times as big as the economy of metropolitan Detroit). Unfortunately, many politicians and policy makers used the Greek crisis to hijack the debate, changing the subject from job creation to fiscal rectitude.
New York Times Editorial Board: To Make a Safe City Safer
The next mayor’s challenge will be to meet high expectations for protecting the public – and not just against street crime, but terrorism, too – at a time of strapped budgets and with a depleted force of about 34,500 officers, down from a peak of about 40,000 in 2000. Though crime has been falling for a long time, the trend is not automatic or irreversible: data from this month, for example, show rapes, felony assaults and grand larcenies inching up.
The new mayor will also have to curb unconstitutional policing – the widespread harassment of innocent black and Hispanic men and surveillance of law-abiding Muslims – that has inflamed resentment across the city.
This won’t be easy. Still, it’s a chance for a fresh start, for new strategies that keep the peace, respect the Constitution and heal the divide between police and public.
Glass-Steagall prevented a classic conflict of interest that we know frequently arises in the real world. Commercial banks are subsidized through federal deposit insurance. Most economists support providing deposit insurance to commercial banks for relatively smaller depositors. I am not aware of any economists who support federal “deposit” insurance for the customers of investment banks or the creditors of non-financial businesses.
It violates core principles of conservatism and libertarianism to extend the federal subsidy provided to commercial banks via deposit insurance to allow that subsidy to extend to non-banking operations. Absent Glass-Steagall, banks could purchase anything from an aluminum company to a fast food franchise and (indirectly) fund its acquisitions and operations with federally-subsidized deposits. If you run an independent aluminum company or fast food franchise do you want to have to compete with a federally-subsidized rival?
Robert Kuttner: Breaking the Glass Ceiling at the Federal Reserve
Larry Summers is running hard to succeed Ben Bernanke as chairman of the Federal Reserve. This is a terrible idea, on several grounds (which I’ll discuss in a moment.) Even so, I’d place the odds of President Obama giving Summers the job at 50-50 or better, unless progressive Democrats get mobilized, and fast. [..]
The prime alternative to Summers is Fed Vice Chair Janet Yellen, who is very much like Bernanke, only better. She has gone even further in expressing concern for the economy’s persistent unemployment and in criticizing the bipartisan obsession with deficit reduction. I wrote about Yellen’s stellar performance for the Huffington Post back in February.
Yellen deserves to be Fed chair purely on the merits. It pains me to write that if she gets the job, one other major contrast with Summers will weigh in her favor. She is female.
Robert Reich: Detroit, and the Bankruptcy of America’s Social Contract
One way to view Detroit’s bankruptcy — the largest bankruptcy of any American city — is as a failure of political negotiations over how financial sacrifices should be divided among the city’s creditors, city workers, and municipal retirees — requiring a court to decide instead. It could also be seen as the inevitable culmination of decades of union agreements offering unaffordable pension and health benefits to city workers.
But there’s a more basic story here, and it’s being replicated across America: Americans are segregating by income more than ever before. Forty years ago, most cities (including Detroit) had a mixture of wealthy, middle-class, and poor residents. Now, each income group tends to lives separately, in its own city — with its own tax bases and philanthropies that support, at one extreme, excellent schools, resplendent parks, rapid-response security, efficient transportation, and other first-rate services; or, at the opposite extreme, terrible schools, dilapidated parks, high crime, and third-rate services.
William Greider: Stop Larry Summers Before He Messes Up Again
Washington insiders are spreading an alarming news alert. Barack Obama, I am told, is on the brink of making a terrible mistake by appointing Lawrence Summers as the new chairman of the Federal Reserve. That sounds improbable, since Summers is a toxic retread from the old boys’ network and a nettlesome egotist who offended just about everyone during his previous tours in government. More to the point, Summers was a central player in the grave governing errors that led to the financial collapse and a ruined economy.
Surely not, I thought, when I heard the gossip. But my source heard it from the White House. Obama’s senior economic advisers-still dominated by Clintonistas and aging acolytes of Robert Rubin-are pushing the president to choose Summers as the successor to Ben Bernanke, whose term ends in January. And they are urging Obama to make the announcement right now, before the opposition can get organized.
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