Archive for the ‘Editorials / Leaders’ Category
Reforming financial regulations in America: Better broth, still too many cooks
The original article is posted here.
From The Economist print edition
Barack Obama’s plan for regulatory reform is not bold enough
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FINANCIAL regulation in America has two problems: there is both too much of it and too little. Multiple federal agencies oversee the financial system: five for banks alone, and one each for securities, derivatives and the government-sponsored mortgage agencies. They share these duties with at least 50 state banking regulators and other state and federal consumer-protection agencies. Yet all these regulators failed to anticipate and prevent the worst financial crisis since the Depression, because risk-taking flourished in the cracks between them. Toxic subprime mortgages were peddled by lenders with little federal oversight and shoved into off-balance-sheet vehicles. The greatest leverage accumulated in firms that avoided the capital requirements of banks.
On June 17th Barack Obama took aim at these weaknesses (see article). Read the rest of this entry »
Government and business in America: Piling on
The original story is available here.
From The Economist print edition
In his zeal to fix capitalism, Barack Obama must not stifle America’s dynamism
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DEFENDING American capitalism these days is a thankless job. Reckless lending by American financiers produced a crisis that has pushed the world into its worst recession since the 1930s. Tales of greed and fraud during the boom years abound.
Small wonder that although Americans still prefer their government neat and local, they are a little less hostile to federal activism these days (see article). Such sentiments, last November, helped propel Barack Obama into the White House and his Democratic Party to bigger majorities in both houses of Congress. As Rahm Emanuel, the president’s chief of staff, says, Mr Obama does not want to waste this crisis. He is using it to create a bigger role for government throughout the economy, from education and health care to banking and energy.
He, and Congress, risk overreaching. Read the rest of this entry »
Deflation in America: The greater of two evils
The original story is linked here.
From The Economist print edition
Inflation is bad, but deflation is worse
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MERLE HAZARD, an unusually satirical country and western crooner, has captured monetary confusion better than anyone else. “Inflation or deflation,” he warbles, “tell me if you can: will we become Zimbabwe or will we be Japan?”
How do you guard against both the deflationary forces of America’s worst recession since the 1930s and the vigorous response of the Federal Reserve, which has in effect cut interest rates to zero and rapidly expanded its balance-sheet? Read the rest of this entry »
