Archive for January 4th, 2009
links for 2009-01-04
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Samuel Huntington, the political theorist who died on Dec. 24, demonstrated the potency and peril of the big idea.
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This column argues that national governments ought to credibly commit themselves to not bailing out their banks if the worst comes. But it would be far from easy to do so.
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Government guarantees for financial institutions that are "too big to fail" seem unavoidable, but such insurance against insolvency imposes major costs and may increase the risk of crisis. This column argues for the necessity of non-conventional regulatory solutions to make big banks pay for their implicit insurance. Progressive capital ratios may be one such solution
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Portræt af en statsminister, der i 2008 mistede en del af sin styrke, men som endnu står som dansk politiks ubestridt stærkeste mand.
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Även om det känns frustrerande för många bör staten låta bli att gå in som ägare i Volvo och Saab. All erfarenhet tyder på att statligt ägande har små chanser att förbättra läget för fordonsbranschen. Snarare finns stor risk att situationen för Volvo och Saab blir långsiktigt sämre med staten som ägare.
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Today, short-run economic policy cannot just be left to the central bank alone. For one thing, its balance sheet is not big enough. At a minimum, the central bank now needs the assistance of that part of the government that taxes and borrows.
Moreover, the highest priority for central banks can no longer be to maintain their credibility as guardians of price stability, but rather their credibility as guardians of the financial system’s stability and soundness. Once that highest goal has been achieved, central banks can turn their attention to trying to keep the economy near full employment.
You Want Elections? We’ve Got Elections!
In this case “we” are the Germans. If I get this right, it’s one presidential election (indirect). one election for the federal parliament, one for the European Parliament and fourteen sub-national elections.
All of this will be during a global economic crisis and as such make a brilliant test-case for the assumption that politicians will not make unpopular (even if technically right) decisions in the run-up to an election. If the German government manages to pull off some big decisions during the first six months of 2009, this will be a challenge to conventional wisdom.
Or will it be a good thing (for the rest of the world) if the Germans with their price-stability obsession are out of the active economic policy circuit?
