Financial reform via resolution. David Altig, Atlanta Fed. Even when financial regulation is adequately tightened up, systemically important institutions will fail…
Blumenthal and Vietnam. Raymond Hernandez, NYT. The Connecticut Democrat misspoke about his “service in Vietnam”. For now, he’s toughing it out. It’s very strange. If it was a deliberate lie, how could he plausibly expect to get away with it? See also Josh Green.
Europe’s historic gamble. Barry Eichengreen, Project Syndicate. Europe needs a stability pact with teeth, and that’s not all. Compare with John Cochrane in the WSJ. Europe’s problem was not that the stability pact was too weak, but that it had one in the first place:
The mere existence of the limits says, in effect, that politicians will have a hard time resisting bailout pressure. So the markets lent at low rates and gave high bond ratings… The euro founders should have said instead, “Go ahead, use our currency if you like. Rack up any debts you want. We don’t care, because we are not going to bail you out—we’ve set it up so we can’t bail you out. Bond buyers beware.”
The death of the European dream. Gideon Rachman, FT. Are you there, Jeremy Rifkin? Reflecting on Rifkin’s view that Europe shows the way to enlightenment, Gideon doesn’t know “whether to laugh or cry”. See also Wolfgang Munchau on how to save the eurozone.