WHY BERLIN IS BALKING ON A BAILOUT
BY HANS-WERNER SINN
NEW YORK TIMES
…President Obama is urging Germany to share in the debt of the euro zone’s southern nations. But in doing so, he and others overlook several critical facts. …[A] bailout doesn’t make economic sense, and would likely make the situation worse. Such schemes violate the liability principle, one of the constituting principles of a market economy, which holds that it is the creditors’ responsibility to choose their debtors. If debtors cannot repay, creditors should bear the losses. If we give up the liability principle, the European market economy will lose its most important allocative virtue: the careful selection of investment opportunities by creditors. We would then waste part of the capital generated by the arduous savings of earlier generations. I am surprised that the president of the world’s most successful capitalist nation would overlook this.
NEW YORK TIMES
Over the last three years, at least 700,000 state and local government employees have lost their jobs, including teachers, sanitation workers and public safety personnel, contributing a full percentage point to the unemployment rate. That seems to be just fine with Mitt Romney, who, like many Republicans, does not consider a job to be economically significant unless it is in the private sector. Last week, he attacked President Obama for proposing to help states hire more teachers and other workers, saying the president doesn’t understand that Americans don’t want to hire “more firemen, more policemen, more teachers.” Only right-wing ideologues make that distinction; most Americans know driving a bus or picking up trash is just as important economically as working in a big-box store.
NEW YORK TIMES
What’s needed now is even more support, including federal spending on education and public-works projects to create jobs, targeted tax credits for hiring, programs to deliver mortgage relief that supports house prices by keeping Americans in their homes, as well as a renewed commitment to financial regulation to ensure that the system doesn’t melt down again. The Republicans — for reasons of ideology and self-serving election-year politics — are determined to block all of these necessary programs. America’s families have already lost decades’ worth of savings and investments. Many will never get back to where they were. They deserve a lot better, including a robust debate on these issues in the presidential campaign.
THE ORDINARY AMERICAN, RIP
BY KATHLEEN PARKER
Forcing our aspiring leaders to pretend to be ordinary, rolling up their sleeves and slugging back a (fill in the blank) at the local pub/coffee shop (but never a Starbucks), chumming with people they’ve studiously avoided all their lives, is the most ludicrous of exercises and rewards the very pandering we loathe. … Neither Obama nor Romney is remotely ordinary, needless to say. And neither is very good at faking it. Both bring substantial talents, a sterling career in Romney’s case and a smorgasbord of broadening experiences in Obama’s, including almost four years as president. … Retiring both the term and the idea of “ordinary” (and attendant perfidies) would be a welcome development in any random year, but especially in this one. Who, after all, wants to be ordinary — or be deemed so by the more fortunate? The ordinary American is us. Extraordinary leadership is what we hope for.
JEB BUSH’S HERESY
BY DANA MILBANK
This week’s featured entree in the Republicans’ auto-da-fe is a rather surprising selection: presidential son, presidential brother and presidential timber Jeb Bush. The former Florida governor, until now a revered figure in the party, had the temerity to state in public what many others think in private: that the Republican Party has become so intransigent that even Ronald Reagan couldn’t fit under its tent. … He told the House Budget Committee recently that he would accept a dollar in tax-revenue increases in exchange for every $10 in spending cuts — a hypothetical deal the party’s presidential candidates rejected. Bush later told Charlie Rose that his willingness to accept the reality of tax increases means “I’m not running for anything.” …[F]or now, the burden of responsibility is being carried by only a few heretics, such as Jeb Bush, who dares to say things such as “I don’t have to play the game of being 100,000 percent against President Obama.”
HOW THE EURO WILL END
BY GERALD P. O’DRISCOLL, JR.
WALL STREET JOURNAL
Greece is the epicenter of a currency and fiscal crisis in the euro zone. Markets fear a “Grexit,” or Greek exit from the euro. That exit is almost a foregone conclusion. The endgame for the euro will be played out in Spain. … How the Spanish banking situation is handled will determine the future of the euro and possibly of the larger European Union. Will German’s taxpayers and those of other solvent countries be willing to fund an even larger bailout of Spanish banks to save impecunious Spaniards? Will the citizens of EU countries outside the euro zone, such as Sweden and the U.K., be asked to chip in? Or will Spain be allowed to descend into a catastrophic 1930s-style banking crisis and Great Depression? Spanish banking problems are not the end, but only the beginning, of European banking problems.