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Bill Gates notes "The value to society from inventions is far greater than the financial reward that the inventors themselves receive. This is the opposite of most financial innovations." (TheGatesNotes) A strong case could be made that the cause of our crisis is that just about everyone - from Americans buying homes, to mortgage companies, to Fannie and Freddie, to regulators, to Congress, to Wall Street, to institutional and private investors - believed the value of financial innovations was that they provided a way to increase homeownership. Now we know that spreading the risk of unpaid mortgages across the financial system doesn't reduce the risk, it just infects the entire system.
"The planned overhaul of US financial rules prompted Standard & Poor’s to warn on Tuesday it might downgrade the credit ratings of Citigroup and Bank of America on concerns that the shake-up would make it less likely that the banks would be bailed out by US taxpayers if they ran into trouble again." Good - banks should be judged on their own condition, not the condition of the government. If S&P follows through, it's a strong acknowledgement that they understand my point above. (Financial Times)
In addition to saying "Mr Obama’s budget reveals a road-map to fiscal catastrophe" and "the cuts the president has proposed are comically insufficient," the Economist also says the budget "makes the heroic assumption that a final version of health reform will pass, and save the government some $150 billion over the next decade."
Former secretary of labor Robert Reich says not to worry - it's all a "misunderstanding." If only the "Mad-as-hellers" knew "what the President is trying to achieve and what he’s up against," they wouldn't be so mad. (Salon)
The Economist also has an article on defense spending in President Obama's budget. "America will spend more money on defence than it did during the Korean or Vietnam wars, though as a share of national wealth defence spending is still relatively low in historical terms (see chart)." Defense secretary Robert Gates is trying to cut some costs, including attempting to "kill off plans for an alternate engine for the F-35 Joint Strike Fighter—and if Congress attempts to preserve these two projects, Mr Gates said, he will ask Mr Obama to veto the budget." The article also says "he would also dock $614m in performance fees for the contractor, Lockheed Martin." If Lockheed is missing performance targets, I wonder how much of that is due to the back-and-forth between the President, Congress, and the Pentagon, who can't seem to make up their minds on what engine their "backbone of American air power" should use?
In his news conference yesterday, President Obama said: "I've also called for a bipartisan fiscal commission. Unfortunately this measure, which originally had received the support of a bipartisan majority of the Senate and was cosponsored by Senators Conrad and Gregg, Democrats and Republicans, was blocked there. So I'm going to be creating this commission by executive order." I'm still very skeptical about this commission idea - it seems like a way to provide political cover for politicians that can't make the difficult choices they are supposed to make.
"The planned overhaul of US financial rules prompted Standard & Poor’s to warn on Tuesday it might downgrade the credit ratings of Citigroup and Bank of America on concerns that the shake-up would make it less likely that the banks would be bailed out by US taxpayers if they ran into trouble again." Good - banks should be judged on their own condition, not the condition of the government. If S&P follows through, it's a strong acknowledgement that they understand my point above. (Financial Times)
In addition to saying "Mr Obama’s budget reveals a road-map to fiscal catastrophe" and "the cuts the president has proposed are comically insufficient," the Economist also says the budget "makes the heroic assumption that a final version of health reform will pass, and save the government some $150 billion over the next decade."
Former secretary of labor Robert Reich says not to worry - it's all a "misunderstanding." If only the "Mad-as-hellers" knew "what the President is trying to achieve and what he’s up against," they wouldn't be so mad. (Salon)
The Economist also has an article on defense spending in President Obama's budget. "America will spend more money on defence than it did during the Korean or Vietnam wars, though as a share of national wealth defence spending is still relatively low in historical terms (see chart)." Defense secretary Robert Gates is trying to cut some costs, including attempting to "kill off plans for an alternate engine for the F-35 Joint Strike Fighter—and if Congress attempts to preserve these two projects, Mr Gates said, he will ask Mr Obama to veto the budget." The article also says "he would also dock $614m in performance fees for the contractor, Lockheed Martin." If Lockheed is missing performance targets, I wonder how much of that is due to the back-and-forth between the President, Congress, and the Pentagon, who can't seem to make up their minds on what engine their "backbone of American air power" should use?In his news conference yesterday, President Obama said: "I've also called for a bipartisan fiscal commission. Unfortunately this measure, which originally had received the support of a bipartisan majority of the Senate and was cosponsored by Senators Conrad and Gregg, Democrats and Republicans, was blocked there. So I'm going to be creating this commission by executive order." I'm still very skeptical about this commission idea - it seems like a way to provide political cover for politicians that can't make the difficult choices they are supposed to make.
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