Bravo Papandreou!

Greek Prime Minister Georgios Papandreou startled Europe and the financial world Monday by announcing that he will be calling a referendum on the terms of the latest deal negotiated by European leaders and bankers.

What is the Greek leader up to?

On one level, Papandreou is simply weary of being the agent of his own country’s economic destruction at the hands of bankers. He also is tired of the political unpopularity that comes with the role of broker of austerity.

Half-Right Brooks

David Brooks’ column today is one of his better ones—noting that the U.S. is plagued by two kinds of inequality, that which divides the top one percent from everyone else, which is prevalent in our major cities, and that in smaller cities and rural areas, where college grads are doing OK but where the bottom has fallen out for those Americans who don’t complete college or, worse, high school. The gap between the lives of college grads and others has widened not just in terms of income but health, diet, marriage stability, and the percentage of children born and raised out of wedlock.

Limit Leverage!

The astounding thing about the collapse of Jon Corzine’s gambling venture, MF Global, is the revelation that his bets were leveraged at about 40 to 1. This is like playing poker and borrowing 97 percent of your stake. If you guess wrong on a big bet (as Corzine did), you are wiped out (as he was).

The same thing happened to Lehman Brothers.

This also shows how utterly feeble Dodd-Frank is and how little the system has changed since the collapse of 2008.

The so-called shadow banking system—outfits like Corzine’s—can still bet the house if they have a taste for risk. The only good news was that at $8 billion, Corzine’s MF wasn’t big enough to take down the system or require a government bailout. But it could have been.

The Ties That Blind

A belief in American pull-yourself-up-by-your-bootstraps mythology lies at the heart of conservative attacks on the 99 percent.


When the Canadian activist magazine AdBusters issued a call on its listserv to start the Occupy Wall Street demonstrations in New York and other cities, a couple of like-minded protesters created a companion blog on Tumblr called “We are the 99 percent.” The purpose of both the protests and the blog was to point out that the bottom 99 percent have been subsidizing the very rich and their wealth-multiplying experiments for decades. But the blog did something the protests didn’t: It allowed folks who couldn’t camp out in Lower Manhattan and risk arrest to participate. Contributors upload pictures of themselves holding handwritten notes that tell their stories of disenfranchisement, insolvency, and unfair workplace practices.

For Europe, High Stakes in Greece

Stabilizing one teetering economy won't end the eurozone's dance of death.

(Flickr/Oscar Alexander)

The problems of the euro turned critical when the Greek government nearly defaulted in May 2010 and the International Monetary Fund and European Union agreed to a bailout. In truth, the 17-nation euro area had deep troubles long before that. Its oversized and undercapitalized banks, its common monetary policy but diverse and fragmented fiscal policies, the persistent economic imbalances among nations that use the euro, and a cumbersome decision-making structure all made the euro-area economy vulnerable. The crisis, which still bears the mark of the Greek tragedy that first set it off, has now spread far beyond Greece.

Foreclosed for Business

Before the Republican presidential primary debate in Nevada, 2012 GOP frontrunner Mitt Romney told the editorial board of the Las Vegas Review Journal that government shouldn’t be in the business of trying to help families about to lose their homes. “Don’t try and stop the foreclosure process,” he said.

Obama's Wheel and Deal

The administration's recent trade agreement with Korea, Colombia, and Panama is expected to destroy more than 200,000 American jobs.

President Barack Obama stands after signing the Korean Free Trade Agreement in the Oval Office of the White House in Washington, Friday, Oct. 21, 2011. He is joined by, from left, Korean Ambassador Han Duk-soo, Commerce Secretary John Bryson, DOW Chemical Company CEO Andrew Liveris, Boeing CEO Jim McNerney, US Trade Representative Ron Kirk, Rep. Dave Camp, R-Mich., Xerox CEO Ursula Burns, Korean Alliance for Free Trade William Hwang and Correct Craft, Inc., CEO William Yeargin. (AP Photo/Susan Walsh)

On Borrowed Time

President Obama's new student loan plan isn't enough to help students saddled with debt.

AP Photo/Ed Andrieski

On Tuesday, the Obama administration announced its new plan for student loans: new graduates can cap their student loan repayments to 10 percent of their monthly income. After 20 years, their debt will be forgiven. Graduates already repaying their loans can consolidate and get half a percent interest rate cut. These changes will go into effect next year, two years before they were already scheduled to do so, and the administration said the move was in response to an online petition drive on its “We the People” site.

A Scary Guide to the GOP Tax Plans

When did tax-reform plans become so sexy? It seems like every day now GOP candidates are flaunting a new, slimmer tax plan, complete with a catchy name and nonsensical (or nonexistent) ideas supporting them. After a while, they can all start to look the same, but they vary widely on the craziness spectrum. Homeland Security decided that colors are passé as a way to measure threat, so here is my patented Herman Cain “I am America” smile threat level system.

Europe Buys Some Time

The stock market liked the European deal that was announced in the wee hours of Thursday morning. At this writing, the Dow is up 268 points. But the market, as is so often the case, could well be wrong.

For starters, this is not yet a done deal. The European leaders agreed that the banks will take "voluntary" losses of about 50 percent on their holding of Greek bonds, so that the Greek economy can gain some room to breathe—but the banks did not agree.

What Americans Make

Last Friday, the Social Security Administration released its figures on how much money Americans made in 2010 from wages, salaries, and tips (but not from capital gains, dividends, or rents). Turns out that the 150,398,796 Americans for whom employers issued W-2 forms made just over $6 trillion in net compensation. If you calculate the raw mean average, that comes out to $39,959.30 per worker. But 66 percent of wage earners actually made less than that (or that amount exactly)—which means, the high level of pay for upper-income workers produced a much higher mean average than the average American worker actually makes. The median wage—the dollar amount that 50 percent of wage earners made more than, and 50 percent made less than—was $26,363.55.

The GOP's Broken Record

For the eight years of the George W. Bush presidency, economic policy in the United States had as its lodestar the view that we needed to lower taxes. Liberals objected that Bush-era tax-policy proposals were regressive, tilting the majority of their benefits to high-income taxpayers who had the least need for additional funds. The retort at the time was that this was a misleading way to think about it: The lower taxes weren't simply designed to bolster individual incomes; they were supposed to bolster overall economic growth. Higher growth rates would result in higher incomes for people up and down the economic ladder. The results of this policy have been disappointing, to say the least.

Rick Perry Promises Four Years of Abysmal Job Growth

Texas Governor Rick Perry has released his first television ad, and in it, he makes a big promise. “As president, I will create at least 2 and half million new jobs.”

Doomed to Fail

Once again, the Obama administration has announced a plan to shore up housing prices and underwater homeowners—and once again the plan is very likely to fail.

This latest effort will try to use Fannie Mae and Freddie Mac, now wards of the government, to help homeowners refinance mortgages at lower interest rates.

The premise is that with interest rates at record lows, homeowners can save hundreds of dollars a month in their mortgage payments by refinancing. For example, by refinancing a 5.5 percent mortgage to a 4.5 percent mortgage, a homeowner with a $300,000 loan could save about $250 a month.

Steve Jobs and the Chinese Wall

Walter Isaacson’s biography of Steve Jobs hit the bookstores on Monday (or, worse, the websites that have replaced bookstores as the place where people go to buy books), and the more piquant details have already started popping up in the press. Among those details—actually, it’s a good deal more than details—is Jobs’s Manichean view of humankind (at least, those elements of humankind with whom he came into contact). As Michael Rosenwald summarizes it in Monday’s Washington Post: