Press Briefing

Nov 11, 2011

Indonesia's Example to the World
http://goo.gl/fb/m03Rt

Federal President Has a Listening Problem - The idea that government can spend our way to prosperity doesn't make sense to voters
http://online.wsj.com/article/SB10001424052748703805004575606531967171108.html

Tuesday Talks: Veterans Day
http://goo.gl/fb/8xynY

George W. Bush's Fuzzy Math
http://online.wsj.com/article/SB10001424052748703805004575606573027045824.html

Nuclear Regulation in Dynamic Times: A Conversation with NRC Chairman Gregory Jaczko
http://www.brookings.edu/events/2010/1013_nuclear_energy.aspx

How About a Partnership Stimulus? - To help rebuild America's roads and airports, let's tap the billions of dollars of private capital looking for safe returns
http://online.wsj.com/article/SB10001424052748704635704575604563679175190.html

U.S. Assistance to the Palestinian Authority
http://www.state.gov/r/pa/prs/ps/2010/11/150812.htm

The $30 Bonanza - The Supremes hear a major arbitration case. Trial lawyers pant.
http://online.wsj.com/article/SB10001424052748704635704575604342012494842.html

Market structure developments in the clearing industry: implications for financial stability
http://www.bis.org/press/p101110.htm

White House Statement on the Initial Bowles-Simpson Bipartisan Fiscal Commission Proposal
http://goo.gl/fb/Cirz6

Joel Klein's Report Card - If you can reform schools there . . .
http://online.wsj.com/article/SB10001424052748703805004575606481103226208.html

Remarks by the President at the University of Indonesia in Jakarta, Indonesia
http://goo.gl/fb/e5O4D

Wind Jammers at the White House - A Larry Summers memo exposes the high cost of energy corporate welfare
http://online.wsj.com/article/SB10001424052748704635704575604502103371986.html

Recovery Through Retrofit
http://goo.gl/fb/KXLnl

How to Shut Down Fannie and Freddie. By Emil W Henry Jr
The Treasury Department can stop rubber-stamping their debt issuance at any time
WSJ, Nov 11, 2011
http://online.wsj.com/article/SB10001424052748704635704575604570042260954.html

Although Fannie Mae and Freddie Mac played a central role in causing the recent economic crisis, they are absent from the reform plans of Congress and the Obama administration. So these two government-sponsored enterprises (GSEs) remain mired in conservatorship, as extensions of the federal government. Bureaucrats now steer the primary provider of secondary market liquidity for our $10 trillion housing finance market.

The administration has offered many explanations for the delay: Housing finance is complex, says Treasury Secretary Tim Geithner, so he's consulting Congress and has assembled "academic experts, consumer and community organizations, industry participants and other stake holders" to review the matter.

But the Treasury doesn't need Congress or an academic assessment in order to tackle the most important reform goal: eliminating the GSEs and moving their activities to the private sector. Mr. Geithner himself can immediately reshape the mortgage markets—by withholding his approval of new debt issuances by the GSEs. That's the best way to begin curtailing the GSEs, and it can be done unilaterally.

Congress chartered the GSEs and in their charters required that the Treasury secretary approve all of their new debt. For decades, the Treasury exercised this duty, and the GSEs submitted each new debt issuance to the department for prior approval.

But the Clinton administration found this process cumbersome and a strain on Treasury staff. It established a new process that weakened the administrative approval process for GSE securities offerings. This hands-off approach represented an abdication of Treasury's essential oversight powers.

The bloating and strategic drift of the GSEs began soon thereafter. Within a decade, there were vast failings in Fannie's and Freddie's accounting, corporate governance and risk management—including the cessation of basic disclosure practices such as annual reports. Even after the Sarbanes-Oxley law, which forced public companies to adhere to a new oversight paradigm, the GSEs escaped with minimal scrutiny. Insolvency was a matter of time.

By the mid-2000s, the GSEs' process of debt approval had devolved to a simple notification of the Treasury, without any formal process of approval. The pace of debt issuance was so rapid that such notifications came to the Treasury weekly, typically on one piece of paper that simply listed proposed issuances without supporting data (such as income statements or balance sheets) upon which to make informed judgments.

If the Obama administration is serious about addressing the GSEs, it should re-establish a rigorous process to review all GSE debt issuance. That process should require the GSEs to provide Treasury with full financial data and justification for issuances, including statistics that show the creditworthiness of the agencies after each offering. In addition, the Treasury secretary should have to approve all new debt issuances personally.

The administration should also announce that in 2012 the Treasury will begin to deny a portion of GSE debt issuances with the goal of reducing their debt 50% by 2015 and 100% by 2018. This eight-year period of adjustment would allow the private markets ample time to provide secondary market liquidity.

There will be a private market ready to absorb the securities currently held by the GSEs. Private companies won't be able to borrow as cheaply as the GSEs could (thanks to their implicit government guarantee), but there will still be plenty of profit left to capture in the market for mortgage securities.

Large banks may be wary of this solution because the federalization of the GSEs has offered them a stable vehicle for off-loading their mortgages. Policy makers, meanwhile, will worry about impairing the recovery if a private market is slow to materialize. But the alternative is keeping the flawed system whereby liquidity depends upon distorted price discovery, permanent subsidization, and the economic judgments of bureaucrats.

To allow Fannie and Freddie to exist in any form—even on a smaller basis—would again give them an unfair funding advantage. Buyers of their debt would again pay up for implicit government support. And, once again, we'd have the market distortions, risk-taking and obscene political patronage that caused so much economic chaos.

Mr. Henry, the CEO of Henry, Tiger, LLC, was an assistant secretary of the Treasury from 2005 to 2007.


Video: President's Town Hall with Students in Mumbai
http://goo.gl/fb/1sVeF

The 1099 Democrats - The Democrats decoupled from business—and lost the election
http://online.wsj.com/article/SB10001424052748703805004575606750168419176.html

Shame on Holder and Panetta for Not Going after CIA Destruction of Torture Evidence
http://progressive.org/wx111010.html

Stop Smearing Federalism - From consumer advocacy to gay marriage, liberals routinely embrace federalism. So why do they keep comparing it to slavery?
http://reason.com/archives/2010/11/10/stop-smearing-federalism

Respecting the Dignity and Human Rights of People on the Move: International Migration Policy for the 21st Century
http://www.state.gov/g/prm/rls/rmks/2010/150557.htm

Fixing Transit: The Case for Privatization
http://www.cato.org/pub_display.php?pub_id=12543

Panel Chairmen Recommend Cutting Federal Spending by $200 Billion
http://online.wsj.com/article/SB10001424052748703805004575606643067587042.html

Press Briefing

Nov 10, 2010

Geithner, Shanmugaratnam, Swan: A Four-Point Plan for the G-20 - Strengthen global growth, keep it balanced, let currencies adjust, avoid protectionism
http://online.wsj.com/article/SB10001424052748703523604575605472860000524.html

Rand Paul and Earmarks
http://online.wsj.com/article/SB10001424052748704635704575604680661943738.html

Late-Breaking Races Swing in Democrats’ Favor
http://goo.gl/fb/O18tG

Super Marius vs. the World - A CEO doesn't find takers for more transparent resource markets
http://online.wsj.com/article/SB10001424052748704635704575604332598231738.html

Strengthening an Emerging Industry While Helping Families Save Money
http://goo.gl/fb/4xZDR

Not as Easy as A,B,C - Fighting crime in one of Manhattan's rougher neighborhoods
http://online.wsj.com/article/SB10001424052702304410504575561150018734606.html

You’re Invited “Inside The White House”
http://goo.gl/fb/hWb7K

How to Outmaneuver Iran in Iraq - The Sunni-backed bloc needs to be brought into the government, and the U.S. shouldn't be shy about saying so
http://online.wsj.com/article/SB10001424052748703514904575602341835694642.html

State Dept: Making Progress in Combating Piracy Off the Horn of Africa
http://blogs.state.gov/index.php/entries/progress_piracy/

From Jakarta to Jerusalem - Obama's puzzling settlement demarche
http://online.wsj.com/article/SB10001424052748704635704575604720195910014.html

Response of the United States of America to Recommendations of the United Nations Human Rights Council
http://www.state.gov/s/l/releases/remarks/150677.htm

A Better G-20 Agenda - The real source of global 'imbalances' and how freer trade can help
http://online.wsj.com/article/SB10001424052748703514904575603432548236498.html

President Barack Obama’s First Two Years: Policy Accomplishments, Political Difficulties
http://www.brookings.edu/papers/2010/1104_obama_galston.aspx

The GOP's Racial Challenge - Republicans can't win in the future without more nonwhite votes
http://online.wsj.com/article/SB10001424052748703514904575602942138252552.html

Dispatch from the Reddest State
http://progressive.org/rc110910.html

If You Give a Solar or Wind Company a Subsidy
http://www.instituteforenergyresearch.org/2010/11/09/if-you-give-a-solar-or-wind-company-a-subsidy/

Saving Lives in Laos: United States Leadership in Clearing Landmines and Unexploded Ordnance
http://www.state.gov/r/pa/prs/ps/2010/11/150696.htm

A Happy Meal ban is nothing to smile about - The proposal to ban meals with toys in San Francisco is based on some dubious assumptions about obesity and health
http://www.spiked-online.com/index.php/site/article/9871

Press Briefing

Nov 09, 2010

White House and State Department Issue Statements on Burma’s Elections
http://blogs.state.gov/index.php/site/entry/statements_on_burmas_elections

The President's Indonesia Opportunity - It isn't enough to declare that we aren't at war with Islam, as true as that is
http://online.wsj.com/article/SB10001424052748703514904575602323794337784.html

State Sec Clinton Highlights the Importance of U.S. Trade at Port of Melbourne
http://blogs.state.gov/index.php/site/entry/travel_diary_clinton_trade

The virtues and hazards of going 'all in' at moments of crisis - Review of Bush's Decision Points
http://online.wsj.com/article/SB10001424052748703514904575602542935259532.html

Business Summit in Mumbai http://goo.gl/fb/2JEGE

Union Card Checkmate - Voters in four states protect the secret ballot
http://online.wsj.com/article/SB10001424052748704353504575596790376536822.html

Remarks by the President to the Joint Session of the Indian Parliament in New Delhi… http://goo.gl/fb/uQ0PD

The ACLU Stands Up for Pro-Lifers—Really - Unelected commissions shouldn't pass judgment on campaign claims
http://online.wsj.com/article/SB10001424052748703514904575602612279218480.html

Have a Question About the Economy and Job Growth? Ask us.
http://goo.gl/fb/ba6bH

Blair: Making Muslim Integration Work
http://online.wsj.com/article/SB10001424052702303362404575580700415413596.html

Remarks by the President and the First Lady in Town Hall with Students in Mumbai http://goo.gl/fb/jKyAu

Burma's Hollow Election - A sham vote to please outsiders
http://online.wsj.com/article/SB10001424052748704013504575601692672025922.html

The National Export Initiative: U.S. - India Transactions http://goo.gl/fb/qR1QU

The Fed's reckless notion that it can simultaneously raise inflation and lower interest rates presumes bond buyers are fools. They aren't.
http://online.wsj.com/article/SB10001424052702303467004575574610003111250.html

A US-India Partnership on Open Government http://goo.gl/fb/0611I

Palin's Dollar, Zoellick's Gold - An unlikely pair elevate the monetary policy debate
http://online.wsj.com/article/SB10001424052748703514904575602231815453378.html

The Lord’s Resistance Army of Today. By Ledio Cakaj
http://www.enoughproject.org/publications/lords-resistance-army-today

Obama's Best Speech - In India, the president defended free markets, free trade and free societies
http://online.wsj.com/article/SB10001424052748703514904575602103901437396.html

Press Briefing

Nov 08, 2010

Remarks At the Australia-United States Ministerial
http://www.state.gov/secretary/rm/2010/11/150663.htm

'Net Neutrality' Goes 0 for 95 - Regulating the Web wasn't a political winner last week
http://online.wsj.com/article/SB10001424052748704353504575596562893007720.html

An Interview with W. S. Merwin, Poet Laureate (raw transcript)
http://progressive.org/Rampellx1110.html

Rubio Republicans - Republican candidates can talk tough on immigration and still do well with Hispanic voters if they can convincingly promote a message of economic opportunity
http://online.wsj.com/article/SB10001424052748703514904575602533618329228.html

Rand Paul’s Lack of Class
http://progressive.org/wx110810.html

Dawa and the Islamist Revival in the West, by Nina Wiedl
http://www.currenttrends.org/research/detail/dawa-and-the-islamist-revival-in-the-west

President Obama Promotes U.S.-India Partnership on Open Government
http://blogs.state.gov/index.php/site/entry/obama_u.s.-india_open_government

The Damascus Mirage - Team Obama's Syrian education
http://online.wsj.com/article/SB10001424052748704462704575590550032278816.html

Remarks by the President on the October Jobs Report
http://goo.gl/fb/bcRYz

The Great Transmission Heist - The latest scheme to subsidize solar and wind power to the detriment of rate payers
http://online.wsj.com/article/SB10001424052702304772804575558400606672006.html

Press Gaggle on the President's Upcoming Trip to Asia by Press Secretary Gibbs, Deputy National Security Advisor Froman, Deputy National Security Advisor Rhodes and Treasury Under Secretary for International Affairs Brainard
http://www.whitehouse.gov/the-press-office/2010/11/01/press-gaggle-presidents-upcoming-trip-asia-press-secretary-gibbs-deputy-

California: The Lindsay Lohan of States - Sacramento is headed for trouble again, and it shouldn't expect a bailout
http://online.wsj.com/article/SB10001424052748703506904575592612400443370.html

Secretary Clinton's Visit to Australia Highlights Collaboration
http://www.state.gov/r/pa/prs/ps/2010/11/150519.htm

How Medicare Killed the Family Doctor - Low government payment rates became the private-sector benchmark, resulting in fragmented care
http://online.wsj.com/article/SB10001424052748704353504575596140752021042.html

Attacks on President Obama Going to Asia: A Long Trip from Reality
http://goo.gl/fb/3rW2u

The New Malaise and How to End It - Given what ails the economy, additional monetary policy measures are poor substitutes for more powerful pro-growth policies
http://online.wsj.com/article/SB10001424052748704353504575596762375409760.html

Press Briefing

Nov 07, 2011

Weekly Address: President Obama Calls for Compromise and Explains his Priorities
http://goo.gl/fb/HazXr

Assessing "The Vision of the Jihaadi Movement"
http://onwarandwords.wordpress.com/2010/11/04/assessing-the-vision-of-the-jihaadi-movement/

Defending GM's Wagoner, Round Two - How GM failed and Ford survived is not a tale of either Obama genius or CEO incompetence
http://online.wsj.com/article/SB10001424052748703506904575592332874766368.html

A Short History of Midterm Elections - If the past is indeed prologue, then Republicans shouldn't get too cocky
http://online.wsj.com/article/SB10001424052748703805704575594343435477562.html

Iowa's Total Recall - Voters give activist judges the boot. Lawyers are shocked.
http://online.wsj.com/article/SB10001424052748704353504575596441490066762.html

Governors and the Development of the Pragmatic Caucus
http://www.brookings.edu/interviews/2010/1030_governors_katz.aspx

The Pelosi Minority - The Speaker decides to reward herself for an epic defeat
http://online.wsj.com/article/SB10001424052748704353504575596602409404626.html

RT @theprogressive: "Republicans say they’re offering up an olive branch. But it looks more like a painted paralyzed asp with the anesthetic wearing off"

The president as intellectual and political philosopher - Review of James T. Kloppenberg's Reading Obama
http://online.wsj.com/article/SB10001424052748703805704575594430946553428.html

Comments on Jesus Fernandez-Villaverde's Recomendaciones de Lectura: Ley Dodd-Frank

Spanish - comentary on Jesus Fernandez-Villaverde's Recomendaciones de Lectura: Ley Dodd-Frank, Oct 22, 2010, http://www.fedeablogs.net/economia/?p=7059 :

hola, el artículo referido habla de "[c]entralised clearing of derivatives" y dice que, junto con "the push for greater transparency of prices, volumes, and exposures–to regulators and in aggregated form to the public–" los mercados deberían estar mejor capacitados "to deal better with counterparty risk, in terms of pricing it into bilateral contracts, as well as understanding its likely impact."

De ninguna forma se ve en ese artículo, basado en la introducción del libro que van a publicar los autores, que haya alguna preocupación por que los centralized clearinghouses puedan ser "the ultimate too big to fail organization."

Abundando en esa preocupación, un artículo en WSJ (European Clearing Reform Dealt Late Setback, Nov 01, 2010, http://online.wsj.com/article/SB10001424052748704141104575588451106445976.html) revela los últimos desarrollos en Europa al respecto:

"
[...]

Regulators were this week expected to approve a so-called "interoperability" arrangement between four of Europe's largest clearing houses [...]. However, at least one national regulator—thought to be the U.K.'s Financial Services Authority—raised concerns over the deal at the eleventh hour and has postponed its approval until the end of this month at the earliest, these people said. Those worries are understood to center on risk-management issues.

[...]

[A] source close to one of the clearers said the FSA had contacted the four central counterparties, advising them that the meeting at which the decision was expected to be made would be delayed until the end of November. The FSA wasn't available to comment.

In February this year, the regulator sent a private letter to the central counterparties in which it outlined concerns that the clearing houses needed to account for a number of risks created by interoperability. These included additional counterparty credit risk, technical, and liquidity risk. The FSA hasn't prescribed any measures, however, and has left it up to the central counterparties to work out how to address these issues.

[...]

Responding to industry pressure, LCH.Clearnet, SIX x-clear, EuroCCP and EMCF agreed to link their technology systems in the first half of last year but concerns regarding the threat of "contagion risk" between clearers—namely that the clearers could spread systemic risk across borders—led the Dutch, Swiss and U.K. regulators to halt the project last November.
"

Por supuesto, no he encontrado la carta de FSA en su website. Si alguien puede añadir más información, por favor, sería de agradecer.

---
European Clearing Reform Dealt Late Setback, by Michelle Price
WSJ, Nov 01, 2010
http://online.wsj.com/article/SB10001424052748704141104575588451106445976.html

AMSTERDAM—A long-awaited agreement between four of Europe's leading clearing houses, which was expected to be signed off as early as this week and would have opened up competition in the market after years of pressure from banks and investors, has been postponed by European regulators at the last minute, according to people familiar with the matter.

Regulators were this week expected to approve a so-called "interoperability" arrangement between four of Europe's largest clearing houses: the London-based LCH.Clearnet; the Swiss clearer SIX x-clear; EuroCCP in London; and the Netherlands-based European Multilateral Clearing Facility, according to senior sources in the market infrastructure industry attending the Sibos conference in Amsterdam last week.

However, at least one national regulator—thought to be the U.K.'s Financial Services Authority—raised concerns over the deal at the eleventh hour and has postponed its approval until the end of this month at the earliest, these people said. Those worries are understood to center on risk-management issues.

Interoperability is important because it would open up the fragmented post-trade market infrastructure to competition and reduce costs for market participants and, ultimately, for investors and pension funds.

Interoperability between clearers would allow trading firms to choose which clearing house they want to clear their trades, instead of being—as they are now—forced through the clearer chosen by the exchange or platform on which they are trading.

Most exchanges and trading venues in Europe route their trades through a single clearer. All-in trading costs are consequently as much as 10 times higher than in the U.S. The lack of open competition means that fees for clearing and settlement account for the majority of trading costs for investors and market participants.

The industry hopes that interoperability could have the same impact on clearing and settlement as the 2007 markets in financial instruments directive did on equities trading, or Mifid. Mifid triggered a wave of new entrants into the equities market, increasing competition and reducing trading fees across the industry.

The head of one trading venue said last week at the Sibos international banking conference in Amsterdam: "We are expecting the go-ahead for full interoperability between these four clearers to come—at last—in the first week in November." Sources close to two of the clearers involved confirmed the expected announcement.

However, a source close to one of the clearers said the FSA had contacted the four central counterparties, advising them that the meeting at which the decision was expected to be made would be delayed until the end of November. The FSA wasn't available to comment.

In February this year, the regulator sent a private letter to the central counterparties in which it outlined concerns that the clearing houses needed to account for a number of risks created by interoperability. These included additional counterparty credit risk, technical, and liquidity risk. The FSA hasn't prescribed any measures, however, and has left it up to the central counterparties to work out how to address these issues.

The concept of interoperability was first mooted by the former European Commissioner for the internal market, Charlie McCreevy, who imposed a code of conduct on the industry in 2006. However, a combination of vested interest and protectionism by incumbent clearers meant the code was broadly ignored.

Responding to industry pressure, LCH.Clearnet, SIX x-clear, EuroCCP and EMCF agreed to link their technology systems in the first half of last year but concerns regarding the threat of "contagion risk" between clearers—namely that the clearers could spread systemic risk across borders—led the Dutch, Swiss and U.K. regulators to halt the project last November.

In August, the clearing houses re-submitted a detailed plan that addressed these concerns by including provisions for more robust risk management between the clearers. It is understood the regulators have yet to finish their analysis relating to the cash collateral provisions designed to address their concerns over contagion.

"Interoperating in cash equities is not tremendously difficult," one person close to the discussions said. "The problem has been that during the reviews that the regulators have been performing during the last year, the analysis produces a list of questions and the answers generate more questions, so it's been a fairly circular process."

Press Briefing

Nov 05, 2010

An Undeserved Win for the GOP - Conventional wisdom says the president was too liberal and tried to do too much. Nonsense.
http://online.wsj.com/article/SB10001424052748703506904575592900976030696.html

William Galston, former domestic policy adviser to President Bill Clinton, writing at tnr.com, on the independent vote
http://online.wsj.com/article/SB10001424052748703805704575594410054850060.html

The G-20 Seoul 2010 Summit: Strengthening the Global Recovery
http://www.brookings.edu/reports/2010/1102_g20_summit.aspx

The Two Left Coasts - Why the GOP wave didn't wash over New York and California
http://online.wsj.com/article/SB10001424052748703506904575592291628618242.html

Global Agriculture and Food Security Program Partners Announce Second Round of Grants
http://www.treas.gov/press/releases/tg945.htm

The GOP's 2012 Game Plan
http://online.wsj.com/article/SB10001424052748703805704575594810781693940.html

Will Post-Elections Australia Pursue a Course Independent of the United States?
http://www.eastwestcenter.org/publications/search-for-publications/browse-alphabetic-list-of-titles/?class_call=view&mode=view&pub_ID=3596

Boehner: What the Next Speaker Must Do - Secrecy, arrogance, and the abuse of power have shattered the bonds of trust between the people and their elected leaders. Repairing that trust requires sweeping change, beginning with an end to earmarks.
http://online.wsj.com/article/SB10001424052748703805704575594280015549088.html

Criticizing the Inspectors
http://www.whitehouse.gov/blog/2010/11/03/criticizing-inspectors


The German Ecological-Industrial Complex. By Malte Lehming
This 'good' ideology increases inequality more than neo-liberal policies ever could
WSJ, Nov 04, 2010
http://online.wsj.com/article/SB10001424052748704141104575588121224451544.html

Berlin - Germans are the most eager sorters of trash. They dutifully bring their light bulbs and batteries to special recycling points, introduced deposits on bottles and cans seven years ago, build tunnels under highways so frogs can safely cross. They fight for every endangered tree and animal. More and more windmills dominate the landscape. Environmental studies is taught in school, and the German chancellor's work for climate protection is one of her trademarks.

Historically and psychologically, this close connection to ecology is understandable. The Germans need some sort of ideology. They've had bad experiences with fascism and communism and had to be painstakingly educated in the ideals of freedom and democratic virtue. So ecology was the right idea at the right time. Germans believe it gives them a vision that puts them, for the first time, on the right side of history, the side of the good and of the future.

This explains the inexorable rise of the Greens. For the last five weeks, the party has been polling ahead of the Social Democrats (SPD), replacing them as the second strongest political force. Only slightly behind the ruling Christian Democratic Union (CDU), the Greens could even appoint the chancellor in a coalition with the SPD if national elections were held today.

The Greens' voters long ago stopped coming primarily from the left-wing alternative milieu. Their strongest supporters now come from the well-off middle class. According to the polling institute Forsa, 37% of German civil servants would vote Green. Among upper-level civil servants the figure is as high as 41%. Nearly one in three self-employed voters supports the environmental party. Green voters are "well-off post-materialists": Their average household income is higher than that of the supporters of any other party. Workers and retirees go elsewhere.

That said, all of Germany's other parties have long-since discovered ecology as well. Chancellor Angela Merkel was once the federal environmental minister, as was (SPD) leader Sigmar Gabriel. Even the market-friendly Free Democrats (FDP) have turned greenish. The governing CDU-FDP coalition recently adopted the world's most ambitious climate-protection program. "Clean Energy For Everyone" was the slogan. Wind parks in the sea, solar plants, energy storage facilities, energy-saving renovations: The goal is that by 2050, Germany should be able to power itself almost entirely through regenerative energy while the carbon dioxide emissions of all buildings will be reduced to zero.

This will be enormously expensive, but that doesn't bother the Germans. Energy prices have already risen drastically, and Mrs. Merkel has prepared the country for rent increases. "Of course, at first glance not everyone likes that," she says, but in the long run everyone will gain. There is consensus that current generations must bear the main burden of ecologically restructuring Germany's energy system. We're the good guys.

And these days, being good even pays off. Given the increasingly global regulations to curb pollution and carbon emissions, exporting countries hope to make environmentally friendly technology the leading industry of the 21st century. In 15 years, according to a government-sponsored study, green technology will overtake the automobile industry as Germany's core industry. A multi-billion-dollar market has developed, and Germany is the leader in many emerging branches, with a worldwide market share in green technology of around 16%. Some 1.5 million Germans already work in the green industry.

Ecology has become an economic "stimulus" program of sorts. Consumers are forced to buy new versions of expensive everyday products—from refrigerators to cars—not because of age or deterioration, but because they no longer conform to the most recent environmental standards. These norms also serve as wonderful import-defense weapons. No dirty plastic dolls from China can enter, no gene-manipulated food may be purchased. Germany's purity law has turned into a type of national environmentalism. Our morality protects our markets.

But it's the consumer who pays the piper. Climate-friendly retrofitting of Germany's buildings might cost some €2.5 trillion. Building owners can transfer these costs to tenants. That means that rents will rise steeply for years. In Berlin alone, according to estimates by tenants' associations, nearly one in three households will have to move because they will no longer be able to afford their old apartments. This will primarily affect the unemployed and those with low income.

You have to be able to afford ecology. The Greens can, but weaker social groups will suffer. Expensive organic products, kerosene surcharges, gas price increases, higher parking fees, rising energy prices and rents—ecology makes the poor poorer. And for those who can no longer afford to fly to Mallorca, the Greens graciously recommend taking a vacation at home. That will boost domestic tourism.

Those who believe they are on the right side of history may view the social consequences of radical environmentalism, in coldly arrogant tones, as unavoidable collateral damage. And wasn't it always unpleasant for Germany's well-off to share the beaches in exotic vacation locales with simple workingclass families, just because of those cheap charter flights?

The Greens like to portray themselves as fighting against the excesses of capitalism. Now it's clear that the ecological-industrial complex increases inequality more than neo-liberal policies ever could.

Mr. Lehming is op-ed page editor of Der Tagesspiegel. Belinda Cooper translated this essay from the German.





Holographic Video Brings Star Wars-Style 3D Telepresence a Step Closer
http://spectrum.ieee.org/tech-talk/computing/hardware/holographic-video-telepresence

Press Briefing

Nov 04, 2010

Holographic Video Brings Star Wars-Style 3D Telepresence a Step Closer
http://spectrum.ieee.org/tech-talk/computing/hardware/holographic-video-telepresence

A Way Forward for Obama - What the president can do if he wants to remain relevant
http://online.wsj.com/article/SB10001424052748703506904575592192122802022.html

Court should nullify Arizona immigration law
http://progressive.org/mpsanchez110410.html

The GOP will have operational control of the Senate more often than Majority Leader Harry Reid will
http://online.wsj.com/article/SB10001424052748703506904575592690262053182.html

Life-Saving Treatments: Made in the U.S.A.
http://goo.gl/fb/Db6bJ

Martyrs to ObamaCare - Health care blows a hole in the Democratic majority
http://online.wsj.com/article/SB10001424052748703506904575592712665123730.html

Arms Control and International Security: Remarks to the National Model UN Conference
http://www.state.gov/t/isn/rls/rm/150366.htm

More Monetary Cowbell - "I got a fever, and the only prescription is more quantitative easing!"
http://online.wsj.com/article/SB10001424052748703506904575592591109709212.html

The New START Treaty: It's Time for the Senate to Vote
http://www.state.gov/t/avc/rls/150374.htm

GOP: Unlock the American Economy - A genuine pro-growth economic agenda requires more than spending restraint
http://online.wsj.com/article/SB10001424052748703506904575592580602147668.html

Lessons of the Election
http://progressive.org/rc110310.html

President James Madison on the limits of federal power over the economy: veto message on the Internal Improvements Bill, 1817
WSJ, Nov 03, 2010
http://online.wsj.com/article/SB10001424052748704141104575588521206221584.html

The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers, or that it falls by any just interpretation within the power to make laws necessary and proper for carrying into execution those or other powers vested by the Constitution in the Government of the United States.

"The power to regulate commerce among the several States" can not include a power to construct roads and canals, and to improve the navigation of water courses in order to facilitate, promote, and secure such a commerce without a latitude of construction departing from the ordinary import of the terms strengthened by the known inconveniences which doubtless led to the grant of this remedial power to Congress.

To refer the power in question to the clause "to provide for the common defense and general welfare" would be contrary to the established and consistent rules of interpretation. . . . It would have the effect of subjecting both the Constitution and laws of the several States in all cases not specifically exempted to be superseded by laws of Congress. . . . Such a view of the Constitution, finally, would have the effect of excluding the judicial authority of the United States from its participation in guarding the boundary between the legislative powers of the General and the State Governments. . . .

I am not unaware of the great importance of roads and canals and the improved navigation of water courses, and that a power in the National Legislature to provide for them might be exercised with signal advantage to the general prosperity. But seeing that such a power is not expressly given by the Constitution, and believing that it can not be deduced from any part of it without an inadmissible latitude of construction and a reliance on insufficient precedents; believing also that the permanent success of the Constitution depends on a definite partition of powers between the General and the State Governments, and that no adequate landmarks would be left by the constructive extension of the powers of Congress as proposed in the bill, I have no option but to withhold my signature from it.


What You Missed: Tuesday Talk on the President’s Trip to Asia
http://goo.gl/fb/Y2DpI

Dan Rather on MSNBC: Mitch McConnell 'Wants to Cut Out Obama's Heart and Feed His Liver to the Dogs'
http://www.mrc.org/biasalert/2010/20101103032018.aspx

International Cooperation: Furthering US National Space Policy and Goals
http://www.state.gov/t/avc/rls/150316.htm

State Bailouts? They've Already Begun - Bond subsidies and transfers have allowed states to avoid making tough decisions. It won't last.
http://online.wsj.com/article/SB10001424052702304173704575578203887408076.html

Radio Renegades - Review of Adrian Johns' Death of a Pirate
http://online.wsj.com/article/SB10001424052702303284604575582773700520824.html

Press Briefing

Nov 03, 2010

State Dept: Addressing Today's Nuclear Threats
http://www.state.gov/t/isn/rls/rm/150287.htm

On Capitol Hill, Anything Goes
http://online.wsj.com/article/SB10001424052748703708404575586581040981148.html

Statement by the Press Secretary on the Case of Ms. Sakineh Mohammadi Ashtiani
http://goo.gl/fb/TTFu0

Arizona Christian School Tuition Organization v. Winn - A crucial case on tax credits for scholarships to religious schools
http://online.wsj.com/article/SB10001424052702303362404575580572837153924.html

Statement by the President on the 10th Anniversary of Crews Aboard the International Space Station
http://goo.gl/fb/7RfPl

High Rollers at the Fed. WSJ Editorial
The central bank becomes a Treasury profit center—for now.
WSJ, Wednesday, November 3, 2010
http://online.wsj.com/article/SB10001424052702304741404575564733097905488.html?mod=WSJ_newsreel_opinion

The Federal Reserve's Open Market Committee seems poised today to make a historic decision to expand its balance sheet by as much as $1 trillion or more to boost inflation and reduce unemployment. We've said before that we think this is a monetary mistake, but the public and Congress should also be aware that it increasingly carries fiscal risks.

In conducting monetary policy, the Fed has historically stuck to the purchase of short-term Treasury securities and other highly safe assets. That changed amid the financial panic, as the Fed grew its balance sheet to $2.1 trillion in 2009 from $900 million in 2007. That expansion was controversial but it was defensible on grounds that the central bank was fulfilling its duty as lender of last resort during a liquidity squeeze. Roughly $1 trillion of the new assets were in short-term credit facilities, including foreign central bank swaps.

In 2008, the Fed began its dive into riskier assets by adding securities from Bear Stearns and AIG totaling about $70 billion, Fannie Mae and Freddie Mac debt of $45 billion and over $200 billion in Fan and Fred-guaranteed mortgage-backed securities. But those purchases remained a small part of the Fed's portfolio and were widely viewed as emergency measures amid a crisis. As it turned out, the Fed was only warming up.

Today the Fed's balance sheet of more than $2.3 trillion has no term auction facilities, commercial paper funding facilities or liquidity swaps. In their place mortgage-backed securities have ballooned to $1.1 trillion, U.S. Treasurys to $821 billion and Fannie Mae and Freddie Mac debt to $154 billion.

In the short-term, these investments have proven to be a revenue windfall for the U.S. government. In the first six months of 2010, the Fed says this portfolio produced net earnings of some $36.9 billion. Most of those earnings came from Treasurys, Fannie-Freddie debt and mortgage-backed securities (MBS). This compares to $16 billion in the first six months of 2009.

The Congressional Budget Office reports that in fiscal 2010, which ended September 30, the Fed earned $76 billion, a 121% increase from a year earlier. To put that in perspective, $76 billion is more than a third of the $192 billion that the corporate income tax raised in fiscal 2010. The Fed has become one of the Treasury's biggest cash cows, helping to mask the real size of the budget deficit.

As you may have read, however, there is no free lunch, and this revenue stream is the result of taking new risks. Before 2008, short-term government debt was the Fed's traditional instrument of monetary policy. Today the Fed's mortgage-backed portfolio has a maturity of more than 10 years, and nearly half of its portfolio of Treasurys is now greater than five years.

This means greater interest rate risk, as outlined in a new paper in the American Institute of Economic Research, "The World's Most Profitable Corporation," by former Atlanta Fed President William Ford and Walker Todd, a former New York Fed lawyer specializing in monetary affairs. The authors estimate that if interest rates on 30-year fixed-rate MBS were to rise to 5% from 4%, "the Fed's current portfolio of such bonds ($1.079 trillion) would decline in value by about $162 billion—nearly three times the $57 billion of capital on the Fed Banks' consolidated balance sheet in mid-October 2010."

The Fed's new risk profile also shows up in its capital to asset ratio. Messrs. Ford and Todd point out that the Fed's short-term portfolio has allowed it to carry only a 4% ratio of capital to assets compared to an 8% ratio at commercial banks. But since 2008, while the portfolio has become more risky, the capital ratio has dropped. The authors says that today the New York Fed's capital ratio is a measly 1.45%, which means a leverage ratio of 69 to 1 and the entire Fed system has a ratio of 2.46% or 47 to 1.

More leverage together with extended maturities means that if there is a sharp rise in the yield of long-term bonds, perhaps due to rising inflation expectations, the Fed's balance sheet could look very ugly, very fast. Fed officials will rightly argue that they are able to hold these long-term assets to maturity without having to realize losses. But what if the Fed has to sell assets to drain liquidity from the economy faster than it might prefer, and thus take losses on its portfolio? The revenue gain for the government would become losses. Imagine how delighted that would make Congress, not to mention complicating the political task of Fed tightening.

Everybody loves the Fed when it is easing money, as all but a few of us did during the credit boom and housing bubble of the mid-2000s. The trouble comes when the bill comes due. One task of the next Congress should be to better inform the public about the risks the U.S. central bank is taking, ostensibly on our behalf.


Readout of the President's Call with President with Yemeni President Saleh
http://goo.gl/fb/cWdIq

The GOP Can Outsmart ObamaCare - How Republicans can create a national insurance charter, deregulate health insurance and save ObamaCare from itself
http://online.wsj.com/article/SB10001424052748704462704575590344022699132.html

The President's Foreign Trip
http://goo.gl/fb/OmqH0

DeMint: Remember what the voters back home want—less government and more freedom
http://online.wsj.com/article/SB10001424052748704141104575588612828579920.html

Monetary and Fiscal Policy Interactions in the Post-war U.S.
http://www.imf.org/external/pubs/cat/longres.cfm?sk=24322.0

EPA Regulations Could Cause Potentially Serious Capacity Problems Coal
http://www.instituteforenergyresearch.org/2010/11/02/epa-regulations-could-cause-potentially-serious-capacity-problems/

Strengthening Fragile Families
http://www.brookings.edu/reports/2010/1027_fragile_families_foc.aspx

Flashback: Media Decried Voters in 1994, Argued Conservatives Had "No Mandate"
http://www.mrc.org/biasalert/2010/20101102034417.aspx

Press Briefing

Nov 02, 2010

Maddow's list of accomplishments by the Democratic-controlled 211th Congress
http://bit.ly/aZz6SC

Pakistan's Courts: A Counterterrorism Challenge
http://www.eastwestcenter.org/publications/search-for-publications/browse-alphabetic-list-of-titles/?class_call=view&pub_ID=3602&mode=view

Kenneth Pollack explains why President Obama's current approach to Iran is no longer strong enough to succeed
http://brookin.gs/aBzw

RT @BarackObama: This is the day you’ve been working so hard for. Make calls to voters to make sure they get out
http://OFA.BO/DCktjz

Conservatives: Stopping Voter Fraud
http://blog.heritage.org/2010/11/02/morning-bell-stopping-voter-fraud

President Obama: "I need you to keep on fighting"
http://goo.gl/fb/KlQ4n

Ukraine's Economic Revolution - Viktor Yanukovych's reform agenda is truly transformational
http://online.wsj.com/article/SB10001424052748704141104575588010538323230.html

Brussels' Budget Bounty - If only the EU would follow its own advice and spend within its means
http://online.wsj.com/article/SB10001424052748704141104575588061830994180.html

President Obama: "Put It In D" http://goo.gl/fb/5nec4

Rally to Restore Authority - What Jon Stewart really stands for.
http://online.wsj.com/article/SB10001424052748704141104575588290578875362.html

President Obama’s Challenge to Philadelphia: 20,000 Doors
http://goo.gl/fb/n9uKn

From the South Bronx to West Point - A public school discovers the Army
http://online.wsj.com/article/SB10001424052748704141104575588661247433110.html

Poetry of the Taliban
http://www.hurstpub.co.uk/BookDetails.aspx?BookId=624

An Empire State Reprieve? - Incredible to believe, even New Yorkers may be voting for reform
http://online.wsj.com/article/SB10001424052748704141104575588362959040590.html

Michelle Obama: “This isn’t about politics”
http://goo.gl/fb/wIH3a

Moving America Forward: Bridgeport, CT
http://goo.gl/fb/ukS1J

Campaign-Finance Reform, RIP - This year's gusher of spending has made far more races competitive
http://online.wsj.com/article/SB10001424052702303341904575576542623346452.html

Moving America Forward: Philadelphia
http://goo.gl/fb/iIA2d

Democrats Can't Blame the Economy - Imagine if President Obama had moved right after Scott Brown's election. The party would be in better shape today.
http://online.wsj.com/article/SB10001424052748704141104575588234130620908.html

Obama in India: Pakistan on the Mind
http://www.brookings.edu/opinions/2010/1025_india_riedel.aspx

Michelle Obama: "There is so much at stake"
http://goo.gl/fb/NLD5z

Obama's Next Worry: A Restive Left Flank - Every president who lost re-election in the last half-century has first been weakened by a primary fight
http://online.wsj.com/article/SB10001424052748704141104575588283239100518.html

Statement for the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association
http://www.treas.gov/press/releases/tg939.htm

Mitch Stewart on Rachel Maddow: What Republican Surge?
http://goo.gl/fb/99cWz

Why Obama Is No Roosevelt - Roosevelt: 'Your government has unmistakable confidence in your ability to hear the worst without flinching and losing heart.' Obama: We don't 'always think clearly when we're scared.'
http://online.wsj.com/article/SB10001424052748704141104575588211544818170.html

Press Briefing

Nov 01, 2010

Latest Reports from Recovery Act Recipients on Recovery.gov http://goo.gl/fb/mSGwU

Journalism Scoops WikiLeaks - There's little of public benefit in the documents that hadn't already been reported
http://online.wsj.com/article/SB10001424052702303284604575582692517152862.html

Cleveland Readies for President Obama’s Visit, Volunteers Get Out the Vote
http://goo.gl/fb/FXxqV

Gabrielle Union: Raise Your Vote
http://goo.gl/fb/bj68E

Puerto Rico's Governor Channels Ronald Reagan - Luis Fortuño wants deep tax cuts to spur growth. Are Republicans in D.C. paying attention?
http://online.wsj.com/article/SB10001424052702303284604575582680391414648.html

Video: Helping Businesses Grow and Hire New Employees
http://goo.gl/fb/e7iIr

Wall Street Still Doesn't Love the GOP - Bankers understand that Dodd-Frank has written 'too big to fail' into law. So do the tea partiers.
http://online.wsj.com/article/SB10001424052702303362404575580564099427490.html

More than 800,000 White House Visitor Records Online
http://goo.gl/fb/BJTHk

The Ground Zero Settlement - The plaintiffs have been offered a fair deal
http://online.wsj.com/article/SB10001424052702304173704575578394260217042.html

"Volunteer for what you believe in."
http://goo.gl/fb/I2CiD

Where Is Gao Zhisheng? - The Chinese human rights lawyer has disappeared
http://online.wsj.com/article/SB10001424052702303341904575577162235606470.html

10 Million Goal Smashed—On to the Final Push
http://goo.gl/fb/yJEIM

Hallmarks of al Qaeda - Why drone attacks against Awlaki in Yemen are justified
http://online.wsj.com/article/SB10001424052748703414504575584633090140278.html

Your Questions on Veterans Education, Student Debt, and Protecting America
http://goo.gl/fb/dVIOU

A Vote Against Dems, Not for the GOP - Voters don't want to be governed from the left, right or center. They want Washington to recognize that Americans want to govern themselves.
http://online.wsj.com/article/SB10001424052748703708404575586063725870380.html

Failed States and the Spread of Terrorism in Sub-Saharan Africa. By Tiffiany Howard
http://www.psa.ac.uk/journals/pdf/5/2010/1598_1514.pdf

Why rising government debt burdens really matter
http://blogs.ft.com/economistsforum/2010/10/why-rising-government-debt-burdens-really-matter/

Utopia, With Tears - A review of Fruitlands, by Richard Francis

Utopia, With Tears. By ALEXANDRA MULLEN
No meat, no wool, no coffee or candles to read by, but plenty of high aspirations—and trouble.A review of Fruitlands, by Richard Francis (Yale University Press, 321 pages, $30)

WSJ, Friday, October 29, 2010
http://online.wsj.com/article/SB10001424052702304173704575578761068904960.html


In 1843, in the quiet middle of Massachusetts, a group of high-minded people set out to create a new Eden they called Fruitlands. The embryonic community miscarried, lasting only seven months, from June to January. Fruitlands now has a new chronicler in Richard Francis, a historian of 19th-century America. "This is the story," he writes, "of one of history's most unsuccessful utopias ever—but also one of the most dramatic and significant." As we learn in his thorough and occasionally hilarious account, the claim is about half right.

The utopian community of Fruitlands had two progenitors: the American idealist Bronson Alcott and the English socialist Charles Lane. Alcott was a farm boy from Connecticut who had turned from the plough to philosophy. According to Ralph Waldo Emerson, his friend, Alcott could not chat about anything "less than A New Solar System & the prospective Education in the nebulae." Airy as his thoughts were, Alcott could be a mesmerizing speaker. Indeed, his words partly inspired an experimental community in England, where he met Lane.

Lane has often been considered the junior partner in the Fruitlands story, merely the guy who put up the money (for roughly 100 acres, only 11 of which were arable). But Mr. Francis fleshes him out, showing him to be a tidier and more bitter thinker than Alcott, with a practical streak that could be overrun by his hopes for humanity.

As Mr. Francis notes, Alcott and Lane shared a "tendency to take moderation to excess," pushing their first principles as far as they could go. One such principle was that you should do no harm to living things, including plants. As Mr. Francis explains: "If you cut a cabbage or lift a potato you kill the plant itself, just as you kill an animal in order to eat its meat. But pluck an apple, and you leave the tree intact and healthy."

The Fruitlands community never numbered more than 14 souls, five of them children. The members included a nudist, a former inmate of an insane asylum, and a man who had once gotten into a knife fight to defend his right to wear a beard. Then there was the fellow who thought swearing elevated the spirit. He would greet the Alcott girls: "Good morning, damn you." Lane thought the members should be celibate; Alcott's wife, Abigail, the mother of his four daughters and the sole permanent woman resident, was a living reproach to this view.

All of Fruitlands members, however, agreed to certain restrictions: No meat or fish; in fact nothing that came from animals, so no eggs and no milk. No leather or wool, and no whale oil for lamps or candles made from tallow (rendered animal fat). No stimulants such as coffee or tea, and no alcohol. Because the Fruitlanders were Abolitionists, cane sugar and cotton were forbidden (slave labor produced both). The members of the community wore linen clothes and canvas shoes. The library was stocked with a thousand books, but no one could read them after dark.

And how did the whole experiment go? Well, most of the men at Fruitlands had little farming experience. Alcott, who did, impressed Lane with his ability to plow a straight furrow; but Alcott was always a better talker than worker. The community rejected animal labor—and even manure, a serious disadvantage if you want to produce enough food to be self-sufficient. The farming side of Fruitlands was a dud.

But the experiment was indeed, as Mr. Francis claims, "dramatic." The drama came from a common revolutionary trajectory in which "a group of idealists ends by trying to destroy each other." "Of spiritual ties she knows nothing," Lane wrote of Abigail. "All Mr. Lane's efforts have been to disunite us," she confided to a friend, referring to her relations with Bronson. Even the usually serene Bronson agonized: "Can a man act continually for the universal end," he asked Lane, "while he cohabits with a wife?" By Christmas, which he spent in Boston, Bronson seemed on the verge of dissolving his family. In the new year he returned to Fruitlands, but he had a breakdown. This was no way to run a utopia, and the experiment ended.

Was Fruitlands "significant"? In Mr. Francis's reading, the community "intuited the interconnectedness of all living things." That intuition, he believes, underlies our notions of the evils of pollution and the imminence of environmental catastrophe, as well as our concerns about industrialized farming. The Fruitlanders' understanding of the world, he argues, helped create a parallel universe—an alternative to scientific empiricism—that is still humming along in the current day.

Perhaps so. Certainly many New Age and holistic notions, in their fuzzy and well-meaning romanticism, share a common ancestor with the Fruitlands outlook. But the result is not always benign. It was the Fruitlanders' belief, for instance, that "all disease originates in the soul." One descendant of this idea is the current loathsome view that cancer is caused by bad thoughts.

Though obviously sympathetic to the Fruitlands experiment, Mr. Francis gives us enough facts to let us draw our own conclusions. He records Bronson and Abigail's acts of charity, already familiar to us from their daughter Louisa's novel "Little Women" (1868). But he also retells less admiring stories, of their petty vindictiveness and casual callousness. Along the way he adumbrates the ways in which idealism can slide into megalomania.

Mr. Francis reports a conversation that Alcott once had with Henry James Sr., the father of the novelist Henry and the philosopher William. Alcott let it drop that he, like Jesus and Pythagoras before him, had never sinned. James asked whether Alcott had ever said, "I am the Resurrection and the Life." "Yes, often," Alcott replied. Unfortunately, Mr. Francis fails to record James's rejoinder: "And has anyone ever believed you?"

Ms. Mullen writes for the Barnes & Noble Review.