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GenevUID：2543794

Health-care reform in America

Fired up and ready to go

Sep 10th 2009 | NEW YORK
From The Economist print edition

The president weighs in, successfully, on health-care reform

“THE time for bickering is over. Now is the time for action.” With those fiery words, delivered to a special joint session of Congress on September 9th, Barack Obama made his case for reforming America’s troubled health system. Coming after a legislative recess in which his efforts were demonised at town hall meetings across the country, this speech was widely seen as his best, and perhaps last, chance to rescue his most important domestic policy initiative from failure.

The speech was a success on several measures. It was passionate, which is essential if he is to win over a sceptical American public and energise his liberal base. Mr Obama has seemed professorial, even pedantic, during recent town hall meetings on health reform. This week, though, he seemed to have fire in his belly. For weeks, right-wing critics have made nonsensical but alarming claims that his reforms will lead to “death panels” and other travesties. Mr Obama’s efforts to deflect such attacks by taking the high road have left many on the left cold, and confused the general public. In his speech, he denounced the right’s “bogus claims” bluntly, insisting that such talk was “laughable if simple.” it weren’t so cynical and irresponsible. It is a lie, plain and simple.

The most powerful part of his speech was his invocation of Senator Edward Kennedy, the liberal giant who had championed health reform for decades before he died last month. Reading from a letter he had received from him posthumously, as his widow listened from the gallery, Mr Obama made the moral case for change: “At stake are not just the details of policy, but fundamental principles of social justice and the character of our country.”

During this passage, he cleverly reminded Americans that leading Republicans currently hostile to Democratic efforts at health reform—including Senators Orrin Hatch and John McCain—had worked hand-in-hand with Mr Kennedy on earlier, smaller efforts at health reform. That points to the second reason to think that Mr Obama’s speech may yet succeed in kick-starting reform this autumn: it managed to position the president as a reasonable and moderate adult in a room full of petty and partisan ideologues.

The Republicans did not help their cause with their behaviour during his speech. Some, including their whip in the House, were caught fiddling with their BlackBerrys. Others rudely waved hand made signs or copies of Republican health bills. And one, from South Carolina, even shouted out “You lie!” when Mr Obama insisted that his reforms would not cover illegal immigrants. (He later apologised.)

The speech positioned Mr Obama as a moderate in style and substance. He pointed out that while some on the left are demanding a single-payer system and some on the right want to abolish the system of employer-provided insurance, he considers both options too radical. He also announced a surprising idea to use executive authority to encourage state-level experiments in curbing malpractice abuses.

Mr Obama also unveiled the main elements of his own centrist reform plan for the first time. He wants to expand coverage to some 30m Americans without insurance, principally by introducing an individual mandate for cover, insurance exchanges, subsidies for the less well-off and heavy regulation of insurers. He also accepted an important proposal to tax the most lavish of insurance plans.

Crucially, he made it plain that he would not accept a health-reform bill from Congress that raises the deficit—not now, not ever. He also vowed that most of the $900 billion his plan will cost—again, the first time he has given a firm figure for his initiative—will come not from taxes on the rich, as the current bills in the House envision, but from internal savings to be realised within the health system.

He offers two reasons to suppose that this claim is not complete bunk. The first is the White House’s support for empowering an independent panel of experts to cut costs in Medicare and other government health schemes. This matters, because Congress has shown it is incapable of making such difficult cuts. More impressive is his vow this week that any final bill must include provisions for mandatory spending cuts that would kick in if budgeted cost savings do not materialise.

Will this speech be enough to get the president’s reform agenda back on track? It just might be. One reason to think so is the deft way Mr Obama signalled a willingness to compromise on the “public option” this week. The left has insisted on a government-run insurance scheme, but this ill-founded idea is strongly opposed by the health-care industry and by Republicans. It also has no hope of passing the Senate, as Max Baucus, the head of its Finance Committee, confirmed this week. Mr Obama voiced theoretical support for the idea, but by also supporting other options—including, crucially, the idea that such a plan could be triggered only if necessary later—he has, in effect, dealt it a death blow.

Several committees in the House have already passed versions of health bills, but all contain the public option and are seen as too far to the left of the Senate—and now, it is clear, of where Mr Obama stands. So all eyes are now on the Senate Finance Committee, where a “Gang of Six” led by Mr Baucus has been working to forge a moderate bill that could provide the backbone for any final health law this year. Mr Baucus this week unveiled his own $900 billion proposal (also a moderate approach without the public option), and announced plans to finalise a bill next week.

Earlier this week that effort seemed to be flagging, as two of the Republicans in the gang, Charles Grassley and Mike Enzi, appeared to be undermining its efforts. That leaves Olympia Snowe, the free-spirited Republican from Maine, as the most courted legislator in recent memory. Mr Obama’s speech and sensible proposals, which are similar to those drafted by Mr Baucus, and his openness to the trigger option favoured by Ms Snowe, can only boost efforts at compromise.

Whether it is enough to keep Ms Snowe and perhaps one or two other Republicans firmly on board remains to be seen. But even if it does not, the next few weeks could yet produce a bill that is better than anything seen thus far and which would be worth passing. He was not the first president, Mr Obama said, to take up health-care reform; but he was determined to be the last.

GenevUID：2543794

French politics

Behind the scenes

Sep 21st 2009 | PARIS
From Economist.com

A trial in Paris will illuminate the murky workings of French politics

THE courtroom doors opened on Monday September 21st for the start of a judicial drama that is set to expose the murky dealings at the heart of French political power. On paper, the “Clearstream trial”, as the court case is known, concerns five suspects accused of involvement in a smear campaign, and some 40 civil plaintiffs, whose names were linked to fake bank accounts supposedly holding the proceeds of kickbacks on an arms deal. Politically, however, the trial is a duel between two ambitious politicians, once rivals for power: one, Nicolas Sarkozy, is now president, and the other, Dominique de Villepin, is a former prime minister who was once his chief challenger for the job.

The case dates back to a judicial investigation, launched in 2001, into kickbacks linked to the sale of French frigates to Taiwan in the early 1990s. In 2004, investigating judges received anonymously a list of foreign bank accounts, subsequently found to be fake, that fingered various French personalities. They include Mr Sarkozy, then interior minister under President Jacques Chirac, Dominique Strauss-Kahn, then a Socialist Party notable and now head of the IMF in Washington. Others from across the political spectrum included such people as Jean-Pierre Chevènement, another left-winger, Alain Madelin, a liberal former finance minister, and Brice Hortefeux, the current interior minister.

When the judge ruled the list bogus, a fresh investigation began into the false accusations. Investigative judges have spent years raiding premises, confiscating documents, decrypting computer files and interrogating witnesses, including two top French former spymasters. Besides Mr de Villepin, the judges have also put in the dock Jean-Louis Gergorin, a former executive at the European Aeronautic Defence and Space company (EADS), and Imad Lahoud, an EADS computer whiz and sometime intelligence operative himself.

For Mr Sarkozy, the affair is proof of a plot at the highest level to discredit him and thwart his chances of becoming president in 2007. It is easy to forget that, at the time, the two men were seen to be part of an evenly matched contest. Mr de Villepin, who became Mr Sarkozy’s boss when named prime minister in 2005, was Mr Chirac’s right-hand man for years. Elegant, aristocratic, lyrical, having made his name as the poster boy for those opposed to the Iraq war, he was Mr Chirac’s preferred heir. As his former chief-of-staff at the Elysée palace, Mr de Villepin also honed the more opaque arts of political kingmaking. He is accused of “complicity in false accusation, complicity in the use of forgeries, receipt of stolen goods, and breach of trust”.

Appearing in court on Monday for the first day of the trial, in the courtroom where Marie-Antoinette was sent to the guillotine in 1793, Mr de Villepin declared: “I am here because of the doggedness of one man, Nicolas Sarkozy.” He insisted that he would emerge “free and cleared” at the end. Mr de Villepin has repeatedly complained of political manipulation of the judicial process, and of a personal “lynching” by the media. He admits having asked a top intelligence boss to look into the list of names but, he claims, let the matter drop once he learned that the list was bogus.

During the next four weeks, evidence that has leaked out into the press over the years from France’s sieve-like investigation process will finally be put firmly in the public domain. It will cast light on the inner workings of not just French political power, but also the intelligence services and the defence industry. Mr Sarkozy himself will not be asked to testify, as he enjoys judicial immunity while in office. Mr de Villepin could, in theory, face up to five years in prison. In any event, the trial will determine whether he has a political future. And it will supply an extraordinary glimpse into the backroom manoeuvrings of the French establishment.

GenevUID：2543794

Barack Obama and free trade

Economic vandalism

Sep 17th 2009
From The Economist print edition

A protectionist move that is bad politics, bad economics, bad diplomacy and hurts America. Did we miss anything?

Correction to this article

YOU can be fairly sure that when a government slips an announcement out at nine o’clock on a Friday night, it is not proud of what it is doing. That is one of the only things that makes sense about Barack Obama’s decision to break a commitment he, along with other G20 leaders, reaffirmed last April: to avoid protectionist measures at a time of great economic peril. In every other way the president’s decision to slap a 35% tariff on imported Chinese tyres looks like a colossal blunder, confirming his critics’ worst fears about the president’s inability to stand up to his party’s special interests and stick to the centre ground he promised to occupy in office.

This newspaper endorsed Mr Obama at last year’s election (see article) in part because he had surrounded himself with enough intelligent centrists. We also said that the eventual success of his presidency would be based on two things: resuscitating the world economy; and bringing the new emerging powers into the Western order. He has now hurt both objectives.

Deeply tyresome

Last year the fear was that Mr Obama would give in to enormous protectionist pressure from Congress. By introducing the levy, Mr Obama has pandered to a single union, one that does not even represent a majority of American tyre-industry workers, and he has done so against the interests of everyone else (see article). America’s tyre-makers, who have more or less given up making low-end tyres at home in favour of importing them (often from joint-ventures in guess where) declined to support the application for import “relief”. Consumers will have to pay more. The motor and garage trades will be harmed. And no one can seriously imagine that any American tyre-making job will be saved; firms will simply import cheap tyres from other low-cost places like India and Brazil.

One might argue that these tariffs don’t matter much. They apply, after all, only to imports worth a couple of billion dollars last year, hardly the stuff of a great trade war. China is incandescent with rage; but China is a master of theatrical overreaction. Its actual response so far has been the minor one of announcing an anti-dumping investigation into American chicken and car-parts exports. The whole affair might blow over, much as did the furore surrounding George Bush’s selective steel tariffs (much worse ones than Mr Obama’s on tyres) back in 2002. Presidents, after all, sometimes have to throw a bit of red meat to their supporters: Mr Obama needs to keep the unions on side to help his health-reform bill.

That view seems naive. It is not just that workers in all sorts of other industries that have suffered at the hands of Chinese competitors will now be emboldened to seek the same kind of protection from a president who has given in to the unions at the first opportunity. The tyre decision needs to be set into the context of a string of ominously protectionist policies which started within weeks of the inauguration with a nasty set of “Buy America” provisions for public-works contracts. The president watered these down a bit, but was not brave enough to veto. Next, the president stayed silent as Congress shut down a project that was meant to lead to the opening of the border to Mexican trucks, something promised in the NAFTA agreement of 1994. Besides these sins of commission sit the sins of omission: the president has done nothing at all to advance the three free-trade packages that are pending in Congress, with Colombia, Panama and South Korea, three solid American allies who deserve much better. And much more serious than that, because it affects the whole world, is his failure to put anything worthwhile on the table to help revive the moribund Doha round of trade talks. Mr Bush’s tariffs, like the Reagan-era export restraints on Japanese cars and semiconductors, came from a president who was fundamentally committed to free trade. Mr Obama’s, it seems, do not.

America is needed to lead. The global trading system has many enemies, but in recent times the man in the White House could be counted as its main champion. As the driver of the world’s great opening, America has gained hugely in terms of power and prestige, but the extraordinary burst of growth that globalisation has triggered has also lifted hundreds of millions out of poverty over the past few decades and brought lower prices to consumers everywhere. The global recession threatens to undo some of that, as country after country is tempted to subsidise here and protect there. World trade is likely to slump by 10% in 2009, and a report from the London-based Global Trade Alert claimed this week that, on average, a G20 member has broken the no-protectionism pledge once every three days since it was made. For Mr Obama now to take up the no-protection cause at the G20’s forthcoming meeting in Pittsburgh would, alas, be laughable. But if America does not set an example, no one else is likely to.

Dumb and dumber

Nor is the potential fallout from Mr Obama’s wrongheaded decision limited to trade. Evidence of a weak president being pushed leftward might cause investors to worry whether he will prove similarly feeble when it comes to reining in the vast deficits he is now racking up; and that might spook the buyers of bonds that finance all those deficits. Looming large among these, of course, are the Chinese. Deteriorating trade relations between the world’s number one debtor and its number one creditor are enough to keep any banker awake at night.

And America needs China for a lot more than T-bonds. Any hope of securing a climate-change agreement at Copenhagen in December on a successor treaty to Kyoto will require close co-operation between America and China. So does the work of negotiating with North Korea on its nuclear weapons. And as for Iran, where America is keen to seek a fresh round of UN sanctions in the hope of forcing it to scrap its nuclear programme, China holds a power of veto at the Security Council. Under the relevant trade laws, Mr Obama had the absolute discretion not to impose the recommended tyre tariffs on the grounds of overall economic interest or national security. Given everything that is at stake, his decision not to exercise it amounts to an act of vandalism.

GenevUID：2543794

The IMF on economic recovery

Snail's pace

Sep 22nd 2009
From Economist.com

Recovery from this recession is likely to take several years, says the IMF

WHEN the chairman of the Federal Reserve, Ben Bernanke, told a Washington think-tank this month that “the recession is very likely over at this point”, he was careful to add that the American economy would remain weak for some time yet. Analysis released on Tuesday September 22nd by IMF economists who have been studying the aftermath of 88 banking crises over the past four decades, supports Mr Bernanke's cautious talk. While most discussion of the worst recession since the Depression looks at the immediate pain from lost jobs and shuttered shops, the IMF analysis suggests that the effects of the downturn will be felt long after it is technically over.

It is not surprising that trouble in the banks results in big drops in GDP: the IMF finds that output per head falls steadily for three years after a typical banking crisis. Recovering from that takes a long time, even after a return to pre-crisis growth rates. Seven years after a typical banking crisis has ended output per head is 10% lower, on average, than it would have been in the absence of a crash. The IMF also finds that recessions (such as this one) that are associated with banking crises lead to output declines that are about three times as large in the medium term as those that follow currency crises (222 of which the fund's economists also scrutinised).

None of that bodes well for the recovery of the global economy today. Part of the problem is that it is a long and messy task to clean up a banking system. While this is being done, many people lose their jobs and drop out of the labour force altogether. In America, for example, the Bureau of Labour Statistics said that in August 758,000 people were “discouraged workers”—people who have given up looking for work because they believe there are no jobs for them. That is nearly double the figure of a year earlier. Even those who keep looking may find that their skills have grown rusty by the time a recession ends, making it hard to find a new job.

Profits also collapse during a financial crisis because credit becomes much more expensive; this in turn means that firms have less to invest when the crisis ends. If firms cut spending on research and development during the downturn that is likely to result in slower productivity growth later—nor does it help that many productive firms go bust because of credit shortages. The IMF concludes that falling productivity, the employment rate, and the amount of machinery and equipment available to workers each accounts for about a third of the medium-term output losses.

All this is what happens in a typical crisis. The conditions, and the effectiveness of policy, differ in each particular instance. For this case, the findings of the fund's economists are hardly cause for cheer. They estimate that countries where an unusually high proportion of income was invested before a crisis (for example, by borrowing abroad to speculate in assets, such as housing) are worse off in the medium term. As most rich countries had a property boom before the banking crisis, they should expect more pain in the coming years.
On the other hand, governments might be encouraged by the IMF. The economists also looked at the effects of macroeconomic policy, concluding that bigger increases in government spending help to limit the medium-term damage from recessions. Thus decisions taken to prime the fiscal pump during this crisis, despite the enormous increases in government debt in rich countries, may turn out to have been the right ones.

Still, deciding when to end fiscal and monetary stimulus is tricky. Doing so too early risks making the green shoots of recovery wither; waiting too long means even more debt to deal with. Governments and central banks have the difficult task of ensuring that their actions do not nip in the bud what in any case is likely to be feeble growth.

zhtwdUID：2319724

A year after Lehman Brothers collapsed
The promised blandSep 15th 2009
From Economist.com
Barack Obama marks a year since the collapse of Lehman Brothers with a speech to Wall Street


“THIS sucker could go down.” George Bush’s verdict during the worst of the financial crisis a year ago was crude but penetrating. Barack Obama, delivering a speech in New York on September 14th to mark the anniversary of Lehman Brothers’ failure, managed the opposite trick. He produced plenty of elegant phrases but little that was new, and quite a bit that was confusing.

To be fair, this was not an occasion for detailed policy pronouncements. The big areas of financial reform have been endlessly rehearsed in speeches, summits and papers (which may explain why the occasion felt a little flat). This was more about applying a bit of presidential pressure. By sketching out the rationale behind his principal legislative proposals—a systemic-risk regulator, a new consumer-protection agency, the need for strong capital and better resolution regimes—he reminded Congress that health care is not his only priority. He also used his time at the podium to chide bonus-hungry bankers for failing to learn the lessons of Lehman.

Even so, much of what Mr Obama said was disingenuous. He included some helpful words on the responsibility borne by homeowners for taking risks they could not afford. But he also urged banks to bring financial services to those currently outside the financial system, and put the consumer-protection agency first on his list of reforms. He said that the cost of future failures would fall on shareholders and creditors. But it is far from clear that he will force money-market funds, a major source of bank funding, to give up their promise to return their capital to investors intact.

He pledged that if taxpayers ever had to step in again to rescue the system, they would get every cent back, a nonsensical promise. True, as Mr Obama pointed out, taxpayers have earned a 17% return on their “investment” in banks that have since bought the government out. But such figures, which are being disseminated with increasing regularity, ignore the money shelled out on institutions such as AIG, Fannie Mae and Freddie Mac, to say nothing of the myriad financing and bond-purchase programmes put in place to support the banks. Nor do they adjust the returns for risk, the very sin that banks committed during the go-go years.

The intricacies of bank reform were never likely to get a thorough airing in a set-piece political speech. But the casual listener to Mr Obama’s oratory might conclude that the crisis occurred because there were no regulations, that big banks would be allowed to fail in the future and that the proposed constraints of finance will create a new age of prosperity. (They would also think that the incomprehensible decision on Friday to impose tariffs on Chinese tyre imports was designed to save free trade.) The truth is far messier. Reform is badly needed, but people will still be greedy, banks will still need saving and a more stable system will entail less credit flowing through it. Mr Obama is eloquent but too often he does not tell it like it is.

zhtwdUID：2319724

The wealth effect
Withdrawal symptoms
Sep 3rd 2009
From The Economist print edition
Most new borrowing during America’s housing boom was for spending


HOW big an influence on spending is housing wealth? Hopes for a consumer revival in countries where house prices have slumped rest, in part, on the answer. A purist view is that the value of homes has no “wealth effect” on consumption. An increase in house prices only raises the future cost of shelter. Those about to trade down or sell out receive a windfall, but first-time buyers and those hoping to buy a bigger home are worse off. The overall effect on wealth is a wash. But even if that is correct, house-price increases may still have an impact as they create housing collateral for consumers who could not otherwise borrow. A study by Atif Mian and Amir Sufi of the University of Chicago’s Booth School of Business pins down the size of this effect, using the credit records of almost 70,000 American borrowers.

It could be that an unseen influence, such as greater optimism about future earnings, pushed up both house prices and debt. So the authors use their granular data to first establish a link between the two, which is apparent in the aggregate figures up to 2006 (see chart). They found that house prices and household debt increased most where the supply of new housing was limited—in places that are hemmed in by hills, rivers or the ocean. But in cities where housing supply is very “elastic”—where homes can easily be built to meet demand and prices did not rise—debt barely rose either. This suggests that house-price rises led to more borrowing.

How much of this was simply down to new buyers needing bigger home loans? By limiting their sample to those who were already homeowners in 1997, before the boom in housing and credit, the authors were able to measure how much of the rise in debt was the result of cashing in on higher home values. They reckon almost 60% of increased debt between 2002 and 2006 came from this source. Put another way, every $1 increase in home values led to a rise of 25-30 cents in borrowing. That is far bigger than some long-standing estimates of the wealth effect from rising asset values, which are in the 3-5 cent range (though these include the response of renters, too).

Money released from housing equity was not funnelled into other forms of saving. Homeowners in cities where house prices rose quickly were less, rather than more, likely to invest in other properties. Funds raised against rising home equity were not used to pay down other debts. And fewer households invested in financial assets, such as shares and bonds, when house prices were rising. All this suggests that almost all of the $1.45 trillion the authors estimate was borrowed against rising home equity was used for spending.

Digging deeper into their data, the two Chicago economists discovered that the pattern of home-equity withdrawal was far from uniform. The young were keener to cash out than the old. That is at odds with the life-cycle theory of consumption, which says that the young amass wealth so that they can spend it in old age. Borrowing by the top quartile of homeowners ranked by their creditworthiness scarcely rose in response to rising house prices. That is evidence against a pure wealth effect, says Mr Sufi. The most eager borrowers were those with the lowest credit ratings and whose credit-card borrowing was closest to the agreed limit. That sits well with a model of willing but frustrated consumers given access to credit through the rising value of their homes.

It also fits a more worrying interpretation: that many of the keenest borrowers were myopic or had problems with self-control. More than a third of new defaults in 2006-08 were because of home-equity-based borrowing. Default rates for low credit-quality homeowners rose by more than 12 percentage points in places where housing was scarcest and prices had risen most. In “elastic” cities, by contrast, the increase was less than four percentage points. This suggests huge over-borrowing. Prospects for a sustained recovery look dim if households that are most inclined to spend are mired in negative equity.

StefanaUID：2143510

这么好的帖子 顶一个
最近我也开始做阅读
今天考试体会到了什么是
出来混迟早是要还的了

紫薇花开UID：2461167

跟踪STE
加油

plukaUID：2721764

谢谢LZ，正在愁不知道怎么练阅读呢！好高的楼……决定今天开始补~

oatmeal119UID：2877676

:hug:辛苦啦