Restoring Confidence

The NY Times has some worthwhile reads this morning.

Perhaps you noticed the uncritical enthusiasm on yesterday's television news programs for the selection of Timothy Geithner as Treasury Secretary, and Lawrence Summers as director of the National Economic Council. The editorialists at the Times are not quite so enthusiastic:

As treasury secretary in 2000, Mr. Summers championed the law that deregulated derivatives, the financial instruments — a k a toxic assets — that have spread the financial losses from reckless lending around the globe. He refused to heed the critics who warned of dangers to come.

That law, still on the books, reinforced the false belief that markets would self-regulate. And it gave the Bush administration cover to ignore the ever-spiraling risks posed by derivatives and inadequate supervision.

[snip]

At the New York Fed, Mr. Geithner has been one of the ringmasters of this year’s serial bailouts. His involvement includes the as-yet-unexplained flip-flop in September when a read-my-lips, no-new-bailouts policy allowed Lehman Brothers to go under — only to be followed less than two days later by the even costlier bailout of the American International Group and last weekend by the bailout of Citigroup.

Bob Herbert talks about how to wisely spend economic stimulus payments:

Senator Chris Dodd of Connecticut is sponsoring a bill that would create an infrastructure bank with a bipartisan board of directors and a chief executive to be appointed by the president and confirmed by the Senate.

The board would streamline the process of reviewing and signing off on major infrastructure proposals. It would determine the value to the public of each project — and its environmental impact. It would provide federal investment capital for approved projects and use that money to leverage private investment.

“Our major economic competitors in the 21st century are spending seven, eight, nine percent of their gross domestic product on infrastructure,” said Senator Dodd. “We’re spending almost nothing at all.”

The U.S. is moving from a period in which leaders spent money on wars and on lavish tax cuts for the rich, but not on investments in the nation’s future. That era of breathtaking irresponsibility must come to an end. Which means that now, with so much federal money soon to be available for infrastructure projects, it’s crucially important to spend the money as wisely as possible.

Finally, saving the most depressing story for last,

Just as the world seemed poised to combat global warming more aggressively, the economic slump and plunging prices of coal and oil are upending plans to wean businesses and consumers from fossil fuel.

From Italy to China, the threat to jobs, profits and government tax revenues posed by the financial crisis has cast doubt on commitments to cap emissions or phase out polluting factories.