The Atlantic’s Matthew O’Brien, whom you should really be reading, raises an important point lost in all the discussion about Ben Bernanke and whether he’s doing enough to combat unemployment.
Last Sunday in The New York Times Magazine, Paul Krugman showed how Chairman Bernanke’s actions have been far less vigorous than Professor Bernanke would have advised.
But the Fed Chairman isn’t the Dictator of the Dollar. He has to deal with a committee of bank governors and presidents who have their own ideas about inflation and unemployment. O’Brien on the Federal Open Market Committee:
Its structure is a bit Byzantine and not terribly important, but what is important is that the Fed Chairman usually gets his way without any dissent. That hasn’t been true lately. The Fed’s unconventional measures have unsurprisingly not been too popular with the FOMC’s more conventional members. Unfortunately, that hasn’t stopped Bernanke from trying to reach a consensus. He thinks he needs to. Bernanke recently told Roger Lowenstein that he thinks any policy that doesn’t get at least a 7-3 majority simply won’t be credible. This political calculation gives the hawks more policy influence than they would otherwise have.
And now it looks like there are more hawks. As Greg Ip of The Economist has pointed out, most of Bernanke’s colleagues now want to raise rates before he does. He increasingly looks isolated. Even if Bernanke is inclined to ease a bit more — and reading between the lines, he might be — there’s little chance of it happening. It’s worth remembering that even the hawks project inflation to remain below target and unemployment to remain above target for the next few years. If the Fed believes its own forecasts, it should be doing more.
This is a critically important and—O’Brien is right—underplayed story.
— ProPublica’s Jesse Eisinger criticizes the SEC for going after minor violations at Egan-Jones, a small, outsider credit-ratings firm, while leaving Moody’s, S&P, and Fitch, who enabled the financial crisis, untouched.
All told, the allegations seem especially paltry when compared with the disastrous performance of the ratings agencies that matter — Moody’s and S.&P. Egan-Jones’s ratings didn’t cripple the global economy. Mr. Egan’s business model is far less prone to compromise and corruption. The inescapable conclusion is that the S.E.C. is letting Moody’s and S.&P. officials walk free while pursuing Mr. Egan on minor technicalities.
This is your S.E.C., folks. It courageously assails tiny firms, and at the pace of a three-toed sloth. And when it goes after its prey, it’s because it has found a box unchecked, rather than any kind of deep, systemic rot.
Unfortunately, there’s an even worse problem here. The action against Mr. Egan gives the appearance, perhaps inadvertently, that the agency is persecuting a longstanding critic of the ratings agencies. That just solidifies the woeful ratings oligopoly we have today.
— Bloomberg reports that the number of Americans renouncing their U.S. citizenship last year was seven times the number who did in 2008.
What’s behind the huge increase (on a small 2008 base of 235 renouncers, to be sure)? Bloomberg argues a good portion of it due to the tax crackdown against illegal tax avoidance in Swiss banks:
The embassy in Bern, the Swiss capital, redeployed staff to clear a backlog as Americans queued to relinquish their passports…
During a 10-minute renunciation ceremony in a booth with bullet-proof glass windows, embassy staff ask exiting Americans whether they are acting voluntarily and understand the implications of giving up their passports. They pay a fee of $450 to renounce and may incur an “exit tax” on unrealized capital gains if their assets exceed $2 million or their average annual U.S. tax bill is more than $151,000 during the past five years.
They receive a certificate within three months, telling them they are no longer American citizens and entitled to the services and protection of the U.S. government.