Tuesday, September 30, 2014

Three interesting but totally different articles in today's Times

An article on the decision not to bail out Lehman Brothers (suggesting that it was in some ways arbitrary, ill-thought-out, deceptively presented, and quite political) builds on recent pieces discussing AIG et al (with no haircut whatsoever for Goldman Sachs) that bring to mind the dual nature of the 2008 rescues.  On the one hand, the Fed's interventions were necessary to prevent true global macroeconomic calamity, well beyond the plenty-bad-enough consequences that we nonetheless experienced, and yet they were politically attacked in a way that could make doing the right thing harder in the future.  (Then again, perhaps the political costs of rescue do help to ease, if only slightly, the moral hazard problems caused by knowing that one is too big or central to fail.)  But on the other hand, they reinforce my sense that in some ways the rescuers' choices really can't withstand much scrutiny, given how they arbitrarily played favorites and reflected the undue political influence of players such as Goldman.

On  a totally separate theme, an article on the European Commission's preliminary finding that Ireland gave Apple tax advantages that amounted to illegal state aid, and may be ordered to collect billions of dollars in back taxes that the Irish government, with an eye to future freedom of action in making deals with companies, may not even want.

Finally, for comic relief, Mitt Romney keeps bringing to mind the song, "How Can I Miss You if You Won't Go Away?"

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