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Occupy the mortgage lenders

By Simon Johnson WASHINGTON, DC: Participants in the Occupy Wall Street movement are right to argue that the big banks have never properly been investigated for the mortgage origination, aggregation, and securitization behavior that was central to the financial crisis — and to the loss of more than eight million jobs. But, thanks to the efforts …


Who will eclipse America?

By Simon Johnson WASHINGTON, DC: According to Voltaire, the Roman Empire fell “because all things fall.” It is hard to argue with this as a general statement about decline: nothing lasts forever. But it is also not very useful. In thinking, for example, about American predominance in the world today, it would be nice to know …


The Tea Party’s modest proposal

By Simon Johnson WASHINGTON, DC: America’s Tea Party has a simple fiscal message: the United States is broke. This is factually incorrect — US government securities remain one of the safest investments in the world — but the claim serves the purpose of dramatizing the federal budget and creating a great deal of hysteria around America’s …


Defaulting to big government

By Simon Johnson WASHINGTON, DC: Leading United States Congressmen are determined to provoke a showdown with the Obama administration over the federal government’s debt ceiling. Ordinarily, you might expect House Republicans to blink at this stage of the negotiations, but there is a hardline minority that actually appears to think that defaulting on government debt would …


Europe’s naked banks

By Simon Johnson WASHINGTON, DC: European leaders are convinced that bank capital is “expensive,” in the sense that raising capital requirements would slow economic growth. But the latest developments in the Greek crisis show that the exact opposite is true — it’s European banks’ lack of capital that threatens to derail European and global growth. Banks’ …


Arrogance and authority

By Simon Johnson WASHINGTON, DC: It is increasingly common to hear prominent American and European central bankers proclaim, with respect to the crisis of 2008-2010, the following verdict: “We did well.” Their view is that the various government actions to support the financial system helped to stabilize the situation. Indeed, what could be wrong when the …


The road to fiscal crisis

By Simon Johnson WASHINGTON, DC: It has become fashionable among Washington insiders — Democrats and Republicans alike — to throw up their hands and say: We ultimately face a major budget crisis in the United States, particularly as rising health-care costs increase the fiscal burden of entitlements like Medicare and Medicaid. But then the same people …


Did the poor cause the crisis?

By Simon Johnson WASHINGTON, DC: The United States continues to be riven by heated debate about the causes of the 2007-2009 financial crisis. Is government to blame for what went wrong, and, if so, in what sense? In December, the Republican minority on the Financial Crisis Inquiry Commission (FCIC), weighed in with a preemptive dissenting narrative. …


Voodoo economics revisited

By Simon Johnson WASHINGTON, DC: Democratic and Republican leaders in Washington are suddenly falling over themselves to agree on the need for major tax cuts — affecting not just middle-class Americans, but also very rich people (both living and when they die). Does this sudden outbreak of the long-desired bipartisan consensus indicate that a new, stronger …


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