Articles & Essays
The American system of mortgage financing is broken and needs a total overhaul. Until there is a realistic prospect of stabilizing housing prices, the value of mortgage-related securities will erode and Treasury Secretary Henry Paulson's efforts will come to naught.
The emergency legislation before Congress was ill-conceived - or, more accurately, not conceived at all. As Congress tried to improve what Treasury requested, an amalgam plan has emerged that consists of Treasury's original troubled asset relief programme and a quite different capital infusion programme in which the government invests in and stabilises weakened banks and profits from the economy's eventual improvement.
Hank Paulson's $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque.
All this has occurred at the same time as a world credit crisis that started with the collapse of the US housing bubble. The rising cost of oil, coming on top of the credit crisis, has slowed the world economy and reinforced the prospect of a recession in the US.
The recent compromise struck between the Treasury and Democrats in Congress on the fate of Fannie Mae and Freddie Mac, the government-sponsored mortgage guarantors, constitutes the worst of all possible worlds. The Treasury offered a blank cheque to come to the rescue, if necessary, but the managements of both companies were kept in place.
The proposal from Hank Paulson, US Treasury secretary, for reorganising government regulation of financial institutions misses the point. We need new thinking, not a reshuffling of regulatory agencies. The Federal Reserve has long had authority to issue rules for the mortgage industry but failed to
The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.
However, there is a profound difference: the current crisis marks the end
The United States and Israel seek to deal only with the president of the Palestinian Authority, Mahmoud Abbas, in the hope that new elections would deny Hamas the majority it now has in the Palestinian Legislative Council. This is a hopeless strategy because Hamas has said it would boycott early elections, and even if their outcome would result in Hamas's exclusion from the government, no peace agreement would hold without Hamas's support.
The Bush administration is again committing a blunder in the Middle East by supporting the Israeli government in its refusal to recognise a Palestinian unity government that includes Hamas.
The war on terror is a false metaphor that has led to counterproductive and self-defeating policies. Five years after 9/11, a misleading figure of speech applied literally has unleashed a real war fought on several fronts -- Iraq, Gaza, Lebanon, Afghanistan, Somalia -- a war that has killed thousands of innocent civilians and enraged millions around the world.