Mahler & Anti-Semitism in Europe
by Bill Breakstone
October 29, 2009
The role that anti-Semitism played during the lifetime of Gustav Mahler, and many other artists of Jewish descent, was very important in both a personal sense, and in an artistic one as well. Many may think that the rise of hatred against European Jews stemmed from the 1920s and the rise of Hitler’s National Socialist Party, but it in fact goes much, much further back in history.
What is both interesting, and tragic, is that European Jews were on the verge of real emancipation from religious bigotry. Mahler and his family provide a fascinating case in point.
Mahler was born in 1860 in the small Moravian town of Iglau, close to the border with Bohemia. It was one of just a few towns in that region where German-speaking inhabitants predominated. His father, Bernhard, was a Jew born in Germany, and was a quite successful businessman who had accumulated a high degree of education and monetary wealth.
Without becoming too historically detailed, during the 18th Century a division occurred among Jews in Europe. The emerging Haskalah sect, whose members were referred to as “Maskilim”, was composed of doctors, lawyers, philosophers and business people of all types, who “exhibited an ideal synthesis of loyalty to Judaism and involvement in general culture and society”1, and its purpose can be defined as ‘to bring light to the dark night in which the people of Israel are immersed’.2 These were the beliefs that Bernhard Mahler adopted in his early years. The Maskalim bitterly opposed Hasidism and its rampant superstition as the main obstacle in the way of improving the political, moral, and cultural situation of the Jews.
When the young Gustav Mahler left Iglau in 1875, nothing dramatic had yet occurred to dash the Jews’ hopes of emancipation, and he no doubt looked forward to attaining his full civil rights in the capital. Nor was he to be disappointed, for in Vienna he found himself in a tolerant society in which the Jews had been successfully integrated, even though the most precious benefits of assimilation were of course reserved for the rich bourgeoisie and foremost intellectuals.
This religious tolerance was about to change beginning in the late 1870s and then far more dramatically from 1880 onwards, especially after the 1895 General Election, which brought the Christian Socialists to power with an anti-Semitic programme that destroyed all hopes of assimilation of the Jews. As De La Grange states, “In any case, although Christian politics, Christian anti-Semitism and Christian social demagogy had effectively taken over Viennese politics, it was still Jewish brains, Jewish passion for learning, and Jewish artistic gifts which held sway in all branches of the City’s intellectual life, with science, medicine, philosophy, sociology, and the law all largely in Jewish hands. Jewish talent reigned over Viennese culture, especially in literature, while the philanthropy of Jewish magnates sustained the visual arts and saved them from sinking into traditional Viennese conservatism. The majority of the press was also in Jewish hands, and had remained faithful to its former liberal ideals. But an important change had taken place: Vienna had become the major centre of European anti-Semitism.”3
After his time in Hamburg and Prague, Mahler was approached by the Vienna Court Opera [Hofoper] to take over its reins. Mahler was quoted as saying “The fact was that it was impossible to occupy an official post without being baptized.” Thus, what I call a conversion of necessity was accomplished in 1896, shortly before he accepted the position in Vienna, one of the world’s highest achievements in musical arts.
Here it is worth quoting De La Grange in detail. “In any case, what is demonstrable is that he [Mahler] never was, and never became, a church- or synagogue-goer. Although there were a great number of Jewish organizations, societies, and fraternities—both religious and secular—Mahler never belonged to any of them. Throughout his adult life he never observed any of the Jewish High Holidays, but instead confined himself to the traditional—i.e., Christian—feasts, with Christmas as the main one. His religious beliefs were expressed in other ways. First there was his devotion to music and his positive sense of morality and justice. Then there was his unceasing life struggle to achieve the highest ethical standards, whether in a search for inner truths and eternal values or in his uncompromising sense of duty and solidarity with the rest of humanity. But, above all perhaps, at the core of his belief lay the commitment to be as true to himself as possible (often dangerously so), whether in his life or in his music. Mahler’s imaginary folk music, his expressionistic excesses (the asperities and cruel irony of his late scherzos for instance), can be interpreted as a form of the Jewish ‘ethical pursuit of truth, because in his music he strove to include everything human and thus sought to fulfill his ultimate desire—artistic integrity.”
1 Steven Belle, Vienna and the Jews 1867-1938(Cambridge University, Cambridge,
1989).
2 Samuel Finer, Haskalkah and History, The Emergence of Modern Jewish Historical
Consciousness (Littman, Oxford, 2002).
3 Henry-Louis de La Grange, Gustav Mahler—A New Life Cut Short (1907-1911), (Oxford University Press, London, 2008
Friday, October 30, 2009
Saturday, October 24, 2009
Dudamel & The Los Angeles Philharmonic on Great Performances
The PBS Great Performances broadcast of Gustavo Dudamel's Inaugural Concert with The Los Angeles Philharmonic earlier this week was an interesting event. Much has been made of this 28-year-old "wunderkind" from Venezuela. He certainly got some terrific sounds from his orchestra in the two pieces performed, John Adams' "City Noir" and Mahler's Symphony No. 1 in D Major.
I have always admired Adams as one of the leading composers of our day, and this latest work is a blockbuster, and one I must catch again when this program is rebroadcast. I prefer to never judge a new compoistion on a first hearing, so will have more to say on this piece later.
Now for the Mahler. This youthful work has never been my favorite Mahler opus, but it is filled with new ideas (or as his earlier critics said were re-workings of old ideas), wonderful orchestration and a brilliant finale. The funeral march is what has always set me back. I never could understand why Mahler used as his theme the simple, happy children's tune of "Frere Jacques" for such a funereal subject.
I now must admit a personal failing. I do not have the patience I used to, whether it is listing to music, watching a baseball championship game, or reading a book that takes forever to get into. When the Yankees gave up four runs in the first inning of their 5th game the other night, off went the TV! I had a similar reaction to Dudamel's reading of the first movement of Mahler's First. The restatement of the opening theme as the orchestra increases its dynamics leading to the tutti was performed with an accelerando that immediately brought me to think that thgis young conductor, as brilliant as he may be, has a long, long way to go. No doubt he will get there eventually as his musical intellect matures, but this was Mahler I just did not care to sit through.
Let's just leave it at that!
I have always admired Adams as one of the leading composers of our day, and this latest work is a blockbuster, and one I must catch again when this program is rebroadcast. I prefer to never judge a new compoistion on a first hearing, so will have more to say on this piece later.
Now for the Mahler. This youthful work has never been my favorite Mahler opus, but it is filled with new ideas (or as his earlier critics said were re-workings of old ideas), wonderful orchestration and a brilliant finale. The funeral march is what has always set me back. I never could understand why Mahler used as his theme the simple, happy children's tune of "Frere Jacques" for such a funereal subject.
I now must admit a personal failing. I do not have the patience I used to, whether it is listing to music, watching a baseball championship game, or reading a book that takes forever to get into. When the Yankees gave up four runs in the first inning of their 5th game the other night, off went the TV! I had a similar reaction to Dudamel's reading of the first movement of Mahler's First. The restatement of the opening theme as the orchestra increases its dynamics leading to the tutti was performed with an accelerando that immediately brought me to think that thgis young conductor, as brilliant as he may be, has a long, long way to go. No doubt he will get there eventually as his musical intellect matures, but this was Mahler I just did not care to sit through.
Let's just leave it at that!
Financial Regulation--Mistakes Made and A Path Forward
Financial Regulation—Mistakes Made and
A Path Forward
By Bill Breakstone
October 23, 2009
Only fools don’t learn from their mistakes. Is that how the saying goes?
Wednesday’s New York Times contained a front page article about Paul A. Volcker, former Chairman of the Federal Reserve Bank and currently the head of President Obama’s Economic Recovery Advisory Board. I skimmed the article briefly at first, and then re-read it carefully.
Much later that evening, I viewed the PBS program “Frontline,” an hour-long story about Brooksley Born, former head of the Commodity Futures Trading Commission, who resigned under pressure in 1999, and foresaw the coming financial collapse. She and her staff tried unsuccessfully to reign in the renegades on Wall Street who had created a multi-hundred-trillion-dollar market in derivatives trading, and who were totally unregulated and unrestricted under any securities laws.
First, the Volcker story, excellently written by The Times Louis Uchitelle. Here are some excerpts:
“Mr. Volcker (he is 82) has some advice, deeply felt. He has been offering it in speeches and Congressional testimony, and repeating it to those around the president, most of them young enough to be his children.
He wants the nation’s banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008. And the administration is saying no, it will not separate commercial banking from investment operations.”
“Mr. Obama has in Mr. Volcker an adviser perceived as standing apart from Wall Street, and critical of its ways, some administration officials say, while Timothy F. Geithner, the Treasury secretary, and Lawrence H. Summers, chief of the National Economic Council, are seen, rightly or wrongly, as more sympathetic to the concerns of investment bankers.
For all these reasons, Mr. Volcker’s approach to financial regulation cannot be just brushed off — and Mr. Goolsbee, speaking for the administration, is careful not to do so. “We have discussed these issues with Paul Volcker extensively,” he said.
Mr. Volcker’s proposal would roll back the nation’s commercial banks to an earlier era, when they were restricted to commercial banking and prohibited from engaging in risky Wall Street activities.
The Obama team, in contrast, would let the giants survive, but would regulate them extensively, so they could not get themselves and the nation into trouble again. While the administration’s proposal languishes, giants like Goldman Sachs have re-engaged in old trading practices, once again earning big profits and planning big bonuses.
Mr. Volcker argues that regulation by itself will not work. Sooner or later, the giants, in pursuit of profits, will get into trouble. The administration should accept this and shield commercial banking from Wall Street’s wild ways.
“The banks are there to serve the public,” Mr. Volcker said, “and that is what they should concentrate on. These other activities create conflicts of interest. They create risks, and if you try to control the risks with supervision, that just creates friction and difficulties” and ultimately fails.
The only viable solution, in the Volcker view, is to break up the giants. JPMorgan Chase would have to give up the trading operations acquired from Bear Stearns. Bank of America and Merrill Lynch would go back to being separate companies. Goldman Sachs could no longer be a bank holding company. It’s a tall order, and to achieve it Congress would have to enact a modern-day version of the 1933 Glass-Steagall Act, which mandated separation.
Glass-Steagall was watered down over the years and finally revoked in 1999. In the Volcker resurrection, commercial banks would take deposits, manage the nation’s payments system, make standard loans and even trade securities for their customers — just not for themselves. The government, in return, would rescue banks that fail.
On the other side of the wall, investment houses would be free to buy and sell securities for their own accounts, borrowing to leverage these trades and thus multiplying the profits, and the risks.
Being separated from banks, the investment houses would no longer have access to federally insured deposits to finance this trading. If one failed, the government would supervise an orderly liquidation. None would be too big to fail — a designation that could arise for a handful of institutions under the administration’s proposal.
“People say I’m old-fashioned and banks can no longer be separated from nonbank activity,” Mr. Volcker said, acknowledging criticism that he is nostalgic for an earlier era. “That argument,” he added ruefully, “brought us to where we are today.”
“He may not be alone in his proposal, but he is nearly so.”
“Still, a handful side with Mr. Volcker, among them Joseph E. Stiglitz, a Nobel laureate in economics at Columbia and a former official in the Clinton administration. “We would have a cleaner, safer banking system,” Mr. Stiglitz said, adding that while he endorses Mr. Volcker’s proposal, the former Fed chairman is nevertheless embarked on a quixotic journey.”
With this current news story as a backdrop, the excellent PBS show, “The Warning,” carried an impact that to this viewer was overwhelming, and maddening.
Brooksley Born graduated from Stanford University and Stanford University Law School at the top of her class in the mid-1960s, and was Editor of The Stanford Law Review. She was the first woman in Stanford’s history to attain such honors. One of her classmates was our former Supreme Court Justice Sandra Day O’Connor.
Born was appointed by President Clinton in 1997 to head the Commodities Futures Trading Commission (CFTC), an independent Federal regulatory agency created under Congressional authority. She soon became aware of how quickly the over-the-counter (OTC) derivatives market was growing, and how little any of the Federal regulators knew about it. “We had no regulation. No federal or state public official had any idea of what was going on in those markets, so enormous leverage was permitted, enormous borrowing. There was also little or no capital being put up as collateral for the transactions. All the players and counterparties to one another’s contracts. This market had gotten to be over $680 trillion in notational value as of June 2008 when it topped up. I think that was a peak. And that is an enormous market. That’s more than 10 times the gross national product of all the countries of the world.”1
“First of all, we really didn’t know the dangers in the market because it was a dark market. There was no transparency. But in any financial market, if there is not government oversight to control abuses like fraud and manipulation, to limit speculation, to make sure that a major default won’t cause a domino effect throughout the economy, the public interest is exposed and in danger.” The previous year, suit was brought by Proctor & Gamble (P&G) and Gibson Greeting Cards against Bankers Trust, their OTC derivatives dealer, alleging fraud, a suit won by the plaintiffs. There had also been some spectacular failures, collapses from speculative dealings of fund managers at public institutions acting with similar derivatives dealers, notably the Pension Fund of Orange County, California, which was forced into bankruptcy because of its speculation, gambling with public money in the OTC derivatives market on interest rate swaps. In that case, every taxpayer in Orange County suffered the consequences.
Berksley Born was the Chair of this regulatory agency, the CFTC. She, rightly, perceived one of her responsibilities as defending the public interest. There was something definitely wrong about these markets. There was no record-keeping requirement; no reporting. Now keep in mind that this was 1997, a full decade before the financial collapse that we are still recovering from.
Born and her staff thus prepared a paper on the subject called a “concept release” [a report to be released to the public outlining a proposed rule change], in this case asking questions about the market, whether certain changes needed to be made to the regulatory regime; whether there need to be record-keeping; should there be reporting requirements to some Federal regulator; would clearing the transactions in a clearinghouse help protect against counterparty risk of default by one side or another?
When word of this proposed release reached the government, in the persons of Treasury Secretary Robert Rubin, Fed Chairman Alan Greenspan, and SEC Chair Arthur Levitt, all hell broke loose. In a meeting set up in Greenspan’s office, Born was told a report of this nature would be catastrophic to the financial markets, which at the time were operating smoothly and churning out record profits. Born was shocked. Was fraud to be permitted, sanctioned at the highest levels of government due to a straightjacket ideological approach to market self-regulation?
Despite the warnings of Greenspan, et al, the CFTC went ahead and published the concept release in May of 1997. Eventually, Congressional hearings were held, and a six-month moratorium at first imposed on the CFTC from taking any action, which was further extended indefinitely.
Some two years later, the hedge fund Long Term Capital Management collapsed, causing near-panic on Wall Street and a crisis that was averted only because the Fed and Treasury pressured a dozen or so of the largest investment houses to fund its rescue by an infusion of hundreds of millions of dollars in capital. Sound familiar?
The bottom line was that these OTC “black markets” were allowed to go on in a business as usual mode, with no regulatory changes made. In fact, a statute was passed in 2000 called the Commodities Futures Modernization Act [CFMA] which specifically took away all jurisdiction over the OTC derivatives market from the CFTC. Born resigned in 1999, and the rest is history.
Could the financial collapse of 2007-2009 been prevented by bringing light to a market that was completely unregulated and unknown by market participants and counterparties? Probably not, but the damage would have been contained somewhat. The collapses of several investment houses may have been avoided, but other factors were acting on the economy, the bursting of the housing bubble, the evaporation of the public trust in the markets without which public and private finance cannot thrive, the subsequent collapse of consumer confidence and spending, and the worst unemployment rate in over 35 years.
So, where are we now? Financial regulation is a main topic in today’s news, the Volcker story just one example. What are the odds that safeguards will be put in place to avoid a repetition of the recent financial disasters? The major players on the stage back in 1998, with the exception of Rubin, have all submitted their “mea culpa’s.” Yet the financial industry’s lobby is putting up a terrific fight to preserve its self-interest.
Born was asked if this moment passes [without such regulation], what will be the consequences from your perspective? She answered “I think we will have continuing danger from these markets and that we will have repeats of the financial crisis. It may differ in details, but there will be significant financial downturn and disasters attributed to this regulatory gap over and over until we learn from experience.”
One final cautionary note from Nobel Prize Winning Economist Joseph Stigliltz:
“So this is a dangerous moment, because if we don’t get it right, we are likely to wind up with an even more politically influential financial system, banks that are even bigger, more too big to fail, too big to be financially resolved, and so the risk of another crisis some years down the line is going to be greater. The risk that our economy’s performance will be weaker, the risk that there will be greater inequalities and a sense of injustice in our society will be higher.
So I think this is really a moment. I was very hopeful that in the aftermath of the crisis we could see what had gone wrong and say “Let’s fix it.” But it may be that we are passing that critical moment.”
1 Quoted material in this article is from interviews with the participants, and can be found on-line at http://www.pbs.org/. Go to “Frontline” to view the numerous interviews.
A Path Forward
By Bill Breakstone
October 23, 2009
Only fools don’t learn from their mistakes. Is that how the saying goes?
Wednesday’s New York Times contained a front page article about Paul A. Volcker, former Chairman of the Federal Reserve Bank and currently the head of President Obama’s Economic Recovery Advisory Board. I skimmed the article briefly at first, and then re-read it carefully.
Much later that evening, I viewed the PBS program “Frontline,” an hour-long story about Brooksley Born, former head of the Commodity Futures Trading Commission, who resigned under pressure in 1999, and foresaw the coming financial collapse. She and her staff tried unsuccessfully to reign in the renegades on Wall Street who had created a multi-hundred-trillion-dollar market in derivatives trading, and who were totally unregulated and unrestricted under any securities laws.
First, the Volcker story, excellently written by The Times Louis Uchitelle. Here are some excerpts:
“Mr. Volcker (he is 82) has some advice, deeply felt. He has been offering it in speeches and Congressional testimony, and repeating it to those around the president, most of them young enough to be his children.
He wants the nation’s banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008. And the administration is saying no, it will not separate commercial banking from investment operations.”
“Mr. Obama has in Mr. Volcker an adviser perceived as standing apart from Wall Street, and critical of its ways, some administration officials say, while Timothy F. Geithner, the Treasury secretary, and Lawrence H. Summers, chief of the National Economic Council, are seen, rightly or wrongly, as more sympathetic to the concerns of investment bankers.
For all these reasons, Mr. Volcker’s approach to financial regulation cannot be just brushed off — and Mr. Goolsbee, speaking for the administration, is careful not to do so. “We have discussed these issues with Paul Volcker extensively,” he said.
Mr. Volcker’s proposal would roll back the nation’s commercial banks to an earlier era, when they were restricted to commercial banking and prohibited from engaging in risky Wall Street activities.
The Obama team, in contrast, would let the giants survive, but would regulate them extensively, so they could not get themselves and the nation into trouble again. While the administration’s proposal languishes, giants like Goldman Sachs have re-engaged in old trading practices, once again earning big profits and planning big bonuses.
Mr. Volcker argues that regulation by itself will not work. Sooner or later, the giants, in pursuit of profits, will get into trouble. The administration should accept this and shield commercial banking from Wall Street’s wild ways.
“The banks are there to serve the public,” Mr. Volcker said, “and that is what they should concentrate on. These other activities create conflicts of interest. They create risks, and if you try to control the risks with supervision, that just creates friction and difficulties” and ultimately fails.
The only viable solution, in the Volcker view, is to break up the giants. JPMorgan Chase would have to give up the trading operations acquired from Bear Stearns. Bank of America and Merrill Lynch would go back to being separate companies. Goldman Sachs could no longer be a bank holding company. It’s a tall order, and to achieve it Congress would have to enact a modern-day version of the 1933 Glass-Steagall Act, which mandated separation.
Glass-Steagall was watered down over the years and finally revoked in 1999. In the Volcker resurrection, commercial banks would take deposits, manage the nation’s payments system, make standard loans and even trade securities for their customers — just not for themselves. The government, in return, would rescue banks that fail.
On the other side of the wall, investment houses would be free to buy and sell securities for their own accounts, borrowing to leverage these trades and thus multiplying the profits, and the risks.
Being separated from banks, the investment houses would no longer have access to federally insured deposits to finance this trading. If one failed, the government would supervise an orderly liquidation. None would be too big to fail — a designation that could arise for a handful of institutions under the administration’s proposal.
“People say I’m old-fashioned and banks can no longer be separated from nonbank activity,” Mr. Volcker said, acknowledging criticism that he is nostalgic for an earlier era. “That argument,” he added ruefully, “brought us to where we are today.”
“He may not be alone in his proposal, but he is nearly so.”
“Still, a handful side with Mr. Volcker, among them Joseph E. Stiglitz, a Nobel laureate in economics at Columbia and a former official in the Clinton administration. “We would have a cleaner, safer banking system,” Mr. Stiglitz said, adding that while he endorses Mr. Volcker’s proposal, the former Fed chairman is nevertheless embarked on a quixotic journey.”
With this current news story as a backdrop, the excellent PBS show, “The Warning,” carried an impact that to this viewer was overwhelming, and maddening.
Brooksley Born graduated from Stanford University and Stanford University Law School at the top of her class in the mid-1960s, and was Editor of The Stanford Law Review. She was the first woman in Stanford’s history to attain such honors. One of her classmates was our former Supreme Court Justice Sandra Day O’Connor.
Born was appointed by President Clinton in 1997 to head the Commodities Futures Trading Commission (CFTC), an independent Federal regulatory agency created under Congressional authority. She soon became aware of how quickly the over-the-counter (OTC) derivatives market was growing, and how little any of the Federal regulators knew about it. “We had no regulation. No federal or state public official had any idea of what was going on in those markets, so enormous leverage was permitted, enormous borrowing. There was also little or no capital being put up as collateral for the transactions. All the players and counterparties to one another’s contracts. This market had gotten to be over $680 trillion in notational value as of June 2008 when it topped up. I think that was a peak. And that is an enormous market. That’s more than 10 times the gross national product of all the countries of the world.”1
“First of all, we really didn’t know the dangers in the market because it was a dark market. There was no transparency. But in any financial market, if there is not government oversight to control abuses like fraud and manipulation, to limit speculation, to make sure that a major default won’t cause a domino effect throughout the economy, the public interest is exposed and in danger.” The previous year, suit was brought by Proctor & Gamble (P&G) and Gibson Greeting Cards against Bankers Trust, their OTC derivatives dealer, alleging fraud, a suit won by the plaintiffs. There had also been some spectacular failures, collapses from speculative dealings of fund managers at public institutions acting with similar derivatives dealers, notably the Pension Fund of Orange County, California, which was forced into bankruptcy because of its speculation, gambling with public money in the OTC derivatives market on interest rate swaps. In that case, every taxpayer in Orange County suffered the consequences.
Berksley Born was the Chair of this regulatory agency, the CFTC. She, rightly, perceived one of her responsibilities as defending the public interest. There was something definitely wrong about these markets. There was no record-keeping requirement; no reporting. Now keep in mind that this was 1997, a full decade before the financial collapse that we are still recovering from.
Born and her staff thus prepared a paper on the subject called a “concept release” [a report to be released to the public outlining a proposed rule change], in this case asking questions about the market, whether certain changes needed to be made to the regulatory regime; whether there need to be record-keeping; should there be reporting requirements to some Federal regulator; would clearing the transactions in a clearinghouse help protect against counterparty risk of default by one side or another?
When word of this proposed release reached the government, in the persons of Treasury Secretary Robert Rubin, Fed Chairman Alan Greenspan, and SEC Chair Arthur Levitt, all hell broke loose. In a meeting set up in Greenspan’s office, Born was told a report of this nature would be catastrophic to the financial markets, which at the time were operating smoothly and churning out record profits. Born was shocked. Was fraud to be permitted, sanctioned at the highest levels of government due to a straightjacket ideological approach to market self-regulation?
Despite the warnings of Greenspan, et al, the CFTC went ahead and published the concept release in May of 1997. Eventually, Congressional hearings were held, and a six-month moratorium at first imposed on the CFTC from taking any action, which was further extended indefinitely.
Some two years later, the hedge fund Long Term Capital Management collapsed, causing near-panic on Wall Street and a crisis that was averted only because the Fed and Treasury pressured a dozen or so of the largest investment houses to fund its rescue by an infusion of hundreds of millions of dollars in capital. Sound familiar?
The bottom line was that these OTC “black markets” were allowed to go on in a business as usual mode, with no regulatory changes made. In fact, a statute was passed in 2000 called the Commodities Futures Modernization Act [CFMA] which specifically took away all jurisdiction over the OTC derivatives market from the CFTC. Born resigned in 1999, and the rest is history.
Could the financial collapse of 2007-2009 been prevented by bringing light to a market that was completely unregulated and unknown by market participants and counterparties? Probably not, but the damage would have been contained somewhat. The collapses of several investment houses may have been avoided, but other factors were acting on the economy, the bursting of the housing bubble, the evaporation of the public trust in the markets without which public and private finance cannot thrive, the subsequent collapse of consumer confidence and spending, and the worst unemployment rate in over 35 years.
So, where are we now? Financial regulation is a main topic in today’s news, the Volcker story just one example. What are the odds that safeguards will be put in place to avoid a repetition of the recent financial disasters? The major players on the stage back in 1998, with the exception of Rubin, have all submitted their “mea culpa’s.” Yet the financial industry’s lobby is putting up a terrific fight to preserve its self-interest.
Born was asked if this moment passes [without such regulation], what will be the consequences from your perspective? She answered “I think we will have continuing danger from these markets and that we will have repeats of the financial crisis. It may differ in details, but there will be significant financial downturn and disasters attributed to this regulatory gap over and over until we learn from experience.”
One final cautionary note from Nobel Prize Winning Economist Joseph Stigliltz:
“So this is a dangerous moment, because if we don’t get it right, we are likely to wind up with an even more politically influential financial system, banks that are even bigger, more too big to fail, too big to be financially resolved, and so the risk of another crisis some years down the line is going to be greater. The risk that our economy’s performance will be weaker, the risk that there will be greater inequalities and a sense of injustice in our society will be higher.
So I think this is really a moment. I was very hopeful that in the aftermath of the crisis we could see what had gone wrong and say “Let’s fix it.” But it may be that we are passing that critical moment.”
1 Quoted material in this article is from interviews with the participants, and can be found on-line at http://www.pbs.org/. Go to “Frontline” to view the numerous interviews.
Friday, October 9, 2009
David Brooks on Health Care Reform
You've just have to admire David Brooks. A lot of noise has been heard lately from the far right about his criticism of The Republican Party, of which he is a member. Nonetheless, he believes that what the majority of Republicans are saying and doing is akin to political suicide.
When one watches the cable news channels, or PBS, or Meet The Press and other Sunday morning national network interview programs, you can't help but take note of the extreme positions taken by interviewees, such as Kay Bailey Hutchinson's comments this morning on CNBC, when asked about the liklihood of Congress passing compromise legislation such as that which emerged from the Senate Finance Committee this week. It didn't take her a second to roll off reasons tyhat she and her Republican colleagues would turn it down, as an example of increased government spending an interferece in the marketplace. Other Republicans decry the cutting of Medicare benefits to the elderly, and say we're better off with the status quo.
So give Republican Brooks credit for analyizing the issues and choices we face in his Op-Ed today. I'm sure he could also back up his reasoning with the argument that once again, the obstructionist right is taking a position that runs counter to the Nation's long-term welfare [God forgive me for using that term], as well as being against the interest of their Party.
And what was Mitch McConnel's comment after it was announced that President Obama was awareded The Nobel Peace Prize. "I'm sure he won it because of his star power." Thanks Mitch! What a gracious man.
Best,
Bill B.
Somers, NY
October 9, 2009
THE NEW YORK TIMES
October 9, 2009
Op-Ed Columnist
The Baucus Conundrum
By DAVID BROOKS
The longer the health care debate goes on, the more I become convinced that the American system needs fundamental reform. We need to transition away from a fee-for-service system to one that directs incentives toward better care, not more procedures. We need to move away from the employer-based system, which is eroding year by year. We need to move toward a more transparent system, in which people see the consequences of their choices.
I’ve also become convinced that the approach championed by Senator Ron Wyden, Democrat of Oregon, is the best vehicle for this sort of change. The Wyden approach — first introduced in a bill with Robert F. Bennett, Republican of Utah, and now pared down to an amendment to the current bills—would combine choice with universal coverage.
People with insurance could stay with their existing health plans. But if they didn’t like the plans their employer offered, they could take the money their employer spends, add whatever they wanted to throw in, and shop for a better option on a regulated exchange. People without insurance would get subsidies to shop at the exchanges.
Americans would have real choices. The vigorous exchanges would reward providers and insurers that are efficient, creative and innovative.
But barring a legislative miracle, the Wyden approach was effectively killed in committee last week. The business and union lobbies worked furiously against it. They want to control their employees’ and members’ benefit packages. Many politicians support it in principle but oppose it in practice. They fear that if they try to fundamentally reform the system, voters will revolt.
So what we are going to get is health insurance reform, not health care reform. We’ll be adjusting and expanding the current system, not essentially changing it.
At this point people like me could throw up our hands and oppose everything. But that’s not what adulthood is about. In the real world, you often don’t get to choose what your options will be. You have to choose from a few bad options. The real health care choice now is between the status quo and the bill primarily authored by Senator Max Baucus, Democrat of Montana, that is emerging from the Senate Finance Committee.
The Baucus bill centralizes power, in contrast to the free choice approach, which decentralizes it. The Baucus approach aims to reduce costs, expand coverage and improve efficiency by empowering regulators to write a better set of rules. It aims to rationalize the current system from the top down.
This approach has many weaknesses. It entrenches a flawed system. It creates greater uniformity and rigidity. It redistributes income from the politically disorganized young to the politically organized old. It squeezes people into a Rube Goldberg complex of bureaucracies based on their income level. It will impose huge costs on people as they rise up the income ladder, distorting the whole economy.
The biggest problem is that it will retard innovation. Top-down systems just don’t innovate well, no matter how many Innovation Centers you put in the Department of Health and Human Services. The bill will retard innovation by using monopoly power to squeeze costs. It will also retard innovation by directing resources toward current care (and current voters) and away from future technologies and future beneficiaries.
But the Baucus bill has some advantages over the status quo as well. It would insure an additional 29 million people, a social benefit critics never grapple with.
It is also more fiscally responsible than any other committee bill. It courageously cuts Medicare benefits by hundreds of billions. It raises taxes on the upper and middle classes in many necessary (and covert) ways. The bill will not really be budget neutral, but the authors have taken fiscal responsibility seriously. They’ve earned that good score from the Congressional Budget Office.
Most impressively, the Baucus bill includes many provisions to make government-run health care more rational. It would bundle payments to hospitals and encourage doctors to work in efficient teams. It would punish hospitals that have to readmit patients. It would create a commission to perpetually squeeze costs. It would improve information technology. It would measure the comparative effectiveness of different treatments. No one knows how much savings would be produced by these changes in payment method, but they could be significant.
If you asked me to compare the Baucus approach with the Wyden approach, the answer is easy. But if you asked me to compare it with the status quo, the answer is hard. The Baucus bill contains hidden bombs that could lead to a rigid bureaucratic system that still doesn’t address the fundamental problems. On the other hand, it contains hidden experiments that could lead to new models that might spread across the system.
If I were in Congress, I’d figure there’s an 80 percent chance of something like this passing anyway. I might as well get engaged as a provisional supporter to fight to make it better, or at least to fight off the coming onslaught to make it worse.
When one watches the cable news channels, or PBS, or Meet The Press and other Sunday morning national network interview programs, you can't help but take note of the extreme positions taken by interviewees, such as Kay Bailey Hutchinson's comments this morning on CNBC, when asked about the liklihood of Congress passing compromise legislation such as that which emerged from the Senate Finance Committee this week. It didn't take her a second to roll off reasons tyhat she and her Republican colleagues would turn it down, as an example of increased government spending an interferece in the marketplace. Other Republicans decry the cutting of Medicare benefits to the elderly, and say we're better off with the status quo.
So give Republican Brooks credit for analyizing the issues and choices we face in his Op-Ed today. I'm sure he could also back up his reasoning with the argument that once again, the obstructionist right is taking a position that runs counter to the Nation's long-term welfare [God forgive me for using that term], as well as being against the interest of their Party.
And what was Mitch McConnel's comment after it was announced that President Obama was awareded The Nobel Peace Prize. "I'm sure he won it because of his star power." Thanks Mitch! What a gracious man.
Best,
Bill B.
Somers, NY
October 9, 2009
THE NEW YORK TIMES
October 9, 2009
Op-Ed Columnist
The Baucus Conundrum
By DAVID BROOKS
The longer the health care debate goes on, the more I become convinced that the American system needs fundamental reform. We need to transition away from a fee-for-service system to one that directs incentives toward better care, not more procedures. We need to move away from the employer-based system, which is eroding year by year. We need to move toward a more transparent system, in which people see the consequences of their choices.
I’ve also become convinced that the approach championed by Senator Ron Wyden, Democrat of Oregon, is the best vehicle for this sort of change. The Wyden approach — first introduced in a bill with Robert F. Bennett, Republican of Utah, and now pared down to an amendment to the current bills—would combine choice with universal coverage.
People with insurance could stay with their existing health plans. But if they didn’t like the plans their employer offered, they could take the money their employer spends, add whatever they wanted to throw in, and shop for a better option on a regulated exchange. People without insurance would get subsidies to shop at the exchanges.
Americans would have real choices. The vigorous exchanges would reward providers and insurers that are efficient, creative and innovative.
But barring a legislative miracle, the Wyden approach was effectively killed in committee last week. The business and union lobbies worked furiously against it. They want to control their employees’ and members’ benefit packages. Many politicians support it in principle but oppose it in practice. They fear that if they try to fundamentally reform the system, voters will revolt.
So what we are going to get is health insurance reform, not health care reform. We’ll be adjusting and expanding the current system, not essentially changing it.
At this point people like me could throw up our hands and oppose everything. But that’s not what adulthood is about. In the real world, you often don’t get to choose what your options will be. You have to choose from a few bad options. The real health care choice now is between the status quo and the bill primarily authored by Senator Max Baucus, Democrat of Montana, that is emerging from the Senate Finance Committee.
The Baucus bill centralizes power, in contrast to the free choice approach, which decentralizes it. The Baucus approach aims to reduce costs, expand coverage and improve efficiency by empowering regulators to write a better set of rules. It aims to rationalize the current system from the top down.
This approach has many weaknesses. It entrenches a flawed system. It creates greater uniformity and rigidity. It redistributes income from the politically disorganized young to the politically organized old. It squeezes people into a Rube Goldberg complex of bureaucracies based on their income level. It will impose huge costs on people as they rise up the income ladder, distorting the whole economy.
The biggest problem is that it will retard innovation. Top-down systems just don’t innovate well, no matter how many Innovation Centers you put in the Department of Health and Human Services. The bill will retard innovation by using monopoly power to squeeze costs. It will also retard innovation by directing resources toward current care (and current voters) and away from future technologies and future beneficiaries.
But the Baucus bill has some advantages over the status quo as well. It would insure an additional 29 million people, a social benefit critics never grapple with.
It is also more fiscally responsible than any other committee bill. It courageously cuts Medicare benefits by hundreds of billions. It raises taxes on the upper and middle classes in many necessary (and covert) ways. The bill will not really be budget neutral, but the authors have taken fiscal responsibility seriously. They’ve earned that good score from the Congressional Budget Office.
Most impressively, the Baucus bill includes many provisions to make government-run health care more rational. It would bundle payments to hospitals and encourage doctors to work in efficient teams. It would punish hospitals that have to readmit patients. It would create a commission to perpetually squeeze costs. It would improve information technology. It would measure the comparative effectiveness of different treatments. No one knows how much savings would be produced by these changes in payment method, but they could be significant.
If you asked me to compare the Baucus approach with the Wyden approach, the answer is easy. But if you asked me to compare it with the status quo, the answer is hard. The Baucus bill contains hidden bombs that could lead to a rigid bureaucratic system that still doesn’t address the fundamental problems. On the other hand, it contains hidden experiments that could lead to new models that might spread across the system.
If I were in Congress, I’d figure there’s an 80 percent chance of something like this passing anyway. I might as well get engaged as a provisional supporter to fight to make it better, or at least to fight off the coming onslaught to make it worse.
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