“Despite all that has happened since 2008, banking remains a very peculiar business—peculiarly cosseted, peculiarly financed, and peculiarly risky. Indeed, its current prosperity reflects not just the over-all economic recovery but the persistence of many of the factors that got us into the financial crisis in the first place: an emphasis on trading rather than lending, a high degree of leverage, and implicit subsidies from the taxpayer.”

—John Cassidy, The Problem with Record Bank Profits

In other words: nope, lessons of the giant Credit Crisis haven’t been learned. It’s just a matter of time before history repeats.

“The point is that talking about Mr. Romney’s personal history isn’t a diversion from substantive policy discussion. On the contrary, in a political and media environment strongly biased against substance, talking about Bain and offshore accounts is the only way to bring the real policy issues into focus. And we should applaud, not condemn, the Obama campaign for standing up to the tut-tutters.”

—Paul Krugman, Policy and the Personal

In fact, almost everyone following the situation now realizes that Germany’s austerity obsession has brought Europe to the edge of catastrophe — almost everyone, that is, except the Germans themselves and, it turns out, the Romney economic team.

Needless to say, this bodes ill if Mr. Romney wins in November. For all indications are that his idea of smart policy is to double down on the very spending cuts that have hobbled recovery here and sent Europe into an economic and political tailspin.

—Paul Krugman, We Don’t Need No Education

Seven Lean Years

Krugman’s response matches my own. It’s true, the jobs report is good. But given the ditch we’re in and the lasting impact of the recession, champagne-popping is still a ways off.

Possible Downgrades

News is currently circulating that S&P will downgrade a handful of European countries. Reuters reports that the announcement will come at 21:30 GMT (4:30 EST), and The Big Picture gives some context to the actions:

With the likelihood of an S&P credit downgrade of France, Spain, Italy, Belgium and Portugal, it’s important to understand that #1, they are just following what the markets have priced in and #2, Fitch and Moody’s in some circumstances have already moved ahead of S&P…

Update: coverage from The New York Times.

“[T]here’s no contradiction between the assertion that F&F were bad institutions run by bad people, and the assertion that they played no important role in creating the financial crisis. The widespread belief that they did play such a role is the result of an effective right-wing disinformation campaign, not serious analysis.”

—Paul Krugman, Fannie Freddie Follies

“It all adds up to one of the most disastrous summits imaginable. A continent which has risen to multiple occasions over the past 66 years has, in 2011, decided to implode in a spectacle of pathetic ignominy. Its individual countries will survive, of course, albeit in unnecessarily straitened circumstances. But the dream of European unity is dissolving in real time, as the eyes of the world look on in disbelief.”

—Felix Salmon, on the EU summit. Paul Krugman shares his grim outlook.

newyorker:

Debt by Degrees

Maybe we need to be willing to spend more and more of  our incomes and taxpayer dollars on school, or maybe we need to be  willing to pay educators and administrators significantly less, or maybe  we need to find ways to make colleges more productive places, which  would mean radically changing our idea of what going to college is all  about. Until America figures out its priorities, college kids are going  to have to keep running just to stand still. 

- James Surowiecki on college tuition, student loans, and unemployment: http://nyr.kr/vWc0iP

newyorker:

Debt by Degrees

Maybe we need to be willing to spend more and more of our incomes and taxpayer dollars on school, or maybe we need to be willing to pay educators and administrators significantly less, or maybe we need to find ways to make colleges more productive places, which would mean radically changing our idea of what going to college is all about. Until America figures out its priorities, college kids are going to have to keep running just to stand still. 

- James Surowiecki on college tuition, student loans, and unemployment: http://nyr.kr/vWc0iP

Can Anyone Really Create Jobs?

Adam Davidson’s debut column in the New York Times Sunday Magazine is a must read. As a longtime listener of Planet Money, I’m thrilled to see Davidson reaching a wider audience.