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As Congress debates financial reform, one piece of Dodd-Frank that is potentially on the chopping block is the Orderly Liquidation Authority (OLA)a mechanism to wind down large financial institutions. As with many other parts of Dodd-Frank, its inclusion in the law is an understandable reflection of the time at which it was written. Since then, however, we have had time to rethink the wisdom of the provision. It is time for the OLA to go away.
The OLA was a response to dramatic financial firm failures during the crisis, especially Lehman Brothers and AIG. The bankruptcy of the former and…

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One of the great advantages of the United States has, at least historically, been the nations sheer scale. With almost four million square miles of territory, there has almost always been somewhere to go to find land, or at least a living.
But the economic geography of the nation has shifted. Productive activity is increasingly concentrated in certain cities and their surroundings. Four in ten Americans are urban dwellers. One result of this shrinkage of economic activity has been to drive up the value of land in the most prosperous places. This is a natural process, of course, for which…

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It is hard to say who would have been more surprised Milton Friedman or Karl Marx. On one side at the Asia-Pacific Economic Cooperation (APEC) meeting stood the advocates of free trade China and Vietnam, both officially Communist. On the other stood the country seeking to frustrate freer trade, the long-time advocate of free enterprise, the United States. The world has changed and not for the better.
It is tempting to think that the conversion of long-time command-and-control economies like China represents the most important development in the free trade issue. Chinese…

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Over four decades beginning in the 1970s, the U.S. financial system had one big municipal debt crisis per decade. These were New York City in the 1970s, the Washington Public Power Supply System (Whoops!) in the 1980s, Orange County, California in the 1990s, and Jefferson County, Alabama in the 2000s.
But our current decade, not yet over, has already set two consecutive all-time records for the largest municipal insolvencies in history: first the City of Detroit, which entered bankruptcy in 2013, and then Puerto Rico, which is now in an equivalent of bankruptcy especially created for…

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Almost everyone has a simple cure for Americas stubborn budget deficits: faster economic growth. The Trump administration is particularly keen on this. It argues that its proposed tax reductions and regulatory cuts will accelerate economic growth and shrink the deficits. No doubt faster growth would help. But a more realistic appraisal is that, even with accelerated growth, huge gaps would remain between government spending and taxes.
As the White House presents its first full budget (segments were released earlier), this is worth emphasizing. It suggests that only unpopular tax increases…

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Heres a not-so-trick question: if technologically-gifted and offered the chance to develop those talents at Google or the federal government, which would you choose? The question is almost rhetorical its so simple.
Working at the Googleplex in Mountain View, CA allows the talented to develop ideas with some of the worlds greatest minds in concert with some of the cushiest corporate perks ever conceived. So big is the fight for talent in Silicon Valley that even the areas chefs are enjoying bidding wars for their services. Google would be a pretty wondrous place to work, and…

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Uniteds passenger re-accommodation debacle was so easy to avoid. An auction would discover which passengers would be eager to step aside. United did dangle $800 in flight credits for seats, but that price was wrong. Bidding was curiously halted. And then United decided to acquire its desired seats the old-fashioned way, caveman style.
How did that work out? Rather than paying what four passengers considered appropriate compensation say, $1,200 in UAL vouchers and a handful of Chik-fil-A coupons United is now paying in reduced demand for its services, captured cleanly in a…

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The Trump Administration has just spelled out what it wants from a renegotiated NAFTA. Basically what it wants is the Trans Pacific Partnership, the very agreement that Trump rejected on his third day in office as a disaster.
When President Trump was telling The Economist earlier this month about the kind of changes he would insist on as a price for renegotiating NAFTA, specifics eluded him as he evaded the magazines questions about what a fair NAFTA deal would look like. But he did make several one-word references to the magnitude of the changes massive and…

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If the smart-money folks on Wall Street think a special counsel to oversee the Russian probes spells defeat for business tax cuts, theyre leaning well over their skis.
The market sold off over 300 points on Wednesday, but it may have come back to its senses with a 140-point gain on Friday. And while theres never 100 percent probability in forecasting political risk, it seems the likelihood of health-care reform by the summer and tax reform by year end (or early 2018), is quite high.
Paradoxically, special counsel Robert Mueller will provide cover for President Trump, as it will take him…

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Politics of the exact wrong kind have roared back to the forefront this week, as President Trump garners attention for reasons that most Americans don’t seem to care much about. It is, of course, difficult to assess what matters to the public, but what little data is available suggests James Comey’s circus isn’t one such. In a NBC/Wall Street Journal poll conducted last Friday, 32% of voters have no opinion on the issue one way or the other. The rest break down predictably along partisan lines. Social media research company SocialFlow reported that postings on Facebook…

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For the past several years, about 40 percent of honeybee hives in the United States did not make it through the winter, one of the highest rates of mortality ever recorded. During that same time, however, the total number of hives in the United States increased.
How can honeybees be dying at a greater rate while the overall population is increasing? The answer lies in the power of the free market, personal knowledge and incentives. The story is emblematic of a path away from 1970s environmentalism and toward a stewardship ethic that celebrates individual incentive. It’s also a story of…

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The President’s legislative and policy agenda will be diluted and delayed Sell stocks as risk is underpriced Buy gold as a protective strategy and for diversification purposes
“News broke late Tuesday of Mr. Comey’s contemporaneous notes that Mr. Trump asked him in February to “let this go,” referring to the FBI probe of axed National Security Adviser Michael Flynn. The White House denied that account of the conversation, but that would be more credible if its previous statements were more reliable.
Mr. Trump’s strife and insults with the intelligence community were also bound to invite…

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Our hearts just broke they just wanted to get out of their lives,” but we had to drive off with Charlie and me hanging off the car literally beating the guys away. Those are the words of Mike Martin about midway through Crossing the Congo: Over Land and Water in a Hard Place, the fascinating book he wrote with Chloe Baker (introduction) and Charlie Hatch-Barnwell (photos) about the trios perilous 2013 drive across the Democratic Republic of Congo (DRC), from Kinshasa to South Sudan.
For those who think they know poverty, dysfunction, or basic corruption within government…

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Its budget time again in Sacramento. And as is his wont, Governor Jerry Brown has attempted to signal a tone of frugality. While announcing the May Revise last week, Governor Brown confidently stated that “Cuts are coming over the next few years, and theyll be big. Why the warning? Because despite Browns much-touted California Comeback, his budget still has a $3.3 billion shortfall smaller than previous deficits, but still notable given the states overall good economic health.
Importantly, this tone of frugality is more perception than reality. More political…

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Earlier this month four economists released a study of income trends based on an under-used data source, Social Security wage records. These earnings reports are submitted by employers for the purpose of calculating workers tax payments and, eventually, Social Security benefits. The income amounts are quite accurate and cover a full career of wage income. The new study confirms that average male earners have seen scant wage gains over the past generation.
The study also turned up a surprise. When we combine the earnings trends for men and women, the rise in inequality…

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