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The problem of international action

One thing that scares me about the Greece situation -- and about financial reform more generally -- is that corporations and markets and banks and panics are much, much more international than governance is. As slow as it is for legislatures to make decisions on things, it's even worse when you get representatives of multiple legislators trying to coordinate a decision on something. That's not to say it never happens, but the framework is just much weaker and more rigid and prone to failure and the relevant players have much less experience navigating it. To put it another way, Barack Obama and the people in his political shop have a fair amount of practice at dealing with Congress. The same can't be said for hammering our enforceable agreements with a collection of finance ministers from other countries.

So you get something like Greece where the bailout has to come from people who don't think they care whether Greece fails, or you get something like a global bank tax where Canada refuses to go along because its banks don't deserve to be punished with a tax. As domestic regulations and solutions become more vulnerable to international arbitrage and global problems, the needs for smooth international actions will become greater, but it's not clear to me such things are actually becoming easier.

By Ezra Klein  |  April 29, 2010; 4:15 PM ET
 
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Comments

Here's something else to get scared about: awful economic conditions can have absolutely toxic political consequences. We're got the Great Depression and its aftermath as a prime example.

Posted by: leoklein | April 29, 2010 4:30 PM | Report abuse

another parallel is the Cornhusker kickback that propelled Scott Brown into office. Why should MA who is responsible with healthcare subsidize Nebraska?

At least they have the commonality of being states. Greece and Germany's ties are much less strong.


With this inaction has caused the price to go up. They need to act and they need to act now.

Posted by: visionbrkr | April 29, 2010 4:42 PM | Report abuse

I know you do mostly domestic politics and not theory, but Alexander Wendt's "Why a world state is inevitable" shows why problems like this one won't be problems, eventually...

Posted by: Owen_Truesdell | April 29, 2010 5:15 PM | Report abuse

We just need those damn Vulcans to drop by to propel us into a unified world government, the found The United Federation of Planets.

Posted by: MosBen | April 29, 2010 6:07 PM | Report abuse

Portugal, Greece (Ellas), Brussels, Spain... what will hit the Progressive Obama Administration yet? I sincerely hope it's not an onslaught of Mexican refugees: but I do admire those who have the courage to open the locks of their doors to Mexican citizens who simply need a place to sleep for the night, a meal in the morning, and health care for the rest of their lives.

Why won't citizens open their doors? Why can't tonight be the night that every American citizen says "Come sleep with me! My door is open! I'll give you health care at the expense of every rich person who make more than $40,000 a year!" Why lock your doors? There are people who need beds!

The rich take too much in this country: if just every owner of every home costing more than $40,000 would give 10%, every Mexican immigrant could live happily for the rest of his life. Just imagine what we could do if owners of $311,000 homes were willing to contribute!

Posted by: rmgregory | April 29, 2010 7:28 PM | Report abuse

rmgregory,

is that $311,000 pre or post housing bubble?

interesting poll from Gallup I found on Politico today.

http://www.politico.com/news/stories/0410/36567.html

where are the 34% of Democrats that are in favor of the law? Heck all we hear about is Republicans screaming against it afraid of being called bigots, profilers or whatever?

oh and while i'm posting from Politico here's a nice one about Mr. Rubin.

http://www.politico.com/news/stories/0410/36505.html

Posted by: visionbrkr | April 29, 2010 9:27 PM | Report abuse

I for one wouldn't mind a global bank tax that excluded Canada. Canadian banks do not need to be punished. More influence of financial markets by Canadian style banking would be a good thing.

Posted by: theamazingjex | April 29, 2010 10:36 PM | Report abuse

historically, larger unions of governance are formed in response to crises caused by ineffective government on the lower level.

I tend to think that the EU is going to do whatever it takes to backstop Greece's problems. Ultimately, they're going to be left with a more integrated and powerful federal government.

The crisis becomes the mechanism by which the states of the EU cede their power. At some point whether Greece fails or not is going to become about ego, and at that point France and Germany will do everything they can to make sure the EU comes out of this intact.

Posted by: zosima | April 30, 2010 5:10 AM | Report abuse

Actually, the IMF, which the US Taxpayer is one of the ultimate backers of, is probably going to take on a lot of the risk of loaning money to Greece so they can continue to retire early.

Of course, when the US takes on the risk, the lenders to the US are taking on the risk as well, so China is loaning money to the US so we can give it to the IMF to loan to Greece.

Posted by: staticvars | April 30, 2010 10:37 AM | Report abuse

THIS IS WELL KNOWN FACTS THAT MARKETS,BANKERS,CORPORATES OR TYPHOONS NEVER WAIT AND WATCH THE GOVERNANCE OF ANY REGEIMS,NOT GUIDED AND DULY REGULATED BY THEM,EVEN IF DONE WITH MUTUAL INTERESTS ONLY....

Posted by: deepjairediffmailcom | April 30, 2010 11:15 AM | Report abuse

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