Here’s what we should’ve learned from the events of the past decade: Murphy was right. What can go wrong, will go wrong — and we need to plan accordingly. Because terrorist attacks? They happen. Credit bubbles? They burst. Underregulated Wall Street banks? They fail. Poorly designed offshore drilling platforms? They explode. Overleveraged European economies? They can’t pay their debts. Broken-down levees in hurricane country? They breach.
But we haven’t learned our lesson. Forget preparing for the “black swans,” investor Nassim Taleb’s name for the unpredictable crises that disrupt and damage our lives. We’ve stopped preparing for what economist Nouriel Roubini calls the “white swans”: the crises we can predict, and could even prevent.
Ezra Klein
Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs, and is on Twitter, Google+ and Facebook. E-mail him here.
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It’s been less than three years since the fall of Lehman. The financial crisis remains lodged in our minds, and in our jobless rate. And yet the Federal Reserve lacks a vice chairman for banking supervision. There’s no one officially in charge of the Treasury Department’s Office of Financial Research. The seat marked “insurance” on Financial Stability Oversight Council is empty. The Consumer Financial Protection Bureau has a leader but not a director. No one has been confirmed to head the Office of the Comptroller of the Currency. And Republicans are still saying Nobel Prize-winning economist Peter Diamond is underqualified to serve on the Federal Reserve’s Board of Governors.
Meanwhile, the House GOP is fighting to starve financial regulators of the resources they need to do their work. Both the Securities and Exchange Commission and the Commodity Futures Trading Commission needed extra money to scale up to their expanded roles under the Dodd-Frank law, but the Republicans’ 2011 budget proposal whacked them with sharp cuts — and then their 2012 proposal repealed most of Dodd-Frank, with no vision for what should go in its place. The irony? All this is being pursued under the guise of deficit reduction. And why do we have such a gaping deficit? The . . . financial crisis.
Last spring, we watched a drilling platform explode in the Gulf of Mexico. Oil prices are gyrating violently, causing pain for consumers and heartburn for economists. And, most important, nine of the 10 hottest years on record were in the past decade. So the Earth is warming and our energy status quo is, quite literally, blowing up in our faces. But are we doing anything about it? Quite the opposite.
Most of the Republicans vying for the 2012 presidential nomination once supported a cap-and-trade plan to curb carbon emissions and move us past fossil fuels. It was part of the McCain-Palin platform in 2008, part of the Jon Huntsman and Tim Pawlenty and Mitt Romney governorships, part of Newt Gingrich’s speeches. Today? They’ve all recanted. And Congress is not seriously considering alternatives, such as real infusions of money into research and development. We’re just watching temperatures climb and prices spike and hoping against all the evidence that this turns out well.
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