James Surowiecki in The New Yorker on fixing the European crisis The fundamentals of troubled European economies haven't drastically changed. Instead, the financial crisis they face is largely caused by rising interest rates on their debt and a lack of investor confidence. "The frustrating thing about all this is that there is a ready-made solution. If the European Central Bank were to commit publicly to backstopping Italian and Spanish debt, by buying as many of their bonds as needed, the worries about default would recede and interest rates would fall," Surowiecki argues. He uses the history of central banks to show that it would be within the ECB's role to take these measures, and he describes the political restraints that are causing them not to, including the sense that we shouldn't bail out irresponsible countries. "Plenty of people in Italy and Spain and Greece were irresponsible, and reform is necessary. But destroying the euro in order to teach a lesson is too blunt an instrument," he says.
Bill Keller in The New York Times on the state of economics Bill Keller spent time consulting economists and textbooks to conclude that short-term stimulus really is the scientifically proven way to help us recover from a recession, and yet, for many reasons we've confused ourselves on this point. "I've come to think something is rotten in the state of economics. The dismal science, as Thomas Carlyle called it, has been ravaged by the same virus that has corrupted the rest of our national discourse." Keller describes the negative impact of our widened political discourse in which the "loudest voices" tend to break through the clutter best, and he says economists sign onto more extreme theories for similar reasons. Because the internet allows anyone to be an expert, people can cherry pick opinions from the mass of information. "I've never in my professional life seen the disjunction between the political debate about economics and the consensus of economists be as large as it is today," he quotes one economist saying.