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A Quick Look at Bloomberg News's Opinion Section for March 12, 2012

The good news is that Americans and the government are doing something about
the debt morass. The bad news, says op-ed contributor Carmen M. Reinhart, is
the way they are going about it. "As they have before in the aftermath of
financial crises or wars, governments and central banks are increasingly
resorting to a form of 'taxation' that helps liquidate the huge overhang of
public and private debt and eases the burden of servicing that debt,"
Reinhart explains. "Such policies, known as financial repression, usually
involve a strong connection between the government, the central bank and the
financial sector. In the U.S., as in Europe, at present, this means
consistent negative real interest rates (yielding less than the rate of
inflation) that are equivalent to a tax on bondholders and, more generally,
savers."[2] Link.
Links:
2. http://bloom.bg/zRorPK

In another op-ed piece, Roger Lowenstein notes that companies, too, are
looking to cut down on debts -- to the detriment of workers depending on
their pensions. "Big employers want Congress to give them a break on pension
funding," he writes. "Business lobbies such as the U.S. Chamber of Commerce
and the National Association of Manufacturers have managed to get a pension
sweetener attached to a Senate highway bill that, potentially, would reduce
required contributions by billions of dollars. This is the same sort of
short-term thinking that got companies such as United Airlines, Bethlehem
Steel Corp. and Delphi -- or, to be more exact, their workers -- in
trouble. From the shelter of bankruptcy, these employers terminated their
pension plans, leaving inadequate funds to pay retirees. The government-run
Pension Benefit Guaranty Corp. pays $458 million every month to more than
800,000 retired workers of about 4,300 failed companies. In many cases,
insurance didn’t cover the full amount and workers got stiffed." [3]Link.
Links:
3. http://bloom.bg/wNyK83

Well, even if pensions are in doubt, at least retirees will be able to
depend on health-care benefits. Actually, the View editors point out,
Medicare has its own burgeoning problems: "For more than two decades, the
U.S. Government Accountability Office has designated Medicare a 'high-risk
program' because of its 'susceptibility to mismanagement and improper
payments.' Criminal charges filed last month in Dallas in a $375 million
Medicare fraud case suggest the program won’t be losing its 'high-risk'
designation anytime soon. It’s difficult to understand how a criminal
enterprise can bilk Medicare of a sum like $375 million (or $295 million, to
take another recent example). At least part of the answer is that Medicare
is where the money is -- lots of it." [4]Link.
Links:
4. http://bloom.bg/wnC5nh

Of course, there's a simpler way to get rid of debt: just don't pay up, at
least not in full. "Greece has taken a big step toward getting the debt
relief it needs to fix its economy and stay in the euro area," write the
View editors. "Now the question is whether other strapped countries that use
the single currency should follow its lead ... To some extent, it is in
Europe’s best interests to encourage such managed defaults by governments
that can’t afford their debts. The primary uncertainty weighing on the
region’s markets and economy is the extent to which governments will
ultimately need to renege on their debts, and how much banks will lose as a
result. Emergency financing from the European Central Bank is no more than a
temporary solution. Postponing the final reckoning will only increase the
economic pain and the cost of the inevitable bailouts." Next in the batting
order: Portugal. [5]Link.
Links:
5. http://bloom.bg/wHOKDm

"Apparently, it is reckless to think that India could bring about a
rapprochement between Iran and the U.S.," writes View columnist Pankaj
Mishra, who's been keeping on top of his fan mail. "That, at least, is the
view of some readers of my last column on India’s lenient attitude toward
Iran’s nuclear program. They reprimanded me for being naive. For Iran, run
by Islamic fundamentalists committed to the destruction of Israel, desires
no such reconciliation with the country Ayatollah Ruhollah Khomeini
indelibly called the 'Great Satan.' Alas, such a view, which sees fixed
essences where there is movement and change, will always grievously misread
geopolitical situations."[6] Link.
Links:
6. http://bloom.bg/xf5rvO

Also, op-ed contributor Megan Greene thinks its time for Greece to bid the
EU yassou; columnist Al Hunt looks at Hillary Clinton's future; and, as
always, the editors' breaking views at the Ticker blog.

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