March 31, 2023

PAC Backed by Billionaire to Broadcast Ads for Lhota

The committee, New Yorkers for Proven Leadership, said the commercials signaled the beginning of a longer campaign to persuade voters across the political spectrum, including Democrats, to support Mr. Lhota in the November general election, assuming he wins the primary on Tuesday.

“We’re a group of New Yorkers who believe that Joe Lhota provides the best hope for the future of our city and who provides the kind of leadership we saw from Mayor Giuliani and Mayor Bloomberg over the last 20 years,” Michael McKeon, a spokesman for the group, said.

Mr. McKeon, who advised former Mayor Rudolph W. Giuliani’s 2008 presidential campaign, is one of several people involved in the committee who have ties to Mr. Giuliani.

The emergence of the committee is an important development for Mr. Lhota, a former deputy mayor to Mr. Giuliani, especially as he plans a possible general election bid. Republicans are outnumbered by Democrats in New York City more than six to one, and Mr. Lhota is likely to need substantial financial support to mount a competitive campaign.

The advertising is also useful in the short term. Mr. Lhota’s main opponent in the Republican primary is John A. Catsimatidis, the billionaire owner of the Gristedes supermarket chain, who has invested heavily in television advertising.

Mr. McKeon said the committee was just beginning to collect donations, and had received $145,050 from Mr. Koch, a New York City resident who is known for his support of conservative causes, as well as $145,050 from his wife, Julia. The donations were reported by The New York Observer on Tuesday.

The committee’s first commercials are two 15-second advertisements that will run in tandem during the same commercial break. Both show a photograph of Mr. Lhota and Mr. Giuliani together.

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Inside Europe: Protest Vote Likely to Grow in European Parliament’s Next Elections

BRUSSELS — In the diplomatic parlor games popular in Brussels, few issues are generating more gossip or being talked about more animatedly than next year’s elections to the European Parliament.

They may be 11 months away, but anyone following European affairs closely knows the vote has the potential to shake the ground under the political establishment and bring about a fundamental shift in the balance of power in Europe. Frustration with how leaders have handled the economic crisis over the past three years, coupled with rising populism, has raised expectations that the anti-E.U. vote will surge in the polls.

That would undermine the traditional blocs, which range across the political spectrum but for the most part are in favor of the Union. And because they will be the first European elections since the introduction of the Lisbon Treaty in 2009, which gave the Parliament additional powers, it means the outcome will directly influence the appointment of the Union’s most important jobs.

“Most people I’ve talked to are predicting that parties on the extreme wings of the politics of Europe, both the far right and the far left, will pick up seats in this election,” said William Kennard, the U.S. ambassador to the European Union for the past four years.

“There is a not-insignificant prospect that the populists, particularly on the far right, will have more influence in the Parliament than they’ve had in this particular term, and I think that could affect politics in an interesting way,” he added.

If there was any complacency about the potential impact of the vote, which takes place in all 28 E.U. member states from May 22 to 25 next year, it was displaced recently by Britain’s Nigel Farage, the leader of the rightist, anti-E.U. party U.K. Independence Party.

“There is a gathering electoral storm. It’s coming on the left, on the center and on the right,” he warned the European Commission president, José Manuel Barroso, as he addressed the full European Parliament. “The European elections next year present the opportunity to show you, Mr. Barroso, that the European project is reversible and it needs to be reversed for the betterment of the peoples of Europe.”

A year is an extremely long time in politics, and there is every likelihood that electoral predictions made now will prove to have been dramatically off-base come April or May next year. But polling conducted by Gallup and research by Debating Europe, a youth politics group, point to two trends that could prove important: Turnout may be substantially higher next year than in the past, and the youth vote may be much stronger.

At every poll since the first direct elections to the European Parliament were held in 1979, turnout has fallen, dropping to just 43 percent for the last vote in 2009. But in a survey carried out in May, Gallup found 68 percent of Britons said they would vote if the elections were held next week, double the British turnout for the 2009 ballot. The figures were similar for France, with the survey finding 73 percent of French were ready to vote this time, versus 40 percent in 2009.

Gallup also found increasing disapproval in most large E.U. countries over the direction in which Europe is moving, suggesting that many of those who do turn up to vote could cast anti-Union ballots or go against how they have voted in the past. Add to that the prospect of hundreds of thousands of young people who have never voted before turning up at the polls, especially those who are unemployed and frustrated.

“Young people are angry, and they want to have a voice,” Adam Nyman, the director of Debating Europe, said earlier this year. “I don’t think they will shy away from the next election.”

No one knows how large the anti-Union vote will be, but speculating about it has become a favorite Brussels pastime. Some see a 25 percent to 30 percent “protest vote” as possible, a figure that alarms sitting members of the Parliament, who tend to break the issue down into individual member states, where anti-Union or protest parties have their national quirks.

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Today’s Economist: Uwe E. Reinhardt: Redistribution of Wealth in America


Uwe E. Reinhardt is an economics professor at Princeton.

A recent article in The Washington Post and an audio clip accompanying it on the Web featured an excerpt from a speech in 1998 by Barack Obama, then an Illinois state senator, at Loyola University Chicago.

Today’s Economist

Perspectives from expert contributors.

In that speech he remarked, “I actually believe in redistribution, at least at a certain level, to make sure that everybody’s got a shot.”

The article then quotes Mitt Romney: “I know there are some who believe that if you simply take from some and give to others then we’ll all be better off. It’s known as redistribution. It’s never been a characteristic of America.”


Aside from hard-core libertarians, who view the sanctity of justly begotten private property as the overarching social value and any form of coerced redistribution as unjust, how many Americans on the left and right of the political spectrum would disagree with Mr. Obama’s very general and cautiously phrased statement?

In fact, I wonder whether even Governor Romney actually disagrees with that general statement, aside from some dispute over “the certain level” at which redistribution takes place. After all, he has promised elderly voters to protect the highly redistributive Medicare program, which would remain highly redistributive, or become more so, under proposals by his running mate, Representative Paul D. Ryan, for restructuring Medicare.

The fact is that redistributive government policy — mainly through benefits-in-kind programs, agricultural policy and the like — has been very much a characteristic of American life, just as it has been in every economically developed nation, albeit at different levels.

Start at the local level. Through property taxes, local governments all over the United States routinely take from high-income Americans living in expensive houses to subsidize the education of children from lower-income families. It is the American way, based on the widespread belief that doing so will make society as a whole better off. Is there a significantly large constituency for abolishing this form of redistribution at the local level and instead letting every family fend for itself, with its own budget, in a private market for education?

The same can be said, at the local level, for fire and police protection. One could imagine a world in which every family cuts a deal with private contractors to provide fire and police protection — leaving poor neighborhoods to fend for themselves — but that is just not an American characteristic. Is there a sizable constituency in America for completely privatizing local fire and police protection?

At the state level, consider Medicaid. By design, Medicaid is purely redistributive. It takes from higher-income people at the state and federal levels and pays fully for the health care of low-income people. Is there a strong constituency for abolishing Medicaid and letting the poor, when they are ill, fend for themselves in the market for health care?

Or take public colleges and universities. Although tuition has increased in past years, these institutions are still heavily supported by the states and charge tuition much below the full cost of the education they impart.

At the federal level, Social Security and Medicare were deliberately structured by their designers to be in part redistributive. As Eugene Steuerle and Adam Carasso of the Urban Institute’s Retirement Project have reported, both programs redistribute from retirees who had been high-income earners in their work years to those who had been low-income earners.

Would elimination of this redistributive feature inherent in Social Security and especially in Medicare have much of a political constituency today? Would any politician dare propose openly — and I stress openly — that Medicare beneficiaries who had been high-income earners in their work years should have a health care experience superior to those who had low incomes in their work years? Would that proposal be a winner this year?

By the way their benefits and the financing of these benefits are structured, Social Security and Medicare also redistribute income from the current working population collectively to the currently retired population collectively. Is that fair?

In thinking about this issue, keep in mind that a young generation about to enter the workplace has, for a fifth to a quarter of a century, been the beneficiary of huge transfers of human and nonhuman capital. Overwhelmingly, they have taken from society and not contributed to it.

By human capital economists mean the education and training that foster in the young marketable skills that can be traded for cash at the workplace. Although, unlike students in many other countries, American students do contribute significantly to the financing of their human capital — at the college and postgraduate levels — the production of their human capital remains very heavily subsidized by the preceding generational cohorts. Charge the total value of that transfer to an intergenerational account.

Charge to it next the nonhuman capital transferred to the young. This includes the vast array of physical structures built and largely financed by preceding generations, transferred virtually free of charge to the younger generation for its use, along with the scientific knowledge and the blueprints for applied technology developed and financed by previous generations but available, again largely free of charge, as an economic platform for the younger generation.

I believe the designers of Social Security and Medicare were mindful of this vast redistribution of assets to the young when they embedded in these programs a social contract creating a reverse redistribution from the young to the old during the latter’s retirement years.

These designers seem also to have kept in mind that future generations benefit greatly from the secular increase in overall productivity in the economy. It can reasonably be assumed that future long-run growth in real gross domestic product per capita will be 1 to 2 percent a year. At only 1 percent, real G.D.P. per capita in 2050 will be about 46 percent larger than it is today. At 2 percent growth, it will be more than twice as large.

At issue between the two political camps in this election season, then, is not redistribution per se, which is as American as apple pie. Rather, at issue is the “certain level” to which that redistribution is to be pushed. An honest and thoughtful debate on that would certainly be useful at this time. It would be useful at any time.

To be respectful to voters, such a debate should proceed at a level concrete enough to allow voters — or at least researchers and news organizations — to estimate fairly precisely how different families would fare under the different visions of that “certain level.”

It is the minimum voters ought to expect from political candidates.

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Today’s Economist: Simon Johnson: Fiscal Confrontation Undermines the U.S.


Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

It is axiomatic among most of our Washington elite that the United States cannot lose its pre-eminent global role, at least not in the foreseeable future. This assumption is implicit in all our economic policy discussions, including how politicians on both sides regard the leading international role of the United States dollar. In this view, the United States is likely to remain the world’s financial safe haven for international investors, irrespective of what we say and do.

Today’s Economist

Perspectives from expert contributors.

Expressing concerns about the trajectory of our federal government debt has of course become fashionable during this election cycle; this is a signature item for both the Tea Party movement in general and the vice-presidential candidate Paul D. Ryan in particular.

But the tactics of fiscal confrontation – primarily from the right of the political spectrum – make sense only if the relevant politicians, advisers and donors firmly believe that the American financial position in the world is unassailable.

Threatening to shut down the government or refusing to budge on taxes is seen by many Republicans as a legitimate maneuver in their campaign to shrink the state, rather than as something that could undermine the United States’ economic recovery and destabilize the world. This approach is more than unfortunate, because the perception of our indefinite pre-eminence – irrespective of how we act – is at completely odds with the historical record.

In his widely acclaimed book, “Eclipse: Living in the Shadow of China’s Economic Dominance,” Arvind Subramanian places the rise of the dollar in its historical context and documents how economic policy mistakes, World War II and the collapse of empire undermined the British pound and created space for the United States dollar to take over as the world’s leading currency. (Dr. Subramanian and I are senior fellows at the Peterson Institute for International Economics; we have worked together, but not on this book.)

Very few people in Washington are aware – and even fewer care – that persuading people around the world to hold both their official government reserves and their private wealth in dollars was the result of a hundred-year process and a great deal of hard work. Responsible economic policy and being careful about fiscal accounts were absolutely part of why the United States persuaded others that holding its dollars was appealing.

But Dr. Subramanian also asserts that two other factors were important: the sheer size of the American economy, which overtook Britain’s, probably at some point in the late 19th century, and the United States current account surplus. In particular, American exports were far larger than imports during World War I and in the years that followed, and by the end of World War II the United States had amassed almost half the gold in the world (gold at that time was used to settle payments between countries).

In effect, the United States dollar pushed aside the British pound in part because the United States became the world’s largest creditor.

Dr. Subramanian’s point is not just that the United States will lose its predominance but rather that it has already lost key advantages. The United States has run current account deficits consistently since the 1980s; we are now the world’s largest debtor, not a creditor. About half of all federal debt is held by foreign individuals and governments. Emerging markets have amassed very large foreign-currency reserves (much of which is this Treasury debt in dollars).

The Chinese are embarked on a long-term strategy to make their currency, the renminbi, into an appealing reserve currency. Their economy is currently about one-quarter the size of the American economy, but it is catching up fast. China has overtaken the United States as the world’s leading exporter. You may not agree with Dr. Subramanian on the extent of Chinese dominance today, but there is no question that this is a real possibility within 20 years.

The “fiscal cliff” coming at the end of this year could be resolved in a reasonable manner (if you need a primer on what is coming, I recommend these graphics from NPR’s “Planet Money”). For example, let the Bush-era tax cuts expire and replace them with other temporary tax cuts (e.g., to payroll taxes), to provide short-term support to the economy. And American politicians could find other ways to restore federal government revenue to where it was in the late 1990s while also bringing health care spending under control.

The point is not to make precipitate adjustments but rather to increase revenue and limit spending in a reasonable manner over the next two decades.

But this is not going to happen. Congressional Republicans will refuse to consider anything they regard as a tax increase, and the fiscal cliff is likely to become a repeat of the debt-ceiling fight last summer, which ended up making everyone in Washington look bad. What would be the consequences?

First, this will definitely be destabilizing to world financial markets – making people more concerned about risk both in the United States and around the world. Anyone who pays a “risk premium” when they borrow – including American home buyers and euro-zone governments – is likely to be affected negatively. Uncertainty and fear will increase, slowing the economy in the United States and perhaps contributing to yet another round of crisis in Europe. The stock market will presumably fall.

Second, yields (market-determined interest rates) on United States Treasury debt are likely to decline. In most other countries, when politicians act irresponsibly, bond yields go up. But we are still the world’s No. 1 safe haven – so capital will come into the United States. Some politicians will see this as justification for their tactics – and continue with more of the same.

Third, Dr. Subramanian will be proved right, faster than would otherwise be the case. The world will more eagerly seek an alternative to the fickle American dollar. It will become increasingly hard for the United States to borrow at reasonable interest rates. Indeed, one striking point in “Eclipse” is the speed with which the British pound lost its predominance once the British position weakened as a result of World War I.

The dollar became strong because American politicians were responsible, careful and willing to compromise. Fiscal extremism, confrontation and a refusal to consider tax increases over any time horizon will undermine the international role of the dollar, destabilize the world and make it much harder for all of us to achieve any kind of widely shared prosperity.

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Economix Blog: Simon Johnson: Restoring the Legitimacy of the Federal Reserve


Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

The Federal Reserve has a legitimacy problem. Fortunately, a potential policy shift is available that offers both the right thing for the Fed to do and a way to please sensible people on both sides of the political spectrum.

As the election season progresses, Republican politicians are increasingly criticizing the monetary policy of Ben Bernanke and his colleagues on the grounds that they are exceeding their authority, particularly by buying assets and trying to lower interest rates in what is known as “quantitative easing.”

Today’s Economist

Perspectives from expert contributors.

There is growing concern in Republican circles that the Fed is tipping the election toward President Obama, and Mitt Romney repeated unambiguously in August that he would not reappoint Mr. Bernanke (a Republican originally appointed by President George W. Bush).

At the same time, a significant number of people on the left of American politics are concerned about how the Fed acted in the period leading up to the crisis of 2008 — blaming it for a significant failure of regulation and supervision — and about how much support it currently provides to big banks.

If the right and the left were ever to come together on this issue, they might enact legal changes that would reduce the independence of the Federal Reserve, making it more subject to Congressional pressures. At the very least, the implicit buffers that protect the Fed from political interference could easily weaken, depending on the outcome of the November election.

The Fed has no special constitutional protection, from either the original Constitution or any subsequent amendment. The Federal Reserve System was created in 1913 by an act of Congress and its mandate, functions and authority have been amended by Congress over the years. Most recently, some small but potentially significant changes were enacted as part of the Dodd-Frank financial legislation in 2010.

The Fed has been unpopular before, most notably when under Paul A. Volcker, its chairman, it tightened monetary policy to bring down inflation in the early 1980s. And some tension is built into the very objectives of the organization. Section 2A of the Federal Reserve Act, as amended, now reads:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long-run growth of the monetary and credit aggregates commensurate with the economy’s long-run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.

(This so-called dual mandate came from the Full Employment and Balanced Growth Act of 1978, sometimes known as the Humphrey-Hawkins legislation. This language was not in the Federal Reserve Act of 1913 or the 1946 Employment Act).

Most of the previous political concerns were from the left of the political spectrum and concerned whether the Fed placed too much weight on low inflation and not enough weight on achieving a high level of employment. Strong voices from the left currently assert that Mr. Bernanke’s team should have done more, earlier and faster, to speed the economic recovery.

But now the brunt of the attack comes from the right, where trouble for the Fed has been brewing for some time.

Open season on the Fed was declared last year by Rick Perry, governor of Texas and then a Republican presidential candidate. On the campaign trail in summer 2011, he remarked memorably:

If this guy prints more money between now and the election, I don’t know what you all would do to him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous — treasonous, in my opinion.

Mr. Perry was picking up on longstanding themes from that part of the Republican right that feels the very existence of the Federal Reserve undermines the Republic. Ron Paul’s book on the subject is titled “End the Fed.” Mr. Paul is sometimes regarded as a fringe figure, but anti-Fed sentiment is no longer a marginal view within the Republican Party – see, for example, the range of voices quoted by Politico last week.

(Mr. Paul’s and, to some extent, Governor Perry’s intellectual predecessor was Wright Patman, a populist Democrat from Texas who served in the House for almost 50 years and was a regular bête noire of Fed chairmen. In one hearing on the Fed’s monetary policy, for example, Mr. Patman opened the session by caustically asking the chairman, Arthur Burns, “Can you give me any reason why you should not be in the penitentiary?” Mr. Patman, it should be noted, was described by the historian Robert Caro as to the left of Lyndon B. Johnson.)

Fortunately there is a way for the Fed to reaffirm its legitimacy: the Board of Governors should strengthen capital requirements for the largest United States banks and other systemically important financial institutions. Ideally it should move policy in a direction that is responsible and that would be welcomed on both sides of the political spectrum.

The best way to do this would be to increase capital requirements for very large banks and other financial institutions that the Fed deems to be systemically important. Both sides of the aisle increasingly show some understanding that higher capital requirements for megabanks would make them generally safer and more resilient in the face of really big unusual shocks — and therefore reduce the degree of public subsidy they receive, implicitly, because they are too big to fail (and therefore able to get support, when needed, from the Fed).

(The Dodd-Frank Act constrained the ability of the Fed to help individual financial institutions, but in my assessment left the door open to various kinds of broader assistance to classes of assets or groups of companies — either through the Fed discount window for lending to banks or through some mechanism to be specified later.)

The recent letter to Mr. Bernanke by Senators Sherrod Brown, Democrat of Ohio, and David Vitter, Republican of Louisiana — which I wrote about recently — is a perfect example of the emerging cross-partisan consensus. In private, I hear strong voices from right and left echoing the sentiments of this letter.

The megabanks, naturally, are opposed. They contend that higher capital requirements would be bad for the economy. That is a myth, fully exploded by the Stanford professor Anat Admati and her colleagues (if you have not already seen their Web site, you should look at it now.)

The Fed has the ability and the opportunity to make a move on capital requirements for systemically important financial institutions — we are currently in a comment period that runs until Oct. 22 on exactly this issue. Higher requirements would make the financial system safer. They would also represent an important step toward rebuilding the political legitimacy of the Federal Reserve System.

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Mario Monti Accepts Job as Italy’s Premier

Mr. Monti, 68, a respected economist who has promised to be a steady hand in a time of market turbulence, said he expected to move ahead as soon as he secured a parliamentary majority for the new government.

Assembling a majority usually requires days or weeks of talks, but Italy does not have the luxury of time. Skeptical investors have pushed the country’s borrowing costs to dangerous heights, putting at risk the euro currency that 17 nations share. The crisis forced the resignation of Prime Minister Silvio Berlusconi on Saturday, turning Italy’s most complex political shift in nearly two decades into one of its most urgent transitions.

President Giorgio Napolitano, who as the head of state must approve the formation of a new government, gave a tough speech on Sunday aimed at reassuring investors about Italy’s commitment to the euro and warning the nation’s insular political class about the stakes involved. He called on lawmakers to form a broad coalition in support of Mr. Monti that would be able to push through urgent economic measures.

News media reports said that Mr. Monti initially sought to include figures from the major parties in his cabinet in an effort to share the political cost of the government’s program, including unpopular austerity measures. But while most major parties were prepared to back his government, few were willing to join it. The new cabinet is now expected to consist mainly of technical experts rather than politicians.

Mr. Napolitano, who met with leaders from across the political spectrum on Sunday to gather pledges of support, said in his speech that “it is a responsibility we perceive from the entire international community to protect the stability of the single currency as well as the European frame work.” He added that Italy understood how its actions would affect “the prospects for the recovery of the world economy.”

Italy must repay or refinance almost 200 billion euros, about $276 billion, worth of maturing bonds by April 2012. Last week, the political turmoil drove the effective yields on Italy’s bonds to 7.4 percent, a level at which other countries in the euro zone have sought bailouts. If Italy is forced to continue to pay such high rates to borrow, it will have difficulty in handling its debt load, which is among the highest in Europe.

The president’s remarks were widely seen as directed mainly at Mr. Berlusconi’s political party, the People of Liberty, which said earlier on Sunday that it would accept a Monti government, but only for a limited time before going to early elections.

Angelino Alfano, the secretary of the People of Liberty and Mr. Berlusconi’s political heir apparent, acknowledged on national television on Sunday that there was opposition to a Monti government within his party. But he confirmed that the party would back Mr. Monti if certain conditions were met concerning the composition of the cabinet and the how long the government would last before elections.

Mr. Monti declined to say how long he hoped to govern. News media reports suggested that he was aiming to remain in office until the end of the current legislature’s term in 2013. Mr. Monti said he would act “with a sense of urgency, but also with care” in forming a new government; he is expected to present his cabinet and program to Parliament in a few days.

As for his broad goals, he said his government would try to restore the country to financial health and growth without compromising “social equity.”

“We owe it to our children to give them a dignified and hopeful future,” he said.

Not one to be upstaged, Mr. Berlusconi spoke publicly on Sunday evening for the first time since his resignation, vowing in a video that was broadcast on television to redouble his efforts in Parliament to save the country and the euro.

Pale and visibly tired, Mr. Berlusconi called his resignation “an act of generosity” that was carried out with a “sense of responsibility” for Italy, and he said he had been insulted by his jeering critics.

He quoted wistfully from a speech he delivered when he first ran for office in 1994, praising Italy and its promise of freedom. “Mine was and remains a declaration of love for Italy,” Mr. Berlusconi said. “That love remains unchanged.”

In his video address, Mr. Berlusconi called on the European Central Bank to expand its role in shoring up the euro, arguing that the debt crisis extended far beyond Italy.

For their part, European leaders had come to see Mr. Berlusconi as a liability both to Italy and to the single currency after his government repeatedly fell short on promises of fiscal and economic reform. Mr. Berlusconi resigned after Parliament finally approved a package of austerity and growth measures but denied him the majority support he needed to remain in office.

The Berlusconi government had been shadowed in recent years by sex scandals surrounding the prime minister. Mr. Monti attended Mass with his wife on Sunday morning in the Roman Catholic Church of Sant’Ivo in the historic center of Rome.

Many Italians awoke on Sunday to what they felt was a new day in Italian politics, even if many did not quite believe that Mr. Berlusconi, a fixture of public life here for nearly two decades, was really gone. Some young Italians, who increasingly feel shut out by a labor market that protects older workers, considered his departure to be good sign.

“We’ve been following what happened since the summer with growing concern,” said Laura Calderoni, 36, an architect in Rome. “The government’s complete immobility, deafness and incapability to understand reality and act accordingly was very scary.”

She added: “We are part of the brain-drain generation, but I kept on telling all my friends, ‘Don’t flee; it will be over.’ A fairer country starts with citizens like us that build their lives here and believe in it.”

Others said that Italy’s problems did not begin with Mr. Berlusconi and would not end with Mr. Monti.

“I just think that Berlusconi is not the root of all our economic evil,” said Anna Costeri, 43, a dental hygienist from Sardinia who was visiting Rome and said she had voted for a right-wing party in the past. Referring to Mr. Monti’s background, she said, “I am not that hopeful that someone so close to rating agencies and the banks can do our best interest.”

Gaia Pianigiani contributed reporting.

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Common Sense: Volcker Rule Grows From Simple to Complex

Last year, when the Dodd-Frank Wall Street Reform and Consumer Protection Act went to Congress, the Volcker Rule that it contained took up 10 pages.

Last week, when the proposed regulations for the Volcker Rule finally emerged for public comment, the text had swelled to 298 pages and was accompanied by more than 1,300 questions about 400 topics.

Wall Street firms have spent countless millions of dollars trying to water down the original Volcker proposal and have succeeded in inserting numerous exemptions. Now they’re claiming it’s too complex to understand and too costly to adopt.

Having read at least some of the proposed regulations — I made it through about five pages before sinking in a sea of acronyms — I can assure you that the banks are right about that. Even the helpful summary prepared by Sullivan Cromwell, a law firm that represents big banks and that has associates who no doubt wrote the summary over several all-nighters, runs a dense 41 pages.

In numerous interviews this week with people across the political spectrum, I couldn’t find anyone who actually supports this behemoth — including Mr. Volcker, whose name it bears.

“I don’t like it, but there it is,” Mr. Volcker told me in his first public comments on the sprawling proposal.

“I’d write a much simpler bill. I’d love to see a four-page bill that bans proprietary trading and makes the board and chief executive responsible for compliance. And I’d have strong regulators. If the banks didn’t comply with the spirit of the bill, they’d go after them.”

He says he likes the fact that the proposed regulations, complex as they are, make top management and boards responsible for compliance. “If they think it’s too complicated, they have no one to blame but themselves,” he said of the banks.

Do we need to go back to the drawing board?

“Here’s the key word in the rules: ‘exemption,’ ” former Senator Ted Kaufman, Democrat of Delaware, told me. “Let me tell you, as soon as you see that, it’s pronounced ‘loophole.’ That’s what it means in English.” Mr. Kaufman, now teaching at Duke University School of Law, earlier proposed a tougher version of the Volcker Rule, which was voted down in the Senate. “We’ve been through this before,” he said. “I know these folks, these Wall Street guys. I went to school with them. They’re smart as hell. You give them the smallest little hole, and they’ll run through it.”

“I support the concept of the Volcker Rule,” Representative Peter Welch, Democrat of Vermont, said, “but these rules aren’t going to be effective. We’ve taken something simple and made it complex. The fact that it’s 300 pages shows the banks pushing back and having it both ways.”

And these are Democratic critics of the proposed regulations. An overwhelming number of Republicans oppose them, as they have virtually every aspect of Dodd-Frank. Even Senator Richard Shelby, Republican of Alabama, the ranking member of the Senate Committee on Banking, Housing and Urban affairs, who was the lone Republican to support the tougher Brown-Kaufman legislation, dismisses the latest incarnation.

“This proposal, however, is filled with central questions that Congress should have answered before even drafting Dodd-Frank,” said Jonathan Graffeo, a spokesman for Senator Shelby. “Instead, Congress willfully ignored the ramifications of its actions, just as it did in repealing Glass-Steagall.”

Yet the Volcker Rule, or something like it, could be the most important reform measure to emerge from the financial crisis.

If there was any doubt about that, this week the Securities and Exchange Commission unveiled its latest charges involving mortgage-backed securities. In what may be a new low for conduct by a major Wall Street firm in the walk-up to the financial crisis, Citigroup settled charges (without admitting or denying guilt) that it defrauded investors by creating a package of mortgage-backed securities for which it selected a pool of mortgages likely to default, bet against the security for the bank’s benefit by shorting it and then foisted it off on unwitting investors without disclosing any of this.

According to the S.E.C., one trader characterized this particular security in an all-too-candid e-mail as “possibly the best short EVER!”

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Panel Urges Germany to Close Nuclear Plants by 2021

The recommendations, which have not been made public, will go to a panel of specialists meeting in a closed session in Berlin this weekend. Mrs. Merkel said this week that Germany would certainly end its reliance on nuclear energy, and that the only question was how long nuclear would be needed as a “bridge technology” until other forms of energy could meet the country’s needs.

Nuclear energy provides 22.6 percent of Germany’s electricity, according to the Energy Ministry. Coal supplies more than 42 percent; natural gas, 13.6 percent; and renewable sources like wind and solar, 16.5 percent. Other sources provide the rest.

Not even Japan, site of the nuclear disaster that followed an earthquake and tsunami in March, plans to abandon nuclear power. Prime Minister Naoto Kan said on Tuesday that Japan would scrap plans to build 14 more nuclear reactors while the government re-evaluated its energy policies. Nuclear energy provides 30 percent of Japan’s electricity.

Germany’s move away from nuclear energy is being closely watched by environmental groups and other European governments, particularly those in Central and Eastern Europe that plan to develop or expand nuclear power production.

“At the moment, there is really a mixed picture in responding to the Japanese disaster by countries that have nuclear power,” said Serge Gas, a spokesman for the Nuclear Energy Agency, part of the Organization for Economic Cooperation and Development.

While Russia, Britain, France and Poland have said they will leave their nuclear energy policies largely unchanged, Italy and Switzerland have stopped development of new reactors. Germany, which has a strong antinuclear movement that cuts across the political spectrum, has gone the furthest in reacting to the Fukushima accident.

According to the World Nuclear Association, an industry group, 440 nuclear reactors operate in 31 countries, producing about 15 percent of the world’s electricity. The association said more than 60 plants were being built in 15 countries, notably Russia, China and South Korea.

Germany has 17 reactors; six are boiling water reactors, which is the design used at Fukushima, and 11 use pressurized water. The United States has 104 operating reactors, of which 35 are boiling water reactors and 69 are pressurized water.

Big German energy companies, including RWE and E.ON, have warned that the rapid withdrawal of nuclear power could spell disaster for the economy, lead to electricity shortages and turn the country into a net importer of energy.

But the so-called Ethics Commission appointed by Mrs. Merkel said that rather than being damaged by the abandonment of nuclear power, the German economy could benefit from the reduction of energy use and the development of alternative power sources.

The commission is led by a conservative, Klaus Töpfer, a former environment minister and former executive director of the United Nations Environment Program, and Matthias Kleiner, president of the German Research Foundation. The 22 panel members were drawn from the energy industry and nongovernmental organizations.

“A withdrawal from nuclear power will spur growth, offer enormous technical, economic and social opportunities to position Germany even further as an exporter of sustainable products and services,” said the panel’s 28-page report, which was seen by The International Herald Tribune. “Germany could show that a withdrawal from nuclear energy is the chance to create a high-powered economy.”

But while citing the economic benefits of a withdrawal from nuclear power, the commission emphasized that Germany’s 17 nuclear plants should be closed for safety reasons. “The withdrawal is necessary to fundamentally eliminate risks,” it said.

The commission also said it would be unacceptable for Germany to ration electricity, import power from nuclear plants in other countries or increase carbon dioxide emissions. “There is an ethical responsibility to combat climate change,” it said.

The commission acknowledged that it was not possible to greatly accelerate the development of renewable energy. Instead, it recommended measures, including reducing energy use by as much as 60 percent and developing cleaner technologies for coal-fired power plants.

Only last year, Mrs. Merkel overturned a decision by a previous Social Democratic-Green government to close Germany’s nuclear plants by 2022, instead allowing the newer reactors to operate well into the 2030s.

She quickly changed her mind in March, as the damage to the Fukushima Daiichi plant became apparent. She ordered seven of Germany’s power plants to be temporarily closed, instituted a moratorium on construction of new reactors, ordered an intensive review of security and safety measures, and appointed the Ethics Commission.

She announced the decision days before regional elections in southwestern Germany, where the Greens soundly defeated the governing conservatives.

Matthew L. Wald contributed reporting from Washington.

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