Al Queda vs. The Pirates!

This story of an al-queda linked group fighting against Somali pirates is fascinating. Al-Shabab apparently controls significant portions of southern Somalia; the pirates apparently operate out of the north. But this story is interesting because it illustrates that so-called "terrorist" groups are not all allies who fight the US. This story got a small blurb in the Washington Post, but is exactly the type of reporting I wish we had more of: something that makes us question our worldview and determine that things are not quite as simplistic as some would have us believe.

Why We Waited on Financial Regulation

This just clicked. We bailed out the banks, but then did nothing to regulate them, even though populist rage was at its peak and we could pass anything under the sun. I never understood why until now. I think that the real reason the Administration didn't want to do financial reform and "Too Big To Fail" regulation right away was three-fold. First, many wanted to do Healthcare as soon as possible (this is a poor reason). Second, we wanted to give the economy time to stabilize before enacting sweeping changes on the system (considering that this still hasn't happened, I'm uncertain it was a central facet of the decision). And finally and most cynically, the Administration wanted to recoup its bailout investment by letting the banks continue the status quo of unjustified profits, and only thereafter enact any sort of regulation.

This final point, I think, was biggest in the calculation. By recouping the bailout investment prior to regulations that would stymie big bank profits, Obama can regain some amount of political capital by saying that the bailout didn't cost taxpayers in the end. This was probably a politically smart calculation (despite the fact that it subsizided a year of excessive profits for the big banks), because regulation now looks imminent.

Of course, the real issue today is that we have set a precedent for bailouts. Because we are recouping most of the investment, future bailouts probably don't even look that bad from an Administration standpoint. As such, there is every reason to expect another bailout if it becomes the only way to prevent significant harm to the US economy. This means that Too Big To Fail is probably an even bigger issue today than it was a year ago.

Too Big To Fail...

By now we're very familiar with the idea of the Too Big To Fail banks. This article about Pfizer shows us, however, that the problem is not limited to financial institutions.

My knee-jerk response is that if we want to truly protect the public, our entire regulatory structure has to completely shift focus to ensure that no companies ever get too big to fail. This could also have the nice side-effect of limiting the deleterious consequences of the Citizens United decision and eliminating many anti-trust concerns.

The two significant downsides I can see arethe creation of a more hostile environment for corporations and increased costs coming from the minimization of economies of scale.

But what other solutions are there?