Morning Reading

Good morning. Hope you had a good weekend. A few questions to start the week: Can government get banks lending? What do we need health insurers for anyway? And is no financial reform bill better than a bad one?

No financial reform bill is better than a weak bill (Paul Krugman/NYT)

There are times when even a highly imperfect reform is much better than nothing; this is very much the case for health care. But financial reform is different. An imperfect health care bill can be revised in the light of experience, and if Democrats pass the current plan there will be steady pressure to make it better. A weak financial reform, by contrast, wouldn't be tested until the next big crisis. All it would do is create a false sense of security and a fig leaf for politicians opposed to any serious action -- then fail in the clinch.

What do we need health insurers for anyway? (LA Times)

The only way insurers can remain profitable at all is by selling healthy people on policies that don't offer much coverage at all, while squeezing older, less healthy people remorselessly so they either pay for most of their care out of pocket or get priced out of the insurance market completely (thus becoming a burden for taxpayers).

In short, this is an industry that acts as if it will have trouble making money unless regulators allow it to cover only injuries suffered by a young single male hit by an asteroid.

Rupert Murdoch: The Raging Septuagenarian (New York Magazine)

If anything, he's been more active than ever, raging at his adversaries with the vigor of a man half his age. Over the last several months, he's been waging a very public war with Google, trying to bend the freewheeling web according to his own rules. He successfully fought Time Warner to get the cable giant to cough up millions to broadcast his Fox affiliates. And he's rebuilding The Wall Street Journal with an eye on destroying the New York Times, one of the most ancient of his enemies.

Can government get banks lending again? (Reuters) Felix Salmon says no:

...the size of a bank's deposit base is not a meaningful constraint on the amount of lending it does. And what's more, if you have an adequately-capitalized bank, like say JP Morgan Chase, then throwing money at it either through fiscal policy (Troubled Asset Relief Program) or through monetary policy (cutting interest rates) is by no means guaranteed to change the amount of lending that the bank engages in.

If you want to get banks lending again, governments can try a bit of moral suasion, but ultimately it's a decision that any bank is going to have to make on its own economic merits. And it's likely, unfortunately, to take rather more time than most governments -- and borrowers, for that matter -- have patience for.

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