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September 2011 Archives

September 5, 2011

Off to College--Skeel

Almost the only thing our older son knew for sure about as he conducted his college search last year was that he wouldn’t be going to college in the Philadelphia area. So after weighing his options last spring, he of course found that he loved Penn and decided to stay in the neighborhood after all. His dorm adjoins, almost literally, the law school where I teach.

This meant we wouldn’t have the long car or plane trip that many of his friends’ parents had when they took their kids to college. When we dropped our son off at college on Thursday, we took the same commuter train I always take, and walked the same streets I always walk. And yet it still seemed a little disorienting. It was as if we were inhabiting a parallel universe. The day before this had been my train to work, but Thursday it was a train taking our first son to college. The streets were familiar, but they suddenly seemed strange.
 
My wife mentioned today that our son says he probably won’t come home often during the year, perhaps not even for Thanksgiving. This reminded me of the first letter I got from my mother, a month or two into my freshman year of college. “I was beginning to wonder if I still had a son in college,” the letter began, and it went on to explain that my mother had run into the parents of a fellow freshman, who assured her that I was still alive and well. (My friend was a far better correspondent than I was.) I don’t think my son can match that, and don’t plan to let him try.

 

September 13, 2011

First Review of Bill's Book

The first (I think) review of The Collapse of American Criminal Justice has just appeared, just as the book is about to hit the shelves.  Here's the review, which Lincoln Caplan wrote for Democracy.  I think the review is superb, and there's lots more to come.   This is the first of what I expect will be a number of posts on Bill's magnum opus.

September 28, 2011

Lehman and the Eurozone Crisis--Skeel

Everyone, even German Chancellor Angela Merkel, seems to be comparing the Eurozone crisis to Lehman Brothers’ collapse three years ago. According to this reasoning, the default of Greece (or Portugal, Ireland, Spain or Italy) could trigger market chaos, just as Lehman supposedly did in 2008. My own view of Lehman, as a few readers of this blog may remember, is that the conventional wisdom is mistaken in almost every respect. Lehman does seem to me a useful analogy, however. The reason Lehman’s collapse came as such a shock was that the decision to rescue Bear Stearns six months earlier seemed to signal that large troubled institutions would be bailed out. Everyone understandably expected a bailout, and was stunned when no bailout came. European leaders have boxed themselves into a very similar corner. Even now, few think that they will let Greece default, despite the fact that Greece is clearly insolvent and has no real prospect of repaying its debt.

In other contexts (states, large financial institutions, Argentina in the early 2000s), I have argued that a bankruptcy is likely to be a better solution than bailouts or a default. There are some good arguments for creating a European bankruptcy framework. European countries already have given up some of their sovereignty, for instance, so bankruptcy would only be a limited additional interference; and countries such as Italy may be too big to bail out. But I’m not sure if bankruptcy would be the right answer here. The banks of other European countries, especially France, hold large amounts of Greek debt. If a bankruptcy regime were in place and Greece used it, the bankruptcy would have serious knock on effects in these other countries. It’s not clear whether countries like France or the E.U. could plausibly contain the effects on the banking sector. I may eventually cast my own lot for bankruptcy here as elsewhere, but the overall case seems a little murkier.