TOP NEWS: Economy: May 14, 2012

Excerpts and more top stories

Why We Regulate - Paul Krugman, NY Times
There’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.

As European Austerity Ends, So Could the Euro- Peter Boone and Simon Johnson, Bloomberg
The euro currency is a malady that condemns at least a generation of Greeks, Italians, Spaniards, Portuguese and Irish to the economic infirmary.  The economists and politicians who created the system still proclaim it can survive. Their time would be better spent recognizing they made a bad mistake and preparing for an orderly dismantling of the euro before the damage spreads and further undermines European unity.

JPMorgan is embarrassed, but not endangered - Allan Sloan, Washington Post
It’s especially tempting to beat up on Jamie Dimon, JPMorgan’s chief executive, the Volcker Rule’s most prominent opponent. He’s been talking for months about the supposed dangers of overregulating banks, and now his bank has just stepped into $2 billion of deep doodoo. Schadenfreude City, here we come.— But if you take a dispassionate look, you see that the bank isn’t endangered.

The Expansion Limps Ahead- Gene Epstein, Barron’s
The current economic expansion, now nearing its third birthday, is the weakest since 1950, and there’s no pickup in sight. Rumors of its death have been greatly exaggerated, although it has often resembled the walking wounded, if not occasionally the walking dead.

Slowly, as Student Debt Rises, Colleges Confront Costs - Andrew Martin
With the balance of student debt topping $1 trillion, college presidents are recognizing that they must handle the costs of education through methods other than tuition increases.

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Flights to Safety Can’t Hide the Dangers- Jeff Sommer, NY Times
When people are worried, all roads lead to Treasuries, and that just doesn’t seem likely to change anytime soon…Right now, if the economy slows down further, bond yields could go even lower.

‘Taxmaggedon’ Is a Real Threat- John Snow, The Wall Street Journal
Next year’s scheduled increases on dividends and capital gains will retard investment and derail the recovery. With the expiration of the 2003 tax law at the end of this year, taxes—not only on capital earnings but also on ordinary incomes—will return to the much higher levels that previously existed.

The Dimon Principle- Editorial, Wall Street Journal
J.P. Morgan’s failed trades may well have passed the Volcker rule. Employees at J.P. Morgan may think that CEO Jamie Dimon’s primary rule is to minimize risk. But Washington politicians now have their own Dimon Principle: Use mistakes at a bank run by an admired CEO to expand government control over financial markets. If this impulse were being translated into reduced taxpayer exposure to Wall Street trading, it would be cause for cheer. But the events of the past week demonstrate why taxpayers are still a long way from enjoying real reform.

Romney Vowing Dodd-Frank Repeal Hits JPMorgan Inconvenient Truth- Julie Hirschfeld Davis and Lisa Lerer, Bloomberg
Mitt Romney says he wants to talk about the economy in this presidential campaign, including his call to repeal the Dodd-Frank financial regulation law. JPMorgan Chase & Co. (JPM) (JPM)’s $2 billion trading loss in risky transactions isn’t the sort of conversation he had in mind.

JPMorgan investment chief out- Charles Riley, CNN
Ina Drew will retire from JPMorgan Chase. JPMorgan Chase announced Monday that Ina Drew, the firm’s chief investment officer, has left the bank after revelations of a $2 billion loss sustained over the past six weeks.