Our Best Economic Minds Are Failing Us

The most terrifying moment in modern economic history occurred two years ago this month. For several long days after the fall of Lehman Brothers on Sept. 15, 2008, the financial system was in danger of total collapse, and the United States seemed on the precipice of another Great Depression.

Hillary Clinton's Political Star Rises

The most powerful woman in American politics has kept her head down for most of the first 18 months of her tenure as secretary of state. She is also by far the most unscathed senior member of a badly battered administration. And the once defeated Democratic candidate may have the most promising political prospects of just about anyone in the administration.

'Time to Turn the Page'

In marking the end of America’s combat role in Iraq, President Obama sought to shift his priorities to the United States’ own deep problems at home. “We have met our responsibilities. It is time to turn the page,” Obama told the nation from the newly refurbished Oval Office, seeking to open a new chapter in his troubled presidency.

GOP Divisions Over Afghanistan

No one doubts that Michael Steele suffers from chronic foot-in-mouth disease. So when Steele, the chairman of the Republican National Committee, declared recently that Afghanistan was a war that Obama had chosen, and that America shouldn’t get bogged down in a place where “everyone who has tried over a thousand years of history has failed,” he initially encountered the usual reaction from conservatives leery of his leadership: derision and calls to resign.

Al Franken Gets Serious

The funnyman turned freshman senator has quietly made himself a force to be reckoned with in Washington.

After McChrystal, What's Next for Afghanistan?

The abrupt dismissal of Gen. Stanley McChrystal for making inappropriate remarks and the simultaneous announcement that he would be succeeded by his superior, CentCom Commander David Petraeus, papered over Obama’s real problem: the counterinsurgency (COIN) strategy that McChrystal championed and Petraeus virtually invented may be fatally flawed, at least as it’s practiced in Afghanistan.

A Politically Correct War

The Obama team may be overcompensating for the mistakes made by George W. Bush, who possessed a too-great eagerness to expand the idea of radical Islamism in order to gin up the war against Iraq—though it was unrelated to Al Qaeda—and to connect the "war on terror" to all extremist groups, including Hamas and Hizbullah.

On Iran Sanctions, Incrementalism Rules

On Wednesday, the Treasury Department announced the latest in a series of sanctions slapped against Iranian financial companies. But a question was put to Undersecretary Stuart Levey at the news conference: why not make Iran’s choice suddenly and unmistakably, rather than "increasingly," clear?

The BP-Goldman Continuum

The reason you can’t give regulators (of Wall Street or big oil) too much "discretion" is that they’ll always be outsmarted by the private sector. That’s why standards have to be spelled out in the law.

Obama's Mideast Strategy Implodes

Another misstep by Israel—a flotilla raid that brought Gaza back into focus—has tanked Washington’s plan to stop Iran, advance peace talks, and heal the region. Why can’t Israel focus on what really matters?

Obama's Strategy Looks Familiar

If Barack Obama and George W. Bush are like Dr. Jekyll and Mr. Hyde—opposites in world view and approach—why do they share so many ideas about national security?

Financial Reform—With a Giant Hole

When is a bill like a doughnut? When it has a huge hole in the center of it, one that is so critical to the success or failure of the bill that it becomes the legislation's defining characteristic. That appears to be the problem with the financial-reform bill that finally cleared "cloture"—closing off debate as it goes to a final vote—Thursday on a 60 to 40 vote that included three Republicans: Susan Collins and Olympia Snowe from Maine, and Massachusetts's newly minted senator, Scott Brown. ...

Dems Fall Out on Financial Reform

The biggest financial overhaul since the Great Depression—which has been flirting with incoherence for weeks—lurched backward yet again Wednesday, with a failed vote of 57 to 42 to close off debate in the U.S. Senate. The Democrats' inability to get the needed 60 votes for cloture was yet more evidence of a worsening state of disunity and confusion in the party. It was also only the latest evidence of what happens when the White House, which purports to champion tough reform of Wall Street, leaves all the hard dealing to legislators. ...

Karzai Like a Fox

Hamid Karzai, who is on his umpteenth visit to Washington, is a royal pain who has made no secret of his growing anti-Americanism, to the point of threatening to join the Taliban. President Karzai may also be, for that reason, the most critical asset Barack Obama now has in Afghanistan—and the main ticket home for thousands of American troops there. ...

Thank you, Goldman Sachs

Call it the Goldman effect. For whatever reason, it looks as if the Senate is holding firm, for the moment, on tough new regulations on Wall Street. The Street's lobbyists are no longer getting the traction they once did in congressional corridors paved with millions of lobbying dollars. While Senate banking committee chairman Chris Dodd had to throw out a provision mandating a $50 billion corporate-funded rainy-day fund that the ranking Republican, Richard Shelby, described as a "honey pot," other new restrictions remain as the overall financial-reform bill heads to a floor vote. Among them: a new rule inspired by the SEC charge that Goldman Sachs created a "synthetic CDO" designed to fail with secret advice from the short-selling maestro, John Paulson. The new rule gives the SEC and Commodity Futures Trade Commission discretion to ban swap transactions that look like mere gaming bets on whether deals—or countries—will fail, preserving the swap function for...

Carl Levin: Another ‘Big Shoe to Drop' on Goldman

Washington is suddenly looking very unkind to the firm that used to be known as "Government Sachs." Now the Senate's Permanent Subcommittee on Investigations, led by Carl Levin, Democrat of Michigan, is planning to focus hearings scheduled for next week at least in part on Goldman Sachs's role in the financial disaster. Levin's staff has uncovered new documents "that link certain actions to specific people" at Goldman, according to a senior legislative official who spoke on condition of anonymity. The official would not divulge the nature of the allegation but said that Levin believes it amounts to "another big shoe to drop on Goldman." Spokespeople for Levin said they were not prepared to discuss the nature of the probe, but his committee has been conducting several weeks of hearings and one is planned for April 27 on "the role of the investment banks." "We expect to have some information tomorrow," spokesman Bryan...

Is the SEC Opening the Floodgates?

The civil suit brought against Goldman Sachs by the Securities and Exchange Commission on Friday involved just a single transaction and a single executive, and in a conference call with reporters, SEC Enforcement Director Robert Khuzami refused to say how widespread his investigation is. But that doesn't make the case any less significant. Securities-fraud charges related to the subprime debacle have been few and far between until now (plenty of mortgage originators have been indicted, but Wall Street has remained mostly unscathed). By naming the most prestigious firm on Wall Street and a world-famous hedge fund—Paulson & Co.—known for making some of the biggest profits by shorting subprimes, the SEC has signaled that there may be a lot more indictments to come. ...