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Posts published in “Columns”

Plotting an American-style fracking revolution in Britain

The U.S. is surging into global leadership in petroleum production, surpassing Saudi Arabia. At the same time, America’s greenhouse-gas emissions are declining and U.S. energy costs are the envy of the industrialized world. These astonishing developments have been made possible by the U.S.-pioneered techniques of horizontal drilling and hydraulic-fracturing, better known as “fracking.”

James Ratcliffe, the British billionaire and CEO of the European petrochemical giant Ineos, has taken notice. He wants to launch fracking in the United Kingdom with his company in the lead. Last month Mr. Ratcliffe announced a bold offer to his countrymen: Ineos will pay 4% royalties to landowners plus 2% royalties to municipalities on fracking revenue, far more than currently offered by developers. Mr. Ratcliffe means to spark an American-style fracking revolution.

The tax effect behind the market selloff

After last year's low volatility and impressive gains, stock market investors have been whipsawed in early 2014. Stocks dropped sharply in January, with the Dow Jones Industrial Average tumbling more than 5%, and falling again Monday.

Yet the roller-coaster ride may just be getting started. Aside from the trouble in emerging markets and slowdown in U.S. manufacturing activity, there is a tax effect at play in the current market downturn, and it is likely to increase market volatility for the rest of this year.

Get pre-K facts before investing billions

This weeks widely followed Program for International Student Assessment (PISA) results comparing the education attainment of 15-year-olds across much of the industrialized world found a floundering U.S. education system. American students' performance plummeted from 25th to 31st in math, 11th to 21st in reading, and 20th to 24th in science. The result was amplified coming only weeks after our own National Assessment of Educational Progress (NAEP) disappointed once again.

Sandwiched between the two reports was one reason why America's education system continues to lag. We keep investing in efforts that don't produce results.

The ‘universal Pre-K’ fallacy

Universal pre-kindergarten schooling, every progressive's fondest dream, is back in the news. Bill de Blasio, the overwhelming favorite in the New York mayoral race and the likely future head of the nation's largest school system, is pushing universal pre-K as his No. 1 policy proposal. President Obama offered a national version of this idea in his February State of the Union address and has since pushed hard in other settings. Two problems: Such programs would have negligible educational value, and they would be massively expensive.

Banks’ size is greater threat than complexity

Senators from both sides of the political divide are displaying an
encouraging resolve to break up the country’s biggest banks. Unfortunately,
they’re focusing too much on the complexity of big bank operations and ignoring
the greater threat entailed in their enormous size.

The federal revenue surge won’t last

There were many happy faces in Washington on Friday with the Treasury Department's announcement of robust tax revenues for April. Individual income-tax receipts surged to $240 billion for the month, taking the total for 2013 to $483 billion. This is far greater than the $393 in tax revenues the federal government collected for the first four months of 2012. The increase far surpassed the Congressional Budget Office projections in February.

The influx surprised the CBO and many other observers, but it shouldn't have. Neither should the dramatic drop that is likely to follow, though policy makers will be tempted to behave as if the revenue flood will continue.

Breaking up banks is easy when they aren’t failing

If we decide to break up the big banks, can we actually do it?

The
first and most obvious proof that we can lies in the 2010 bank-regulation law,
the Dodd-Frank Act,
which requires America’s too-big-to-fail banks to submit plans -- so-called
living wills -- outlining how they can be dismantled if they get into trouble.
So these banks have already provided breakup blueprints.

All
that is required is to remove the conditionality and change the timing: Break
them up now, not when and if. And what could be easier than doing so according
to their own instructions, and so, once and for all, eliminate the systemic
risk posed by the biggest and riskiest banks?

Germany, not Greece, should exit the Euro

All the debate about the pros and cons of a Greek exit from the
euro area is missing the point: A German exit might be better for all
concerned.

Unless
Europe’s leaders take some kind of radical action, such as adopting and
executing some of the many reform ideas they have floated, the currency union
is headed for disintegration.

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