Brooks, Cohen and Krugman

In “American Power Act” Bobo says the road to energy innovation is sure to be messy, but the U.S. is going to have to develop energy sources that are plentiful and clean.  Mr. Cohen, writing from Ramallah, West Bank, sends us “Fayyad’s Road to Palestine,” in which he says Salam Fayyad, the Palestinian prime minister, is the best hope for Palestine in a very long time.  Prof. Krugman, in “The Euro Trap,” says when Greece, Portugal and Spain joined the euro zone, they put themselves in a policy straitjacket. Now they face a debt crisis. There is a lesson here.  Here’s Bobo:

In 1860, Samuel Curtis, a Republican congressman of Iowa, sponsored a bill to create a transcontinental railroad. The debate over that public-private partnership was long and messy. Democrats said the proposal was unconstitutional. Others rightly argued that it meant huge giveaways to the rich.

But the railroad effort, backed by Abraham Lincoln, swept forward. “Nations are never stationary,” Representative James Campbell told the House. “They advance or recede. We cannot remain inactive … without the loss of trade, of commerce, and power.”

After the legislation was approved in 1862, there were continual setbacks. The Union Pacific Railroad languished. Scandals mounted. Yet despite it all, the final spike was hammered into place at Promontory Point, Utah, in 1869, linking the nation and heralding a new burst of prosperity.

When you read that history, you’re reminded that large efforts are generally plagued by stupidity, error and corruption. But by the sheer act of stumbling forward, it’s possible, sometimes, to achieve important things.

Energy innovation is the railroad legislation of today. This country is studded with venture capitalists, scientists, corporate executives and environmental activists atremble over the great opportunities they see ahead. The energy revolution is a material project that arouses moral fervor — exactly the sort of enterprise at which Americans excel.

As with all causes of this sort, the righteousness sometimes runs ahead of the reality. When you actually look at the details of global warming legislation, you run into myriad questions. Is cap-and-trade really the most appropriate policy tool to reduce carbon emissions? Do the benefits of the most ambitious global warming bills really outweigh the costs? I strongly recommend two essays by Jim Manzi — “Conservatives, Climate Change, and the Carbon Tax” from The New Atlantis and “Dunce Cap-and-Trade” from National Review — in which he presents data suggesting they do not.

Nonetheless, the vision is certainly right. To remain the world’s pre-eminent nation, the U.S. is going to have to develop energy sources that are plentiful, clean and don’t enrich the worst people on earth. That means in the short term, the U.S. has to unleash the tens of billions of dollars of potential energy investments now being pent up by uncertainty and regulatory hurdles. To make a difference in the long term, the U.S. is going to have to invest more and differently in energy research and development.

Technology companies spend 5 percent to 15 percent of revenue on research and development. Energy companies, on the other hand, spend only one-quarter of 1 percent. The federal government spends $30 billion on health research, but only $3 billion on clean energy research.

It’s clearly going to take legislative action to catalyze private investment and to increase federal research to where it should be — about $25 billion a year, according to Mark Muro of the Brookings Institution. It’s going to take some equivalent of the Pacific Railroad Acts to kick this into gear.

The best vehicle now is the American Power Act, drawn up by John Kerry, Joe Lieberman and Lindsey Graham. The bill, like all politically plausible bills these days, is larded with special-interest provisions and public giveaways to defuse opposition and win votes. But it does perform a few essential tasks. To boost innovation, it raises the price on carbon and devotes some of that money (though not nearly enough) to research and development.

In addition, it establishes a predictable price for carbon. Lew Hay, the chief executive of the power provider FPL Group, e-mailed me on Thursday to say that if he can get that certainty on the carbon price and if there can be a renewable energy standard to create a market for carbon-free energy, his company could boost investments right away:

“Regarding wind energy investment at our NextEra Energy Resources subsidiary, we think we might invest about $1.5 billion to $2 billion more per year. Regarding solar, we think NextEra Energy Resources might invest $500 million or more per year outside of Florida and that our Florida Power & Light subsidiary might invest about $1 billion a year inside Florida.” Last but not least, he wrote, a new law would be a “huge factor” in deciding whether to move forward with new nuclear units.

Similarly, David Crane, the C.E.O. of NRG Energy, wrote that with a new law, his company could double the number of clean energy projects, from 17 to 36; it could triple the megawatts of clean generating capacity it is planning to add; it could produce three times as much nuclear power and 40 times as much coal with carbon capture and sequestration.

You get the sense that this country is straining against the leash, eager for a new wave of energy development. There will be excess, stupidity and greed along the way. But it would be simply amazing if, through some set of narrow political gamesmanship, Washington continued to stand in the way of all this.

Here’s Mr. Cohen:

I spoke to the Palestinian prime minister, Salam Fayyad, for 90 minutes, and the word he uttered most often, by far, was “security.” As in, “The absence of security has been our undoing.”

When Palestinian leaders are talking about their self-inflicted undoing, as well as the undoing inflicted on them by Israel, things may be starting to move.

His aim, Fayyad told me, was an end to the “security pluralism” that produced a “state of chaos and militias.” It was this chaos, he said, that fueled the violent schism between Fatah in the West Bank and Hamas in Gaza, undermining past Palestinian attempts to build the rudiments of statehood.

Fayyad, 58, is a small, precise, U.S.-educated man with a very ordered mind. He builds long, intricate sentences with an academic bent and is given to words like “axiomatic” or “purview.” For almost a decade his home was the World Bank; he’s hardly a political firebrand. Armed struggle has never been his thing. But right now he is a man with a mission.

That mission is a two-year program, begun last August, to ready Palestine for statehood by the second half of 2011. It represents a break with past Palestinian failure in that it espouses nonviolence — “an ironclad commitment, not a seasonal thing,” he said — and is focused on prosaic stuff like building institutions (police, schools, a justice system, roads and an economy) rather than exalted proclamations.

The program has secured explicit backing from the “Quartet” of the United States, Russia, the European Union and the United Nations, the group that last month called for “a settlement, negotiated between the parties within 24 months, that ends the occupation which began in 1967 and results in the emergence of an independent, democratic and viable Palestinian state living side by side in peace and security with Israel.”

The world’s 24 months and Fayyad’s timetable do no exactly overlap, but they are close enough for the intent to be clear. Fayyad has strong backing from President Barack Obama.

Next year, before the U.S. presidential campaign kicks in, will be crunch time. Can Fayyad’s program, which is advancing, and political negotiations, which are not, be made to coincide?

I don’t know, but I’m sure Fayyad is the best hope for Palestine in a very long time. He’s building it rather than ballyhooing it.

The easy argument against him is that he’s isolated politically — opposed by Hamas in Gaza and regarded with suspicion by the Fatah old guard in the West Bank. The argument for him is that he’s getting things done, improving people’s lives, and Palestinians are tired of going nowhere.

“This is about our right to life as a free people with dignity on this land — meaning, so that I’m not misunderstood, the land occupied by Israel in 1967,” Fayyad told me. “Every day we do work consistent with that to create the sense of a state growing. Bad things happen every day but you’re bound to have a lucky bounce and we have to be ready for it.”

Outside his office in Ramallah, and elsewhere in the West Bank, the fruits of that work are apparent. Stores and restaurants are full, Palestinian Authority police are everywhere in their crisp uniforms, tension is low and the economy, fueled by massive injections of aid, grew 7 percent last year. Israel’s presence remains overwhelming — the checkpoints, the snaking wall-fence, the settler-only highways — but Fayyad’s state-building is pushing into whatever space is available.

Would Palestinians, if talks fail, unilaterally declare independence in 2011 — an idea Fayyad has on occasion seemed to intimate?

“This is not about declarations of statehood,” he said. “This is not about proclamations of a state. It is about getting ready for one. Ours is a healthy unilateralism. Contrast that, if you will, with Israeli settlement activity.”

He continued: “This is not about going it alone; this is about going together holding hands with everybody, including Israelis.”

Fayyad is tired of the paralyzing claims of the past. “Let us not allow ourselves the luxury of acting as victims forever,” he said. “This is a case of two opposed historical narratives. And if this is going to direct traffic in the future, we are not going too far. It’s time to get on with it and end this conflict. Let’s move on. Let’s really look forward.”

But what about Hamas, representing some 40 percent of Palestinians, those in Gaza, whose charter calls for Israel’s destruction and whose opposition to Fayyad is fierce? A “major problem,” an “Achilles’ heel,” the prime minister conceded, but insisted that statehood, as it took form, could prove a unifying theme.

“Is it possible,” he told me, “given past experience, that we may find ourselves in spring of next year without progress being made?

“It is possible. But I believe, instead of sitting on our hands and waiting to get a perfect alignment of the stars, if we get busy helping ourselves, in realizing our dream of having strong and effective institutions of state, we make this outcome less likely. That’s a good enough bet for me.”

Now here’s Prof. Krugman:

Not that long ago, European economists used to mock their American counterparts for having questioned the wisdom of Europe’s march to monetary union. “On the whole,” declared an article published just this past January, “the euro has, thus far, gone much better than many U.S. economists had predicted.”

Oops. The article summarized the euro-skeptics’ views as having been: “It can’t happen, it’s a bad idea, it won’t last.” Well, it did happen, but right now it does seem to have been a bad idea for exactly the reasons the skeptics cited. And as for whether it will last — suddenly, that’s looking like an open question.

To understand the euro-mess — and its lessons for the rest of us — you need to see past the headlines. Right now everyone is focused on public debt, which can make it seem as if this is a simple story of governments that couldn’t control their spending. But that’s only part of the story for Greece, much less for Portugal, and not at all the story for Spain.

The fact is that three years ago none of the countries now in or near crisis seemed to be in deep fiscal trouble. Even Greece’s 2007 budget deficit was no higher, as a share of G.D.P., than the deficits the United States ran in the mid-1980s (morning in America!), while Spain actually ran a surplus. And all of the countries were attracting large inflows of foreign capital, largely because markets believed that membership in the euro zone made Greek, Portuguese and Spanish bonds safe investments.

Then came the global financial crisis. Those inflows of capital dried up; revenues plunged and deficits soared; and membership in the euro, which had encouraged markets to love the crisis countries not wisely but too well, turned into a trap.

What’s the nature of the trap? During the years of easy money, wages and prices in the crisis countries rose much faster than in the rest of Europe. Now that the money is no longer rolling in, those countries need to get costs back in line.

But that’s a much harder thing to do now than it was when each European nation had its own currency. Back then, costs could be brought in line by adjusting exchange rates — e.g., Greece could cut its wages relative to German wages simply by reducing the value of the drachma in terms of Deutsche marks. Now that Greece and Germany share the same currency, however, the only way to reduce Greek relative costs is through some combination of German inflation and Greek deflation. And since Germany won’t accept inflation, deflation it is.

The problem is that deflation — falling wages and prices — is always and everywhere a deeply painful process. It invariably involves a prolonged slump with high unemployment. And it also aggravates debt problems, both public and private, because incomes fall while the debt burden doesn’t.

Hence the crisis. Greece’s fiscal woes would be serious but probably manageable if the Greek economy’s prospects for the next few years looked even moderately favorable. But they don’t. Earlier this week, when it downgraded Greek debt, Standard & Poor’s suggested that the euro value of Greek G.D.P. may not return to its 2008 level until 2017, meaning that Greece has no hope of growing out of its troubles.

All this is exactly what the euro-skeptics feared. Giving up the ability to adjust exchange rates, they warned, would invite future crises. And it has.

So what will happen to the euro? Until recently, most analysts, myself included, considered a euro breakup basically impossible, since any government that even hinted that it was considering leaving the euro would be inviting a catastrophic run on its banks. But if the crisis countries are forced into default, they’ll probably face severe bank runs anyway, forcing them into emergency measures like temporary restrictions on bank withdrawals. This would open the door to euro exit.

So is the euro itself in danger? In a word, yes. If European leaders don’t start acting much more forcefully, providing Greece with enough help to avoid the worst, a chain reaction that starts with a Greek default and ends up wreaking much wider havoc looks all too possible.

Meanwhile, what are the lessons for the rest of us?

The deficit hawks are already trying to appropriate the European crisis, presenting it as an object lesson in the evils of government red ink. What the crisis really demonstrates, however, is the dangers of putting yourself in a policy straitjacket. When they joined the euro, the governments of Greece, Portugal and Spain denied themselves the ability to do some bad things, like printing too much money; but they also denied themselves the ability to respond flexibly to events.

And when crisis strikes, governments need to be able to act. That’s what the architects of the euro forgot — and the rest of us need to remember.

Collins and Kristof

In “Red, Blue and Broke” Ms. Collins has a question:  Your elected officials work hard to create as many disasters as possible, and where’s the credit?  Mr. Kristof is in Dor, Sudan.  In “Winning the Worm War” he says former President Jimmy Carter’s plan to eradicate Guinea worm worldwide is succeeding because local villagers are involved in the effort.  Here’s Ms. Collins:

Good news! The giant Palouse earthworm of the American plains is not extinct.

Nobody had seen a Palouse worm since the 1980s, but it appears they were around all the time, going about their business underground. As Jim Robbins reported in The Times, spunky scientists from the University of Idaho recently located two by burying electrodes that sent shock waves through the ground and encouraged the worms to shoot up to the surface.

Good work, University of Idaho scientists! We’re all happy to hear the giant Palouse earthworms are still with us. Even though it turns out that they’re actually not all that big.

I am telling you this because my actual topic today is state legislatures. We all know how hard it is to keep anyone’s attention when discussion veers off in this direction, so, yeah, I was going for a cheap thrill.

State legislatures are frequently the subject of derision, but lately they have been freaking out with such alarming intensity that you’d think a mad scientist had surrounded state capitols with electrodes just to see what would come popping out.

This month, the most dreadful laws have been coming from Oklahoma and Arizona. The Oklahoma Legislature just overrode Gov. Brad Henry’s veto on two anti-abortion bills, one of which gives doctors immunity from being sued if they conceal information about a fetus’s possible birth defects from a pregnant patient.

Both Arizona and Oklahoma passed bills exempting state residents from gun registration rules and background checks. Governor Henry vetoed his state’s version. Jan Brewer, the governor of Arizona, seems to sign everything that’s put in front of her. But she was overheard calling the State Capitol “that hell hole,” so we might presume she doesn’t always enjoy it.

Arizona, of course, recently passed an immigration bill so draconian that even Jeb Bush hates it. The State House approved a bill requiring presidential candidates to prove that they were born in the United States. However, the Senate may not follow suit, since the Legislature is scheduled to go home this week.

The Arizona Legislature going home is good news right up there with the big earthworm discovery.

Here in New York, the legislators have not been passing outrageous new laws lately. In fact, they seem determined not to pass anything at all, including the budget which was due on April 1. The state is literally running out of money, construction projects are at a standstill and school districts are in chaos.

Meanwhile, a group of lawmakers have announced plans to go to Arizona and protest the new immigration law by chaining themselves to the border. Given the extremely small chance that they will be needed for anything constructive in Albany, this seems like a good plan. Maybe some state senators from Arizona would like to come to New York and throw themselves over Niagara Falls to protest our lack of a budget.

On the surface, it might seem as if we have a pattern here: red states pass crazy laws, while blue states can’t handle money. But financial failure is color blind. A few months ago, Oklahoma won the Largest Revenue Shortfall in the Nation title, edging out — yes! — Arizona.

It is a little ironic that states that spend so much time complaining about federal meddling have been so dependant on the about-to-vanish federal stimulus funds to keep functioning. The Oklahoma health commissioner recently warned lawmakers that additional budget cuts could send the state sliding from 49th to 50th in the ranking for overall health of its citizens. Which is, I guess, good news if you happen to be Mississippi.

Arizona has been raising quick cash by selling state buildings — including the Capitol — and leasing them back from the new owners.

You can see where the pressure might lead elected officials to do something crazy, like pass a gun control law so unconstitutional it makes the National Rifle Association nervous.

South Carolina is a very red state, but it’s in one of the worst messes, budgetwise. Nevada, which is sort of purple, is facing a huge shortfall in 2011. “People always write about California and New York, but I don’t think any state is in worse shape than Nevada,” said the Las Vegas Sun columnist Jon Ralston. This is the sort of thing that happens to smaller states, and it is totally unfair. Your elected officials work hard to create as many disasters as possible, and where’s the credit?

South Carolina is allegedly led by Mark Sanford of Appalachian Trail fame, and the governor of Nevada, Jim Gibbons, has had so many scandals that keeping them straight is like trying to explain credit default swaps. So I’m working on a theory that the states with terrible government are the ones that are A) Red, B) Blue, C) Run by someone with a sex scandal.

Otherwise, it’s all good. We’re happy as a Palouse earthworm.

Here’s Mr. Kristof:

Since ancient times, one of the world’s most terrifying ailments has been caused by what the Bible calls “the fiery serpent,” now known as Guinea worm.

Guinea worms grow up to a yard long inside the body and finally poke out through the skin. They cause excruciating pain and must be pulled out slowly, an inch or two a day. In endemic areas like this district in Lakes State of southern Sudan, people can have a dozen Guinea worms dangling from their bodies.

Yet this is a good news column.

This district is, in fact, one of the last places on earth with Guinea worms. If all goes well, Guinea worms will be eradicated worldwide in the next couple of years — only the second disease ever to be eliminated, after smallpox.

For the last 24 years, former President Jimmy Carter has led the global struggle against the disease. When he started, there were 3.5 million cases annually in 20 countries. Last year, there were fewer than 3,200 cases in four countries: Ethiopia, Ghana, Mali and Sudan. The great majority of the remaining cases are here in southern Sudan.

Mr. Carter, 85, told me a few years ago that he was determined to outlive Guinea worm. I called him by satellite phone from here and asked if he still thought he would win the race. He laughed and said he was increasingly optimistic that he would outlast the worm. “If I can survive two more years, I’ll meet my goal,” he said.

Among the sufferers of Guinea worm in its last chapter is Anyak Gol Marial, a boy living near the collection of huts known as Dor. Anyak said he thought he was about 8 years old. He had a painful blister on his thigh — a sign that a worm was underneath and might soon poke through.

Guinea worms spread because sufferers try to escape the burning pain by entering water. The worm then dumps its larvae into the water — which other people drink. Without humans to sustain their life cycle, guinea worms disappear forever.

Carter Center health workers are the only outside presence here. There is no school, no clinic, no store, not even a government road — just a path that villagers themselves carved through the bush. On my drive in, I came across several barefoot, barely clad hunters who had just killed a wart hog with nothing but spears. I have rarely felt so inadequate.

To detect cases of the disease, the Carter Center has set up a network of Guinea worm volunteers. Serving as a volunteer is prestigious and brings a reward of a T-shirt — the only real article of clothing some people own. One volunteer had reported Anyak’s blister, and a Carter Center field officer persuaded the boy to move into a compound here for treatment. This ensures that a victim doesn’t enter a pond.

Anyak leapt at the opportunity to move into the compound, partly because of the promise of a bed mat, a mosquito net and three good meals a day (at home he eats only once or twice a day). A moment later, he was riding in our vehicle to the compound — the first time he had ever been inside a car.

The campaign against Guinea worm is succeeding because — unlike many foreign aid projects — it puts villagers themselves in charge. Now that they understand that it is contaminated water rather than witchcraft that causes the disease, village elders have barred anyone with a dangling worm from entering a water source. Violators are fined, typically one goat.

Elders also encourage families to use a well drilled by Unicef, or if it is too far away to use filters handed out by the Carter Center. But it’s an uphill struggle. The well broke down while I was visiting, and I came across a family drinking filthy, unfiltered water collected from a mudhole.

When Anyak was in the compound, a nurse dripped water on his blister to fool the worm into emerging. In the morning, it did, looking like spaghetti. Anyak grimaced as the nurse carefully pulled the worm out a bit, spooled it around gauze, and bandaged it to prevent infection.

In recent decades, the world has learned that fighting poverty is harder than it looks. But the Guinea worm campaign underscores that a determined effort, with local people playing a central role, can overcome a scourge that has plagued humanity for thousands of years.

My favorite moment came when we were bouncing along with Anyak toward the Carter Center compound. I asked him what he wants to be when he grows up, and he answered with the most prestigious and altruistic position he could imagine: “I’d like to be a Guinea worm volunteer.”

Dowd and Friedman

In “Olive Oil and Snake Oil” MoDo says Goldman’s wise guys heard lectures on ethics and casino metaphors on Capitol Hill, but the firm’s stock price rose on Wall Street Tuesday.  The Moustache of Wisdom, in “Failure Is Not an Option,” says while our lawmakers in Washington are stalling on a bipartisan climate/energy/jobs bill, Beijing is celebrating.  When will I stop hearing the word “bipartisan?”  Gawd…  Here’s MoDo:

You kept expecting Tom Hagen to jump up and object to a senator’s question on behalf of his Don.

The wood-paneled Senate committee room had an old-school look. The combed-over committee chairman, Carl Levin, had an old-school look. And the Congressional hearing trying to illuminate surreptitious and avaricious behavior by an amoral, macho gang was the 2010 equivalent of the 1950s Mafia hearing depicted in “Godfather II.”

“Government Sachs,” as the well-connected Goldman Sachs is known, was called to account by the actual government on Tuesday. And the traders and executives who dreamed up the idea of packaging smoke were every bit as slick, evasive and dismissively unapologetic as Michael Corleone. He only claimed to trade in olive oil; they actually delivered the snake oil.

You know you’re ethically compromised when Senator John Ensign scolds you about ethics. The Nevada Republican is under investigation by the Senate Ethics Committee and the F.B.I. for chicanery surrounding an affair with a staffer. His wealthy parents paid off the mistress and her husband, who was also on Ensign’s payroll.

“I think most people in Las Vegas would take offense at having Wall Street compared to Las Vegas. Because in Las Vegas, actually people know that the odds are against them. They play anyway,” said the righteous Ensign. “On Wall Street, they manipulate the odds while you’re playing the game. And I would say that it’s actually much more dishonest.”

There was a bipartisan jackpot in casino metaphors.

“How does that differ from going out to Caesar’s Palace, the sports book, and making a wager on the outcome of an athletic contest?” Senator John McCain of Arizona asked C.E.O. Lloyd Blankfein.

But the Republicans’ whacking of Wall Street’s wise guys lost a little of its punch when you knew that they were ducking out to the Senate floor, trying to thwart Democrats’ efforts to pass a bill tightening regulation of Wall Street. Republicans ignored the contradiction in this, the same way Goldman Sachs ignored the conflict in betting against the product it sold to clients.

President Obama bashed Wall Street to pose as a tough populist. The S.E.C. dragged itself away from porn long enough to make an example of Goldman Sachs to shore up its image as a strict enforcer. And Goldman Sachs came to Washington to try to recover an image for integrity.

As Americans lost homes and lined up for jobs, Goldman made $13 billion in 2009, and Blankfein got a bonus of, as he haltingly admitted to McCain, “um, um, nine million.”

“The idea that Wall Street came out of this thing just fine, thank you, is something that just grates on people,” Delaware Senator Ted Kaufman told Blankfein. “They think that you didn’t just come out fine because it was luck. They think that you guys just really gamed this thing real, real well.”

Baby-faced Josh Birnbaum, the former managing director who urged betting against subprime mortgages, did not polish the firm’s reputation with his elitist smirk and name-dropping of Wharton.

“Mr. Birnbaum, do you know what a stated income loan is?” Senator Kaufman asked.

“I think it’s just what it sounds like,” Birnbaum replied, like a petulant schoolboy in detention.

The Goldman crowd was certainly cosmopolitan. Blankfein dropped a Latin phrase (Goldman had a “de minimis” business in direct home loan mortgages) and French peppered Senate Exhibit No. 62, from the petite, handsome Fabrice Tourre, the S.E.C. target who called himself “the fabulous Fab” in a 2007 e-mail.

“More and more leverage in the system, l’edifice entier risqué de s’effondrer a tout moment. … Seul survivant potentiel,” gushed the highflying Frenchman charged with creating subprime mortgage investment deals intended to fail. That translates loosely to: the cheese stands alone.

Continuing to talk about himself in the third person, he wrote, “Standing in the middle of all these complex, highly levered, exotic trades he created without necessarily understanding all the implications of those monstruosities!!! Anyway, not feeling too guilty about this. …”

In an e-mail to his girlfriend, he called his “Frankenstein” creation “a product of pure intellectual masturbation, the type of thing which you invent telling yourself: ‘Well, what if we created a “thing,” which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?’ ”

In another e-mail to her, he blithely joked that he was selling toxic bonds “to widows and orphans that I ran into at the airport.” At least the Fabulous Fab had the good manners to cloak his feelings of fabulousness in front of the committee and put on an earnest mask. Luckily for Goldman, greed may trump ethics. The firm’s stock closed higher Tuesday. Wholesale olive oil closed higher as well.

And now here’s The Moustache of Wisdom:

China is having a good week in America. Yes it is. I’d even suggest that there is some high-fiving going on in Beijing. I mean, wouldn’t you if you saw America’s Democratic and Republican leaders conspiring to ensure that America cedes the next great global industry — E.T., energy technology — to China?

But, before I get to that, here’s a little news item to chew on: Applied Materials, a U.S. Silicon Valley company that makes the machines that make sophisticated solar panels, opened the world’s largest commercial solar research and development center in Xian, China, in October. It initially sought applicants for 260 scientist/technologist jobs. Howard Clabo, a company spokesman, told me that the Xian center received 26,000 Chinese applications and hired 330 people — 31 percent with master’s or Ph.D. degrees. “Roughly 50 percent of the solar panels in the world were made in China last year,” explained Clabo. “We need to be where the customers are.”

And what kind of week is America having? After months of heroic negotiations, Senators John Kerry, Lindsey Graham and Joseph Lieberman had forged a bipartisan climate/energy/jobs bill that, while far from perfect, would have, for the first time, put a long-term fixed price on carbon — precisely the kind of price signal U.S. industry and consumers need to start really shifting the economy to clean-power innovations. The bill was supposed to be unveiled on Monday, but it was suddenly postponed because of Graham’s justified fury that the Senate Democratic leader, Harry Reid, had decided to push immigration reform first — even though no such bill is ready — in a bid to attract Hispanic voters to revive his re-election campaign in Nevada.

After all the work that has gone into knitting together this bipartisan bill, which has the support of key industry players, it would be insane to let this effort fail. Fortunately, on Tuesday, Reid was hinting about a compromise. But, ultimately, the issue isn’t just about introducing a bill. It’s about getting it passed. And there we are going to need the president’s sustained leadership.

President Obama has done a superb job in securing stimulus money for green-technology and in using his regulatory powers to compel the auto industry to improve mileage standards to a whole new level. But he has always been rather coy when it comes to when and how much he will personally push an energy/climate bill that would fix a price on carbon-emitting fuels. Without that price signal, you will never get sustained consumer demand for, or sustained private investment in, clean-power technologies. All you will get are hobbies.

The president clearly wants this energy bill to pass, but his advisers are worried that because the bill will likely result in higher electricity or gasoline charges, Republicans will run around screaming “carbon tax” and hurt Democrats in the midterm elections. I appreciate the president’s dilemma. But I don’t think hanging back and letting the Senate take the lead is the right answer. This is a big leadership moment. He needs to confront it head-on, because — call me crazy — I think doing the right and hard thing here will actually be good politics, too.

I’d love to see the president come out, guns blazing with this message:

“Yes, if we pass this energy legislation, a small price on carbon will likely show up on your gasoline or electricity bill. I’m not going to lie. But it is an investment that will pay off in so many ways. It will spur innovation in energy efficiency that will actually lower the total amount you pay for driving, heating or cooling. It will reduce carbon pollution in the air we breathe and make us healthier as a country. It will reduce the money we are sending to nations that crush democracy and promote intolerance. It will strengthen the dollar. It will make us more energy secure, environmentally secure and strategically secure. Sure, our opponents will scream ‘carbon tax!’ Well, what do you think you’re paying now to OPEC? The only difference between me and my opponents is that I want to keep any revenue we generate here to build American schools, American highways, American high-speed rail, American research labs and American economic strength. It’s just a little tick I have: I like to see our spending build our country. They don’t care. They are perfectly happy to see all the money you spend to fill your tank or heat your home go overseas, so we end up funding both sides in the war on terrorism — our military and their extremists.”

Much of our politics today is designed to make people stupid, confused and afraid of change. The G.O.P. has been particularly egregious on energy and climate. I believe if you talk straight to the American people on energy and climate, they will give you the right answers, and, ultimately, the support needed to trump the vested interests and lobbyists who have kept us addicted to oil. Obama has all the right instincts on this issue. He just needs to trust them. If he brings his A-game to energy legislation, Americans will follow — and then maybe we can have a good century.

I wonder how many Friedman Units that will take?

Brooks and Cohen

Bob Herbert is off today.  Bobo’s babbling about “The Goldman Drama,” and he tells us all about how dumb but decent meets smart and sleazy in the Washington drama over how to prevent another financial meltdown.  (Oh, and just so you know, he tells us that “consumers, lenders and builders” created the housing bubble.  I generally put the most important thing at the top of a list, so that tells us how Bobo views things…)  Mr. Cohen is in Jerusalem and sends us “Beating the Mideast’s Black Hole.”  He says President Obama’s recalibration of U.S.-Middle East diplomacy is ground-shifting. He’ll stay the course because he’s a realist: Calculation, not conscience, is driving policy.  Here’s Bobo:

Between 1997 and 2006, consumers, lenders and builders created a housing bubble, and pretty much the entire establishment missed it. Fannie Mae and Freddie Mac and the people who regulate them missed it. The big commercial banks and the people who regulate them missed it. The Federal Reserve missed it, as did the ratings agencies, the Securities and Exchange Commission and the political class in general.

It’s easy to see why this happened. People who make it into the establishment work and play well with others. They are part of the same overlapping social networks, and inevitably begin to perceive the world in similar, conventional ways. They thrive in institutions where people are not rewarded for being cantankerous intellectual bomb-throwers.

Outside the establishment herd, on the other hand, there were contrarians who understood the bubble (which was the easy part) and who figured out how to take counteraction (which was hard). Michael Burry worked at a small hedge fund in Northern California. John Paulson ran an obscure fund in New York. Eventually, there were even a few traders at the big investment banks who also foresaw the imminent collapse. One of them was “Fabulous” Fabrice Tourre of Goldman Sachs.

If this were a Hollywood movie, the prescient outsiders would be good-looking, just and true, and we could all root for them as they outfoxed the smug establishment. But this is real life, so things are more complicated. According to Gregory Zuckerman’s book, “The Greatest Trade Ever,” Burry was a solitary small-time operator far away. Paulson was cold and diffident.

And as for Fabulous Fab, he seems to be the product of the current amoral Wall Street culture in which impersonal trading is more important than personal service to clients, and in which any product you can sell to some poor sucker is deemed to be admirable and O.K.

In this drama, in other words, the establishment was pleasant, respectable and stupid, while the contrarians were smart but hard to love, and sometimes sleazy.

This week the drama comes to Washington in two different ways. First, as is traditional in our culture, the elected leaders of the clueless establishment have summoned the leaders of Goldman Sachs to a hearing so they can have a post-hoc televised conniption fit on the amorality of Wall Street.

This spectacle presents Goldman with an interesting public relations choice. The firm can claim to be dumb but decent, like the rest of the establishment, and emphasize the times it lost money. Or it can present itself as smart and sleazy, and emphasize the times it made money at the expense of its clients. Goldman seems to have chosen dumb but decent, which is probably the smart narrative to get back in the establishment’s good graces, even if it is less accurate.

The second big event in Washington this week is the jostling over a financial reform bill. One might have thought that one of the lessons of this episode was that establishments are prone to groupthink, and that it would be smart to decentralize authority in order to head off future bubbles.

Both N. Gregory Mankiw of Harvard and Sebastian Mallaby of the Council on Foreign Relations have been promoting a way to do this: Force the big financial institutions to issue bonds that would be converted into equity when a regulator deems them to have insufficient capital. Thousands of traders would buy and sell these bonds as a way to measure and reinforce the stability of the firms.

But, alas, we are living in the great age of centralization. Some Democrats regard federal commissions with the same sort of awe and wonder that I feel while watching LeBron James and Alex Ovechkin.

The premise of the current financial regulatory reform is that the establishment missed the last bubble and, therefore, more power should be vested in the establishment to foresee and prevent the next one.

If you take this as your premise, the Democratic bill is fine and reasonable. It would force derivative trading out into the open. It would create a structure so the government could break down failing firms in an orderly manner. But the bill doesn’t solve the basic epistemic problem, which is that members of the establishment herd are always the last to know when something unexpected happens.

If this were a movie, everybody would learn the obvious lessons. The folks in the big investment banks would learn that it’s valuable to have an ethical culture, in which traders’ behavior is restricted by something other than the desire to find the next sucker. The folks in Washington would learn that centralized decision-making is often unimaginative decision-making, and that decentralized markets are often better at anticipating the future.

But, again, this is not a Hollywood movie. Those lessons are not being learned. I can’t wait for the sequel.

Now here’s Mr. Cohen:

The U.S. Middle East envoy, George Mitchell, has come and gone, again, with peace talks still on hold and one Israeli commentator, Yossi Sarid, musing that “the Israeli-Palestinian conflict is a black hole that swallows up goodwill ambassadors through the ages.”

I can’t argue with that. Cold wars come and go, new technologies transform the world, but the clash of Zionism and Palestinian nationalism in the Holy Land defeats resolution.

Right now, Israeli Prime Minister Benjamin Netanyahu thinks Palestinians are “up a tree” (a eucalyptus tree, to be precise) and Palestinians think Netanyahu’s a deceitful bully (the lead Palestinian negotiator, Saeb Erekat, characterized his tone as, “Come here, boy, we know what’s best for you.”)

Feeling optimistic already? I confess I am — or rather, the complete despair about the “peace process” with which I arrived in Israel has eased. O.K., that’s not exactly optimism, but in the Middle East small mercies count.

Mitchell’s trip was not unproductive. My understanding is that proximity talks will start again next month, with Mitchell’s team shuttling between the sides. Israel will refrain from provocations of the Ramat Shlomo kind (those planned 1,600 housing units in East Jerusalem) and will promise to get substantive, on borders above all. Palestinians will promise to, well, show up.

But that’s not the reason for my improved mood: It’s hard to celebrate proximity talks when Palestinians and Israelis have often held direct talks. No, I detect three developments. The first is Obama. The second is Fayyad. The third is what Danny Ayalon, the deputy Israeli foreign minister, called “the sugar-coated poison pill” of the Israeli status quo. I’ll take them in order.

Last week, a letter from President Barack Obama was conveyed to Mahmoud Abbas, the Palestinian president. In it, I understand, Obama spoke of his very strong commitment — unprecedented commitment — to a two-state peace and said that if Israel seriously undermines trust between the two parties, the United States will not stand in the way of a United Nations resolution condemning that.

No American definition of what such trust-undermining acts might be was offered, which is why Erekat pressed Mitchell in their meeting last Friday on what would constitute “provocative actions” by Israel.

But it seems clear that any reprise of the Ramat Shlomo debacle, which infuriated Obama, would meet American criteria. The bottom line to Israel is: Hold the building, hold the tenders and hold any other provocations while Mitchell shuttles.

Obama’s recalibration of U.S. Middle East diplomacy is ground-shifting. He’s being pummeled from the usual quarters but he’ll stay the course because he’s a realist and because soldiers have told him that, with 200,000 plus American forces in Muslim countries, getting to Israel and Palestine living side-by-side in peace is a vital U.S. national security interest. Calculation, not conscience (although there’s a little of that), is driving policy.

There’s real change in nascent Palestine, too. Salam Fayyad, the Palestinian prime minister, is the most important phenomenon in the Middle East.

Fayyad is obsessed with security — an obsession reflected in the now ubiquitous Palestinian Authority police on the West Bank — and with building state institutions and the economy. He’s not interested in Palestinian “victimhood.” Narratives do not a family feed. He wants a future. He believes nonviolence is the way to get there. He’s receiving some help from Netanyahu on the economy (but needs more) and security cooperation is ongoing.

Over time, Fayyad can reassure Israelis that they’ll get a reliable state over the border, not some Iranian Trojan Horse. Palestinian institution-building is the best answer to Israel’s “no interlocutor” argument.

Within Israel, a booming economy and day-to-day tranquility would suggest peace is a low priority. But polls show a majority feel the country’s moving in the wrong direction; rampant corruption scandals alone cannot explain that. As Ayalon told me, “We do not have an eastern border.” Countries without defined borders have a hard time believing they’re moving in the right direction.

That tells me Netanyahu has potential interest, Hamas and its vile videos about the kidnapped Gilad Shalit notwithstanding, in getting from status quo to permanent status.

Mitchell believes that. He was asked about Netanyahu during his visit and, according to notes I saw, responded: “I believe Netanyahu is serious, capable and interested in reaching an agreement. What I cannot say is if he is willing to agree to what is needed to secure an agreement.”

That meeting concluded with Mitchell saying: “You asked if I think Netanyahu is serious. They ask the same question. You are an expert on Palestinian and Israeli politics. They are the same. But no one in the world knows American politics better than me, and this I will say. There has never been in the White House a president that is so committed on this issue, including Clinton who is a personal friend, and there will never be, at least not in the lifetime of anyone in this room.”

Don’t give up just yet even if history, and Hamas, say peace is a pipe dream and Mitchell next in line for that “black hole.”

The Pasty Little Putz and Krugman

The Pasty Little Putz, in “Not Even In South Park?”, says our culture has few taboos that can’t be violated, but depicting the Prophet Muhammad in “South Park” was met with cowardice and censorship.  He foresees the collapse of all we hold dear…  Prof. Krugman, in “Berating the Raters,” says the Goldman Sachs e-mail messages we should be focusing on are the ones from employees at the rating agencies, which reveal huge conflicts of interest.  Here’s the Putz:

Two months before 9/11, Comedy Central aired an episode of “South Park” entitled “Super Best Friends,” in which the cartoon show’s foul-mouthed urchins sought assistance from an unusual team of superheroes. These particular superfriends were all religious figures: Jesus, Krishna, Buddha, Mormonism’s Joseph Smith, Taoism’s Lao-tse — and the Prophet Muhammad, depicted with a turban and a 5 o’clock shadow, and introduced as “the Muslim prophet with the powers of flame.”

That was a more permissive time. You can’t portray Muhammad on American television anymore, as South Park’s creators, Trey Parker and Matt Stone, discovered in 2006, when they tried to parody the Danish cartoon controversy — in which unflattering caricatures of the prophet prompted worldwide riots — by scripting another animated appearance for Muhammad. The episode aired, but the cameo itself was blacked out, replaced by an announcement that Comedy Central had refused to show an image of the prophet.

For Parker and Stone, the obvious next step was to make fun of the fact that you can’t broadcast an image of Muhammad. Two weeks ago, “South Park” brought back the “super best friends,” but this time Muhammad never showed his face. He “appeared” from inside a U-Haul trailer, and then from inside a mascot’s costume.

These gimmicks then prompted a writer for the New York-based Web site revolutionmuslim.com to predict that Parker and Stone would end up like Theo van Gogh, the Dutch filmmaker murdered in 2004 for his scathing critiques of Islam. The writer, an American convert to Islam named Abu Talhah Al-Amrikee, didn’t technically threaten to kill them himself. His post, and the accompanying photo of van Gogh’s corpse, was just “a warning … of what will likely happen to them.”

This passive-aggressive death threat provoked a swift response from Comedy Central. In last week’s follow-up episode, the prophet’s non-appearance appearances were censored, and every single reference to Muhammad was bleeped out. The historical record was quickly scrubbed as well: The original “Super Best Friends” episode is no longer available on the Internet.

In a way, the muzzling of “South Park” is no more disquieting than any other example of Western institutions’ cowering before the threat of Islamist violence. It’s no worse than the German opera house that temporarily suspended performances of Mozart’s opera “Idomeneo” because it included a scene featuring Muhammad’s severed head. Or Random House’s decision to cancel the publication of a novel about the prophet’s third wife. Or Yale University Press’s refusal to publish the controversial Danish cartoons … in a book about the Danish cartoon crisis. Or the fact that various Western journalists, intellectuals and politicians — the list includes Oriana Fallaci in Italy, Michel Houellebecq in France, Mark Steyn in Canada and Geert Wilders in the Netherlands — have been hauled before courts and “human rights” tribunals, in supposedly liberal societies, for daring to give offense to Islam.

But there’s still a sense in which the “South Park” case is particularly illuminating. Not because it tells us anything new about the lines that writers and entertainers suddenly aren’t allowed to cross. But because it’s a reminder that Islam is just about the only place where we draw any lines at all.

Across 14 on-air years, there’s no icon “South Park” hasn’t trampled, no vein of shock-comedy (sexual, scatalogical, blasphemous) it hasn’t mined. In a less jaded era, its creators would have been the rightful heirs of Oscar Wilde or Lenny Bruce — taking frequent risks to fillet the culture’s sacred cows.

In ours, though, even Parker’s and Stone’s wildest outrages often just blur into the scenery. In a country where the latest hit movie, “Kick-Ass,” features an 11-year-old girl spitting obscenities and gutting bad guys while dressed in pedophile-bait outfits, there isn’t much room for real transgression. Our culture has few taboos that can’t be violated, and our establishment has largely given up on setting standards in the first place.

Except where Islam is concerned. There, the standards are established under threat of violence, and accepted out of a mix of self-preservation and self-loathing.

This is what decadence looks like: a frantic coarseness that “bravely” trashes its own values and traditions, and then knuckles under swiftly to totalitarianism and brute force.

Happily, today’s would-be totalitarians are probably too marginal to take full advantage. This isn’t Weimar Germany, and Islam’s radical fringe is still a fringe, rather than an existential enemy.

For that, we should be grateful. Because if a violent fringe is capable of inspiring so much cowardice and self-censorship, it suggests that there’s enough rot in our institutions that a stronger foe might be able to bring them crashing down.

Here’s Prof. Krugman:

Let’s hear it for the Senate’s Permanent Subcommittee on Investigations. Its work on the financial crisis is increasingly looking like the 21st-century version of the Pecora hearings, which helped usher in New Deal-era financial regulation. In the past few days scandalous Wall Street e-mail messages released by the subcommittee have made headlines.

That’s the good news. The bad news is that most of the headlines were about the wrong e-mails. When Goldman Sachs employees bragged about the money they had made by shorting the housing market, it was ugly, but that didn’t amount to wrongdoing.

No, the e-mail messages you should be focusing on are the ones from employees at the credit rating agencies, which bestowed AAA ratings on hundreds of billions of dollars’ worth of dubious assets, nearly all of which have since turned out to be toxic waste. And no, that’s not hyperbole: of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent — 93 percent! — have now been downgraded to junk status.

What those e-mails reveal is a deeply corrupt system. And it’s a system that financial reform, as currently proposed, wouldn’t fix.

The rating agencies began as market researchers, selling assessments of corporate debt to people considering whether to buy that debt. Eventually, however, they morphed into something quite different: companies that were hired by the people selling debt to give that debt a seal of approval.

Those seals of approval came to play a central role in our whole financial system, especially for institutional investors like pension funds, which would buy your bonds if and only if they received that coveted AAA rating.

It was a system that looked dignified and respectable on the surface. Yet it produced huge conflicts of interest. Issuers of debt — which increasingly meant Wall Street firms selling securities they created by slicing and dicing claims on things like subprime mortgages — could choose among several rating agencies. So they could direct their business to whichever agency was most likely to give a favorable verdict, and threaten to pull business from an agency that tried too hard to do its job. It’s all too obvious, in retrospect, how this could have corrupted the process.

And it did. The Senate subcommittee has focused its investigations on the two biggest credit rating agencies, Moody’s and Standard & Poor’s; what it has found confirms our worst suspicions. In one e-mail message, an S.& P. employee explains that a meeting is necessary to “discuss adjusting criteria” for assessing housing-backed securities “because of the ongoing threat of losing deals.” Another message complains of having to use resources “to massage the sub-prime and alt-A numbers to preserve market share.” Clearly, the rating agencies skewed their assessments to please their clients.

These skewed assessments, in turn, helped the financial system take on far more risk than it could safely handle. Paul McCulley of Pimco, the bond investor (who coined the term “shadow banks” for the unregulated institutions at the heart of the crisis), recently described it this way: “explosive growth of shadow banking was about the invisible hand having a party, a non-regulated drinking party, with rating agencies handing out fake IDs.”

So what can be done to keep it from happening again?

The bill now before the Senate tries to do something about the rating agencies, but all in all it’s pretty weak on the subject. The only provision that might have teeth is one that would make it easier to sue rating agencies if they engaged in “knowing or reckless failure” to do the right thing. But that surely isn’t enough, given the money at stake — and the fact that Wall Street can afford to hire very, very good lawyers.

What we really need is a fundamental change in the raters’ incentives. We can’t go back to the days when rating agencies made their money by selling big books of statistics; information flows too freely in the Internet age, so nobody would buy the books. Yet something must be done to end the fundamentally corrupt nature of the the issuer-pays system.

An example of what might work is a proposal by Matthew Richardson and Lawrence White of New York University. They suggest a system in which firms issuing bonds continue paying rating agencies to assess those bonds — but in which the Securities and Exchange Commission, not the issuing firm, determines which rating agency gets the business.

I’m not wedded to that particular proposal. But doing nothing isn’t an option. It’s comforting to pretend that the financial crisis was caused by nothing more than honest errors. But it wasn’t; it was, in large part, the result of a corrupt system. And the rating agencies were a big part of that corruption.

Friedman, Kristof and Rich

MoDo is off today.  The Moustache of Wisdom is having a fever dream about a “Tea Party With a Difference.”  He babbles that one way to put all the patriotic energy from the Tea Party Movement to good use would be to go green.  What he fails to understand is that rational people want to go green, ergo…  Mr. Kristof writes from Marial Bai, Sudan about “A School for Hope.”  He says Valentino Achak Deng’s new school in southern Sudan provides a glimmer of hope in a war-torn, poverty-stricken region.  Mr. Rich, in “Fight On, Goldman Sachs!”, says changing Wall Street’s culture will require more than just passing regulatory reforms.  Jeez, ya think?  Here’s The Moustache of Wisdom:

I’ve been trying to understand the Tea Party Movement. Sounds like a lot of angry people who want to get the government out of their lives and cut both taxes and the deficit. Nothing wrong with that — although one does wonder where they were in the Bush years. Never mind. I’m sure like all such protest movements the Tea Partiers will get their 10 to 20 percent of the vote. But should the Tea Partiers actually aspire to break out of that range, attract lots of young people and become something more than just entertainment for Fox News, I have a suggestion:

Become the Green Tea Party.

I’d be happy to design the T-shirt logo and write the manifesto. The logo is easy. It would show young Americans throwing barrels of oil imported from Venezuela and Saudi Arabia into Boston Harbor.

The manifesto is easy, too: “We, the Green Tea Party, believe that the most effective way to advance America’s national security and economic vitality would be to impose a $10 “Patriot Fee” on every barrel of imported oil, with all proceeds going to pay down our national debt.”

America now imports about 11 million barrels a day, about 57 percent of our total oil needs — mostly from Canada, Mexico, Venezuela, Saudi Arabia and Nigeria. As T. Boone Pickens told Congress the other day: “In January 2010, our trade deficit for the month was $37.3 billion — $27.5 billion of that was money we sent overseas to import oil.”

If we put a Patriot Fee on all of those imported barrels, we would use less, cease enriching bad regimes, strengthen our own dollar, make the air cleaner and the climate more stable, foster the exploitation of domestic and renewable energy sources, promote electric vehicles, help bring down the global price of oil (which hurts Iran and helps poor Africa), and we could use the revenue to shrink the deficit. It’s win, win, win, win, win, win …

Indeed, the Green Tea Party could say, “We’ve got our own health care plan — a plan to make America healthy by simultaneously promoting energy security, deficit security and environmental security.”

“Think about it,” said Carl Pope, the chairman of the Sierra Club. “Green tea is full of antioxidants,” which some believe help reduce cancer and heart disease. “It’s really good for your health.” And a Green Tea Party, he added, could be good for the country’s health “by harnessing all of its energy and unconventional politics” to end our addiction to oil.

Yes, I know, dream on. The Tea Party is heading to the hard libertarian right and would never support an energy bill that puts a fee on carbon.

So if there is going to be a Green Tea Party, it will have to emerge from a different place — the radical center, a center committed to a radical departure from business as usual. Acting on that impulse, Senators John Kerry, Lindsey Graham and Joseph Lieberman had forged a bipartisan climate/energy/jobs bill that deserves an energetic centrist Green Tea Party to support it.

This critical piece of energy legislation was supposed to be unveiled by the three senators on Monday, but it was suddenly postponed late Saturday because of Senator Graham’s fury that the Senate Democratic leader, Harry Reid of Nevada, and the White House were planning to take up a highly controversial immigration measure before the energy bill.

If this is what the Obama administration is doing — to score a few cheap political points with Hispanics — it is a travesty. The bipartisan energy bill is ready to go. It is far from perfect. Indeed, it is a shame the fossil fuel industries still have such a stranglehold on Congress. But it’s the best we’re going to get, and we have got to get started. However, without a centrist Green Tea Party movement — one that brings the same passion to cutting emissions that the Tea Party brings to cutting deficits — even this effort will never pass.

This bill introduces a carbon price and other means to control the CO2 emissions of various sectors of the economy, without an economywide cap-and-trade system. The bill’s goal is to cut greenhouse gas emissions by 17 percent below 2005 levels by 2020. But to garner broad support, it will also expand domestic production of oil, natural gas and nuclear power and offer tax breaks to manufacturers who make their facilities more energy efficient and create green jobs.

“No bill that could pass Congress right now or in the immediate future would be sufficient to produce enough clean power to mitigate climate change at the rate we need,” remarked the physicist Joe Romm, who writes the blog climateprogress.org and is author of an insightful new book on this subject, “Straight Up.” “We simply aren’t sufficiently desperate to do what is needed, which is nonstop deployment of a staggering amount of low-carbon energy, including energy efficiency, for the rest of the century.”

The reason a Green Tea Party should coalesce to support this bill, argued Romm, is because it will set a price on carbon pollution and help foster commercialization of clean technologies — like hybrids, batteries and solar — at sufficient scale to enable the U.S. to rapidly ramp up when the seriousness of climate change becomes inescapably obvious to all.

In short, the bill is a step in the right direction toward reducing greenhouse gases and expanding our base of clean power technologies so we can compete with China in this newest global industry. It ain’t perfect, but it ain’t beanbag. And if we don’t start now, every solar panel, electric car and wind turbine we’ll have to buy when climate change really hits will come with instructions in Chinese. Go Green Tea Party.

Lordy, but he has a rich and varied fantasy life, doesn’t he?  Here’s Mr. Kristof:

Southern Sudan is one of the most impoverished places on earth, and this remote town lacks electricity and running water and is 150 miles from the nearest paved road. Yet, thanks to a remarkable young American who grew up here — and to readers who backed him — the town has become a magnet for young Sudanese dreaming of an education.

From hundreds of miles around, boys and girls are streaming here in hopes of being admitted to a new boarding school. It is the brainchild of Valentino Achak Deng, whose flight from war and starvation is recounted in the best-selling book by Dave Eggers, “What is the What.”

Valentino was separated from his family during the civil war in Sudan and spent his childhood dodging soldiers, land mines, lions and other hazards. He learned to read and write by scratching letters in the dust at a refugee camp, and in 2001 he was admitted to the United States as a refugee. He worked his way through college — and then was determined to give back.

“Many people have placed confidence in me, trusted me, supported me, and so I felt a special responsibility,” Valentino said. “I wanted to show that there was a reason that I survived.”

Dave and Valentino devoted the profits from “What is the What” to starting the high school, and it is now choosing students for its second school year, beginning in a few days. More than 1,000 pupils, some of them adults whose studies were delayed by the war, are competing for 150 spots as incoming ninth graders.

I’ve known and admired Valentino for years and wrote about his school in December, prompting $400,000 in contributions from readers. So I decided to visit and see what the donations had achieved.

Valentino has hired first-rate teachers, constructed new buildings and erected two dormitories for girls (at least half the students will be girls). The night I stayed in a thatch-roof cottage — teacher housing — a truck arrived with the dorms’ beds and mattresses, purchased in Uganda. Almost nothing is available locally.

The girls will sleep 25 to a room, but the dorms will greatly expand educational opportunities for young women here. Last year, in all of southern Sudan, only 11 girls sat for high school graduation exams, according to government statistics.

One of southern Sudan’s most wrenching statistics is this: Based on official data, a girl there is far more likely to end up dying in childbirth than she is to gain a primary education.

The upshot is that this one school, serving students from all over southern Sudan, will considerably expand the number of girls graduating from secondary school. American donors can sponsor the girls, for $300 per year, through ValentinoAchakDeng.org.

This school is free, the only hope for brilliant students who have no money for tuition, but the pupils do the cleaning and maintenance themselves. Valentino’s connections help bring American volunteer teachers in the summers; they put up with bucket showers, pit toilets and wilting heat, while gaining the ferocious loyalty of the students.

The rest of the staff is unusual, too. The cook, Achol Mayol Juach, was kidnapped by slave traders in 1986, when she was 7, and was enslaved in the north for nearly two decades before escaping with the help of an aid worker from Christian Solidarity International.

Valentino aims to make the school multiethnic, including Muslim Arab students associated with northern tribes that ravaged the south during the civil war. He has students engaged in service projects, like building huts for displaced people, and he is focused on nurturing leaders who can build a more peaceful and prosperous country.

Operating a school in such a remote area is a dizzying challenge. Computers must be powered by a generator or solar panels. Government officials pester Valentino to admit their children, and he must delicately explain that admission depends entirely on entrance exam scores. (He does give preference to one group: orphans.)

Recent donations have enabled the school to build a library, which is starved of books, but there is no local postal service for American friends to send books. Valentino looked into the possibility of having books mailed to Kenya and then trucked in, but found he would have to pay prohibitive import duties.

The school is not a solution to Sudan’s troubles, and it will educate only a tiny proportion of Sudanese youngsters yearning for a better future. But it is an exhilarating glimmer in a land laden with troubles. It’s a sign of Americans and Sudanese working together and making a difference. And it’s a reminder that sometimes the world’s most desperate and desolate places are the ones brimming with magnanimity and hope.

Now here’s Mr. Rich:

Maybe Lloyd Blankfein was doing “God’s work” after all.

When the Goldman Sachs chief executive made that tone-deaf remark to an interviewer in November, he became the butt of a million insults, the ultimate symbol of Wall Street’s abdication of responsibility for its sleazy role in the Great Crash of ’08. But now we’ve learned that Blankfein was actually, if inadvertently, on the side of the angels. It’s his myopic, unrepentant truculence that left Goldman exposed to a Securities and Exchange Commission accusation of fraud that will be litigated in public rather than bought off in private. And it’s that S.E.C. legal action that has, in a single week, radically transformed the politics and prospects for financial reform in America.

In just that week, the Party of No’s intransigent campaign of obstruction and obfuscation went belly up. The Obama White House moved to get its act together with an alacrity lacking in its health care campaign, abruptly adding Thursday’s New York speech to the president’s schedule. The bipartisan Financial Crisis Inquiry Commission at last issued its first subpoena — to Moody’s, one of the rating agencies that for a fat fee slapped AAA ratings on the toxic garbage Goldman packaged and sold to benighted suckers on the other end of a huge bet placed by a favored client, the hedge fund player John Paulson.

Salutary as this rush of events is, it still adds up so far to just one small step for mankind. We don’t yet know how many loopholes lobbyists will slip into the bill-in-progress. We don’t yet know the outcome of the S.E.C. case, let alone what other much-needed legal pursuit of Wall Street may follow it. And we still don’t know what, if any, true correction lies ahead for the financial sector’s runaway casino culture — much of it legal — that turned a subprime-mortgage bubble in a handful of overheated American states into an international economic meltdown.

But before we get to those gloomy caveats, let’s smell a few roses.

The farcical spectacle of the Republican retreat has been particularly enjoyable. It was only last Sunday that Senator Mitch McConnell went on CNN to flog his big lie that the Senate reform bill somehow guaranteed bank bailouts — a talking point long ago concocted for the G.O.P. by its favorite spin strategist, Frank Luntz. McConnell’s House counterpart, John Boehner, was meanwhile waging a campaign to portray the Democrats as shills for Goldman, a major source of Obama donations and personnel. Never mind that the Bush White House chief of staff, Joshua Bolten, was a Goldman alumnus and that both McConnell and Boehner had voted for the very bailouts they now profess to abhor (a k a TARP) after a sales job by Henry Paulson, the Bush Treasury secretary who was Blankfein’s predecessor as Goldman’s C.E.O.

In another bit of hubris, McConnell boasted of a letter signed by his caucus pledging 41-vote unity to block the reform bill. But on Monday, Senator Bob Corker of Tennessee, a Republican who had been negotiating with his Democratic peers in good faith, took to the Senate floor to start breaking ranks with his dear leader. The bill at hand, Corker said, was “anything but” a mandate for bank bailouts. On Tuesday, the House G.O.P. leadership distributed a spreadsheet publicizing Goldman’s donations to Democrats, and this too backfired. Politico reported the next morning that Goldman’s political action committee donated more money to politicians in March than in all of 2009, most of it to Republicans. The total take for Boehner was double that of Harry Reid’s.

That afternoon Charles Grassley of Iowa, up for re-election this fall, became the first G.O.P. senator to vote with the Democrats on part of the pending package. Maybe someone showed him another spreadsheet — a Pew poll finding that even in a divided America 61 percent favor financial regulatory reform. The unity pledge in McConnell’s pocket was now worth as much as a mortgage-backed security.

The White House’s own shift last week, though far less momentous than the Republicans’, was also promising. A year ago, President Obama had delivered an address labeling the financial crisis a “perfect storm” — the term long favored by Robert Rubin, the discredited guru of bailed-out Citigroup and mentor to many on the White House economic team. At Cooper Union on Thursday, the president, while far from fiery, was no longer likening the calamity to a natural disaster beyond anyone’s control. He chastised those in the financial sector who saw the free market as “a free license to take whatever you can get, however you can get it.” He was no longer describing Blankfein, sitting before him, as a “very savvy” businessman — a compliment he had bestowed on him and Jamie Dimon of JPMorgan Chase just 10 weeks earlier.

Still, the Republicans had half a point when they indicted the White House for being too close to Goldman and its brethren. The truth is that both parties are too often in hock to the financial sector, and both parties bear responsibility for the meltdown. In response to a question from Jake Tapper of ABC News last weekend, Bill Clinton was right to say that he and two of his Treasury secretaries, Rubin and Lawrence Summers, “were wrong” to leave derivatives unregulated. They deserve regulation, Clinton said, because “sometimes people with a lot of money make stupid decisions and make it without transparency.”

Those same people also make smart decisions without transparency — smart for them, if not the country. Even if the reform bill does bring stringent regulation to derivatives — a big if — that won’t rectify capitalism’s worst “innovation” in our own Gilded Age: the advent of exotic, speculative “investments” that have no redeeming social value and are instead concocted to facilitate gambling for its own sake. Such are the Goldman instruments of mass financial destruction that paid off for John Paulson. In 2007 alone, according to Gregory Zuckerman in his book “The Greatest Trade Ever,” Paulson’s personal take amounted to over $10 million a day, “more than the earnings of J. K. Rowling, Oprah Winfrey and Tiger Woods put together.” That “financial alchemy,” as Zuckerman calls it, explains why the finance sector’s share of domestic corporate profits, never higher than 16 percent until 1986, hit 41 percent in the last decade.

As many have said — though not many politicians in either party — something is fundamentally amiss in a financial culture that thrives on “products” that create nothing and produce nothing except new ways to make bigger bets and stack the deck in favor of the house. “At least in an actual casino, the damage is contained to gamblers,” wrote the financial journalist Roger Lowenstein in The Times Magazine last month. This catastrophe cost the economy eight million jobs.

Lowenstein argued for a transfer tax on financial trading, a reform that has found favor with Britain’s prime minister, Gordon Brown, if not our own Treasury secretary, Timothy Geithner. Equally compelling is the notion articulated by Ryan Avent, a blogger at The Economist, that “public anger” and “hooting derision” be increased to shame Wall Street into changing its ethos. This assumes, of course, that there is any capacity for shame. Perhaps the most productive tactic comes from Ted Kaufman, Democrat of Delaware, who is using his lame-duck residence in the Senate (as the appointee to Joe Biden’s old seat) to demand that we root out the “fraud and potential criminal conduct” that “were at the heart of the financial crisis.”

To achieve this overdue reckoning will require action — by the S.E.C., the Justice Department and any other legal authority that wants to get into the act. That no one at Lehman Brothers has yet been held liable for its Enronesque bookkeeping deceit is appalling. That we still haven’t seen the e-mail and documents that would illuminate A.I.G.’s machinations with Goldman and the rest of its counterparties amounts to a cover-up. That investigative journalists have consistently been way ahead of the authorities, the S.E.C. included, in uncovering Wall Street’s foul play is a scandal. If this culture remains in place, the whole crisis will have gone to waste.

As a reminder of the unchastened status quo, Blankfein remains the gift that keeps on giving. On Thursday, The Financial Times reported that he had been calling clients to argue that the S.E.C. case against Goldman would ultimately “hurt America.” The opposing point of view was presented by Ira Glass on his radio show “This American Life” this month. With reporters from the nonprofit journalistic organization ProPublica, it told the story of another hedge fund, Magnetar, that gamed the housing bubble. Bankers who worked on Magnetar deals walked away with their huge bonuses well before disaster struck — or, as the program put it, “bankers made money even when they were buying things that eventually blew up the bank.” Not to mention the economy. And it was all legal.

To award the audience a bonus, “This American Life” concluded with a Broadway song commissioned from a co- author of the satirical musical “Avenue Q.” Titled “Bet Against the American Dream,” it distills a complex financial saga to its essence: Those who shorted the housing market shorted the country.

Go online, listen to it and laugh. But the fact remains that those who truly hurt America are laughing harder still, all the way to the bank.

Collins, solo

Both Mr. Blow and Mr. Herbert are off today, so Ms. Collins is flying solo with “Running on Empty,” in which she says that election season has started in earnest, and one thing is crystal clear. Both the Democrats and the Republicans are hopeless.  Here she is:

The election season is starting in earnest, and already one thing is crystal clear. Both the Democrats and the Republicans are hopeless. It seems inconceivable that either party can possibly win anything. This may be the year when the Whigs finally get to make their comeback.

The whole world is expecting a cataclysm for the Democrats in November. After all, the economy is still a mess, and the party is still … the party. In Illinois, which was first out of the box this season, the Democrats have already moved beyond the primary and into buyer’s remorse. They’ve already dumped the voters’ pick for lieutenant governor. This week, their question is whether they can get rid of their Senate nominee, Alexi Giannoulias, the son of a Chicago banking family, whose bank failed on Friday.

The Democratic disaster scenario would make absolute sense if it did not also require that the Republicans do something right. But in one state after another, they seem bent on nominating the worst possible candidate. The world is one big scavenger hunt, and their clue says, “Find somebody unelectable.”

In Connecticut, having driven Senator Chris Dodd from the race, the Republicans are racing into the corner of Linda McMahon, whose claim to fame is her role in exporting professional wrestling around the globe. In Florida, they got tired of having their popular governor, Charlie Crist, as the senate nominee even before they actually nominated him. Now Crist is expected to run as an independent, and the G.O.P. will try to live happily ever after with a conservative state legislator who has issues about his use of the party credit card.

In Nevada, where Harry Reid, the Senate majority leader, appeared to be hopelessly unpopular, the Republicans’ favorite, Sue Lowden, got caught up in a controversy over whether she favors returning to the days when people paid their medical bills by giving the doctor a couple of chickens. This is truly not the sort of policy debate you want to use to jump-start a campaign. And Lowden has yet to explain how much poultry it would cost for a colonoscopy.

The country may have moved to the right, but conservatives tend to underestimate the amount of blue that’s still out there. The new Republican governor of Virginia seemed stunned that his state reacted badly to his call for a Confederate History Month that did not mention slavery. But really, the very definition of a purple state is a place where, when you devote an entire month to recalling the glories of the confederacy, you have to give some time to the bondage angle.

In Kentucky, Mitch McConnell, the Senate minority leader, intended to take nothing for granted when it came to keeping the Republicans’ hold on a Senate seat that’s up for grabs this year. His first, and canniest, move was to force the incumbent, Jim Bunning, to retire. Bunning, a cranky ex-baseball player, barely won his last race when he got caught using a teleprompter during a debate and claimed that his opponent, an Italian-American doctor, looked like “one of Saddam Hussein’s sons.”

For Bunning’s successor, McConnell picked Trey Grayson, the secretary of state, who looks a little like a younger, larger Mitch McConnell. Unfortunately for the plan, Grayson is currently getting his clock cleaned by the Tea Party candidate, Rand Paul.

It is very hard to pick a favorite. Would you prefer the man endorsed by Mitch McConnell and Dick Cheney, or the one backed by Sarah Palin and Jim Bunning? I watched a Northern Kentucky Chamber of Commerce debate on Friday, and Grayson, who opposed wasteful earmarks, but not the good wholesome ones that come to Kentucky, kind of faded into the woodwork.

It was the out-of-the-running candidates who were the attention-grabbers. There was a very large, genial man whose slogan was “We need to make a U-turn to God,” and a small, gnarled World War II veteran who called the president “a would-be mullah of the most evil kind.” This was Gurley Martin, and his answer to a question on cap-and-trade legislation was to croak out “Horsefeathers! Horsefeathers! Horsefeathers!”

If Paul holds on to his lead and wins the nomination, the Democrats — who never really felt they had a prayer in Kentucky — will take heart. Paul is going to be hampered by a general impression in many parts of the state that he is sort of strange. This may be because Grayson keeps running ads titled “Rand Paul: Strange Ideas.”

The Democratic nominee may be the lieutenant governor, Daniel Mongiardo, the same guy who Bunning called Saddam-like six years ago. If he and Paul are both the final candidates, it will be an all-physician Senate election. You do see more and more doctors in the political game. Perhaps they want to get out of the medical business before that payment-by-chicken thing kicks in.

Brooks, Cohen and Krugman

Bobo is babbling about something he’s calling “The Government War.”  He gurgles that the stale, old debate of big government on the left versus small government on the right is back with a vengeance.  “Small government on the right” is enough to make a cat laugh…  Mr. Cohen, in “Israeli Unassailable Might and Unyielding Angst,” says it’s not easy to parse fact from fiction, justifiable anxiety from self-serving angst, in the pervasive Israeli narrative.  Prof. Krugman, in “Don’t Cry for Wall Street,” says President Obama has to do what’s right for the country when it comes to financial reform. If that hurts the bankers, so be it.  Here’s Bobo:

In these columns I try to give voice to a philosophy you might call progressive conservatism. It starts with the wisdom of Edmund Burke — the belief that the world is more complex than we can know and we should be skeptical of handing too much power to government planners. It layers in a dose of Hamiltonian optimism — the belief that limited but energetic government can nonetheless successfully enhance opportunity and social mobility.

This general philosophy puts me to the left of where the Republican Party is now, and to the right of the Democratic Party. It puts me in that silly spot on the political map, the center, or a step to the right of it.

The center has been losing political power pretty much my entire career. But I confess that about 16 months ago I had some hope of a revival. The culture war, which had bitterly divided the country for decades, was winding down. The war war — the fight over Iraq and national security — was also waning.

The country had just elected a man who vowed to move past the old polarities, who valued discussion and who clearly had some sympathy with both the Burkean and Hamiltonian impulses. He staffed his administration with brilliant pragmatists whose views overlapped with mine, who differed only in that they have more faith in technocratic planning.

Yet things have not worked out for those of us in the broad middle. Politics is more polarized than ever. The two parties have drifted further to the extremes. The center is drained and depressed.

What happened?

History happened. The administration came into power at a time of economic crisis. This led it, in the first bloom of self-confidence, to attempt many big projects all at once. Each of these projects may have been defensible in isolation, but in combination they created the impression of a federal onslaught.

One of the odd features of the Democratic Party is its inability to learn what politics is about. It’s not about winning arguments. It’s about deciding which arguments you are going to have. In the first year of the Obama administration, the Democrats, either wittingly or unwittingly, decided to put the big government-versus-small government debate at the center of American life.

Just as America was leaving the culture war and the war war, the Democrats thrust it back into the government war, only this time nastier and with higher stakes.

This war is like a social script. Once it was activated, everybody fell into their preassigned roles.

As government grew, the antigovernment right mobilized. This produced the Tea Party Movement — a characteristically raw but authentically American revolt led by members of the yeoman enterprising class.

As government grew, many moderates and independents (not always the same thing) recoiled in alarm. In 2008, the country was evenly split on whether there should be bigger government with more services or smaller government with fewer services. Now, according to a Pew Research Center poll, the smaller government side has a 10-point edge. Since President Obama’s inauguration, the share of Americans who call themselves liberals (24 percent) has remained flat, but the share who call themselves conservatives (42 percent) has risen by as much as 10 percentage points, according to a Washington Post/ABC News poll, as former moderates have shifted to the antigovernment side.

As government has seemed more threatening, moderates and independents have also fled from the Democratic Party. Democratic favorability ratings have dropped by 21 points over the past year, from 59 percent to 38 percent. Democrats are viewed less favorably than at any time in modern history.

These shifts in the electorate have had predictable effects on the two parties. During periods when the government war is at full swing, the libertarian/Goldwater-esque tendency in the Republican Party becomes dominant and all other tendencies become dormant. That has happened now.

During periods of government war, the Democratic Party also reverts to its vestigial self. Democrats don’t want to defend big government, so instead they lash out at business. Over the past weeks, President Obama has upped his attacks on Big Oil, Wall Street and “powerful interests,” sounding like an orthodox Reagan-era Democrat.

The government war is playing out just as you’d expect it to, strengthening those with pure positions and leaving those of us in the middle in the cross-fire. If the debate were about how to increase productivity or improve living standards, people like me could play. But when the country is wrapped up in a theological debate about the size of government, people like me are stuck crossways, trying to make distinctions no one heeds.

This is a disappointing time. The Democrats have become the government party and the Republicans are the small government party. The stale, old debate is back with a fury. The war, as always, takes control.

Small government party?  What an unmitigated asshole he is.  Here’s Mr. Cohen, writing from Jerusalem:

For Israeli Prime Minister Benjamin Netanyahu, his people are not traumatized by some wild delusion. No, there are facts: the rise of Iran, the fierce projection of Iran’s proxies, Hamas and Hezbollah, and the rockets that have been fired by them.

Netanyahu is firm in his core self-image as the guarantor of threatened Israeli security. Israeli withdrawals from southern Lebanon and Gaza, led only, in his view, to the insecurity of life beneath a rocket threat.

The question he poses himself, contemplating the West Bank, is how to stop this happening a third time.

To enter Israel is to pass through a hall of mirrors. A nation exerting complete military dominance in the West Bank becomes one that, under an almost unimaginable peace accord, might be menaced from there.

A nation whose army and arsenal are without rival in the Middle East becomes one facing daily existential threat. A nation whose power has grown steadily over decades relative to its scattered enemies becomes one whose future is somehow less secure than ever.

It’s not easy to parse fact from fiction, justifiable anxiety from self-serving angst, in this pervasive Israeli narrative. I arrived on Independence Day, the nation’s 62nd birthday. Blue and white flags fluttered from cars on the superhighways. A million festive picnickers were out. “If a war takes place, we will win,” the chief of the Israel Defense Forces assured them. Did annihilation anguish really spice the barbecue?

I guess so. The threat has morphed since 1948 — from Arab armies to Palestinian militants to Islamic jihadists — but not the Israeli condition. The nation “wallows in a sense of existential threat that has only grown with time,” the daily Haaretz commented. Netanyahu, in a 20-minute interview, told me of “the physical and psychological reality” of a nation whose experience is that “concessions lead to insecurity.”

Part of the insecurity right now stems from the troubles with Israel’s ultimate guarantor, the United States. President Obama, for all his assurances about unbending American commitment, has left Israelis with a feeling of alienation, a sense he does not understand or care enough. Has he not visited two nearby Muslim states — Turkey and Egypt — while snubbing Israel?

I think what is really bothering Israelis, the root of the troubles, is that Obama is not buying the discourse, the narrative.

Instead of standing shoulder-to-shoulder with little Israel against the jihadists, he’s talking of how a festering Middle East conflict ends up “costing us significantly in terms of both blood and treasure.” Instead of Iran, Iran, Iran — the refrain here — he’s saying Iran, yes, but not at the expense of Palestine. Instead of Israeli security alone, he’s talking of “the vital national security interests of the United States” and their link to Israeli actions.

This amounts to a sea change. I don’t know if it will box Israel into a defensive corner or open new avenues, but I do know an uncritical U.S. embrace of Israel has led nowhere. For now, Israeli irritation is clear.

Before meeting Netanyahu, I spoke with Deputy Foreign Minister Danny Ayalon. “We are the ones suffering most in terms of blood and treasure,” he told me, reprising the Obama line. “This is the difference, we are the ones that have to live through an agreement and survive afterward. Of course we want peace but not at the price of our existence.”

He dismissed as “totally false” the notion that the Israeli-Palestinian conflict feeds an environment inimical to U.S. interests. On the contrary, he said, “We pay the price for defending U.S. values in this area.”

For Ayalon, the proximity talks with the Palestinians that the Obama administration is struggling to revive are a “waste of time” and should be replaced by direct talks without preconditions. As for Obama’s demands, believed to include a complete Israeli building freeze in Jerusalem, Ayalon said, “Any demand without a quid pro quo is a mistake. Why should the Palestinians negotiate if others negotiate for them?”

So here we are, 62 years on, negotiating about negotiations whose prospects of leading anywhere seem fantastically remote. I think Ayalon’s right about getting to the table, but peace involves embracing risk over fear, no getting around that, and with the Iranian nuclear program rumbling, Israelis look more risk-averse than I’ve ever seen them. Life’s not bad in affluent, barrier-bordered Israel even if threats loom.

The prime minister insists that he is ready to move forward, that he will not use the Iran threat as a delaying tactic, and that he and Obama respect each other’s intelligence.

What is imperative for him right now is that the United States and Israel talk to each other.

But about what exactly? The trauma of 9/11 bound the Israeli and American narratives. They have now begun to diverge with putative Palestine hanging in limbo between them.

Here’s Prof. Krugman:

On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”

Well, I wish he hadn’t said that — and not just because he really needs, as a political matter, to take a populist stance, to put some public distance between himself and the bankers. The fact is that Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K.

More than that, reform actually should hurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America.

Now, the reforms currently on the table — which I support — might end up being good for the financial industry as well as for the rest of us. But that’s because they only deal with part of the problem: they would make finance safer, but they might not make it smaller.

What’s the matter with finance? Start with the fact that the modern financial industry generates huge profits and paychecks, yet delivers few tangible benefits.

Remember the 1987 movie “Wall Street,” in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier.

These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true. Capital was channeled not to job-creating innovators, but into an unsustainable housing bubble; risk was concentrated, not spread; and when the housing bubble burst, the supposedly stable financial system imploded, with the worst global slump since the Great Depression as collateral damage.

So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was.

And what about the much-touted benefits of financial innovation? I’m with the economists Andrei Shleifer and Robert Vishny, who argue in a recent paper that a lot of that innovation was about creating the illusion of safety, providing investors with “false substitutes” for old-fashioned assets like bank deposits. Eventually the illusion failed — and the result was a disastrous financial crisis.

In his Thursday speech, by the way, Mr. Obama insisted — twice — that financial reform won’t stifle innovation. Too bad.

And here’s the thing: after taking a big hit in the immediate aftermath of the crisis, financial-industry profits are soaring again. It seems all too likely that the industry will soon go back to playing the same games that got us into this mess in the first place.

So what should be done? As I said, I support the reform proposals of the Obama administration and its Congressional allies. Among other things, it would be a shame to see the antireform campaign by Republican leaders — a campaign marked by breathtaking dishonesty and hypocrisy — succeed.

But these reforms should be only the first step. We also need to cut finance down to size.

And it’s not just critical outsiders saying this (not that there’s anything wrong with critical outsiders, who have been much more right than supposedly knowledgeable insiders; see Greenspan, Alan). An intriguing proposal is about to be unveiled from, of all places, the International Monetary Fund. In a leaked paper prepared for a meeting this weekend, the fund calls for a Financial Activity Tax — yes, FAT — levied on financial-industry profits and remuneration.

Such a tax, the fund argues, could “mitigate excessive risk-taking.” It could also “tend to reduce the size of the financial sector,” which the fund presents as a good thing.

Now, the I.M.F. proposal is actually quite mild. Nonetheless, if it moves toward reality, Wall Street will howl.

But the fact is that we’ve been devoting far too large a share of our wealth, far too much of the nation’s talent, to the business of devising and peddling complex financial schemes — schemes that have a tendency to blow up the economy. Ending this state of affairs will hurt the financial industry. So?

Collins and Kristof

Ms. Collins, in “Dance of the Derivatives,” says regulation of the market for derivatives is up to the Senate Agriculture Committee because, really, everything is a crop.  Mr. Kristof is in Juba, Sudan and sends in “Obama Backs Down on Sudan.”  He says when Sudan’s leader suggests that America is supporting him, it’s time to rethink our Sudan policy.  Here’s Ms. Collins:

The United States Senate. Feel the love.

“… You have been great.”

“… I am grateful, very grateful, for your friendship.”

“… I want everyone to know how deeply committed you are to reform.”

“… I also wanted to thank you for your hard work.”

This was Wednesday at the Senate Agriculture Committee, which was considering the regulation of derivatives. These are extremely complicated financial instruments, and they are under the control of the agriculture committee because, really, when you get right down to it, everything is a crop.

“Members of this committee check their partisan politics at the door,” boasted the chairwoman, Blanche Lincoln, a Democrat of Arkansas. Then, in between compliments, the members approved Lincoln’s bill on derivatives in a series of party-line votes.

Except for Charles Grassley, a Republican of Iowa, who sided with Lincoln. Truly, this was a day for the record books. Somebody finally got a Republican to vote for something.

And perhaps a sign of things to come. As President Obama prepared to make his big financial reform speech near Wall Street on Thursday, the G.O.P. seemed increasingly eager to find a way to work this one out.

“We probably generally agree on 90 percent,” said the agriculture committee’s ranking minority member, Saxby (“I golf, therefore I am”) Chambliss. Mitch McConnell, the Senate minority leader, took credit for forcing bipartisan negotiations with his innovative threat-of-a-filibuster tactic. Chris Dodd, the chairman of the banking committee who has been negotiating with the Republicans for months, said it was like a rooster taking credit for the sunrise.

The Republican leadership originally seemed to believe that financial reform could be a replay of health care reform, with a political payoff for total obstruction. They’re discovering that the only real similarity is that both are almost impossible to explain. People love their doctors, but they tend to hate their bankers. Nobody is going to scare voters by predicting that if the Democratic bill passes, they may not be able to keep seeing the same hedge fund manager.

It’s a sign of the shift that Blanche Lincoln has gone to the front of the populist pack. She was one of the weakest reeds on the Democratic side of the health care reform debate. Before that, she was obsessed with trying to cut the estate tax. Before that — well, let’s be frank. We have no idea what she was up to.

Given her record, people had expected a weak, boring package from her committee. But Lincoln came up with rules that were tougher than anyone had expected, requiring derivatives to be traded on public exchanges so investors could compare prices. The banks hate this idea, possibly because it will drive down their profits.

For sure because it will drive down their profits.

“The bridge of cooperation has been washed out,” said Republican Pat Roberts of Kansas crankily, as Lincoln nudged the bill through committee. He also warned that the senators were “smothering ourselves in the milk of human kindness and hoping it doesn’t curdle,” nailing down first place in the hotly contested Senate metaphor-making competition.

It was the first time Lincoln seemed like an interesting political figure since 1998, when, at 38, she became the youngest woman ever elected to the United States Senate. Now her seat is in jeopardy. Conservatives smell blood. The left is backing her opponent in a primary next month. Bill Clinton expressed his support by saying, “I wouldn’t be surprised to see her coming back from the dead.” Which is really not what you want to hear from the former president while you’re out fund-raising.

So it’s pretty easy to figure out what caused Lincoln’s hard line on financial reform. She is tacking to the left the same way John McCain, struggling in a hot primary in Arizona against a Tea Party-type opponent, is tacking to the right.

But let’s give her credit for never having gotten desperate enough to claim that cars full of illegal immigrants were “intentionally causing crashes on the freeway.” Unlike some former mavericks we could mention.

Americans are certainly in the market for some leadership on the subject of derivatives. It’s hard to even figure out how to worry about them, since we have no clue exactly what they are, beyond bets on whether prices will go up or down.

Try to think of derivatives as being like the Tribbles in that classic “Star Trek” episode. For all of history, there was no such thing. Then somebody found the first ones, which looked cute and made soothing noises. We liked them fine, until the population grew to be worth about $600 trillion. When they got into the financial engine, all hell broke loose.

And there is absolutely no political percentage in allowing them free run of the ship.

So.  Who gets to play the role of the Klingons?  Here’s Mr. Kristof:

Until he reached the White House, Barack Obama repeatedly insisted that the United States apply more pressure on Sudan so as to avoid a humanitarian catastrophe in Darfur and elsewhere.

Yet, as president, Mr. Obama and his aides have caved, leaving Sudan gloating at American weakness. Western monitors, Sudanese journalists and local civil society groups have all found this month’s Sudanese elections to be deeply flawed — yet Mr. Obama’s special envoy for Sudan, Maj. Gen. Scott Gration, pre-emptively defended the elections, saying they would be “as free and as fair as possible.” The White House showed only a hint more backbone with a hurried reference this week to “an essential step” with “serious irregularities.”

President Omar Hassan al-Bashir of Sudan — the man wanted by the International Criminal Court for crimes against humanity in Darfur — has been celebrating. His regime calls itself the National Congress Party, or N.C.P., and he was quoted in Sudan as telling a rally in the Blue Nile region: “Even America is becoming an N.C.P. member. No one is against our will.”

Memo to Mr. Obama: When a man who has been charged with crimes against humanity tells the world that America is in his pocket, it’s time to review your policy.

Perhaps the Obama administration caved because it considers a flawed election better than no election. That’s a reasonable view, one I share. It’s conceivable that Mr. Bashir could have won a quasi-fair election — oil revenues have manifestly raised the standard of living in parts of Sudan — and the campaigning did create space for sharp criticism of the government.

It’s also true that Sudan has been behaving better in some respects. The death toll in Darfur is hugely reduced, and the government is negotiating with rebel groups there. The Sudanese government gave me a visa and travel permits to Darfur, allowing me to travel legally and freely.

The real game isn’t, in fact, Darfur or the elections but the maneuvering for a possible new civil war. The last north-south civil war in Sudan ended with a fragile peace in 2005, after some two million deaths. The peace agreement provided for a referendum, scheduled to take place in January, in which southern Sudanese will decide whether to secede. They are expected to vote overwhelmingly to form a separate country.

Then the question becomes: will the north allow South Sudan to separate? The south holds the great majority of the country’s oil, and it’s difficult to see President Bashir allowing oil fields to walk away.

“If the result of the referendum is independence, there is going to be war — complete war,” predicts Mudawi Ibrahim Adam, one of Sudan’s most outspoken human rights advocates. He cautions that America’s willingness to turn a blind eye to election-rigging here increases the risk that Mr. Bashir will feel that he can get away with war.

“They’re very naïve in Washington,” Mr. Mudawi said. “They don’t understand what is going on.”

On the other hand, a senior Sudanese government official, Ghazi Salahuddin, told me unequivocally in Khartoum, the nation’s capital, that Sudan will honor the referendum results. And it’s certainly plausible that north and south will muddle through and avoid war, for both sides are exhausted by years of fighting.

Here in Juba, the South Sudan capital, I met Winnie Wol, 26, who fled the civil war in 1994 after a militia from the north attacked her village to kill, loot, rape and burn. Her father and many relatives were killed, but she escaped and made her way to Kenya — and eventually resettled as a refugee in California. She now lives in Olathe, Kan., and she had returned for the first time to Sudan to visit a mother and sisters she had last seen when she was a little girl.

Ms. Wol, every bit the well-dressed American, let me tag along for her journey back to her village of Nyamlell, 400 miles northwest of Juba. The trip ended by a thatch-roof hut that belonged to her mother, who didn’t know she was coming — so no one was home. Ms. Wol was crushed.

Then there was a scream and a woman came running. It was Ms. Wol’s mother, somehow recognizing her, and they flew into each other’s arms. To me, it felt like a peace dividend.

Yet that peace is fragile, and Ms. Wol knows that the northern forces may come back to pillage again. “I don’t want war,” she said, “but I don’t think they will allow us to separate.”

My own hunch is that the north hasn’t entirely decided what to do, and that strong international pressure can reduce the risk of another savage war. If President Obama is ever going to find his voice on Sudan, it had better be soon.

Friedman, solo

It’s the Moustache of Wisdom flying solo, since MoDo is off today.  In “Everybody Loves a Winner” he says the president got health care reform passed, and it may turn out to be his single most important foreign policy achievement.  Here he is:

I’ve been thinking about President Obama’s foreign policy lately, but first, a golf tip: I went to Dave Pelz’s famous short-game school this winter to improve my putting and chipping, and a funny thing happened — my long game got better. It brings to mind something that happened to Obama. The president got health care reform passed, and it may turn out to be his single most important foreign policy achievement.

In politics and diplomacy, success breeds authority and authority breeds more success. No one ever said it better than Osama bin Laden: “When people see a strong horse and a weak horse, by nature they will like the strong horse.”

Have no illusions, the rest of the world was watching our health care debate very closely, waiting to see who would be the strong horse — Obama or his Democratic and Republican health care opponents? At every turn in the debate, America’s enemies and rivals were gauging what the outcome might mean for their own ability to push around an untested U.S. president.

It remains to be seen whether, in the long run, America will be made physically healthier by the bill’s passage. But, in the short run, Obama definitely was made geopolitically healthier.

“When others see the president as a winner or as somebody who has real authority in his own house, it absolutely makes a difference,” Defense Secretary Robert Gates said to me in an interview. “All you have to do is look at how many minority or weak coalition governments there are around the world who can’t deliver something big in their own country, but basically just teeter on the edge, because they can’t put together the votes to do anything consequential, because of the divided electorate.” President Obama has had “a divided electorate and was still able to muscle the thing through.”

When President Dmitri Medvedev of Russia spoke by phone with Obama the morning after the health care vote — to finalize the New Start nuclear arms reduction treaty — he began by saying that before discussing nukes, “I want to congratulate you, Mr. President, on the health care vote,” an administration official said. That was not just rank flattery. According to an American negotiator, all throughout the arms talks, which paralleled the health care debate, the Russians kept asking: “Can you actually get this ratified by the Senate” if an arms deal is cut? Winning passage of the health care bill demonstrated to the Russians that Obama could get something hard passed.

Our enemies surely noticed, too. You don’t have to be Machiavelli to believe that the leaders of Iran and Venezuela shared the barely disguised Republican hope that health care would fail and, therefore, Obama’s whole political agenda would be stalled and, therefore, his presidency enfeebled. He would then be a lame duck for the next three years and America would be a lame power.

Given the time and energy and political capital that was spent on health care, “failure would have been unilateral disarmament,” added Gates. “Failure would have badly weakened the president in terms of dealing with others — his ability to do various kinds of national security things. … You know, people made fun of Madeleine [Albright] for saying it, but I think she was dead on: most of the rest of the world does see us as the ‘indispensable nation.’ ”

Indeed, our allies often complain about a world of too much American power, but they are not stupid. They know that a world of too little American power is one they would enjoy even less. They know that a weak America is like a world with no health insurance — and a lot of pre-existing conditions.

Gen. James Jones, the president’s national security adviser, told me that he recently met with a key NATO counterpart, who concluded a breakfast by congratulating him on the health care vote and pronouncing: “America is back.”

But is it? While Obama’s health care victory prevented a power outage for him, it does not guarantee a power surge. Ultimately, what makes a strong president is a strong country — a country whose underlying economic prowess, balance sheet and innovative capacity enable it to generate and project both military power and what the political scientist Joe Nye calls “soft power” — being an example that others want to emulate.

What matters most now is how Obama uses the political capital that health care’s passage has earned him. I continue to believe that the most important foreign policy issue America faces today is its ability to successfully engage in nation building — nation building at home.

Obama’s success in passing health care and the bounce it has put in his step will be nothing but a sugar high if we can’t get our deficit under control, inspire a new generation of start-ups, upgrade our railroads and Internet and continue to attract the world’s smartest and most energetic immigrants.

An effective, self-confident president with a weak country is nothing more than a bluffer. An effective, self-confident president, though, at least increases the odds of us building a stronger country.