Jens Weidmann, who heads the Bundesbank and thus is seen as having clout in the European Central Bank headquarters in Frankfurt, delivered a speech yesterday really clarifying his firm conviction that the ECB should do absolutely nothing other than ensure that inflation doesn’t go over two percent. Some people feel that since the ECB is the only institution with the capacity to avert a massive disaster that inflicts huge quantities of human suffering, that this means it should act. But Weidmann says that “the pressure on the ECB as the only reputed institution that can act has increased with every failure by governments to solve the crisis” and this “lessens the imperative” on other leaders to solve the problem.

Get that? The ECB needs to fiddle while Europe burns in order to teach a lesson to all those scalawag governments out there. A new Great Depression should do the trick!

Robin Wigglesworth covers capital markets for the FT and has a rundown of the ensuing carnage, which I shall summarize for you in bullet points:

— Italian 10-year yields jumped 32 basis points to 7.02 per cent, which is the level that prompted Berlusconi’s ouster.
— In Spain a new 12-month bond yielded 5.02 percent (up from 3.6) and 18-month yieled 5.15 percent (up from 3.8).
— “France’s 10-year notes jumped 20 bps to yield 3.59 per cent – a record 188 basis points above comparable German Bunds.”
— “The FTSE Eurofirst 300 index tumbled 1.5 per cent, led by the French, Italian and Spanish markets, and have now given up all of last Friday’s gains.”
— “Belgium, Austria, and Finland’s 10-year benchmark bonds also widened markedly in early trading.”

Now Belgium and Finland aren’t really important countries in the scheme of things but this is a sign that you’ve moved into Total Chaos And Market Panic Mode. You don’t lose faith in Finland’s ability to repay debts based on shady budgeting in Greece or political dysfunction in Italy. You lose faith in Finland’s ability to repay debts when you wake up one day and realize that all European sovereigns no matter how well-run are in a third world fiscal position where they lack a lender of last resort.

Cops poured into Zuccotti Park to forcibly remove the original Occupy Wall Street encampment. Naturally, people aren’t happy. But realistically I think this was the best possible endgame for the group. After all, there are only a few possible ways for a protest to end. One is something like this — the cops come in and get rid of people. A second is something like the Powers That Be sit down to negotiate an end to the standoff in a way that involves giving in to some or all of the protestors demands. The third is for the protests to simply fizzle out as people lose interest. One of the distinctive things about Occupy Wall Street was that it organized itself in such a way as to make option two impossible.

So OWS was either going to end with the cops clearing the park, or else it was going to end with the protestors losing interest. It would be totally human and understandable for the protestors to end up fading away as the weather gets colder, but that would be demoralizing to everyone who’s come to look at the various Occupations as a key signal of popular discontent with rampant inequality. Instead, by ordering the protestors to be removed the Bloomberg administration has ensured continued relevance for the issue. All over the internet today all eyes are on New York and on Occupy Wall Street. Temporary injunctions have already been issued and there are sure to be more lawsuits. The worst possible outcome is for the movement to just kind of fade away, and by trying to forcibly clear the park with the NYPD, Bloomberg has guaranteed that won’t happen.

— The Eurozone grew just 0.2 percent in Q3.

— The richer your dad is the more likely you are to work for the same company.

— Police clear Zuccotti Park.

— Vancouver considering urban freeway demolition.

— Congress wants to make sure derivatives and futures contracts are poorly regulated.

— In terms of health care, it’s like the United States is another planet.

— Qatar’s outsized influence in the Arab World.

A.G. Sulzberger has an awesome piece in the Times about Hispanic immigrants revitalizing dying small downs on the Great Plains:

In the sparsely populated western half of Kansas, every county but one experienced a decline in the non-Hispanic white population, two-thirds of them by more than 10 percent. At the same time, a vast majority experienced double-digit growth in Hispanic population, more than offsetting the declines in seven counties and many smaller cities and towns. Those places with the highest percentage of Hispanic residents tend to have the lowest average ages, the highest birth rates and the most stable school populations.

The fact that implementing a single currency could create a series of cascading continent-wide debt problems wasn’t exactly unknown to the Eurozone’s architects. They’re plan for dealing with it was something called the European Stability and Growth Pact which was support to limit budget deficits to 3 percent of GDP and keep the Italians in line. It didn’t work. Indeed, the Germans themselves were among the first to break the pact which swiftly came to look like a dead letter. Today in her speech (PDF) to the Christian Democrats’ party conference, German Chancellor Angela Merkel paired a stirring rhetorical defense of the European project to a strident call for a more robust version of the pact going forward.

“We want to have automatic sanctions,” she said calling on European states to establish a legal “right of action” against countries who violate the terms of the pact. Good idea?

Well, not really. The crux of the matter is that Ireland and Spain weren’t running large budget deficits before the crisis hit. What they were running was large current account deficits. Much as happened to Nevada and Florida, funds were pouring in from abroad to finance real estate loans. This influx of money pumped up wage and price levels. Then the flow of money halted, leaving unemployment high and then the high unemployment created budget crises. It’s true that Portugal and especially Greece also had unsound budget practices, but this wasn’t the real issue. The countries doing well in Europe today are the country that were running trade surpluses, and the countries that are doing poorly are the ones that were running trade deficits.

Tyler Cowen wants to inculcate the value of hard work and discipline. My personal view about this is that I learned a lot about hard work and discipline from my parents, but I also learned a lot on the job. My editors at the American Prospect weren’t exactly cruel taskmasters, but there really is something different about working a regular job day-in and day-out that school just doesn’t prepare you for. And my sense is that this is pretty common, it’s in the workplace that you really learn to be a grownup. Which brings me to Mike Konczal’s chart of youth labor force participation:

I don’t think that this was caused by a collapse in values and discipline, but you can easily imagine it causing such a collapse.

Everyone understands the classic bank run scenario. If everyone loses confidence in the future of a bank, everyone will withdraw their money and the bank will fail. Consequently, the mere suspicion that a bank is running into trouble can create a self-fulfilling prophesy. A firm that needs to roll over a large quantity of debt on an annual basis is in the same situation. For that matter, so can a country.

That said, we normally only think of this kind of panic as afflicting developing countries because rich countries borrow in their own currency. If the United States government faces a severe liquidity crunch of some kind, there’s always a Federal Reserve System ready to stand behind it. But one of the things we’ve seen during the current crisis is that the European Central Bank (presumably with the arm of Angela Merkel standing behind it) is unwilling to play this “lender of last resort” role. That’s a problem for Italy right now. But in many ways it’s a much more profound issue. Financial markets are done treating Italy — and today it looks like maybe even France — like a risk-free sovereign. But if the European Central Bank is genuinely committed to this no lender of last resort principle, that means that Germany, Finland, the Netherlands, and everyplace else are structurally more akin to Belize or Botswana than to the United States or United Kingdom. They’re all vulnerable to runs in a way countries backstopped by a lender of last resort aren’t.

I’m absolutely on board with Diana Lind in her argument that cities should be aiming to dismantle their urban highways. Something that I think should be clarified, because it drives home how strong the case is, is that building freeways through cities would be a bad idea even if traveling in cars were the only means of transportation on the planet.

The reason is simply that the purpose of a highway is to make it easy to travel long distances in short periods of time. But the central fact about cities is that almost by definition they’re not far from downtown. When you build a freeway that leads from downtown, through residential areas, out to the suburbs what you’re doing is making it easier to get to stuff downtown without living in the city. If you replaced the freeway with a normal at-grade road, suddenly it would make more sense to live closer to downtown. The idea of urban freeway construction was to preserve the vitality of downtown areas at a time when more people wanted to move out to the suburbs. But trying to preserve downtown at the cost of eliminating your residential neighborhood’s core advantage — it’s easy to get downtown! — was fantastically short-sighted. Of course what’s done is done, and just because a highway shouldn’t have been built doesn’t necessarily mean it would make sense to tear it down. But oftentimes that’s exactly what it means!

Regulations may bug big businesses who want to do the things that the regulation stops them from doing. But regulatory compliance as such is rarely a big deal to large firms. Once you’ve got thousands of employees and hundreds of millions of dollars in sales, tasking an extra lawyer with making sure the “T”s are crossed is no problem. But things look very different, as Tim Carney observes, if you’re a small firm or a startup for whom compliance costs could be a big share of your overall cost structure. On the other hand, Kevin Drum notes that precisely for this reason regulations often have carve-outs for small businesses and Suzy Khimm observes that simplifying regulations often means handing discretion to regulators in potentially problematic ways.

To my way of thinking, though, Drum’s observation provides a decent guideline to situations in which there probably shouldn’t be any regulations at all. Big factories shouldn’t be allowed to dump toxic waste into rivers, but small artisanal producers shouldn’t allowed to do this either. It’s a problem if the Gap is defrauding its customers and it’s also a problem if a local boutique is defrauding its customers. If some activity is legitimately dangerous or harmful in a way that makes it worth prohibiting, then letting small outfits get away with it is a terrible idea. But if a sympathetic story about a mom-and-pop operator with a dozen employees who might be forced out of business by a new rule makes you inclined to want to consider an exemption, you ought to consider the possibility that you don’t really favor a regulatory solution at all.

I think it’s pretty frustrating to hear DC officials explicitly talking about the idea of making public service provision less efficient as a job-creation scheme. The city’s planning director, Harriet Tregoning, is right to say that the city is “going to need more jobs that are suited to every level of education” and not just IT and professional services, but there’s tons of low-hanging fruit in this realm. The city is full of formal rules and informal practices whose purpose is to make it difficult to open bars and restaurants of various kinds in different locations. On the national level, it’s difficult or perhaps even impossible to counteract a demand shortfall with supply-side reforms. But even in models that lead to very strong negative conclusions about supply-side actions in severe recessions, these considerations don’t apply on the municipal level.

Massachusetts, for example, is considering a proposal to end the state’s ban on “happy hour” specials. This is exactly the kind of thing state and local governments should be looking at. If Massachusetts makes it easier to tempt people into the bar with drink specials, that means more work for bartenders and bar-backs, more work for delivery guys, etc. It’s more glamorous for politicians to talk about high-end jobs, but as Tregoning says, you need employment for people with low levels of formal education too. Many commentators seem to me to be irrationally biased against working class service sector occupations relative to working class manufacturing works, but even leaving that aside, there’s just no way a big expensive city like DC or Boston is ever going to play home to giant factories.