Even that possibility threatens Europe with trouble. If investors worry that Italy may leave the euro, they will demand greater rewards for continued lending. Those with the greatest debt burdens — Greece, Spain and Portugal — could see their borrowing costs rise beyond their ability to pay.
.. For now, such grim scenarios appear remote. The referendum maintains the power of the Italian legislature’s upper chamber, a potent check on the Five Star Movement, or any government pursuing radical change.
.. The consensus is that Italy can patch immediate holes in the banking system. But the referendum has destroyed what momentum existed to address the condition that is both cause and effect of the banking problem — a dire lack of economic growth.
Italy’s banks are stuffed with uncollectable debts in part because the country’s economy is smaller than it was a decade ago. Bad loans on bank balance sheets reflect that millions of people have lost jobs, eliminating spending power, while companies have seen sales evaporate.
.. Voters clearly did not trust Mr. Renzi to wield greater power. Now, they will be represented by someone with less power where it matters a great deal: Brussels and Berlin.
.. Brussels and Berlin argue, such countries must deliver so-called structural reforms, stripping away labor protections and trimming pension benefits.
.. German Finance Minister Wolfgang Schäuble effectively threatened to banish Greece from the euro if Athens did not deliver on reforms it promised as a condition of successive European bailouts.
.. Mr. Renzi was a rare leader who carried credibility in such quarters. He gained modest relief from European spending strictures in part by pointing at his reforms.
“Renzi is the only leader in recent history who has advanced a structural reform agenda,” said Mujtaba Rahman, managing director for Europe at the Eurasia Group, a risk consultancy.
Are We on the Path to National Ruin?
I never really understood how fascism could have come to Europe, but I think I understand better now. You start with some fundamental historical transformation, like the Great Depression or the shift to an information economy. A certain number of people are dispossessed. They lose identity, self-respect and hope.
They begin to base their sense of self-worth on their tribe, not their behavior. They become mired in their resentments, spiraling deeper into the addiction of their own victimology. They fall for politicians who lie about the source of their problems and about how they can surmount them. Facts lose their meaning. Entertainment replaces reality.
Once facts are unmoored, everything else is unmoored, too. People who value humility and kindness in private life abandon those traits when they select leaders in the common sphere. Hardened by a corrosive cynicism, they fall for morally deranged little showmen.
.. New sorts of political leaders emerged. In city after city, progressive reformers cleaned up politics and professionalized the civil service. Theodore Roosevelt went into elective politics at a time when few Ivy League types thought it was decent to do so. He bound the country around a New Nationalism and helped pass legislation that ensured capitalism would remain open, fair and competitive.
This was a clear example of a society facing a generational challenge and surmounting it. The Progressives were far from perfect, but they inherited rotting leadership institutions, reformed them and heralded in a new era of national greatness.
The Departure of the ‘Turnaround Principal’
Research has shown that when black students feel the faculty cares about them, they are more likely to experience academic success—one reason why Cook knew the school that had been transformed from one of the worst in the state under Mills was still in good hands.
.. “We figured they were the most influential people in the building—the largest in stature, the largest collective group,” Grant says. “The football team goes beyond neighborhoods, beyond family connections, beyond regional things.
.. You get control of them, you get control of the school.
.. The football players not only became models of the kind of behavior the coach and principal expected, they also helped impose order. After Mills and Grant eliminated discipline problems, students were able to spend much more time focusing on academic performance.
.. In many public high schools, the principal is a figure to avoid. At Shabazz, they run toward him, not away.
.. “With Mills, I felt that we had finally gotten to a point where it was real education happening here, real progress. And we had just won the state football championship
.. He believes the school system is too focused on pushing all students toward a college education—when some may be better served by being introduced to careers like plumbing, electrical, auto repair, cosmetology, culinary arts, or even computer coding.
.. In language arts, not one 10th-grader at Shabazz reached the level of “meeting expectations,” which is regarded as passing the test. And just 5.6 percent of ninth-graders and 11th-graders passed. In math, no students passed the Algebra II test, while only 4.5 percent passed Geometry and 7 percent passed Algebra I.
.. “When I say systemic, I mean Shabazz inherits a lot of students who enter the school on the first and second grade reading levels.
Banking’s New Normal
Bonuses and salaries are being slashed; in the past quarter, Goldman Sachs cut the amount it set aside for compensation by forty per cent. Payroll is down, too: banks have eliminated tens of thousands of jobs in the past couple of years and are now embarking on a new round of severe job cuts.
.. Before the financial crisis, financial companies (not including the Federal Reserve banks) accounted for nearly thirty per cent of U.S. corporate profits. By 2015, that number had fallen to just seventeen per cent.
.. “Dodd-Frank was supposed to curb certain kinds of risky behavior on Wall Street,” Mike Konczal, a fellow at the Roosevelt Institute who studies financial reform and inequality, told me. “And by that standard it’s gone very well.” Big banks now have to carry almost twice as much capital as they did before the crisis, and new Fed rules will require them to set aside another two hundred billion dollars on top of that.
.. Dodd-Frank has also reduced the middleman fees that banks collect—for instance, by moving much of the trading of derivatives onto the open market. More than half of credit-default swaps and seventy per cent of currency swaps now trade through a public clearinghouse.
.. Until recently, big banks were able to borrow money much more cheaply than small ones, because investors assumed they’d be bailed out in a crisis. But recent studies suggest that that funding advantage has nearly disappeared.