The lead article in today’s New York Times is titled, “Under Fire, Paterson Quits Governor’s Race.” It describes Paterson’s decision not to run for reelection and the implications for Democrats.

Paterson withdrew amid a furor about his involvement with a domestic violence court case against one of his close aides, including a phone call to possibly influence the woman involved. The story is still developing as prominent Democrats are beginning to call for his resignation.

The withdrawal especially impacts Attorney General Andrew Cuomo who has long been rumored to be preparing a primary challenge against Governor Paterson. It may not come at the best time for Mr. Cuomo as he will now be forced to become more directly involved in the race and take specific positions. So far, though, Mr. Cuomo continues to insist on a focus on state government instead of politics.

Meanwhile, Rick Lazio, the current Republican frontrunner, is continuing direct attacks against Mr. Cuomo, and these attacks will soon require a response from Mr. Cuomo himself.

Frankly, Governor Paterson lost my support after the way he treated Caroline Kennedy who would have been a superb U.S. senator. His back and forth regarding the appointment had the effecting of stringing Caroline Kennedy along and then, in effect, throwing her under the bus. During the process, Governor Paterson alienated major Democratic constituencies throughout the state.

Revelations are still developing about Governor Paterson’s misconduct, and new facts will most certainly come to light.

The lead article in today’s New York Times is titled, “Paterson Weighs Race as Top Aide Quits in Protest.” The article involves a rapidly developing news story accusing the State Police and Governor Paterson of illegally interfering with a woman who had accused one of the Governor’s top aides with domestic abuse.

The aide, David Johnson, was accused by the woman of choking and partially stripping her and had received orders of protection from the courts in the past. This time, the State Police called her, and then the Governor, the day before she was due in court. She then declined to go.

As all these particulars came to light, the Governor’s top criminal justice advisor, Denise O’Donnell, resigned in protest, and the Governor said he was considering whether or not to go forward with his race for reelection.

And I thought it was just the State Assembly and State Senate that were dysfunctional. Only in New York State (well, maybe Illinois, too) could something like this occur. These developments make Elliot Spitzer look like a boy scout.

And there was another bizarre development, too. Governor Paterson asked Andrew Cuomo, the current Attorney General and his likely primary opponent, to investigate the matter.

Well, though I’m rather stunned by this whole matter, I think, at least, Mr. Cuomo should recuse himself from the investigation and appoint a special prosecutor. Meanwhile, there’s a deafening silence from the state legislators.

More to come.

The lead article in today’s New York Times is titled, “Banks Bet Greece Defaults on Debt They Helped Hide.” It compares a new dynamic regarding the possible default of Greece on its debt to the system that drove Lehman Brothers into bankruptcy.

Apparently, there’s a new demand for credit-default swaps regarding Greece as a way for hedge funds and other investors to protect themselves in case the country is unable to meet its obligations. These financial instruments, in turn, make it harder for Greece to borrow money and raise the cost of insurance for its bonds.

The article compares the situation to “the tail wagging the dog,” and traces the development to one company, the Markit Group of London, who created the iTraxx SovX Western Europe index. This index enables credit-default swaps on the solvency of Greece. Previously, there was no demand for such hedging as the possibility of a national bankruptcy in an established nation state was thought to be very remote. Now, however, as more and more traders are starting to bet against Greece, it makes it harder and harder for the country to issue new bonds to cover their existing debt.

This situation is untenable. The article compares it to betting on a four-alarm fire at your neighbor’s home and illustrates the need for financial regulation more than ever. The players, the banks, are not to blame because they are just maximizing their position within the existing system. It is the responsibility of regulatory institutions to step up and establish ground rules to bring some order and responsibility into this chaos. How long will it take for a responsible organization to act?

The lead article in today’s New York Times is titled, “Obama to Seek Federal Power Over Insurers.” It describes a new item included in a comprehensive health plan from the White House regarding the power to regulate rate increases by healthcare insurers.

The proposal comes in advance of the healthcare summit at the White House on Thursday and, according to the article, makes it difficult for the Republicans to oppose without revealing corporate support for healthcare providers over the general public.

Obama’s panel would be called the Health Insurance Rate Authority and would include participants in a variety of industries including insurance executives, medical groups, economic experts, etc.

Meanwhile, other developments in the healthcare debate include a petition started by liberals in the Senate to reintroduce a public option into any new legislation. Senate Majority Leader and President Obama have sidestepped the issue, waiting to see how many Senators sign the document.

Another possiblity on the horizon remains the use of reconciliation to pass major elements of healthcare legislation. This may become even more likely if Republicans seem recalcitrant or posturing during the healthcare summit.

In my opinion, President Obama is going to come through this with flying colors. He’s had a bad freshman year, but one thing different about President Obama compared to President Bush — he learns from his mistakes. 

Based on his approach with the summit, I think President Obama will stick with this and that something major will pass and be signed into law.

The lead article in today’s New York Times is titled, “After Eight Years, F.B.I. Shuts Book on Anthrax Case.” It describes the 2001 case, shortly after 9/11, when letters filled with anthrax were sent to two U.S. Senators and news organizations. The letters infected 22 people and killed five. They led to evacuations of Congress and the Supreme Court and resulted in increased spending on biodefense.

Dr. Bruce Ivins, who was an army biodefense expert, was a prime suspect when he killed himself. The F.B.I. later assigned sole blame to him based on DNA evidence on a flask in his lab, an analysis of his emails and his presence alone in an anthrax lab late at night.

While some felt he was incapable of such acts, and the case was called circumstantial at best, the investigation is now closed.

It’s easy to forget what things were like at that time, when we didn’t know if another Al Qaeda attack was imminent, and many felt it might involve a chemical or biological agent released into the atmosphere. The anthrax letters caused widespread panic despite their limited effect, and copycats sent talcum powder through the mail as a prank.

At least now, we can look back with some perspective on the situation, and thankfully, Al Qaeda has not adopted any of the methods reportedly used by Dr. Ivins.

The lead article in today’s New York Times is titled, “In Surprise Move, Fed Signals Pivot to Normal Policy.” The article describes an increase in the interest rate charged to banks for short-term loans from 0.5 percent to 0.75 percent.

The announcement was made after the stock market closed, and it remains to be seen whether this action will touch off a selling spree on Wall Street. The Fed was careful to say that it still considers the economy very fragile and would be moving deliberately.

On the other hand, many in the financial sector may see this as the beginning of a spiral of increasing interest rates, what many see as the inevitable result of pumping so much money into the economy combined with ever-increasing deficits.

It is disconcerting as a citizen to see the power of the big banks and the financial sector compared to the average American. The lobbying efforts of these industries have resulted in a halt to financial reform. Derivatives are still being traded, and business continues much as it did before the financial crisis.

So the rate increase by the Fed just represents one more potential blow to any growing confidence in the recovery of our economy. Especially when the markets react to it as you can bet they will.

The lead story in today’s New York Times is titled, “Top Judge Sets Liberal Course for New York.” It describes the appointment of Jonathan Lippman to New York State’s highest court, the New York Court of Appeals, and the effect he has had on the majority of conservative members.

Appointed by Governor Patterson, Lippman has maneuvered his fellow judges to create a series of 4-3 decisions in favor of the environment, injured workers and many other liberal positions. He does this by picking up one conservative member from the so-called majority based on a careful analysis of what makes them tick, the issues dear to their hearts.

This approach contrasts greatly with the former Chief Judge, Judith Kaye, who prized her ability to get unanimous decisions. Mr. Lippman’s retort is that she sacrificed bold decisions in order to achieve that unanimity.

Well, it appears like Governor Patterson has finally done something right. Judge Lippman was primarily an administrator before he assumed his current role, and there were not a lot of decisions to review prior to the appointment. His ability to maneuver is far more typical of a politician than an administrator.

In addition, according to the article, rulings by the New York Court of Appeals carry a lot of influence around the nation.

Now, if only President Obama could operate in a similar manner.

The lead article in today’s New York Times is titled, “Party Gridlock Feeds New Fear of a Debt Crisis.” It describes the effect of partisanship on issues of overriding national importance, such as gaining control of the long-term federal debt.

Our current system is widely viewed as dysfunctional, to such an extent that observers worry if anything can wake up our legislators to the urgency of action on long-term issues. Part of the problem involves the dichotomy between short-term and long-term actions; when legislators are concerned about the security of their jobs in the face of current elections, it is hard to convince them to take long-term actions widely viewed as unpopular.

In addition, these unpopular actions vary by party: for the Democrats it concerns cutting popular programs such as Social Security and Medicare while for the Republicans it involves raising taxes to pay for these programs. Thus, the gap between the Parties widens because their respective bases support diametrically opposed, unresolvable policies.

It seems to me that the answer lies in strong Presidential leadership. If President Obama becomes more assertive and uses the bully pulpit of his office, we may be able to make progress. The healthcare summit may prove to be effective in this respect, though it is uncertain how much can be achieved in front of TV cameras. We shall soon see.

The lead article in today’s New York Times is titled, “Secret Joint Raid Captures Taliban’s Top Commander.” It describes the arrest of Mullah Baradar, the Taliban’s military chief, second only to its spiritual leader, Mullah Omar.

The arrest is significant because of the role played by Pakistan’s Intelligence Agency, ISI. Previously, there was some degree of sheltering and mutual assistance between ISI and the Taliban, because the Pakistanis wanted an internal ally inside of Afghanistan when the Americans eventually left.

However, recently there has been a “sea change” in cooperation between ISI and the CIA as the Pakistani government has come to view the Taliban as a threat to its own stability.

Mullah Baradar has been undergoing some extreme questioning, and, reading between the lines, it seems like the Pakistani questioners have exceeded some of the new constraints imposed by President Obama. The arrest certainly comes at an opportune time in the middle of the U.S. offensive against Marja.

There is also the continuing question of whether some more moderate elements of the Taliban could eventually negotiate with the United States in a way similar to the Sunnis in Iraq during the Great Awakening. As a whole, the Taliban refuse to accept the Afghan constitution or renounce Al Qaeda, but with the lack of a strong military leader at the top, maybe this will change.

The lead article in today’s New York Times is titled, “Errant Rocket Kills Civilians in Afghanistan.” It describes the battle for Marja and a fatal error by NATO / U.S. forces in striking a civilian complex with a rocket, killing 10 civilians including five children.

The rocket came from Himars, an acronym for High Mobility Artillery Rocket System. It is supposedly guided by GPS and can strike within a yard or two of the programmed location.

But this rocket missed, and the casualties are exactly the kind of event General McChrystal has emphasized that he wishes to avoid. He apologized to the Afghan President, Hamid Karzai, but the damage has already been done in terms of winning hearts and minds to the U.S. cause.

The problem is that these kind of events are inevitable during the course of a heated battle. You can’t just lay down your arms or handicap yourself when faced with a determined foe.

The rest of the article provides a gripping account of the entry of Marines into Marja and the timeline of the Taliban resistance, their ability to outflank the NATO forces and employment of a sniper as well.

The U.S. has also been talking to local leaders in an effort to get a government installed as quickly as possible when the shooting stops.  This extra step to the clear, hold, build paradigm may prove to be the crucial factor in restoring order and routing the Taliban.