Although I could have done without the "pathological," believe it or not, a part of me is glad that, in her review of Spies: The Rise and Fall of the KGB in America by John Earl Haynes, Harvey Klehr, and Alexander Vassiliev, Anne Applebaum refers to "Navasky's pathological inability to south sea pearl pendant  believe that there really were Soviet spies in America." The reason: It gives me a second shot at correcting an egregious New Republicerror.

The last time a New Republic writer misstated my position on the fact of Soviet spies in America, it was Martin Peretz ("Red Dusk: The Rosenberg Bombshell," October, 2008). After musing about "what the folks around The Nation might think" about Morton Sobell's confession in September of 2008 that he and Julius Rosenberg turned over military secrets to our Soviet allies during World War II, Peretz wrote that I was "a cheerleader for the ‘Everybody was innocent' school in America..." On TNR's website, the head was: "The Persistent--And Despicable--Refusal To Believe That Julius Rosenberg Was A Communist."

At the time I sent a Letter to the Editor. For reasons best known to TNR, it never got around to publishing my letter. In the hope that that was a lapse rather than a policy, I write now to correct TNR's latest misstatement.

The facts about my position on the south sea pearl earrings  Rosenbergs, about whom I had long been an agnostic: Back in 1995, The Nation published an article by Walter and Miriam Schneir based on the release of certain Venona documents, as well as interviews of their own in Prague and Moscow, that concluded that Julius Rosenberg--a Communist--did, indeed, run a spy ring of which Ethel Rosenberg was likely not a member. She was, nevertheless, used as a "lever" in an unsuccessful attempt to pry a confession from Julius. On any number of subsequent occasions, I endorsed these findings. Had Peretz (or, I might add, Applebaum) done any research to support their ad hoc accusations, or even bothered to read the end of Sam Roberts's September 21 New York Times story on Sobell's admission, they would have known my position and seen me quoted saying, "I wish Morty and Ethel and Julian had been open about what they had and hadn't done, or in Morty's case, ‘come clean' before this, but these guys thought they were helping our ally in wartime, and yes, they broke the law, shouldn't have done what they did, and should have been proportionally punished for it."

I also happen to believe that Colonel Rudolph Abel, Theodore Hall, and Morris and Lona Cohen, among many others, were Soviet spies. But that is neither here nor there. It is true that I have also written (and still believe) that the Venona documents need to Jewelry fittings  be fact-checked before they can be accepted at face value; that the Rosenbergs' death sentence was unwarranted; that the case against Alger Hiss is full of holes; and that any number of neo-conservative post-cold war cold warriors too often neglect or underplay new evidence about these and other cases which seems to contradict their ideological predispositions.

Maybe I'm wrong in these beliefs, but right or wrong, Peretz's and Applebaum's statements are flat-out false, and demonstrably so, as a few minutes of inquiry would have demonstrated. So the next time the folks around The New Republic want to know what "the folks around The Nation" think about anything, let me suggest that they check the record, and when they do, they will find that the folks around The Nation don't always agree with each other, no less Peretz's stereotypes of them, although they do have a preference for getting the facts right.

Martin Peretz has a long history of sniping at The Nation (going back to February of 1979 when he wrote a letter to the editor of The New York Times in response to an article about the two magazines, "We have no feud with that magazine. Its readership is too tiny...to trouble with.") Now that The Nation's circulation is triple that of TNR (I take no credit for this, I'm emeritus), I can understand Peretz's agitated hyperbole, but Ms. Applebaum, who ought to know better, should be ashamed of herself.

Victor Navasky is the publisher emeritus of The Nation.

President Obama's speech yesterday was disappointing. As a diagnosis of the problems that let us into financial crisis, it was his clearest and best effort so far. He didn't say it was a rare accident for which no one is to blame; rather he placed the blame squarely on the opera pearl necklace structure, incentives, and actions of Wall Street.

But then he said: Our regulatory reforms will fix that. This is hard to believe. And even the president seems to have his doubts, because he added a plea that--in the meantime--the financial sector should behave better.

The audience was composed of our financial elite, but the Wall Street Journal reports "not one CEO from a top U.S. bank was in attendance" (p.A4). How's that for demonstrating respect, gratitude, and a willingness to behave better?

Louis Brandeis, of course, would have seen things differently. The author of Other People's Money: And How The Bankers Use It, was under no illusions concerning the underlying financial power structures and how they operated. He would have regarded an appeal to the pearl necklace better nature of bankers as somewhere between humorous and sad.

The only thing that will make a different is regulation. This is the lesson of the 1930s in the U.S.--the regulations imposed at that time created a financial sector that did not impede growth after World War II; basic intermediation (connecting savers and borrowers) worked fine and destabilizing frenzies were avoided. During this period, the financial sector came up with venture capital, ATMs, and credit cards--arguably the three most important financial innovations of the past 100 years, and much more helpful of real innovation than anything you've seen since 1980.

President Obama claimed that three regulatory proposals will make the system safer.

"First, we're proposing new rules to protect consumers and a new Consumer Financial Protection Agency to enforce those rules." This is a very good thing, and of course the banks are adamantly opposed. But this Agency will not by itself bring us financial stability; that requires change at the level of how banks and other financial institutions are operated.

Second, he talked about "gaps in regulation"; this is black pearl necklace international finance bureaucrat code for mush (doesn't the President know this?). The specific potentially interesting pieces he put under this heading were run together in this paragraph:

"While holding the Federal Reserve fully accountable for regulation of the largest, most interconnected firms, we'll create an oversight council to bring together regulators from across markets to share information, to identify gaps in regulation, and to tackle issues that don't fit neatly into an organizational chart. We'll also require these financial firms to meet stronger capital and liquidity requirements and observe greater constraints on their risky behavior. That's one of the lessons of the past year. The only way to avoid a crisis of this magnitude is to ensure that large firms can't take risks that threaten our entire financial system, and to make sure they have the resources to weather even the worst of economic storms."

Making the Fed responsible for the largest firms could work, but only if the Fed throws out pretty much everything about the Greenspan doctrine of cleaning up after financial messes, rather than preventing them. There is no indication they are moving in this direction.

The oversight council is unlikely to make a difference. If you ask someone, "Who is responsible for this problem?" and they answer, "Well, we have a committee," does that make you feel better or worse?

The administration will not tell anyone the exact capital and liquidity requirements they are proposing, but close observers of the internal administration process have taken to calling the likely increases "dinky." Remember, the last time our financial system showed this taste for risk and a comparable level of incompetence (prior to 1935), it had equity relative to assets roughly three times current levels (e.g., put into tier one-equivalent terms). There is no proposal on the illusion pearl necklace table, either in the U.S. or within the G20, that is even remotely in the right ballpark. President Obama has put his finger on the problem but is apparently unwilling to do anything about it.

The most remarkable phrasing is probably, "Even as we've proposed safeguards to make the failure of large and interconnected firms less likely, we've also proposed creating what's called 'resolution authority' in the event that such a failure happens and poses a threat to the stability of the financial system. This is intended to put an end to the idea that some firms are 'too big to fail.'"

It is very hard to understand how the administration can say this with a straight face. Certainly a resolution authority would help, but all bank interventions are negotiated receiverships or conservatorships of some kind. When banks are failing, they need a lot of money fast and you have them over a barrel. But if they are vast, complex, and--remember this--cross-border, then taking them over or shutting them down can be scary, whether or not you have a "legal authority." Please point out to me (a) what the U.S. is pushing the G20 to implement in terms of twisted pearl necklace a cross-border resolution authority, and (b) how you would intervene in a bank like Citi without a cross-border authority. This rhetoric around this issue is completely not serious--in fact, it's a distraction from the real issues.