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February 10, 2012
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David G. Savage: Why activists may not be in a hurry to have High Court rule on alternative marriage
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The Kosher Gourmet byDana Velden: Going to the bother of making soup? You know it better be good. This CREAM OF TOMATO SOUP certainly is! And it's a cinch to make, too (Includes techinques and serving secrets)
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Jeffrey Fleishman: In newly democratic Egypt, tens of democracy activists jailed, to stand trial; their groups are 'threatening the stability of the homeland'
Julie Deardorff : Researchers say antioxidants may not be that effective and could do more harm than good
Mark Clayton: How did Anonymous hackers eavesdrop on FBI and Scotland Yard?
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Edmund Sanders : Israeli official says Iran is creating missile that could reach East Coast of US
Victoria Kim: Immigrant-smuggling ring used black drivers to avoid racial profiling
February 2, 2012
Jim Carney: Wrong number call may have saved her life
Reza Kahlili : Ex-CIA spy in Iran's Revolutionary Guard: What Obama doesn't grasp about striking deals with Tehran
Tina Susman: For woodchuck rescuer, every day is Groundhog Day
February 1, 2012
Brian Bennett: US officials see increasing threat of domestic attack from Iran
Emily Brandon: How to Take Advantage of New 401(k) Fee Disclosures
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January 30, 2012
Paul Richter and Ramin Mostaghim: Misreading Teheran's limits -- deadly and economically devastating as they may be -- is a risk administration, Europe seem willing to take
Suzanne Bohan: Warning: Nap-deprived tots missing more than sleep, study finds
Meg Handley: Banks Revamping Rewards Programs to Woo Customers
January 27, 2012
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Yochonon Donn: In liberal New York City, fervently-Orthodox Jews may soon be getting a district to call their own
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Katy Hopkins: New budget rules may affect how much money you get for college
January 26, 2012
Ed Koch: To the New York Times, calling for the murder of Jews by those capable of having their incitement taken seriously isn't news
Jeannine Stein: Mental illness struck one in five U.S. adults in 2010: Report
January 25, 2012
Richard Simon: House passes two bills endorsing the use of religious symbols at military memorials
Fred Weir: Putin: Multiethnic Russia cannot survive as a US-style 'melting pot'; must find its own way
Susan Johnston: 5 Sneaky Coupon Strategies Consumers Should Watch Out For
January 24, 2012
Carol Clark: The price of your soul: How your brain decides whether to 'sell out'
Caroline B. Glick: America lost most in 'Arab Spring'. Sadly, many voters still don't grasp the extent
Warren Richey: Drug criminal scores win in GPS ruling from conservative-leaning high court
Erika Bolstad: Black conservatives gather to talk about gaining strength
January 23, 2012
Melissa Dribben: Jewish voters to play a key role in Florida's Republican primary
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Ali Safi: U.S. envoy gives Taliban terms for peace talks
January 19, 2012
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January 17, 2012
Frank J. Gaffney Jr.: No-kidding red lines: U.S. response to an Iranian nuke may be bluster, but Israel's won't be
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January 13, 2012
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Alexia Elejalde-Ruiz: Thriving through touch: Gentle massage helps older people with low mobility improve in mind and body
January 12, 2012
Warren Richey: Landmark Supreme Court ruling a 'resounding win' for religious groups
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John Fauber : Statins found to raise diabetes risk in postmenopausal women
Katy Hopkins : Consider This Before You Pay for an Online Degree
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January 11, 2012
Shari Roan: Millions of atrial fibrillation sufferers at risk for devastating, but preventable, stroke
Tom Hussain: Pakistan -- recipient of more than $21 billion in civilian and military aid -- speeds pursuit of Iranian pipeline, defying US
David G. Savage: High court signals it won't be loosening TV's 'indecency' rules
Stephen Ceasar: Oklahoma's Islamic law amendment can't go into effect, court rules
January 10, 2012
Reza Kahlili: From an ex-CIA spy: US must exploit new split in Iran's Revolutionary Guard
Karen Kaplan: Study: Nicotine replacement products ineffective when used in real-life situations
January 9, 2012
Michael Doyle: Put through legal hell over dream home, couple fought back hard --- all the way to Supreme Court
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Jewish World Review
March 12, 2008
/ 5 Adar II 5768
Monsters, Muslims and financial crises
By
Tony Blankley
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http://www.JewishWorldReview.com |
The presidential campaign currently underway has missed the historically rare opportunity to engage the candidates for president in a serious discussion about how they would respond to a very likely impending recession brought on by twin banking and currency crises.
Usually financial crises and the recessions that often follow appear without much warning. But today, while of course the future never can be predicted with certainty, the evidence is accumulating to suggest that the United States soon may be facing something similar to Japan's experience in the late 1980s and 1990s.
As described by Franklin Allen and Douglas Gale in their 2007 paper, "Introduction to Financial Crises," Japan experienced an expansion of credit following financial liberalization, which led to a real estate and stock market price bubble in the late 1980s followed by a collapse. "The next few years were marked by defaults and retrenchments in the financial systems. The real economy was adversely affected in the aftermath of the bubble and growth rates during the 1990's were barely positive or negative. …
"Banks and other financial companies that held the stocks and real estate (or made loans on those assets) often came under server pressure from withdrawals because their liabilities (were) fixed and falling prices reduced the value of the assets. Banks in this situation (were) forced to call in loans and liquidate assets, which in turn exacerbate(d) the problem of falling asset prices." Sound familiar?
But if anything, we are situated even more dangerously. As Paul Krugman has argued in recent columns (ignore his political rhetoric, but his economic analysis sometimes can be persuasive and chilling), financial contagion increases the magnitude of the danger: "Troubles that began a little over a year ago in an obscure corner of the financial system, BBB-minus subprime-mortgage-backed securities, have spread to corporate bonds, auto loans, credit cards and now the latest casualty student loans."
Current informed commentaries throughout the financial world are loaded with warnings. Krugan wrote that JPMorgan Chase last week "described what's happening as a 'systematic margin call,' in which the whole financial system is facing demands to come up with cash it doesn't have."
We also are experiencing a historic reduction in the value of the dollar. When a banking crisis and a currency crisis occur at the same time, as they are now, they likely are to be followed by a recession, and the recession is likely to be longer and deeper.
And unlike the Japanese crisis of the 1990s, America's dominant place in the world economy increases the likely worldwide effect of our crisis and recession. For example, the subprime mortgage crisis has been exported to the world already because the world has bought those assets, but the world never bought much Japanese real estate mortgage assets in the '80s and '90s. Further adding to the high risk of economic contraction, of course, is the sharp and continuing rise in oil prices.
Of course, we may get lucky. Perhaps the financial institutions will weather the current storm. Perhaps the dollar will bottom out soon. Perhaps the economy will slow down but not contract. But so far, the Fed's repeated interventions have not solved the lack of liquidity. So far, the markets around the world are betting against good news. And there is talk that the massive Fannie Mae and Freddie Mac real estate corporations may have liquidity problems.
So with all this warning, we should expect the presidential candidates to explain in detail how they would deal with this crisis. After all, in 10 months, one of them either McCain, Obama or Clinton will be president and quite likely will be facing one of the worst financial and economic conditions of recent decades. Instead, we get yet more discussion on who is for hope, who has experience, and who is better able to answer the phone at 3 a.m.
Why not have a novel three-way debate on one of the networks for two hours and see what the three great minds who would be president have to say about what they would do if the likely turns out to happen? I don't have an answer, but I have the first question for them.
Since World War I, economic historians divide the world's financial history into three parts: interwar (1919-1939); the Bretton Woods period (1945-1971); and the present period. In reaction to the Great Depression of the interwar period, Bretton Woods provided strict regulations of financial institutions. As a result, there were few financial crises. Then we liberalized and deregulated during the present period and have had several deep crises.
Questions for the candidates: In 2009, should we re-regulate or not? And should we try to ease the pain of the crisis if it comes or let natural economic forces clear out the dry rot and find the natural bottom? No points for slogans. Extra credit for honest, thoughtful responses.
Or we continue with Obama's people suggesting Hillary is a monster and her people suggesting Obama is a Muslim (and McCain off in the margin somewhere).
Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Tony Blankley is executive vice president of Edelman public relations in Washington. Comment by clicking here.
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