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February 13, 2012
Binyamin Rose: Back to the Bunker: How a life-risking act by a Christian family during the Holocaust saved a family and built a thriving community a world away
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David G. Savage: Why activists may not be in a hurry to have High Court rule on alternative marriage
February 9, 2012
Laura McMullen: 10 Least Expensive Public Schools for Out-of-State Students
Kimberly Palmer: How to actually enjoy -- relaxing, financially -- your vacation
February 8, 2012
Warren Richey: Why momentous Prop. 8 ruling might not satisfy gay-rights groups
Menachem Wecker: Though Controversial, LL.M.'s Can Lead to Specialized Legal Jobs
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)
February 7, 2012
Frank J. Gaffney, Jr.: Caught off-guard? President's Super Bowl interview with Matt Lauer gives those who need a reason not to vote for him, a darn good one
Suzanne Bohan: Leaping lizards! Tiny reptiles advancing robot design
February 6, 2012
Jonathan Tobin: Iran Threatens Israel With Destruction, But the New York Times Doesn't Hear It
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?
February 3, 2012
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
January 31, 2012
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
Caroline B. Glick: Obama: Of course I intend to prevent a nuclear holocaust . . . in a few months
Yochonon Donn: In liberal New York City, fervently-Orthodox Jews may soon be getting a district to call their own
Jeannine Stein: An inflated ego and thinking you're 'all that' doesn't just make others sick of you, it can make you ill
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
Jordan Rau: In quest to grow, Catholic hospital system will announce this morning its break from church
Ali Safi: U.S. envoy gives Taliban terms for peace talks
January 19, 2012
January 18, 2012
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
David G. Savage: They sued their principals after slandering them online --- now the cases are headed to the Supreme Court
David Francis: Where to Invest in 2012: With stocks expected to rebound, opportunity abounds for investors
January 13, 2012
Ben Lynfield: Israeli lawmakers move to annex Jewish Judea, one museum at a time
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
Warren Richey: Supreme Court says no to new rule on eyewitness testimony
John Fauber : Statins found to raise diabetes risk in postmenopausal women
Katy Hopkins : Consider This Before You Pay for an Online Degree
The Kosher Gourmet by Joseph Erdos: This mushroom and barley soup has an intense -- almost nutty -- flavor that mixes robust with Middle East. It has creaminess without cream
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
Sept. 17, 2008
/ 17 Elul 5768
Finance, history and politics
By
Tony Blankley
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http://www.JewishWorldReview.com |
As of this Monday, United States Federal Reserve and Treasury Department policies have entered presidential political debate. While, as a rule, I am in favor of candidates for high office discussing policy, I am inclined to want to make an exception for these arcane, yet vital policy zones. None of the four candidates knows much about Federal Reserve policies, and even their advisers may not be among the very few experts in this area.
But worst of all, the ambiguities and subtleties of such delicate financial crisis-management decision making are singularly unable to be comprehended by slogans and phrases.
And yet both the Obama and McCain campaigns jumped out of the box Monday with the assertions that they don't want a taxpayer-funded bailout, and they both called for comprehensive and tighter new financial regulations. I think I rather would have the candidates lying about each other's character flaws than discuss Fed policy in public. I certainly don't claim expertise, but let me point out a little bit of the history of the confusion.
Let's go back for a moment to the alleged historic mother lode of hard-learned Fed policy wisdom: the stock market crash of 1929 and the following Great Depression. Initially, in late 1929 and early 1930, the Federal Reserve did make major purchases of securities and cut the interest rate from 6 percent to 4 percent.
But by not bailing out banks in the three great runs on banks, in late 1930, spring 1931 and March 1933 (resulting in 10,000 banks going out of business), Treasury Secretary Andrew Mellon's famous (though not strictly followed) advise "liquidate labor, liquidate stocks, liquidate real estate" became the prime example in history of what not to do during a financial panic.
And indeed, the lesson learned from those events has been that the Fed should make sure banks have enough reserves to cover deposits. Quick and sustained intervention has been the rule.
But if one listens carefully to the public comments of the past few months, one hears praise for at least the echo of allegedly coldhearted Andrew Mellon. As Treasury Secretary Hank Paulson said just this Monday, "Moral hazard is something I don't take lightly." This currently very popular proposition correctly observes that in free markets, investors who take undue risk must pay and be seen to pay the price for such improvidence. This proposition is undergirded by the famous maxim of Joseph Schumpeter that failure in the marketplace is part of the creative destruction of capitalism.
Or, as old Andrew Mellon said along with his liquidation trilogy, "Values will be adjusted, and enterprising people will pick up the wreck from less competent people."
So when do we let economic nature take its healthy course, and when do we intervene with taxpayer dollars to bail out large failing institutions? This week, poor old Lehman Brothers was being cheered into bankruptcy by an unholy troika of commentators, experts and presidential candidates as an example, "Pour encourager les autres." (The full quote from Voltaire in translation is, "In England, it is good, from time to time, to kill an admiral to encourage the others.")
But only last week, not only both candidates for president but also even such a free market man as Larry Kudlow called the taxpayer backing of Freddie Mac and Fannie Mae "a necessary action (to stop) a global money meltdown." But, he continued, "It raised the stakes for taxpayers once more." And Kudlow whom I both admire and consider a friend also backed the bailout of Bear Stearns in order to safeguard "the banking system and the whole global financial structure."
So slogans such as no more taxpayer bailouts are meaningless verbiage (although what is said in presidential campaigns sometimes if we are not careful actually can become government policy the following year).
In fact, it is always a matter of nice judgment whether the system needs protection or whether it can withstand the tough, but fair workings of the marketplace. This week, the consensus judgment was that Lehman fell into the latter category. Time will tell because the markets and the public mentally had to absorb not only the Lehman bankruptcy but also the Merrill Lynch purchase by Bank of America and the possible fatal illiquidity of AIG the insurance giant. The first reaction was a 504-point drop.
As I write, Tuesday markets are not closed yet. But it may be months before we know whether it was wise or foolish to "protect the taxpayers" last weekend.
But here is the kicker. About a year ago, the Fed held about $800 billion in securities to use to finance bailouts and for other purposes. As of this week, they are down to about $475 billion in assets. If things get worse and persist, they may not have enough securities to act in the future.
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.
© 2008, Creators Syndicate
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