In this issue

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Sept. 21, 2009 / 3 Tishrei 5770

The lost lesson of the Lehman bankruptcy

By Robert Robb

http://www.JewishWorldReview.com | The prevailing narrative is that the failure of the federal government to bail out Lehman triggered a global financial panic. Only massive government intervention prevented a second Great Depression.

There are important and persuasive dissents from the prevailing narrative. The most prominent and persistent dissenter is Stanford economist John Taylor.

Taylor, in his book "Getting Off Track," painstakingly demonstrates that the interest rate spreads between safe and riskier debt didn't actually increase after the Lehman bankruptcy. The spreads didn't really begin to increase until Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke began running around with their hair on fire, claiming that unless Paulson was given hundreds of billions in bailout funds and Bernanke cranked up the printing presses, we'd all be standing in bread lines.

This alternative chronology was further documented in a Wall Street Journal column this week by John Cochrane and Luigi Zingales, business school professors at the University of Chicago.

The subsequent frenzied federal activity was supposedly to respond to a credit "freeze." After the Paulson-Bernanke panic, interest rates did spike. But, for the most part, they didn't get much, if any, higher than they were in 2006 and 2007, when no one was running around with his hair on fire. And they quickly subsided.

Promoters of the prevailing narrative say this was because markets became confident that the federal government would do whatever was necessary to keep finance flowing. But that's hard to credit. At first, the federal government resembled the Keystone Kops to the rescue.

Congress balked at giving Paulson his $700 billion. The stock market tanked. Then Congress approved the $700 billion. The stock market tanked again.

Paulson first said he would use the money to buy distressed debt securities. Then he said he would instead use the money to force feed capital to banks, including banks that didn't want it and which Paulson declared to be healthy.

In any event, it's hard to see the evidence of a credit freeze. Consumer debt did decline slightly in the 4th Quarter of 2008. Business debt, however, increased. Consumer debt actually declined more rapidly after the Fed began pouring liquidity into it. Businesses and consumers were retrenching primarily because of the recession, not because no one would lend them money.

Taylor says that the Fed, which did crank up the printing press, mistook a lack of confidence in the credit worthiness of counterparties for a liquidity crisis. That would suggest that selected government guarantee programs would have been sufficient, without Paulson's bailout stash and Bernanke's extraordinary monetary expansion.

The guarantee programs, for instance covering money market funds and bank borrowing, were successful. They didn't end up costing the government a dime. In fact, the government made money on the programs from the fees it charged for the guarantees.

The first bailout that was made post-Lehman, AIG, looks increasingly unwise. The bailout mostly allowed its debt insurance clients, such as Goldman Sachs, to avoid taking a haircut they deserved for imprudent investments. The government declaring AIG a sick bird, however, caused an exodus of its traditional insurance customers, leaving the entire company an irredeemable mess.

There's a tendency to give the rescuers the benefit of the doubt. Many very smart people thought the economy was on the precipice. Now it isn't. So, it was better to be safe than sorry.

But the costs of the massive federal intervention are just now coming due. The federal government, which was always a long-term fiscal wreck, is now a short-term fiscal wreck. Bernanke's extraordinary monetary expansion has to be unwound without debasing the currency and unleashing inflation. Since the flight to safety and the dollar abated around March, the dollar has lost 17 percent of its value compared to the euro.

Meanwhile, the Lehman bankruptcy proceeds. It's a protracted, painful and expensive process.

That would be a highly salutary lesson about the costs of excessive risk-taking. Except that the prevailing lesson is that the government should have bailed it out instead.

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.

JWR contributor Robert Robb is a columnist for The Arizona Republic. Comment by clicking here.

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