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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
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Kimberly Palmer: How to actually enjoy -- relaxing, financially -- your vacation
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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
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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
April 30, 2010 / 16 Iyar, 5770
Another Bubble Inflating?
By
Mona Charen
http://www.JewishWorldReview.com |
The Democrats' narrative about the financial crisis of 2008 (and the justification for financial reform) goes like this: Investment bankers, typified by Goldman Sachs, manipulated markets, bamboozled investors, and in their greed, managed to bring the entire economy to its knees. The solution is more strenuous government regulation. Republicans, who are beholden to Wall Street, are blocking reform.
The Democrats excel at presenting legislative tableaux with predigested morals: Stern Democratic lawmaker grills slippery Wall Street executive. Democrats for the people; Republicans for the fat cats.
Do people really buy this anymore? Everyone I know who works on Wall Street is a Democrat. Anecdotes are not evidence, but consider this: According to the Center for Responsive Politics, Democrats received $11.3 million in contributions from hedge funds in 2008. Republicans got $5.9 million. Some critics of the Dodd bill note that it would give broad discretion to the FDIC and a new regulator to decide which firms would be bailed out and which would not. That isn't so much preventing another crisis as institutionalizing "too big to fail." The moral hazard problem — i.e., encouraging risky practices with the implicit or explicit promise of a bailout — remains.
Further, the Dodd bill — and the Democrats' narrative — completely omits the role of government in the financial debacle. Neither Fannie Mae nor Freddie Mac is mentioned in the legislation. But the incentives created by government, specifically the sustained push through law and regulation to provide mortgages to more and more uncreditworthy borrowers, created the conditions for the housing bubble and for its eventual crash. The wizards of Wall Street may have concocted exotic ways to make money by betting on the fortunes of the real estate market, but it was the politicians who first destabilized that market.

Let's stipulate that the masters of the universe on Wall Street may deserve flaying, and sensible reform requiring more transparency and limiting leverage is well and good. But when the federal budget deficit stands at $1.5 trillion, the spectacle of congressmen and senators waxing indignant about the irresponsibility of others is a bit much.
Leaders have a responsibility to be prudent with the taxpayers' money. At least Wall Street trades are between consenting parties. But when politicians gamble with taxpayer money, it's different. We don't willingly sign on to these bets. Yet by their profligacy, elected officials are placing our financial futures at severe risk.
Nicole Gelinas, writing in City Journal, sketches what may be the next crash to rock our world. It's another investment, like housing, that people assume cannot fail — municipal bonds. They are risk free, investors have long been assured, because the cities and states that issue them would do anything to avoid default. Besides, "they … have a captive source of endless funds … State and local governments … can always tax their residents and businesses to pay the bills."
Between 2000 and 2008, states were rolling in cash, pulling in tax revenues that outpaced inflation by 15 percent. But instead of using this windfall to reduce their debts, states continued to spend freely, particularly on expensive union contracts, education, and Medicaid. When the recession began, Gelinas notes, "state and local officials should have realized that hard fiscal times were coming and begun cutting back … Instead they kept on spending, and borrowed to do it." States are now deeply in debt. The most extreme cases — California, New York, and New Jersey — are well known. But the average state now owes 2.1 percent of its residents' annual income.
The 2009 stimulus bill only exacerbated the problem by pumping $200 billion in "reality-distorting funds" into state and municipal coffers, delaying the reckoning and permitting states to continue their reckless spending.
What will happen when states can no longer sustain the public employee pensions and health benefits, the Medicaid payments, and the education spending? Gelinas offers a glimpse of a possible future in the case of Vallejo, California. The city declared bankruptcy in 2008 to escape from crippling union contracts. Vallejo was successful, but in the process, it delayed payments on its bonds for three years. Other bondholders might not be so lucky. It's not hard, Gelinas writes "to imagine some future mayor convincing a bankruptcy judge that it's only fair for bondholders, along with union members, to take big cuts in a restructuring."
When Democrats preen that they are fighting for the average guy, ask this: When they vastly overspend, what happens to the ordinary person who dutifully pays his taxes and prudently invests in "safe" municipal bonds?
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.
Comment on JWR contributor Mona Charen's column by clicking here.
Mona Charen Archives
© 2006, Creators Syndicate
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