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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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February 8, 2012
Warren Richey: Why momentous Prop. 8 ruling might not satisfy gay-rights groups
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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?
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
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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
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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
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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 10, 2008
/ 3 Adar II 5768
How government makes things worse
By
Jeff Jacoby
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http://www.JewishWorldReview.com |
What do ethanol and the subprime mortgage meltdown have in common? On the
surface, nothing at all. But dig down a little, and each is a good reminder of
that most powerful of unwritten decrees, the Law of Unintended Consequences
and of the all-too-frequent tendency of solutions imposed by the state to
exacerbate the harms they were meant to solve.
Take ethanol, the much-hyped biofuel made (primarily) from corn. Ethanol has
been touted as a weapon in the fashionable crusade against climate change,
because when mixed with gasoline, it modestly reduces emissions of carbon
dioxide. Reasoning that if a little ethanol is good, a lot must be better,
Congress and the Bush administration recently mandated a sextupling of ethanol
production, from the 6 billion gallons produced last year to 36 billion by
2022.
But now comes word that expanding ethanol use is likely to mean not less CO2 in
the atmosphere, but more. A lot more: Instead of reducing greenhouse gas
emissions from gasoline by 20 percent the estimate Congress relied on in
requiring the huge increase in production ethanol use will cause such
emissions to nearly double over the next 30 years.
The problem, laid out in two new studies in the journal Science, is that it
takes a lot of land to grow biofuel feedstocks such as corn, and as forests or
grasslands are cleared for crops, large amounts of CO2 are released. Diverting
land in this fashion also eliminates "carbon sinks," which absorb atmospheric
CO2. Bottom line: The government's ethanol mandate will generate a "carbon
debt" that will take decades, maybe centuries, to pay off.
Actually, that's not quite the bottom line. Jacking up ethanol production
causes other problems, too. Deforestation. Loss of biodiversity. Depletion of
aquifers. Deadlier fires (ethanol fires are harder to extinguish than those
fueled by gasoline). More ethanol even means more hunger: As more of the US
corn crop goes for ethanol, the price of corn has been soaring, a calamity for
Third World countries in which corn is a major dietary staple.
Senator Charles Grassley of Iowa bloviates that everything about ethanol is
"good, good, good," but it plainly isn't, isn't, isn't. Which is why the fate
of ethanol, including how much of it is produced, should be determined by the
decentralized process of free exchange the voluntary interactions of
countless consumers and producers, buyers and sellers, each acting according to
his best judgment and in his own best interest. Instead, Congress and the
president, convinced as always that they know best, imposed a single,
inflexible, ham-fisted directive from above. The result is that the carbon
dioxide they aimed to reduce will be increased, and many people will suffer
unnecessary misfortune.
The subprime mortgage collapse is another tale of unintended consequences.
The crisis has its roots in the Community Reinvestment Act of 1977, a
Carter-era law that purported to prevent "redlining" denying mortgages to
black borrowers by pressuring banks to make home loans in "low- and
moderate-income neighborhoods." Under the act, banks were to be graded on their
attentiveness to the "credit needs" of "predominantly minority neighborhoods."
The higher a bank's rating, the more likely that government regulators would
say yes when the bank sought to open a new branch or undertake a merger or
acquisition.
But to earn high ratings, banks were forced to make increasingly risky loans to
borrowers who wouldn't qualify for a mortgage under normal standards of
creditworthiness. The CRA, made even more stringent during the Clinton
administration, trapped lenders in a Catch-22. "If they comply," wrote Loyola
College economist Thomas DiLorenzo, "they know they will have to suffer from
more loan defaults. If they don't comply, they face financial penalties . . .
which can cost a large corporation like Bank of America billions of dollars."
Banks nationwide thus ended up making more and more "subprime" loans and
agreeing to dangerously lax underwriting standards no down payment, no
verification of income, interest-only payment plans, weak credit history. If
they tried to compensate for the higher risks they were taking by charging
higher interest rates, they were accused of unfairly steering borrowers into
"predatory" loans they couldn't afford.
Trapped in a no-win situation entirely of the government's making, lenders
could only hope that home prices would continue to rise, staving off the
inevitable collapse. But once the housing bubble burst, there was no escape.
Mortgage lenders have been bankrupted, thousands of subprime homeowners have
been foreclosed on, and countless would-be borrowers can no longer get credit.
The financial fallout has hurt investors around the world. And all of it thanks
to the government, which was sure it understood the credit industry better than
the free market did, and confidently created the conditions that made disaster
unavoidable.
"No man's life, liberty, or property is safe," warned Mark Twain, "while
Congress is in session." Mark Twain was a humorist, but that was no joke.
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Jeff Jacoby is a Boston Globe columnist. Comment by clicking here.
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© 2006, Boston Globe
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