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 April 2, 2008 / 26 Adar II 5768

The last thing the Fed needs is to be assigned the role of Risk Hunter for the entire economy

By Robert Robb

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http://www.JewishWorldReview.com | Treasury Secretary Henry Paulson wants to turn the Fed into the Risk Hunter, prowling freely throughout the economy to manage anything that threatens the "stability" of financial markets.

This is a task that's impossible to define sensibly, much less do.

Markets are always moving. Some things are going up, others are going down. Some people are making money, others are losing. Some firms are expanding, others are contracting.

This inherent instability of markets is what makes them work effectively and efficiency to allocate resources.

Paulson wants to assign the Fed the job of the impossible because the federal government is apparently unwilling to step aside and let the market impose its own discipline by allowing big boys to go broke.

Big investment banks are in trouble over the housing downturn because they acted imprudently.

About 93 percent of all mortgages are current. Even around 80 percent of subprime mortgages are current.

People who bought mortgage-backed securities with cash as an investment are OK. Mortgages are being paid, income is flowing to those holding the securities.

The return on their investment may end up being less than they expected. But they don't need the federal government to bail them out.

Those in trouble borrowed to buy the securities or put up the securities as collateral for borrowing.

The big investment banks are highly leveraged and rely on churning their debt. A decline in the value of what they do own jeopardizes their game. So, should the federal government care?

There doesn't seem to be any compelling reason why it should.

Clients with custodial accounts with these big investment firms might experience some inconveniences if they were to fail. But they still own what they own and can find others to manage it for them.

If the game is called, a lot of securities might go on the market, temporarily depressing their value. However, prices for long-term holders will eventually return to intrinsic values based upon actual cash flows.

Non-speculators who nevertheless need to liquidate for cash will be hurt during the transition. But investors with cash will get some real bargains. A lot of big boys would lose a lot of money. So what? You make big bets, you run the risk of big losses.

The federal government, however, seems unwilling to let big boys go broke.

The Fed is now helping investment banks churn their debt, accepting as collateral securities private lenders are shunning. It agreed to guarantee $29 billion in collateralized debt securities to facilitate the sell of Bear Sterns to JPMorgan Chase.

This is widely outside the historical role of the Fed as the lender of last resort. The Fed has this role to stave off commercial bank panics, when depositors demand more money than banks have in reserve. In this case, the Fed is lending to stave off the consequences of overborrowing by the investment banks themselves.

This is supposedly to maintain orderliness in the financial markets. But disorderliness may be precisely the right tonic needed to correct and discourage overleveraging.

The Fed is ultimately, of course, us. And some observers are already worried about the stress unconventional lending activity is putting on the Fed's own balance sheet and the risk that poses to taxpayers.

Meanwhile the Fed is doing a lousy job of its main function in the economy, providing a stable currency. Inflation has topped 4 percent and the dollar is in a free fall against other currencies.

The last thing the Fed needs is to be assigned the role of Risk Hunter for the entire economy. In Britain, the central bank doesn't even have supervisory oversight of commercial banks. Maintaining a stable currency is thought to be a big enough job all by itself.

Some argue that if the federal government is going to provide the same backstop to investment banks as commercial banks, then they should be subject to the same requirements and oversight regarding capital and liquidity.

There's sound logic in that. But the better resolution is to deny investment banks the same backstop, for the federal government to declare a willingness to allow big boys to go broke.

Such a declaration would do more to impose market discipline than all the regulations in the world.

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

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