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Reason Foundation

Reason Alert: Mortgage Bailout, 9/11 Anniversary

September 7, 2007

Mortgage Bailout Is Coming
Reason magazine's Jeff Taylor writes, "You can tell the feds are bailing out mortgage lenders by the way no one wants to call it a bailout. President George Bush made that clear last week when he announced his plan to rescue broke borrowers. 'A federal bailout of lenders would only encourage a recurrence of the problem,' Bush explained. So this is not a bailout, you see, because it is for the borrowers, not the lenders. And if you believe that, then you'll also believe that the Federal Reserve has been shoving money at the banks by the billions in recent weeks in order to help borrowers, too. In truth, what Bush has proposed is far worse than a bailout. Federal regulators and policies would supplant market discipline and price signals in the mortgage market. And all because a long-overdue correction in the domestic mortgage-making sector manifested itself this summer...It will take time to digest the bad loans, and real estate prices might dip in some markets going forward as a result. California, for example, has a consensus 10 to 15 percent overvaluation to work through, and that may take a year or two to correct. But that process will slam to a halt once Uncle Sucker begins assuming bad loans left and right."

9/11 Anniversary: Has Fatigue Set In?
"So does grief have a shelf life? The answer is clearly yes," writes Reason magazine's Ronald Bailey as he examines the upcoming 9/11 anniversary. "Americans have gone through all of the disaster rituals, and normal life has more or less returned. Since 9/11, the U.S. economy has grown; gross domestic product has risen by 17 percent. The Pentagon has been repaired and while the skyline of New York is forever marred, the city itself is flourishing...The disaster rituals are done, but we lack one important element: resolution. The men who orchestrated the atrocities have not been brought to justice. And they still threaten to attack us. The current issue of Newsweek reports, 'Intelligence officials in Europe and America have spent a jittery summer seeing signs that Al Qaeda is gearing up to hit the West in some significant way.'"

America's Taliban-Support Program
Reason magazine's Jacob Sullum finds the war on drugs is failing in Afghanistan: "According to a recent report from the U.N. Office on Drugs and Crime, 19,047 hectares of poppies were eradicated in Afghanistan this year, 24 percent more than in 2006. Meanwhile, the number of opium-free provinces more than doubled, from six to 13. Those victories were somewhat overshadowed by the news that the total amount of land devoted to opium poppies in Afghanistan rose from 165,000 to 193,000 hectares, an increase of 17 percent. Due to 'favorable weather conditions,' estimated opium production rose even more, hitting an all-time high of 8,200 metric tons, 34 percent more than the previous record, set last year. Since their efforts have had precisely the opposite of the result they intended, U.S. drug warriors, predictably enough, plan to try harder, calling for more eradication, possibly including aerial spraying of herbicide, and more interdiction. Over the long term, if history is any guide, these supply reduction measures will have little or no impact on heroin consumption. Over the short term, they will continue to strengthen the Taliban insurgency."

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