The ethanol scam and the sub-prime crisis

Thanks a lot, Washington. Here's Jeff Jacoby in today's Boston Globe with "How government makes things worse":

But now comes word that expanding ethanol use is likely to mean not less CO2 in the atmosphere, but 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.

And the subprime mortage crisis found its genesis in the Community Reinvestment Act of 1977 which created incentives for banks to make risky loans in the interest of "helping" people.

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.

Needless to say, ethanol would never survive as an alternative fuel without massive government subsidies (and Iowa's first-in-the-nation caucus doesn't hurt). Meanwhile, Jimmy Carter's attempt to legislate equality has succeeded in spreading the pain to everybody by crippling banks and financial institutions.

The next act in this endless and misguided crusade to play Robin Hood is surely in health care where the Democratic candidates are pushing the new "'fairness." Everybody should have health care, regardless of whether they want it, need it, work for it or just demand it. Hillary has stated as much by darkly proclaiming that, unless everybody signs up for universal coverage, the insurance companies will pick who they will choose to cover. In other words, healthy Americans must be compelled to subsidize those who choose to eat Big Macs everyday. It's only fair, and what could possibly go wrong?

Extra - More from the Globe "Surging costs of groceries hit home": "Several factors contribute to higher food prices, analysts say, but none more than record prices for oil, which last week closed above $105 a barrel. Oil is not only driving up production and transportation costs, but also adding to demand for corn and soybeans, used to make alternative fuels such as ethanol and biodiesel." Because we won't inconvenience some polar bears in a very small section of Alaska, we're all paying high food costs and sending billions to Saudi Arabia.