Walter Bagehot Was Wrong

James Grant:

The governor of the Central Bank of Luxembourg raised some eyebrows when he questioned the integrity of the fast-growing balance sheet of the European Central Bank. Yves Mersch, a member of the ECB’s governing council as well as the Ben Bernanke of the Grand Duchy of Luxembourg, raised the issue at a gathering of the International Capital Market Association in Vienna two weeks ago.
Insofar as a currency derives its strength from the balance sheet of the issuing central bank, the euro is unsound and becoming more so, as Mr. Mersch did not quite say. We, however, will say it for him. In fact, we will say the same for most of the leading monetary brands, that of the United States not excluded. The mortgage mess is the immediate cause of the new debasement. A long-held article of central banking dogma is the remote cause.
Mr. Mersch landed on the front page of the Financial Times by acknowledging that the ECB is accepting a dubious kind of mortgage collateral in exchange for loans to the world’s liquidity-parched financial institutions. In so many words, Mr. Mersch charged that the commercial banks are gaming the central bank, a situation he called of “high concern.” Reading Mr. Mersch, we thought of Thomson Hankey.

Tammy Baldwin’s Office on the Farm Bill

Dear Mr. Zellmer:
Thank you for contacting me about the 2007 Farm Bill (the Farm, Nutrition, and Bioenergy Act, H.R. 2419). It is good to hear from you, and I apologize for the delay in my response.
As you know, the U.S. House of Representatives recently considered the 2007 Farm Bill. The Farm Bill is a comprehensive piece of legislation which touches on a number of agriculture-related issues, including commodity price support programs, nutrition programs, alternative energy, and rural development.
After a considerable amount of deliberation in a conference committee, the House and Senate each passed a conference report that represented the resulting policy compromises. You may be interested to know that I joined my colleagues in the House of Representatives to pass this conference report by a vote of 318 to 106.
While I believe that the U.S. House of Representatives should have taken this opportunity to implement expansive agricultural policy reforms, I supported the conference report because it does contain some noteworthy improvements in the Farm Bill programs. The alternatives to reauthorizing the Farm Bill this year were to extend the previous version of the farm bill or to revert to regulations dating to the 1940s. In my view, neither of these alternatives are desirable or acceptable.
The aspects of the conference report that I strongly support include expanding and updating the Milk Income Loss Contract (MILC) program, and investments in nutrition programs that help 38 million American families afford healthy food. For the first time, the MILC program will include the cost of feeding dairy cows as a factor for triggering program payments, a relief for Wisconsin dairy farmers who face increasing costs of inputs. The nutrition title includes an additional $10 billion to expand food stamp eligibility and increase the minimum weekly benefit, as increase funding for many worthy programs such as food banks, food pantries, soup kitchens, and schools providing healthy snacks to students.

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