Ethanol And Sub-Prime Mortgages Ctd.

Several readers have complained about Jeff Jacoby labeling both the sub-prime crisis and ethanol misadventures in big government. Clive makes this point about the mortgage crisis:

The US already has what must be the world’s most generous fiscal dispensation for mortgage borrowers – uncapped tax relief for owner-occupiers, plus colossal “government sponsored entities” to guarantee loans, implicitly subsidise mortgage rates and promote securitisation. This fiscal regime created an environment in which you felt a fool unless you borrowed to the hilt – not just to buy your house but to keep your equity in it to a minimum, so as to liberate cash for other purposes.

I know many environmentalists have criticized subsidies for corn ethanol and instead promoted cellulosic ethanol. But Tom Philpott argued just a few days ago that cellulosic ethanol isn't likely to be viable. I'm not an expert in either of these fields, but Jeff Jacoby's point about unintended consequences seems to me to hold water.