Posted on 09/25/2008 10:00:46 AM PDT by Revel
To the Speaker of the House of Representatives and the President pro tempore of the Senate:
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
Signed (updated at 9/25/2008 8:30AM CT)
Acemoglu Daron (Massachussets Institute of Technology) Adler Michael (Columbia University) Admati Anat R. (Stanford University) Alexis Marcus (Northwestern University) Alvarez Fernando (University of Chicago) Andersen Torben (Northwestern University) Baliga Sandeep (Northwestern University) Banerjee Abhijit V. (Massachussets Institute of Technology) Barankay Iwan (University of Pennsylvania) Barry Brian (University of Chicago) Bartkus James R. (Xavier University of Louisiana) Becker Charles M. (Duke University) Becker Robert A. (Indiana University) Beim David (Columbia University) Berk Jonathan (Stanford University) Bisin Alberto (New York University) Bittlingmayer George (University of Kansas) Boldrin Michele (Washington University) Brooks Taggert J. (University of Wisconsin) Brynjolfsson Erik (Massachusetts Institute of Technology) Buera Francisco J. (UCLA) Camp Mary Elizabeth (Indiana University) Carmel Jonathan (University of Michigan) Carroll Christopher (Johns Hopkins University) Cassar Gavin (University of Pennsylvania) Chaney Thomas (University of Chicago) Chari Varadarajan V. (University of Minnesota) Chauvin Keith W. (University of Kansas) Chintagunta Pradeep K. (University of Chicago) Christiano Lawrence J. (Northwestern University) Cochrane John (University of Chicago) Coleman John (Duke University) Constantinides George M. (University of Chicago) Crain Robert (UC Berkeley) Culp Christopher (University of Chicago) Da Zhi (University of Notre Dame) Davis Morris (University of Wisconsin) De Marzo Peter (Stanford University) Dubé Jean-Pierre H. (University of Chicago) Edlin Aaron (UC Berkeley) Eichenbaum Martin (Northwestern University) Ely Jeffrey (Northwestern University) Eraslan Hülya K. K.(Johns Hopkins University) Faulhaber Gerald (University of Pennsylvania) Feldmann Sven (University of Melbourne) Fernandez-Villaverde Jesus (University of Pennsylvania) Fohlin Caroline (Johns Hopkins University) Fox Jeremy T. (University of Chicago) Frank Murray Z.(University of Minnesota) Frenzen Jonathan (University of Chicago) Fuchs William (University of Chicago) Fudenberg Drew (Harvard University) Gabaix Xavier (New York University) Gao Paul (Notre Dame University) Garicano Luis (University of Chicago) Gerakos Joseph J. (University of Chicago) Gibbs Michael (University of Chicago) Glomm Gerhard (Indiana University) Goettler Ron (University of Chicago) Goldin Claudia (Harvard University) Gordon Robert J. (Northwestern University) Greenstone Michael (Massachusetts Institute of Technology) Guadalupe Maria (Columbia University) Guerrieri Veronica (University of Chicago) Hagerty Kathleen (Northwestern University) Hamada Robert S. (University of Chicago) Hansen Lars (University of Chicago) Harris Milton (University of Chicago) Hart Oliver (Harvard University) Hazlett Thomas W. (George Mason University) Heaton John (University of Chicago) Heckman James (University of Chicago - Nobel Laureate) Henderson David R. (Hoover Institution) Henisz, Witold (University of Pennsylvania) Hertzberg Andrew (Columbia University) Hite Gailen (Columbia University) Hitsch Günter J. (University of Chicago) Hodrick Robert J. (Columbia University) Hopenhayn Hugo (UCLA) Hurst Erik (University of Chicago) Imrohoroglu Ayse (University of Southern California) Isakson Hans (University of Northern Iowa) Israel Ronen (London Business School) Jaffee Dwight M. (UC Berkeley) Jagannathan Ravi (Northwestern University) Jenter Dirk (Stanford University) Jones Charles M. (Columbia Business School) Kaboski Joseph P. (Ohio State University) Kahn Matthew (UCLA) Kaplan Ethan (Stockholm University) Karolyi, Andrew (Ohio State University) Kashyap Anil (University of Chicago) Keim Donald B (University of Pennsylvania) Ketkar Suhas L (Vanderbilt University) Kiesling Lynne (Northwestern University) Klenow Pete (Stanford University) Koch Paul (University of Kansas) Kocherlakota Narayana (University of Minnesota) Koijen Ralph S.J. (University of Chicago) Kondo Jiro (Northwestern University) Korteweg Arthur (Stanford University) Kortum Samuel (University of Chicago) Krueger Dirk (University of Pennsylvania) Ledesma Patricia (Northwestern University) Lee Lung-fei (Ohio State University) Leeper Eric M. (Indiana University) Leuz Christian (University of Chicago) Levine David I.(UC Berkeley) Levine David K.(Washington University) Levy David M. (George Mason University) Linnainmaa Juhani (University of Chicago) Lott John R. Jr. (University of Maryland) Lucas Robert (University of Chicago - Nobel Laureate) Luttmer Erzo G.J. (University of Minnesota) Manski Charles F. (Northwestern University) Martin Ian (Stanford University) Mayer Christopher (Columbia University) Mazzeo Michael (Northwestern University) McDonald Robert (Northwestern University) Meadow Scott F. (University of Chicago) Mehra Rajnish (UC Santa Barbara) Mian Atif (University of Chicago) Middlebrook Art (University of Chicago) Miguel Edward (UC Berkeley) Miravete Eugenio J. (University of Texas at Austin) Miron Jeffrey (Harvard University) Moretti Enrico (UC Berkeley) Moriguchi Chiaki (Northwestern University) Moro Andrea (Vanderbilt University) Morse Adair (University of Chicago) Mortensen Dale T. (Northwestern University) Mortimer Julie Holland (Harvard University) Muralidharan Karthik (UC San Diego) Nanda Dhananjay (University of Miami) Nevo Aviv (Northwestern University) Ohanian Lee (UCLA) Pagliari Joseph (University of Chicago) Papanikolaou Dimitris (Northwestern University) Parker Jonathan (Northwestern University) Paul Evans (Ohio State University) Pejovich Svetozar (Steve) (Texas A&M University) Peltzman Sam (University of Chicago) Perri Fabrizio (University of Minnesota) Phelan Christopher (University of Minnesota) Piazzesi Monika (Stanford University) Piskorski Tomasz (Columbia University) Rampini Adriano (Duke University) Reagan Patricia (Ohio State University) Reich Michael (UC Berkeley) Reuben Ernesto (Northwestern University) Roberts Michael (University of Pennsylvania) Robinson David (Duke University) Rogers Michele (Northwestern University) Rotella Elyce (Indiana University) Ruud Paul (Vassar College) Safford Sean (University of Chicago) Sandbu Martin E. (University of Pennsylvania) Sapienza Paola (Northwestern University) Savor Pavel (University of Pennsylvania) Scharfstein David (Harvard University) Seim Katja (University of Pennsylvania) Seru Amit (University of Chicago) Shang-Jin Wei (Columbia University) Shimer Robert (University of Chicago) Shore Stephen H. (Johns Hopkins University) Siegel Ron (Northwestern University) Smith David C. (University of Virginia) Smith Vernon L.(Chapman University- Nobel Laureate) Sorensen Morten (Columbia University) Spiegel Matthew (Yale University) Stevenson Betsey (University of Pennsylvania) Stokey Nancy (University of Chicago) Strahan Philip (Boston College) Strebulaev Ilya (Stanford University) Sufi Amir (University of Chicago) Tabarrok Alex (George Mason University) Taylor Alan M. (UC Davis) Thompson Tim (Northwestern University) Tschoegl Adrian E. (University of Pennsylvania) Uhlig Harald (University of Chicago) Ulrich, Maxim (Columbia University) Van Buskirk Andrew (University of Chicago) Veronesi Pietro (University of Chicago) Vissing-Jorgensen Annette (Northwestern University) Wacziarg Romain (UCLA) Weill Pierre-Olivier (UCLA) Williamson Samuel H. (Miami University) Witte Mark (Northwestern University) Wolfers Justin (University of Pennsylvania) Woutersen Tiemen (Johns Hopkins University) Zingales Luigi (University of Chicago) Zitzewitz Eric (Dartmouth College)
Alright! A consensus of economists!
ok I am scanning and why is it I am seeing a lot of
CHICAGO,BOSTON,COLUMBIA,BERKLEY NAMES..Hmmmmmmmm
Maybe Bush knows something these people don’t. And maybe not.
150 Economists, and not a single alternative suggestion.
Somehow I’m not impressed as they are still working on the bill.
Newt Gingrish is the ONLY person making sense.
If you bail out people who could not make payments, you just DELAY the problem- they STILL CAN’T MAKE THE PAYMENTS
While I agree with their concerns, the title of the post is a little misleading. They don’t actually say the bailout is wrong. They express serious concerns with it, but ultimately ask Congress to take their time and be careful.
I see neither Thomas Sowell or Walter Williams’ name on that list.
I don’t like the idea of the goverment holding the paper, but if the bank forecloses and takes a house, who are they going to sell it to? That doesn’t seem to have worked very well in Detroit. I don’t know if there’s a way to garnish non-payer’s paychecks (or SSI checks, or whatever) to get SOME of the money, rather than NONE. Are we talking about people who have never and will never pay their mortgages, or people who have fallen behind and might be able to catch up if they caught a break?
Yep, it’s like sprinkling water on a raging fire. The only way to solve this and it will be a long time is to go back to the old way don’t go into debt and you will be alright.
Would the folks in Congress even be willing to listen to an alternative to THEIR plan? These folks are so full of hubris, it is maddening. Have any of them ever lamented how badly they have let the American people down? Do any of them feel the slightest twinge of remorse (or even a great big spasm) one that causes them to consider stepping down as they think of the lives, the many lives this mess has so dramatically affected? Do any of them ever stop to consider that there might be some way to start down the road to correction other than beginning in the honest taxpayers’ wallets?
No. My gut tells me that unless the solution starts with THEM, they will not likely consider it—excessive pride, arrogance, and the excesses of power have all worked their ill on the majority of those who make up the current legislative body.
What the heck do they know? They’re just Nobel Laureates and winners........Now, if it was ALGore.......
University of Chicago has had more Nobel Prize winning economists than any other place on earth............
There you have it. They feel strongly about it both ways. So helpful, but hey, at least they got their names attached to an international story.
When their students were running Chile in the 1980s, the Chicago Boys had to rescue that country’s bank sector, too. The government was in volved there in a bailout.
About as valuable as the global warming petition signed by AlGore sycophants.
does nothing unless you have a speaker who can relate the message to the constituents!!!!! all the rest is
blah blah blah
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