The Housing Chronicles Blog: 200 economists sign petition against quick bailout plan

Thursday, September 25, 2008

200 economists sign petition against quick bailout plan

Lately most of the anti-bailout rhetoric I've seen has been from people commenting on blogs, with most economists quoted in the MSM in favor of it. So why haven't the 200 economists who have signed a petition against the existing bail-out plan been widely quoted? I guess that's a question for the media. From a member's website:

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.

Click here to see the list.


Anonymous said...

Who brought GW Bush to power? It started by Goldman-Sachs sell off
shares...March, 2000, then Merrill,
then Lehman Bros. Bringing GW Bush
to power, Check Exchange Records, GW part of the most corrupt
family in American Presidential History...Father Like Son:
SR>>> Let a War happen
JR>>> Created a War
SR & JR higher oil prices
profits= Bush Thug Buddies
Real Estate Collapse (both)
BUSH SR & JR recessions lasting
Screw Wall Street
By the way who sat on Goldman-Sachs
board on March 20th, 2000
1 director...from the Bill & Melinda Gates Foundation
1 director...from Intel, etc.
all profiting from the collapse
of a 4 trillion economy for
a GW BUSH false economy the
False WAR & housing economy...
Hang then All!
Supporting the Bush Family amounts

ylDave said...

The bailout plan is a bad idea on so many levels. The criticisms in the letter are just the beginning. This is a proposal to intervene in the natural consolidation of an industry that has had a record run up in recent years.


Anonymous said...

It's important to warn the government off when it's about to take precipitous and disastrous action. But wouldn't it be much more helpful if the 200 could put their heads together and come up with suggestions about what would work? Is that even possible? If it's not, should we really be expecting Congress to find a solution that the experts can't?

Unknown said...

I've been thinking about this a lot (as we all have) and it just occurred to me tonight... I'm be more than happy to agree with the "rescue" plan if Congress will do two things...

1. Hold themselves accountable (by name... not House or Senate but by individual names) if this thing doesn't work. I want to know who screwed up!
2. Agree to some punishment if their plan doesn't do what they are promising it will do. Punishment and an agreement that they will resign their post... Immediately!

I want to see some accountability before I will agree to this approach.