Open Letter about Bailout from 190 top economists

[TexasDevilDog]

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

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)
==============

Now I am sure that someone on DFWstangs will tells why 190 top economists are all wrong.

[Slowhand]

Now I am sure that someone on DFWstangs will tells why 190 top economists are all wrong.

Gpamp in 3...2...1...

But in all honesty, that's uplifting news. Oh wait, that would require Congress to admit that these economists know more than they do, and that sure as hell isn't going to happen.

[5.0_CJ]

Now I am sure that someone on DFWstangs will tells why 190 top economists are all wrong.


this is exactly why there is not an agreement right now.

[TexasDevilDog]

Jeffrey Miron, a Harvard University professor and self- described libertarian, objects to what he says is `` a stunningly broad, aggressive government intervention without appropriate precedents.''

He advocates allowing the normal process of business failure and bankruptcy to run its course. ``It's just nothing like the calamity the administration is making it out to be,'' he said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNKGD.bJwmRA&refer=home

Cliff notes for the socialists: Bad investments should be allowed to go bad. That is how capitalism works.

[slow99]

Dear God, please make it stop.

[AL P]

Cliff notes for the socialists: Bad investments should be allowed to go bad. That is how capitalism works.

"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."

doesn't translate to

"Bad investments should be allowed to go bad. That is how capitalism works"

[TexasDevilDog]

"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."

doesn't translate to

"Bad investments should be allowed to go bad. That is how capitalism works"

I posted from two different links, two different topics. Keep up. This is moving fast.

[slow99]

I posted from two different links, two different topics. Keep up. This is moving fast.

So, which do you believe? Or are you just randomly posting links to post them?

[AL P]

I posted from two different links, two different topics. Keep up. This is moving fast.

You were saying earlier today that the government would be buying securitized debt at 100% of face value and I am the one that needs to keep up?

That's interesting.

[Big Thumper]

I'm no economic genius, but to me, they made bad investements and therefore should go under. Other companies will buy them and life will go on.

[FSON]

No free money to losers. They get a loan and pay it back with interest.

[MadMax404m]

This bail-out plan is a pillow under our ass for a bed that is about to break. No matter how we look at it, the bailout is neccesary to get us a cushion for the time being(although I definatly do not agree to the no courts policy that they have put in it). No matter what, the US's credit will go belly up, in turn our intrest rates will sky rocket, and the american public(no matter if the bill passes or not) will get shafted.

No one realizes it is already to late to do anything to fix the problem, all we can do is help the hit be a little easier and a little later down the road.

[bcoop]

So, which do you believe? Or are you just randomly posting links to post them?



I used to think that TDD was pretty well educated. Now, not so much...

[big_tiger]

The main thing they are worried about is further growth of the economy right? That banks will no long have the extra funds to lend out money to business owners and crap. Well why doesn't the government just do it and let the bad business fail.

[David]

Wasnt it the "smart" folks that got us in this situation?

What does another 190 "smart" folks suppose to get to?

[Denny]

I can think of a shit-load better things to do with $700billion than to fix their fuck-ups. Who is to say that this "bail-out" is going to fix shit anyway? I think it'll just buy time to let "them" find another way to fuck things up.

Why doesn't the govt. just let the market correct itself and let a few jump from buildings?

[cannonball996]

I think the plan is the right plan, if you think the government should have this much interest in private business....I for one believe that if a business fails its not the peoples responsibility to save it.

[MadMax404m]

I love the Dems spin on making this the House Republicans fault its not passed. Can anyone else in this country figure out this is a political ploy, its all for their re-elections NOT for the people.

Does anyone in this freaking country know how our own govt operates? How votes are tallied and how bills are passed in the house?

Lets see, if the house goes off majority of the votes, and the majority at the moment is 235 Dems to 199 Repubs with a couple vacant, how is it the house repubs fault this is not getting passed? It is because TONS of House Dems are against this, EVERYONE knows that this is just a cushion, and they know in 6 months to a year they will have to do this all over again they just want to be the ones who are saying, "hey its not us its the repubs we just agree with them secretly"

There has to be something done, don't get me wrong, as much as I am against socialism and nationalizing ANYTHING nor am I for bailing anyone out, but we cannot let the market fail, although it is definatly to late for anything to be done now. So how do we want it america? Quick and Painful and get it behind us, or a short break yet still just as painful and have our kids and grand children still dealing with it?

[TexasDevilDog]

I used to think that TDD was pretty well educated. Now, not so much...

LOL! Thanks. :D