[Dialogue] Economists oppose bailout plan

[RICHARD HOWIE]

Thanks Janice.
Ellen
On Sep 26, 2008, at 10:02 AM, Janice Ulangca wrote:

> Colleagues:  Perhaps you got the statement below, signed by many  
> economists.  It came to me through a list serv called  
> Democrats.Com, forwarded by a friend.  It is sobering.   I added  
> the green color to the last sentence under 1).  My question is how  
> this could be done.  We are being told that something like the  
> bailout plan is the only way to provide a financial infrastructure  
> we all need.  Janice Ulangca
>
> P.S. This just in from the same friend.  The statement helps to  
> explain why Republicans are so divided today - the bailout turns  
> their economic narrative too obviously on its head.
>
> "We do not support government bailouts of private institutions.
> Government interference in the markets exacerbates problems in the
> marketplace and causes the free market to take longer to correct
> itself."
>
> -- Republican Party platform, 2008
>
> -------------------
>
> 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)
>
>
>
> **************************
> Janice Ulangca
> 3413 Stratford Drive
> Vestal, NY  13850
> 607-797-4595
> aulangca at stny.rr.com
> ***************************
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