Thursday, September 25, 2008

Economists opposed to bailout

I pasted the list of signatures into TextPad, with line numbers turned on, and there are currently 192 signatures.

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)
Posted by Patricia at 11:53 PM
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2 comments:

Anonymous said...

You are opposed to tha bailout and so am I. As you know, I have posted repeatedly on the topic at Mark Thoma's blog. Since yesterday, Mark has deleted at least five or six posts opposed to the bailout from his blog (and also several quoting the NYT about the Wasilla rape kit scandal), claiming they were insulting. The fact is that after the first such post, which was entirely legitimate but ended with a word deemed too strong by Mark, none of the posts that Mark deleted have been in any way offensive (unless one takes any kind of criticism as offensive) and in none of them have I unduly attacked Mark himself (what I said is that economists like Mark "will have to share the blame for beating the drum for Wall Street's delivery, even while adding a few caveats").

I am concerned about this because Mark apparently feels that criticism of the bailout needs to be restricted, and because he attacks my reputation without giving me the chance to defend myself. It is therefore important for me to communicate to my fellow debaters that the posts Mark deleted were legitimate. With your permission, I will just repost in full, without imissions, the last example of a post he deleted (from the "Cantor" thread: ---------

"I'm sorry but I have to say this. I am not the one who wishes to waste my time with debates about censorship on this blog but the fact is that among the posts that have been deleted here were the following:

- one post in which I quoted NYT about the practice of charging rape victims in Wasilla (directed at anne, of course)
- one post in which I responded to the "rant" Richard posted above with a series of entirely
polite questions, asking Richard to not only claim but also prove his claims. Note that Richard accuses those who disagree with the $700B bailout to be creationists, which is oh so respectful.
- one post in which I asked Mark Thoma to actually give reasons why he supports the bailout, and why he thinks it must be done in a rush. Up to now, we haven't seen him even try to make that case. All we have got is a mantra: "We need to act now. We need to act now." Repeat that 700 billion time and it still doesn't become a convincing argument.

The fact is that Mark has an easy time deleting posts and then claiming that they were insulting. Since they have been deleted, nobody can verify that allegation. Those of us who have had posts deleted, however, know the facts. All of us have better stuff to do and this debate could be avoided. The only reason I see why deleting posts might make sense is when somebody is intentionally disruptive by repeatedly posting stuff that has no bearing on the topic, or where disrespect clearly outweighs any substance. Deleting posts due to minor impoliteness is the wrong approach not only because it disrupts or distracts from the debate but also because impoliteness falls back on the originator and debaters have a right to know."

My only wish is that my fellow debaters are able to judge for themselves whether Mark's claims are justified.

8:53 PM
Anonymous said...

PS As amazing as it is, but reposts of mine at Brad DeLong's were also deleted. I should be flattered by so much attention.

8:55 PM

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