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Long List of Economists Oppose Bailout

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  • Long List of Economists Oppose Bailout

    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, Americas 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 9/24/2008 10:30AM CT)

    Acemoglu Daron (Massachussets Institute of Technology)
    Adler Michael (Columbia University)
    Admati Anat R. (Stanford University)
    Alvarez Fernando (University of Chicago)
    Andersen Torben (Northwestern University)
    Barankay Iwan (University of Pennsylvania)
    Barry Brian (University of Chicago)
    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)
    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)
    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)
    Fox Jeremy T. (University of Chicago)
    Frank Murray Z.(University of Minnesota)
    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)
    Goettler Ron (University of Chicago)
    Goldin Claudia (Harvard University)
    Gordon Robert J. (Northwestern University)
    Guadalupe Maria (Columbia University)
    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)
    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)
    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)
    Leuz Christian (University of Chicago)
    Levine David I.(UC Berkeley)
    Levine David K.(Washington University)
    Linnainmaa Juhani (University of Chicago)
    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)
    Nevo Aviv (Northwestern University)
    Ohanian Lee (UCLA)
    Pagliari Joseph (University of Chicago)
    Papanikolaou Dimitris (Northwestern University)
    Paul Evans (Ohio State 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)
    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)
    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)

  • #2
    Jim Cramer loves the he said on his show last night.

    Hello everybody.
    Goodnight everybody.

    Thank god. I don't know how many times during sex I've thought, "Gee, I sure wish there were an artificial product that would make this vagina more invigorating."

    Seriously, the rest of the liberals here on MediaLine (and the world frankly) will do quite fine if you go back to flipping burgers and stay the hell off the internet.
    -Tripe Face


    • #3
      Not surprisingly, nobody else seems to have commented on this thread. Not that there's much to say, except that when it comes to Reaganomics, I told you so.


      • #4
        Weren't all these people in High School Musical 3?
        Enjoy the veal! Be sure to tip your weatherman!


        • #5
          Economists Urge Congress Not to Rush on Rescue Plan (Update1)

          By Matthew Benjamin

          Sept. 26 (Bloomberg) -- More than 150 U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.

          In a Sept. 24 letter to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation.

          ``It doesn't seem to me that a lot decisions that we're going to have to live with for a long time have to be made by Friday,'' said Robert Lucas, a University of Chicago economist and 1995 Nobel Prize winner who signed the letter. ``The situation may get urgent, but it's not urgent right now. Right now it's a financial sector problem.''

          The economists who signed the letter represent various disciplines, including macroeconomics, microeconomics, behavioral and information economics, and game theory. They also span the political spectrum, from liberal to conservative to libertarian.

          Some lawmakers are already citing the letter as reason not to endorse Paulson's plan. Senator Richard Shelby, a Republican from Alabama, said yesterday he has ``five pages of the leading economists in America that wrote to me and the leadership saying the Paulson plan is a bad plan. It will not solve problems. It will create more problems.''

          Negotiations over the plan stalled yesterday after Republicans in the U.S. House of Representatives undercut the Bush administration and left it to congressional leaders to hammer out a compromise.

          `How Capitalism Works'

          The letter, initially conceived by economists at the University of Chicago, was signed by professors from dozens of American universities and several outside the U.S.

          David I. Levine, a professor of economics at University of California-Berkeley, says the current plan being discussed has the wrong structure.

          ``The structure is designed for the Treasury to be the first line of defense,'' said Levine, who studies organizations and incentives. ``A whole lot of people made money supposedly by putting their capital at risk, and those are supposed to be the first line of defense, that's how capitalism works.''

          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.

          Unprecedented Power

          Erik Brynjolfsson, of the Massachusetts Institute of Technology's Sloan School, said his main objection ``is the breathtaking amount of unchecked discretion it gives to the Secretary of the Treasury. It is unprecedented in a modern democracy.''

          Advocates for a rescue plan this week point to a seizing up of credit markets, reflected in elevated inter-bank lending rates, as reason for action. Some economists are unconvinced.

          ``I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout,'' said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory.

          To contact the reporters on this story: Matthew Benjamin at


          • #6
            Of course he does.
            Cramer sucks and is part of the problem.

            Originally posted by DW View Post
            Jim Cramer loves the he said on his show last night.

            Believe nothing,
            no matter where you read it or who has said it,
            not even if I have said it,
            unless it agrees with your own reason
            and your own common sense.
            Gautama the Buddha (more than 2,000 years ago)

            Nemesis always comes in through the unwatched door.
            David P Goldman


            • #7
              Originally posted by Ralphie the buffalo View Post
              Cramer sucks and is part of the problem.
              There's an intelligent analysis for you.


              • #8
                Originally posted by Mighty Dyckerson View Post
                There's an intelligent analysis for you.


                • #9
                  Originally posted by Mighty Dyckerson View Post
                  There's an intelligent analysis for you.

                  Dyckerson, ladies and gentlemen, there's an intelligent analysis for you.

                  I can't do it right.
                  Shut your whole mouth when you're talking about Mighty Dyckerson.


                  • #10
                    Rugen, ladies and gentlemen! He says he can't do it right!

                    ...That's what SHE said.
                    Will rule the World for a snack


                    • #11
                      Anyone else notice how most of those schools are in the Northeast?

                      Anyway, I wonder if any of these professional bookreaders would come up with a solution. I'm sure any person on that list is smarter than Bush and all his Washington cronies! A 700 Billion dollar decision is not something to be decided within a few days because some idiot president pressures lawmakers into it. I'm glad most of them didn't take the bait.

                      I really don't trust Bush enough to back up anything he says. Those economic stimulus checks obviously didn't do ****. $600 can't do crap for most people. And $700 billion would go into pockets of CEOs who'll be rich whether their companies go bust or not. Bush is using scare tactics to get America into supporting this? And I'm even more pissed because I likely won't see a penny of my social security, yet $700 billion bucks pops out of nowhere to help the greedy ****s who screwed the economy to begin with? Hell no!

                      An amendment to the bill said more would be done to help people get out of foreclosure. That's BS! I know so many people in foreclosure who don't qualify for any help with their loans. The banks just tell them to stay in the house and they don't have to pay because there's a huge backlog. WTF? Anyway, **** Bush and **** the economy.

                      And no, I'm not IN Canada. I put that as my location because half my family lives there and I didn't want to enter my real city. I'm a red-blooded American.