Economists against the 700 billion dollar bailout plan.

I don’t believe it is true that the all of the doomsday things they are saying will come true if we don’t inject 700 billion dollars into the system.  Here is what numerous academic economists say about the plan as it currently stands:

26/09/09 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)

 

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12 Responses to “Economists against the 700 billion dollar bailout plan.”


  1. 1 Marie Northrup September 27, 2008 at 12:39 am

    Whatever happened to having to face the consequences of your actions. It use to be that you if you picked up the stick, you got the other end as well. Now society seems to think that you don’t have face the consequences of the poor or risky decisions you made.

    Good Article!

    Marie Northrup

  2. 2 Rudy September 27, 2008 at 8:55 pm

    This is ridiculous!
    I am noticing all the news channels pumping the public with scare tactics just to convince the American people that this bail out is necessary.
    What a load of garbage!
    They keep blaming the people of this country for these problems..nevermind it was George Bush that put us in a war that costs BILLIONS..nevermind that it was Bush that blocked all proposals for alternative fuel research which allowed them to raise prices of oil to such levels that no one could afford to pay their bills AND BUY GAS FOR THEIR CARS SO THEY COULD GO TO WORK!..nevermind that it was Bush that got on T.V. and told the American people everything was fine..nevermind that Pelosi just mentioned openly that this money would NOT GO TO HELP AMERICANS THAT LOST THEIR HOMES..nevermind that
    Washington Mutual (just one of many) PAID THEIR NEW CEO A 20 MILLION DOLLAR PACKAGE AND THEN TURNED AROUND TO ASK THE GOVERNMENT FOR A BAIL OUT..nevermind that this bail out legislation would go to help ALIENS to purchase foreclosed homes of AMERICANS..nevermind that the President is now trying to STEAL PUBLIC TAXPAYER MONIES TO PAY FOR PRIVATE INDUSTRIES THAT HAVE LIED AND CHEATED FOR YEARS AGAINST THE PUBLIC OF THIS COUNTRY.
    Yeah..
    nevermind all that..
    just give King George what he wants or else we will all have to pay.
    WELL WE HAVE AND CONTINUE TO PAY!!
    It’s all OUR FAULT THIS MESS RIGHT?
    Nothing at all to do with the government elected officials that have proven time and time again to be the real enemy to the American people!
    And now..under closed and secretive doors..they try to hatch another plan to harm each and every one of us!
    I say hanging is too good for them!

  3. 3 theradicalmormon September 28, 2008 at 12:05 am

    Scare tactics is the right phrase for what is being thrown at us right now. Whenever our government needs to shove something down our throats, they need to make sure we feel the alternative could be so devastating that we will allow the most drastic of measures to be taken… measures we would never allow had we the opportunity to think things through cool-headedly.

    I wish we would let this giants fail. I am just one person, but anyone who votes for this bailout package will never get my vote.

  4. 4 Andrew Devoss September 29, 2008 at 4:25 pm

    Our four fathers would be ashamed of our government today. When did the “for the people by the people” become “for the business interest of the rich and political by the crushing of the people”? I believe that if I lose money in the stock market no one bails me out, but if a greedy corporation does I have to pay for it? I believe this shows once again that the tide of political concern has turned from the eyes of it’s people and focused on greed.

  5. 5 Antonio Santa Cruz September 29, 2008 at 9:02 pm

    NO BAILOUT!!!!

  6. 6 khubab ahmed September 29, 2008 at 10:26 pm

    I completely agree with the drawbacks mentioned above. especially the one which they said that this plan , if implimented will going to have long term adverse affects. Secondly i also that ijecting such a huge amountof money will cause the prces to go up too

  7. 7 theradicalmormon September 30, 2008 at 1:33 am

    Well, at least we have a temporary reprieve now with the failure to pass the bill in the House. My favorite line from last week was, “Just put 700 billion in the bag and nobody gets hurt.”

  8. 8 PacificGatePost October 29, 2008 at 4:18 am

    Radical Mormon,

    They didn’t listen. They panicked and rushed into a brick wall.

    More abuse of the taxpayer is coming.

    http://pacificgatepost.blogspot.com/2008/10/what-they-didnt-tell-us-about-bailout.html

    Congress didn’t do its job, … again.

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