Paulson Plan – How It Will Mess up Our Economy For Good

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  • #588359

    mariner
    Member

    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:

    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)

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    #622774

    squeak
    Participant

    If university professors don’t like it, then it’s probably a good idea.

    But seriously, this country is going down, big time. Everyone joined the game when it seemed good, and now only the biggest can survive. That will lead to monopolies, which is not good. The alternative is to remove banking from the free market. The latter is a better idea because that is reversible. Once monopolies are created they are nearly impossible to stop.

    #622775

    mariner
    Member

    squek: you clearly no ziltch about the economy. besides, economists tend to be the last bastion inside colleges that are truly bi-partisan. taking banks out of the free market makes as much sense as saying turn banks into pizzerias. banks by their nature are either free in their market or socialized, as in venezuela. you take them and make them socialized, the country becomes a socialist country immediately ,as the government now controls all banks, and decides who gets money and who doesnt. that is by far the stupidest thing i have heard in this site ever. also, the biggest are falling, not the middle or small sized banks. only teh big ones, so again you are wrong. this will not cause monopolies, but rather many small to medium size banks, as no one will trust large mutli-faceted banks anymore.

    #622776

    squeak
    Participant

    Mariner, be careful when you accuse someone of knowing nothing. Especially when you don’t stop there but continue to give your own little tirade – you opened yourself up for everyone to see your own ignorance.

    1) Economists in colleges are bi-partisan? I took a few economics courses myself (in a real college in case you were wondering) and my first professor announced that he is a communist. He is also a respected economist who holds a PhD and publishes frequently and who is allowed to sit in on open market operations. My other professors were not as extreme in their political views, but none of them were even centrists, let alone right leaning (or bi-partisan – itself a ridiculous assertion)

    2) Taking banks out of the free market is indeed idiotic, but that is what this bill does. So you confused my statement of the facts for a statement of opinion of what should be done. I also don’t know what you mean by saying that a socialized bank means that the governement decides who gets money. Do you mean who gets to borrow? Or who gets to access my savings?

    3) “The stupidest thing I have heard on this site ever” is a very far-out assertion, and I doubt that you meant that even in your moment of blind rage. Not to mention that I never even said what you were thinking.

    4) The biggest are falling? Are you sure? Ever heard of JP Morgan? Citigroup? Bank of America? Those are the banks that are left standing, and they will absorb all of the smaller banks as they fail or come close to failing. On the investment banking side, there is Goldman Sachs. These institutions are coming dangerously close to becoming government entities or extensions of the government themselves. Especially Goldman. So which “big one” failed? Washington Mutual? The biggest thrift is by no means a big bank. Wachovia? Give me some names, please.

    5) Do you work for a little bank? Your last statement seemed to indicate such. Sounds like a PR line for a mid size bank. But unfortunately, only the real mom and pop banks that were too small to get involved in CDOs and CDSs and other SIVs are going to be safe. And only the biggest ones (like the 3 I mentioned) are going to be big enough (or made big enough by our tax money) to survive.

    In the future, please just ask for information. I am always happy to share my knowledge. Just don’t attack. Especially not without cause.

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