Why has there been no clear explanation of the problem that needs to be solved with $700 billion dollars? Why the rush to "bail out" Wall Street investment bankers who have lost their shirt?
We are finally getting more voices on the proposed bailout by Paulson and Bernanke, but still not enough clarity on what the problem actually is. Until we know what the problem is, we can't fix it.
I was glad to see the article in the Washington Post today by Nikki Kahn which gives alternative views of economists who are not so tightly connected to Wall Street and Washington, and who are therefore less likely to personally benefit from any plan that is cooked up. I think this level of independence--which is the great thing about academia--is very helpful. We've heard from the Wall Streeters, now let's hear from some economists who know what they are talking about but who are not wrapped up in it.
Kahn began by saying that a group of academic economists had signed a petition opposing the bailout plan. This is a good start. We are told there is an immediate crisis that needs to be solved now. So it is good to hear some scholars whose livelihood is not dependent on Wall Street cast some doubt on the need for speed.
Many economists fault the Bush administration and Congress for moving so quickly on the bailout package without allowing more time for debate. That sentiment was reflected in the petition organized by John Cochrane of the University of Chicago. (None of the economists quoted here were signatories.)
"I totally disagree that this needs to be done this week. It's more important to get it right," Blinder said
(By Nikki Kahn -- The Washington Post)
However, now I would like to hear from several of these people what they consider to be the fundamental problem that needs to be solved. Then offer a solution and explain in clear concise language how the proposed solution will actually help.
Has any one out there in dkos land heard a clear explanation of the problem that $700 billion is supposed to solve?
Please share it below.
Thanks.