What is my opinion about all this? I am of two minds about the complex situation we find ourselves in.
On the one hand, I share many of the concerns of the letter signers and other critics of the Treasury plan.
On the other hand, I know Ben Bernanke well. Ben is at least as smart as any of the economists who signed that letter or are complaining on blogs or editorial pages about the proposed policy. Moreover, Ben is far better informed than the critics. The Fed staff includes some of the best policy economists around. In his capacity as Fed chair, Ben understands the situation, as well as the pros, cons, and feasibility of the alternative policy options, better than any professor sitting alone in his office possibly could.
If I were a member of Congress, I would sit down with Ben, privately, to get his candid view. If he thinks this is the right thing to do, I would put my qualms aside and follow his advice.
Friday, September 26, 2008
Harvard Economist Greg Mankiw Endorses the Bailout
Harvard economist Greg Mankiw reluctantly endorses the bailout:
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We agree that all involved in creating this crisis exhibited bad behavior and don't deserve to be rewarded. What the U.S. people need is for Ben Bernanke to meet with other great economists who are not part of the government. If this group were able to explain how our economy will be impacted by either following through or denying the bailout - as a team of economists - people would be able to vote with knowledge versus voting with emotion.
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