Sep 17, 2008
Question for Brady, Higgs, Hummel, et al. on AIG Bailout
Can any of you comment on the political/economic implications of the AIG bailout? Non-economists are invited to weigh in as well.
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Mark Brady - 9/17/2008
My principal concern is that proposed government responses to the "crisis" -- credit expansion or efforts to prop up real estate prices or whatever -- will make matters worse. In other words, I want prices to clear. I suggest that many asset prices have some way to fall. The faster that prices clear, the sooner that market exchanges will increase and economic activity will expand. In that way, even investment bankers can find employment -- albeit at perhaps much lower compensation levels.
Steven Horwitz - 9/17/2008
My subject line says it all. :) The more "we" keep bailing out those who have used resources poorly, the more poor resources use we're gonna get. There's also the matter of who benefits from such bailouts. I'd like to hear more from my friends on the left decrying the implicit and explicit corporatism involved.