Who's afraid of the big bad bailout?

The bailout plan didn't make it through Congress. I am unsure how I feel about this, disappointed, nervous, or excited that we avoided another rush decision -- anyone see John Stewart's comparison of the Bush's support for the Bailout package to Bush's argument to invade Iraq? Scary....

Nonetheless, the reactions are dramatic, and the consequences unknown. Below is a link to an article I was forwarded by someone who works for Bank of America and forwarded the article by their higher ups. The article, a letter from John Mauldin to his Congressman in Texas, is attempting to persuade a congressman who likely did not vote for the bill. It gives the best economic support I have seen thus far for the bill and might have persuaded me.

http://new.goldmau.com/article.php?id=759

Why We Need to Act Now
By Anne O. Krueger

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403009.html

Ok, so I was waiting for someone else to post something on the current economic situation, but I can't wait any longer. The attached article is clearly in support of the bailout, Anne gives lots of reasons, doesn't spend too much time on support, but that's not the purpose of the article. Essentially, she is putting it out there that she supports the bailout and thinks it should happen quickly. Her support rides in her credentials. But honestly, concrete support is hard. All it appears Paulson and the others can do is point to the lack of credit, and try and show that its going to get worse, which in turn it is argued the consequences are worse than the costs of $700 Billion.

Whether I can fully support it or not, it appears it is going to happen. This morning WAMU was even passed into government hands, which didn't fair well for the stock price which I had just purchased... I digress. What do you guys think the economy will look like in a couple of months? I already know several people who have lost their job and more in fear.. anyone have any anecdotes, I know a couple of you are employed in financial areas?

Comments please!

For Profit Charities

I was looking for a way to volunteer here in Clarksville and I came across this program named "In2Books." The premise is basically electronic penpals for youth. When U investigated the program though I discovered that it is one of the many new for profit charities, so I refrained from immediately signing up. I am concerened about donating time to profit someone else. But, I guess it depends on the point of view that you adopt for the program. You could see it the way I thought of it as giving time to earn other people money, or you could see it as just supporting a child. I think ultimately it is probably a worth while endeavor because the profit margin will attract intelligent people to oversee the program, but I don't know if there is enough oversight of the company to keep it from abusing its young audience.

Recruiting Campaign: Greenspan Wants you!

I have put forth effort to invite people on the blog that come from diverse backgrounds, with economics being a common theme. I even encourage debates by trying to stir up arguments (as some of you maybe aware by my personal emails to you pointing out the potential disagreement). However, I would like to see more activity and less spectatorship. As such, I am hoping that you guys can help me expand participation by inviting your friends to join.

I only ask that they have some interest/understanding of econ and can take being called out on a post (as I was so recently was).

If you do not know how to invite, send me (argarbarino@gmail.com) their email and I will add them.

Cheers!

Angel

The Economic Case For Tax Havens

This video link was distributed to my work via a mass email- rather surprising given that it comes from the CATO institute, a rather openly economically conservative group. However, if it weren't for Tax Havens I may not have a job, so can't complain.

http://www.youtube.com/watch?v=yi0lkJBTi58

Beef with the Video: Tax Havens help Developing Countries

Just because capital flows towards low tax areas, which could help developing countries attract needed investment and economic activity, the presenter acts as if this is a direct link. I completely disagree with how causually this point is made. I remain unconvinced that capital/economic activity spurred by tax havens and the like have dramatic or effective enough spillovers to actually benefit the country's people. I am not saying this can and does not happen, but it is not direct. Here is where I become a softy for proactive governments, who I think, in order to reap the full benefit of increased foreign investment, need to be proactive about funnelling that activity into local infrastructure, public programs and making sure their is knowledge spillover into the local workforce and businesses.

Please feel free to disagree.

White House Memo
Rescue of Mortgage Giants Displays Paulson’s Clout

By SHERYL GAY STOLBERG
Published: September 9, 2008

The Treasury secretary has led President Bush where he would not usually go: into government intervention in the markets

http://www.nytimes.com/2008/09/09/business/09bush.html?ex=1378699200&en=e8201643221576a3&ei=5124&partner=permalink&exprod=permalink

Has anyone read the former Treasury Secretary O'Neil's book? It was great... but aside, anyone have any thoughts on the F&F situation- should the government have stepped in? How will this affect interest rates in the future?

My thoughts are unsure as I don't claim to know too much about the subject. I would guess though, from basic economic theory that the positive reaction by the financial markets comes from false security. Not that the government won't financial back up F&F, but instead that true market risk has been once again push aside, disallowing an unbiased market interest rate to appear. Not letting these companies bear the risks they took on, will slowdown the markets ability to readjust itself, skewing the going interest rate allowing people to get interest rates not truly reflective of the market and its risk.

Comments welcome.