Great Read re: bailout

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgages.htm What angers me the most in all of this is the media/Wall Street folks saying that the house was irresponsible for listening to its constituents rather than voting for the bailout because the constituents are too stupid to know what’s good for them. As proud as I was of our democracy for voting this down despite attempts to pressure them into it, I am that disgusted now that they seem to be passing a new bill that doesn’t solve any of the problems of the original bill but adds “Exemption from excise tax for certain wooden arrows designed for use by children”.

I like my plans better, but his are faster.

Anyone else tired of hearing the word “bailout”? No offense to this post and sorry to thread-jack. When people say this word where the heck did it come from and what do they really mean? There is even a wikipedia article about it. The only thing I can think of is like bailing out a ship when it is sinking. Or getting out of prison on bail. What does that have to do with banks? All I know is it is starting to annoy the bejeesus out of me :slight_smile:

gamblingeconomist Wrote: ------------------------------------------------------- > http://faculty.chicagogsb.edu/john.cochrane/resear > ch/Papers/mortgages.htm > > What angers me the most in all of this is the > media/Wall Street folks saying that the house was > irresponsible for listening to its constituents > rather than voting for the bailout because the > constituents are too stupid to know what’s good > for them. > > As proud as I was of our democracy for voting this > down despite attempts to pressure them into it, I > am that disgusted now that they seem to be passing > a new bill that doesn’t solve any of the problems > of the original bill but adds “Exemption from > excise tax for certain wooden arrows designed for > use by children”. It amazes me that people can’t understand the simple logic embedded in this passage: “There is a lot of talk about “illiquid markets,” “price discovery,” and the “hold to maturity price;” the hope that by making rather small purchases, the Treasury will be able to raise market prices a lot. This is a vain hope – at least it is completely untested in any historical experience. Never in all of financial history has anyone been able to make a small amount of purchases, establish a “liquid market” and substantially raise the overall market price.”

I think that approach works if there aren’t very many people who want to sell something.

this guy was one of my favorite professors at Chicago. thanks for posting.