This cartoon in Greg Mankiw's blog*, caused me to find out more about the recent US bailout legislation (called the Emergency Economic Stabilization Act of 2008) and it led to a simple poll question.
First a little background from Wikipedia (my abridged version):
What is it?
The Emergency Economic Stabilization Act of 2008, commonly referred to as a bailout of the U.S. financial system, is a law authorizing the United States Secretary of the Treasury to spend up to US$700 billion to purchase distressed assets... and make capital injections into banks. The bailed-out banks are mostly U.S. or foreign banks...President Bush signed the bill into law within hours of its enactment, creating a $700 billion Troubled Assets Relief Program to purchase failing bank assets.
What do supporters of it say?
Supporters of the bailout plan argued that the market intervention called for by the plan was vital to prevent further erosion of confidence in the U.S. credit markets and that failure to act could lead to an economic depression.
What do opponents of it say?
Opponents objected to the massive cost of the sudden plan, pointing to polls that showed little support among the public for bailing out Wall Street investment banks, and claimed that better alternatives were not considered...Opponents of the rescue plan also argue that since the problems of the American economy were created by excess credit and debt, a massive infusion of credit and debt into the economy only worsens the problems with the economy: the bailout infuses credit and debt into the economy but, because the government is creating the money out of thin air, immediately creates more credit and debt.
Now that you have familiarized yourself (to the extent of reading the summary above) with this issue, how would you have voted on the Emergency Economic Stabilization Act of 2008 if you were a member of the congress that voted on it?
Are worried that another great depression is coming?
So the other day I'm having lunch with some local business types and they all agree that the media is to blame for creating a financial crisis, when things aren't as bad as they're making them out to be. Their take: the media is making matters much worse by hyping up the financial crisis. Do you agree or disagree with this sentiment?
*Said blog can be found at http://gregmankiw.blogspot.com/