...the American people are getting virtually no hard economic analysis about what the bailout would achieve or what the range of options are.
Why aren't Luc Laeven and Fabian Valencia on television right now? They just submitted a comprehensive report to the International Monetary Fund after studying 42 banking crises over the past 37 years. Their conclusion: Bailouts often do not work, they often result in more bad practices, and they distort economies by transferring wealth from taxpayers to bankers and their customers.
Why hasn't economist Dean Baker been invited onto a single television program in the past week ? He is one of the guys who actually predicted the current crisis. He wrote this week: "There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. The worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks. The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money. In other words, the banks have a gun pointed to their heads and are threatening to pull the trigger unless we hand them $700 billion."
Why isn't New York University economist Nouriel Roubini all over the news right now? He says the claim that "spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. This way of recapitalizing financial institutions is a total rip-off that will mostly benefit - at a huge expense for the U.S. taxpayer - the shareholders and even unsecured creditors of the banks. ....The pockets of reckless bankers and investors (will) have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession."
Roubini continues, "Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money. It is pathetic that Congress did not consult any of the many professional economists that have presented alternative plans that were more fair and efficient and less costly ways to resolve this crisis. ... and it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners."
http://www.huffingtonpost.com/josh-silver/how-the-media-sold-their_b_130891.html
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