Friday, November 21, 2008

More on the Bailout

I'm originally from Michigan and it hurts to seem my home state going through the problems it faces. At the same time, as an economics teacher and as someone who has watched from afar as policy-makers try to ignore fundamental principles, it isn't surprising.

Consequently, part of me is impressed and part of me is depressed to point you to this post by Jason Welker on his blog. I met Jason face-to-face for the first time at the recent AP Economics Conference here in Richmond, and I enjoyed talking with him. It just confirmed what I knew from his blog - he knows his stuff and communicates it well. This post is worth your time, whether you teach AP, IB, or a basic survey course in economics.

I look forward to your comments.

7 comments:

R2K said...

: )

rdan said...

Ah well Tim...

Have you considered the CDOs that have been used for the major companies, suppliers, parts people...what happens when those need paying off or bought? Very big bucks that will also need bailed out and that go to the banks and hedge funds in the collapse of the domestic auto industry...so the bailout will happen in securitization of the loans and not the workers?

I find the post much too full of soundbites and not enough analysis.

rdan said...

http://www.bloomberg.com/apps/data?pid=avimage&iid=i0YrUuvkygWs

How do you explain to students that the money promised or used is actually $7.7 trillion, not 700 billion here and there, starting a year ago, which is about 76% of our GDP (of 13+ trillion)and that national debt is pegged at 11 trillion but promises made indicate 14 trillion if delivered?

Where does the underlying trade deficit and trade model fit in as the driver of this crisis for the US?

I will have a series on the Baltic Dry Index and letters of credit drying up, as sovereign barter deals increase to side step the issue of pricing in unstable currencies. The key is sovereign deals by governments. Barter networks are springing up online in the US as well.

kbaxa said...

I love how he opens with the CEos taking their private jets to ask for money, because without flat out saying it, he's pointing out one of the problems with these major corporations is all the corruption and inflated high official salaries

rdan said...

How are inflated salaries at all relevant to the auto industry woes...policies yes (what were they/)
and trade policy for the last 30 years (which is and lead to what/).

Great symbolic value, and a problem that needs fixing, but little relevance right now.

See John Thorndike on the history of mostly unsuccessful attempts at capping CEO pay.

rdan said...

Time is at a premium yes, but if we do not also learn ourselves a more thorough understanding, how do you teach it??

You can learn more by getting out of the boxes we put ourselves in.

Tim Schilling said...

rdan,

You might want to resubmit your last comment. I think you're missing a word or two in the second sentence.