October 17th, 2008
After the Treasury Department’s proposal for $700 billion to buy up the distressed assets in the financial system was approved by Congress, the markets continued their historic free-fall. Find out why this solution was the only one considered in Washington, as we explore the root causes of the crisis as well as innovative new solutions. First we’ll talk with a former Assistant Secretary of the Treasury to learn how we got into this national financial donnybrook. Then, hear from an economist who has an alternative solution that offers to cost taxpayers far less and reduce the risk of moral hazard.
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Paul Craig Roberts, Former Assistant Sec. of the Treasury | Download MP3
During President Reagan’s first term, Paul Craig Roberts was Assistant Secretary of the Treasury, earning him the title of the “Father of Reaganomics”. He is a former Associate Editor and a columnist for the Wall Street Journal and Business Week. He’s the author of Supply-Side Revolution : An Insider’s Account of Policymaking in Washington; Alienation and the Soviet Economy and Meltdown: Inside the Soviet Economy, and is the co-author of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice. He’s now a syndicated newspaper columnist for Creator’s Syndicate (read his syndicated columns here). In academia, he has been the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, as well as being a Senior Research Fellow at the Hoover Institution.
Luigi Zingales, Professor at the University of Chicago’s Graduate School of Business
As a professor of Entrepreneurship and Finance at the University of Chicago’s Graduate School of Business, Luigi Zingales studies the theory of the firm, the relation between organization and financing, and the going-public decision. He was born in Italy, where high inflation and unemployment inspired his interest in becoming an economist. He doesn’t believe that economists should stay up in an ivory toward, above the fray of practical policy decision. This has inspired his work to improve the $700 billion bailout package. After the initial bailout proposal, he was a signatory of a petition by hundreds of economists to “express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis.” He elaborates on his suggestions for a new rescue strategy in the paper, Plan B and also in an online piece for Foreign Policy magazine, entitled “Stop the Bleeding Hank.”
His book, Saving Capitalism from Capitalists, coauthored with his college Raghuram G. Rajan, outlines the regulatory framework necessary to protect the free market from powerful private interests and was acclaimed by the National Review Online as “one of the most powerful defenses of the free market ever written.” Among the awards he has received for his research are the the 2003 Bernacer Prize for the best European young financial economist, the 2002 Nasdaq award for best paper in capital formation, and a National Science Foundation Grant in economics. His work has been published in the Journal of Financial Economics, the Journal of Finance and the American Economic Review. Zingales is also the director of the American Finance Associations and an contributor to Il Sole 24 Ore, the Italian counterpart of the Financial Times and serves on the Committee on Capital Markets Regulation, an independent and nonpartisan research organization focused on improving the regulation of U.S. capital markets. He’s been a member of the Chicago GSB faculty since 1992, after recieving a PhD in economics from the Massachusetts Institute of Technology.
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