Bailing Out Finance: How Will It End?
Safra professor of economics Jeremy C. Stein and University of Chicago economist Anil Kashyap outline the options, as they see them, for the federal government's promised $700-billion bailout for financial firms...
Writing in today's New York Times, Safra professor of economics Jeremy C. Stein and University of Chicago economist Anil Kashyap outline the options, as they see them, for the federal government's promised $700-billion bailout for financial firms.
Above all, the op-ed by Stein and Kashyap underscores how little is known about what form the bailout will take. Will the government simply buy distressed assets at their current value and hold them until the crisis passes and their value rises again? Will it overpay for these assets to subsidize failing firms, and thus provide them with the capital they need to stay afloat? Will it act as a "bankruptcy judge" for these firms, negotiating firms' debt down in exchange for government assistance? Will it restructure mortgages to help troubled homeowners (a more aggressive intervention)?
"For now," the authors write, "all we can do is make educated guesses."
Read the full op-ed here.
You might also like
Genetic analysis reveals a culture enriched from both sides of the Danube.
Harvard researchers illuminate a longstanding epidemiological connection.
Harvard’s Faculty of Arts and Sciences broaches two tough topics.
Sledding, Nordic skiing, and art at Fruitlands Museum, in Harvard, Massachusetts
The deal marks the end of nearly a year of strained negotiations between the University and its largest labor union.
When academics embraced scientific racism, immigration restrictions, and the suppression of “the unfit”
More to explore
Expect massive job losses in industries associated with fossil fuels. The time to get ready is now.
A third-generation French baker on legacy loaves and the "magic" of baking
Generative AI can enhance teaching and learning but augurs a shift to oral forms of student assessment.