Greg Mankiw On Freddie And Fannie


	Greg Mankiw On Freddie And Fannie

Hana Alberts

9-9-2008 5:16 PM

861 views

Hana Alberts says:

The Harvard economist weighs in. He called for reform in 2003, but he's not bragging. He's just expressing regret that bailouts aren't the answer to the financial crisis.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/66b8f6cc-12b8-444d-a0f9-65a0f649e626/C9A4F620-E9AB-4F14-A209-7C656A210E3A/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://gregmankiw.blogspot.com/" href="http://gregmankiw.blogspot.com/" style="font-size: 11px;">gregmankiw.blogspot.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://gregmankiw.blogspot.com/"><DD class="profile-data"><STRONG>Name:</STRONG>  Greg Mankiw </DD></blockquote><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content7.clipmarks.com/images/clip-icon.gif" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://gregmankiw.blogspot.com/2008/09/thoughts-on-gse-takeover.html" href="http://gregmankiw.blogspot.com/2008/09/thoughts-on-gse-takeover.html" style="font-size: 11px;">gregmankiw.blogspot.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://gregmankiw.blogspot.com/2008/09/thoughts-on-gse-takeover.html"><DIV>2. I am saddened whenever any private profit-seeking enterprise gets bailed out, whether it is Chrysler, Long-term Capital Management, Bear Stearns, or the GSEs. Such bailouts sow the seeds of the next financial crisis by fostering expectations of future bailouts and encouraging excessive risk-taking. (And before anyone emails me that the GSE equity holders are not exactly getting a good deal here, let me point out that the debt holders are. In a capitalist system, you want those extending both debt and equity finance to bear the consequences of the risks they undertake. If the taxpayer is chipping in, someone is being insulated from risk.)</DIV></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://gregmankiw.blogspot.com/2008/09/thoughts-on-gse-takeover.html">the future of these institutions and a large segment of the financial system is still to be determined. The worrisome part is that this future will be determined by a political system that both <A href="http://gregmankiw.blogspot.com/2008/07/thanks-lbj.html">created the GSEs</A> and <A href="http://gregmankiw.blogspot.com/2008/08/seeds-of-mess.html">failed to provide sufficient oversight</A>, even when <A href="http://gregmankiw.blogspot.com/2008/07/on-fannie-and-freddie.html">many economists suggested reform was needed</A>.</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/C9A4F620-E9AB-4F14-A209-7C656A210E3A/blog/" title="blog or email this clip"><img src="http://content8.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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