Economists Do It With Models

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Too Big To Fail, The Musical…

August 17th, 2009 · 2 Comments
Just For Fun

Hi all…sorry I am too tired to write a full post today- my students have a final exam tomorrow and are asking a lot of questions! I figured I would give you a little something to entertain you, thanks to econjeff.

Since I can’t help myself, allow me to give a minor rant as a preface. No, it’s not fair that banks got bailed out. They are like children who are not forced to live with the consequences of their actions. Yes, it creates bad incentives for too much risk-taking if bank managers think that they are going to get bailed out if they make decisions that end poorly. That said, bailing out the banks is better for just about everyone, and this is something that is hard to swallow since it is so egregious in principle. But do you want small businesses to not be able to get capital to grow their companies? Do you want to not be able to get a car loan or mortgage? Do you want companies to go out of business because they can’t get short-term loans to cover their temporary cash flow issues? I didn’t think so. So can we please put our energy into trying to figure out how to prevent this sort of thing from happening again rather than making (admittedly cute) videos about how we are all annoyed?* Thanks.

* My best friend likes to quote one of his professors, the late Jack Falla, who said “The only shot you can stop is the next one.” It’s funny how sports metaphors are so universally applicable…

Tags: Just For Fun

2 responses so far ↓

  • 1 David Murgo // Aug 17, 2009 at 9:32 pm

    Jodi,

    This song was actually written by a friend and classmate of mine who grew up in my hometown of Burlington, MA…The world grows ever smaller…

  • 2 Professor Coldheart // Aug 20, 2009 at 7:01 pm

    But do you want small businesses to not be able to get capital to grow their companies? Do you want to not be able to get a car loan or mortgage? Do you want companies to go out of business because they can’t get short-term loans to cover their temporary cash flow issues?

    Actually, yes. I want the marginal businesses, who would only be profitable in a loose credit market, not to get loans. I want the companies without sustainable business models to go out of business. I want tighter credit than the U.S. has had over the last decade. I want GM, Circuit City, Wachovia and every other business with a bad balance sheet to fail.

    I don’t think that’s an unreasonable wish.

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