| September 26, 2008 Economists urge lawmakers to slow down
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(Brad Puffer, NECN) - As bailout talks continue into the weekend in Washington D.C., there are economists who are urging lawmakers to slow down. The Bush Administration has been telling congress that time is of the essence.
"Five pages of the leading economists in America"
Senator Richard Shelby held up a letter Thursday, signed by more than 200 economists - insisting the Paulson plan won't work. One of those economists is Harvard Professor Oliver Hart.
Prof Oliver Hart
"If you throw money at a problem you will probably going to make that particular problem better but you may be worse off because of the costs."
That cautionary note is one reason House Republicans have held up negotiations - pushing forward alternative plans.
"Rather than buying these bad assets one could take equity positions in financial institutions or lend to them"
Many of the nations top economists are in DC right now, whispering in the ears of Congress. Among them: MIT Professor Simon Johnson.
"Everybody is focused on getting it done so they can get home but I don't think that's the answer they have to work on a really comprehensive decisive solution and that's not what is on the table."
But fixing the underlying problem will take time. And Babson College finance Professor Michael Goldstein says time is running out. He says the longer we wait the greater impact to the economy.
Michael Goldstein
"Sometimes in a crisis you can't make the
best plan but you can make a plan and we kind of at that point."
Still at Harvard, Professor Hart is joined by many colleagues who don't buy into the gloom and doom predictions.
"That argument can always be used to scare people and say if you don't do something right now the world is going to end but I think if you look at the economy historically it's actually pretty robust and things don't collapse overnight."
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