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[0:08] ..." for banks about some. Two more money for Motown. Joining us from Harvard University economist Jeffrey Miron who is one of those people who told us in the past that he thinks that less not more"...
[0:29] ..." I think whatever degree of argument one could make for bailing out Wall Street. I did not think it was a good case for that didn't even last case for auto industry. These days as. Made"...
[4:07] ..." as it possibly can be we've seen. Fairly dramatic first decrease in interest rates in the early years of the debt of this country under Alan Greenspan. And kept it very very low level then raised quite dramatically by Ben Bernanke and lower the whole -- again. All of"...
[4:29] ..." we thank you for your perspective mr. Jeffrey. But aren't of the Harvard University we'll talk again thanks professor."...
[0:00]" People are wondering what's happening to all that tax money where's it going are there any strings attached and if there is always billions spent for banks about some. Two more money for Motown. Joining us from Harvard University economist Jeffrey Miron who is one of those people who told us in the past that he thinks that less not more government involvement. Is a path to economic stability so professor of should the Big Three be bailed out by Washington."
[0:27]" I would say absolutely not I think whatever degree of argument one could make for bailing out Wall Street. I did not think it was a good case for that didn't even last case for auto industry. These days as. Made bad decisions they'd been out competed by other companies and the way the markets work well the way the Kaplan who -- twelve by allowing the winners to succeed in letting the losers fail."
[0:49]" But as governor of Michigan said one intent American jobs is linked directly or entered directly to the auto industry."
[0:55]" Well one can makes similar claims for lots and lots of industries especially if you throw an -- that phrase in directly. And of course the auto industry is alive and well in the US but a lot of it is Toyota usaid Nissan USA those companies are all -- American workers. Good jobs and reasonable wages but it's only a subset of the companies basically the -- Three that are having these extreme difficulties. And so they need to be allowed to go into bankruptcy and possibly -- healthier as a result of whatever restructuring occurs. But nevertheless there shareholders and other stakeholders have to accept a."
[1:26]" Or so what role if any should the government have."
[1:30]" Well the government fact does play a role in bankruptcy in allow it. Promotes a orderly liquidation in ranges for -- settlement between creditors and and existing company. That is the government process but it's much more limited government process it's one which doesn't put taxpayer money -- Because of the people who need the -- on those particular companies to accept the loss. But actually allowed the company continue operating while in chapter eleven and in many cases as the number of airlines. Emerge from chapter eleven -- to your -- Healthy and doing some of the things it does all along the way."
[2:05]" Some observers -- even people who support at least in theory something that you you don't clearly. The government getting involved in in helping get the economy back on track by participating directly in. The ownership of for example banks. Are worried about the opaque nature of this I mean. With hundreds of billions of dollars allocated to. Financial firms no accountability and no visibility about what the money's being spent for at least one big bank apparently is. Used its share to buy a smaller bank others are saying at all what they don't want the money is is that what congress intended."
[2:40]" I don't think that's what it intended but it's certainly what they should have recognizes going to happen. And what makes it even more problematic is. If they try to have control engage in oversight and supervision. Much of that would end up being counterproductive for example take issue that the banks don't seem to be lending out a lot of the capital injection that they received. Now in one view that the bad thing the whole purpose of this capital injections was to expert lending. On the other hand we should be very cautious about saying banks are lending too little because of course we got to the current -- precisely because we extended week too much credit. -- don't either he'd be good profit opportunities for the landing right now we need to respect that at least to some degree. So basically the government caught between a rock and a hard place it's very very hard for to make good decisions in need to elect. Decentralize decision making by different banks in the and the markets. I'll work things out over time."
[3:28]" So for a -- for capitalist who like you professor. What should the government's fiscal policy being."
[3:35]" We should reform those things that we should reform Independent of the financial crisis. If the long run level of taxes should be lower than the tax cut is not necessarily a bad thing if more infrastructure spending is a good thing. Independent a crisis that our roads are deteriorating for example and that may be will be sensible thing. But the the first test should be duties change in policy makes sense even if there were no crisis. Almost all the things designed simply to -- the crisis they're going to end up being counterproductive."
[4:03]" And monetary policy."
[4:05]" Archer also I think we do well to be as stable as it possibly can be we've seen. Fairly dramatic first decrease in interest rates in the early years of the debt of this country under Alan Greenspan. And kept it very very low level then raised quite dramatically by Ben Bernanke and lower the whole -- again. All of that is not necessarily good for the markets either because they have to figure out where things are going and it just all of us change."
[4:27]" Complicated times ahead and we thank you for your perspective mr. Jeffrey. But aren't of the Harvard University we'll talk again thanks professor."
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