The University of Texas at Austin
  • McCombs faculty discuss U.S. financial crisis

    By Rob Meyer
    Rob Meyer
    Published: Oct. 6, 2008

    The Great Bailout Debate

    The most spirited part of the discussion came in a debate on the merits of the government’s $700 billion bailout plan. The forum took place just after the House voted to accept the bill.

    “I would argue that this may not be a good bill, but we need it now,” said Starks. “If we wait, a lot of people are going to suffer and lose their jobs.”

    Titman disagreed, arguing it would it would be more prudent to take additional time to create a better plan. “It reminds me of a scene from ‘Animal House’ where the fraternity president says something in the order of ‘In the time of a crisis, it takes someone to make an enormously stupid gesture, and I think we’re the ones to do it.’”

    Brandl said some action must be taken, but cautioned against viewing any plan as the only answer. “There’s so much uncertainty in the markets, that we need to do something. But we have to be very careful in thinking this bailout will solve all our problems.”

    Magee injected a dose of pessimism into the discussion, saying politics and the economy just aren’t meant to work together. “The [James] Madison paradox says there is no way to stop corruption in a democracy, because special interest money will always infiltrate,” Magee said. “When politics and economics mix, the ‘regulatees’ end up controlling the regulators.”

    He added, “You can take a mortgage and break it into 20 pieces, and everyone makes money. But this only works when the sun shines. When you have a hard rain or Hurricane Ike, it doesn’t work. The banks brought this on themselves.”

    To watch a video of the forum or leave comments about the discussion visit McCombs Today, a new site created by the McCombs School of Business to provide the latest news from the school as it happens.

    • Quote 2
      Homes For Sale in Deltona FL said on Feb. 11, 2011 at 8:50 a.m.
      It's funny to look back at 2008 and realize how good we had it. The real estate market is still trending down in Florida in certain markets. I just want 2003 back.
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