ManagementParadise.com : Worlds Leading Management Portal. MBA | Classroom, Boardroom and Beyond


Go Back   ManagementParadise.com Forums - Your MBA Online Degree Program and Management Students Forum for MBA,BMS, MMS, BMM, BBA, students & aspirants. > Management Students Voices ( MBA,BMS,MMS,BMM,BBA) > International MBA

Should the Federal Government Provide a Housing Bailout?

Should the Federal Government Provide a Housing Bailout?

Discuss Should the Federal Government Provide a Housing Bailout? within the International MBA forums, part of the Management Students Voices ( MBA,BMS,MMS,BMM,BBA) category; One of the reasons that Modern Political Economy is such an enjoyable course to teach is that every term a ...

Reply

 

LinkBack Thread Tools Display Modes
Advertisements
Should the Federal Government Provide a Housing Bailout?
Old
 (1 (permalink))
Maya Raichura
MP-ROBOT has a spectacular aura aboutMP-ROBOT has a spectacular aura about
 
MP_ROBOT
Management Paradise Guru
Status: Offline
Posts: 26,189
Join Date: Nov 2004
Age: 51
Should the Federal Government Provide a Housing Bailout? - August 19th, 2012

One of the reasons that Modern Political Economy is such an enjoyable course to teach is that every term a real-life issue emerges that underscores the course’s contemporary relevance. What to do about the credit crisis that cascaded from the home mortgage debacle is the latest case in point.

Reports are circulating that Wall Street firms, led by Bank of America, are pushing a plan that would have the federal government buy up troubled mortgages at a discount, forgive debt above the current market value of the homes and then use federal loan guarantees to refinance borrowing at lower rates. In other words, bail out everybody who forgot about the concept of risk — from homeowners all the way up the food chain to financial institutions and investors.

Some people have viewed this gambit as somewhat ironic because Wall Street has successfully preached a laissez-faire policy on the part of the government that would encourage all sorts of financial innovations, but of course it isn’t ironic at all. As Adam Smith, the father of modern political economy, recognized more than two centuries ago, when the vicissitudes of the free market strike home, everybody from the poorest of the poor to the richest of the rich looks to the state for protection.

The case against state intervention is that if you bail out those who didn’t pay enough attention to risk, the same dynamic will be repeated in the future. That’s the moral hazard argument of the free-market purists, who argue that in the long run the market will correct itself and go forward with everybody a bit wiser about risk.

The case for state intervention was put succinctly by the always pragmatic Lord Keynes: “In the long run, we’re all dead,” he said to those who argued that market forces would eventually cure the Great Depression. He actually agreed with that perspective, but he favored government pump priming because he worried about the social and political instability that might result from a prolonged economic crisis.

So I asked my Modern Political Economy students to share their views on whether the federal government should intervene in the current crisis or simply let the market work its painful way out. A couple of the students will post their answers on the blog tomorrow. I’d be interested in what others think as well.

Photo credit: Sean O’Flaherty



More...
Advertisements
Friends: (0)
Reply With Quote
Related to Should the Federal Government Provide a Housing Bailout?
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
Solutions Manuals, Instructor Manuals, Test Banks collection 2012 Soso M General Talks 18 2 Weeks Ago 08:43 PM
Should the Government Provide a Bailout? Students Have Their Say Maya Raichura International MBA 0 August 19th, 2012 02:50 PM
Should the Government Provide a Bailout? Students Have Their Say Maya Raichura International MBA 0 July 20th, 2012 05:30 PM
Should the Federal Government Provide a Housing Bailout? Maya Raichura International MBA 0 July 20th, 2012 05:30 PM
!!!!!!!!!!News!!!!!!!!!!!!!! Vijith Pujari Stock Markets Tips & Gyan !! 17 October 19th, 2007 12:28 PM
 

Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On


Login
Forgot Password?  New User?
  

» Ads





» Recent Threads

Solution manual on... ( 1 2 3... Last Page)
Last post by Muhammad Ali
2 Hours Ago 10:18 PM
47 Replies
Solution Manual on...
Last post by Dudu Mqi
2 Hours Ago 10:18 PM
2 Replies
Motivational Video -...
Last post by Bhautik Kawa
2 Hours Ago 09:57 PM
0 Replies
Notes on Satyam Fraud ( 1 2 3)
Last post by Ali Syed
4 Hours Ago 08:42 PM
21 Replies
Best Black Friday Deals...
Last post by Shreya Das
4 Hours Ago 08:10 PM
0 Replies
Scope of BBA in Hospital...
Last post by Bhushan Singh
6 Hours Ago 06:19 PM
0 Replies
Free mobile recharge... ( 1 2 3... Last Page)
Last post by Naveen Kumar
9 Hours Ago 03:08 PM
40 Replies
Discussions going on...
Last post by Murgha Joshi
10 Hours Ago 01:51 PM
0 Replies
6 Reasons Why People...
Last post by Murgha Joshi
11 Hours Ago 01:39 PM
0 Replies
People are Crazy on...
Last post by Murgha Joshi
11 Hours Ago 01:30 PM
0 Replies
Everyone is talking...
Last post by Murgha Joshi
11 Hours Ago 01:13 PM
0 Replies
Did you Follow #vicvotes...
Last post by Murgha Joshi
11 Hours Ago 01:04 PM
0 Replies
7 Sad Discussions about...
Last post by Murgha Joshi
11 Hours Ago 12:53 PM
0 Replies
#bnestorm is Trending on...
Last post by Murgha Joshi
12 Hours Ago 12:35 PM
0 Replies
Tributes To Phillip...
Last post by Murgha Joshi
12 Hours Ago 12:21 PM
0 Replies

» Projects Helpline

No Threads to Display.

» THE BIG FIGHT

ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.


Management Paradise
About Us
Press
Jobs
Contact Us
Kartik Raichura
Legal
Terms & Conditions
Privacy Policy
Disclaimer
Copyrights
Help
Zeitgeist
Support
FAQs
Tour
Feedback
Partners
Follow
Copyright © 2004 - 2013 Management Paradise. Site Developed by Available.co.in