Economist Shiller says bailout is just the beginning
Yale University economist and bubble predictor Robert Shiller isn't sure whether the proposed $700 billion financial-markets bailout will save the economy, but he's positive of one thing: Congress needs to move quickly.
By Elizabeth Rhodes
Seattle Times business reporter
Yale University economist and bubble predictor Robert Shiller isn't any clearer than the rest of us on whether Congress's proposed $700 billion financial-markets bailout will save the economy.
But he's positive of one thing: Congress needs to move quickly.
"Given the intensity of the crisis, I'm willing to write my part of the check," Shiller said, speaking Thursday at a Greater Seattle Chamber of Commerce breakfast.
Even with a bailout, "My worry is we'll be in a slow economy perhaps for years to come, but at least we won't have a collapse," he added.
A developer of the widely quoted S&P/Case-Shiller Home Price Indices and one of the early predictors of a home-price bubble, Shiller is in Seattle promoting his newest book, "The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do About It."
Shiller said he wrote the book early this year anticipating that toxic subprime loans would continue to drag the economy down.
But with the recent nationalization of Fannie Mae and Freddie Mac, with the sale of Merrill Lynch to Bank of America, with Lehman's bankruptcy, the situation now "is even worse than I anticipated," he said.
Since the details of Congress's rescue are still being formulated, Shiller said it's impossible to know how well it will work.
Meanwhile, he acknowledges very real public anger.
Some 10,000 homes are being foreclosed upon daily, he said, and what are their owners "to think when we're bailing out rich companies? There has to be a sense of fairness."
Also, what's to stop the nation's ailing financial firms from dumping their sickest debts onto the government while keeping the healthiest? That would amount to a "free lunch" for them at taxpayers' expense, he said.
While this situation is playing out quickly, Shiller suggested long-term changes to help prevent future bubbles, starting with better financial literacy.
Going back a century or more, the U.S. has suffered numerous economic bubbles, yet the public generally denied their existence until they popped, he said.
"The great mystery of human nature is how you get bubbles repeatedly."
As an antidote, the government should subsidize independent financial advice for everyone — with the advisers paid by fees, and not sales commissions, he stressed.
New financial watchdogs should be created to take consumer complaints, and financial disclosure improved so the public can see how intertwined markets really are.
Finally, Shiller suggested developing real-estate risk markets to trade in housing futures.
The idea already is in limited practice, but Seattle is not among the cities included. Such a market would have minute-by-minute pricing so buyers could adjust their risk, Shiller said.
By RAYMOND J. LAWRENCE Weekend Edition September 20 / 21, 2008
Is this country ready for a president who is excited about and eagerly looking forward to the Rapture?
The Rapture, as it is called, is the imaginary day when Jesus will come down from the sky and lift up into heaven all those who are saved, leaving behind all unbelievers to destruction and death?
Anyone who believes in the Rapture scenario will likely interpret a catastrophic nuclear exchange as the opening scene of the Rapture. Thus an American president who believes in the Rapture would arguably have at least some ambivalence toward a nuclear holocaust. A believer in the Rapture with his or her fingers on the nuclear trigger might even be tempted to bring on the Rapture. The Rapture, for those who believe in it, is hardly a negative event. Rather it is culmination of everything they hope for, deliverance into the heavenly arms of Jesus.
Presumably Sarah Palin believes in the Rapture. It is one of the doctrines of her religion, and she has nowhere disavowed it. Are Americans ready to sleep at night with a President who longs for the Rapture?
The doctrine of the Rapture is a very recent invention within some of the radical fringe churches of Christianity. The Rapture doctrine is first cousin to millennialism, the belief promoted by various groups who have predicted that “the end is near.” Millennialist groups have popped up and burnt out from time to time throughout Christian history.
The Rapture doctrine has no support in the historic Christianity of any of the main traditions - Roman Catholic, Eastern Orthodox, or Protestant. The doctrine of the Rapture is cobbled together from several obscure, unrelated comments drawn from the epistles of Paul the Apostle. No credible biblical scholar in two thousand years of Christian history has taken seriously the Rapture doctrine, millennialism, or anything similar to it.
The American people ought to be concerned about the religious beliefs of its political leaders as those beliefs may determine the life of the nation as a whole. It would be foolish of the American people not to be deeply concerned about the religious beliefs of Sara Palin, who may be elected Vice President for the oldest President ever inaugurated into the office.
When John F. Kennedy campaigned for the presidency in 1960, many Americans were concerned about his commitment to the Roman Catholic Chruch. The fear was that he might be subject to directions from Catholic priests, or from the Pope, since he was a practicing Catholic, and Catholic leaders are typically quite directive and authoritarian. Kennedy answered that concern in speaking to the Houston Ministerial Association during the campaign. He declared boldly and correctly that no political leader should take directives from religious authorities whatsoever. He claimed a commitment to the strict separation of church and state. Kennedy’s assurances were widely accepted by the public.
The Sarah Palin problem is somewhat different. The concern is not whether she would take orders from her pastor. That is unlikely. Her church does not typically exercise that sort of authority. The problem is both more simple and more worrisome. The public must presume that Palin believes in the Rapture, since it is one of the central doctrines of her church. Furthermore, the American people should assume that Palin’s personal religious beliefs will have consequences in her decision-making as a President. Both Palin and McCain have already made clear that their religious views about abortion will determine presidential appointments to the courts.
The press and much of the public seem reluctant to engage Palin on her religious views, considering them to be a personal matter. In certain respects that is admirable restraint. We do not want candidates for office grilled on their private religious views as long as those views do not impinge upon the public welfare. Whether an individual believes in the bodily assumption of the Virgin Mary, predestination, or other such religious views should not be subject to political scrutiny. Such beliefs have no inherent impact on public policy.
However, a belief in the Rapture as an historic event toward which history is rapidly moving, is a belief with potentially catastrophic political implications. Do the American people want a believer in such a fantasy to hold in her hands the nuclear power to destroy civilization?
Raymond J. Lawrence is an Episcopal cleric, recently retired Director of Pastoral Care, New York Presbyterian Hospital, and author of numerous opinion pieces in newspapers in the U.S., and author of the recently published, Sexual Liberation: The Scandal of Christendom (Praeger) [ http://www.amazon.com/exec/obidos/ASIN/0275993736/counterpunchmaga ]. He can be reached at: raymondlawrence@mac.com
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