Proposed financial bailout no drop in the bucket, MSU experts say
EAST LANSING, Mich. â€" New additions to a proposed financial system bailout plan would carry it over the $700 billion mark originally estimated to free up the credit market. That’s bigger than the annual cost of Social Security ($608 billion) and the anticipated cost of the war in Iraq through 2009 ($606 billion).
(Media-Newswire.com) - EAST LANSING, Mich. — New additions to a proposed financial system bailout plan would carry it over the $700 billion mark originally estimated to free up the credit market.
That’s bigger than the annual cost of Social Security ( $608 billion ) and the anticipated cost of the war in Iraq through 2009 ( $606 billion ).
MSU physics and astronomy department chairperson Wolfgang Bauer figures that a dollar out of the proposed $700 billion bailout would approximate the proportion of a bucket of water drawn from the 430-square-mile Lake St. Clair.
To get a better handle on what that means financially, Michigan State University economist Mark Skidmore suggests this:
In per capita terms, it works out to $2,330 per U.S. citizen. As a percentage of U.S. Gross Domestic Product ( $13.8 trillion ), it is about 5.1 percent. As a percentage of combined annual federal, state and local government expenditures ( $4.7 trillion ), it is about 15 percent. Skidmore, who holds the Morris Chair in State and Local Government Finance and Policy at the MSU College of Agriculture and Natural Resources, is one of many MSU experts monitoring the financial crisis and proposed rescue plan now being debated in Washington.
Several MSU economists support it, but at least one – Naveen Khanna– is not a fan, arguing that it’s giving more money to the crowd who got us into this mess in the first place. A professor and Pasant Endowed Chair of Finance at the Eli Broad College of Business, Khanna has an intriguing alternative – he’s proposed to lawmakers to instead reward responsible financial behavior: an across-the-board, 15 percent cut in mortgage debt for everyday homeowners.
Here’s contact information for some of MSU’s economic analysts:
Economics professor Charles Ballard is a well-known source on the economy and business. He’s an expert in all areas of economics including microeconomics; tax and expenditure policy; state-and-local public finance; taxation; and poverty and income distribution. Phone: ( 517 ) 353-2961 or e-mail: ballard@msu.edu.
Should responsible borrowers and mortgage holders be left holding the bag? Naveen Khanna of the Eli Broad College of Business can hold forth about that, together with the general merits and demerits to the bailout, whether government should obtain warrants in the deal, how it should provide relief to mortgage holders and on executive compensation issues. Phone: ( 517 ) 353-1853, cell: ( 734 ) 604-5537 or e-mail: khanna@bus.msu.edu.
Lisa Cook, assistant professor of economics and international relations, is an expert on financial institutions and markets. Contact her at ( 517 ) 432-7106, cell ( 617 ) 335-9444 or lisacook@msu.edu.
Connie Costner is a specialist on consumer economics and family credit issues and an MSU Extension program leader for Children, Youth, Families and Communities . She does a lot of work educating Extension staff on issues relating to housing debt and foreclosure matters. Phone: ( 517 ) 432-5620 or e-mail: costner@msu.edu.
For a historical perspective on financial crises in America, Department of History Chairperson Mark Kornbluh can speak. Contact him at ( 517 ) 355-9300 or 355-7502, cell: ( 517 ) 862-2851 or e-mail kornbluh@msu.edu.
David Schweikhardt is a professor in the Department of Agricultural, Food and Resource Economics who can give a very good background, overview and analysis of the credit crunch and what’s at stake at all levels with the bailout plan. “It is really hard to get your mind around the dimensions of this problem,” he says. He can talk about a wide range of impacts, including those affecting farmers – who will be affected by tight credit and rising interest rates as much as any borrower. Phone: ( 517 ) 355-2320 or e-mail: schweikh@msu.edu.
Eric Scorsone, an extension specialist with the Department of Agricultural, Food and Resource Economics, is co-chair of the State and Local Government Program. He’s very good at laying out the roots and likely outcomes of the credit crisis and proposed bailout, and has special insight on its effect on state and local governments. Phone: ( 517 ) 353-9460, cell: ( 517 ) 449-0992 or e-mail: scorsone@msu.edu.
Public finance and economic development are the chief fields of research for professor Mark Skidmore, another faculty member in the Department of Agricultural, Food and Resource Economics. He’s been studying the effects of falling property values on local communities. Phone: ( 517 ) 353-9172, cell: ( 920 ) 650-2295 or e-mail: mskidmor@msu.edu.
Robert Wiseman can talk about strategic risk and decision making, executive compensation and corporate governance. He also can discuss the advantages and pitfalls of investment banks becoming part of the more heavily regulated commercial deposit-taking banks, and how organizations get themselves into these kinds of problems in the first place. He’s the Eli Broad Legacy Fellow of Management and an associate professor of management at the Eli Broad College of Business. Phone: ( 517 ) 432-3508, cell: ( 517 ) 980-1283 or e-mail: wiseman@bus.msu.edu.
For a more complete list of experts, click to news.msu.edu.
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This story was released on 2008-10-02. Please make sure to visit the official company or organization web site to learn more about the original release date. See our disclaimer for additional information.