Knowledge Problem

Bailouts, Stimulus, and Debt: John Cochrane and Russ Roberts on Econtalk

Lynne Kiesling

I recommend this EconTalk podcast between Russ Roberts and John Cochrane very highly:

John Cochrane, of the University of Chicago, talks with EconTalk host Russ Roberts about the financial crisis. He talks about the origins of the crisis, why the Troubled Assets Relief Program (TARP) was flawed from the beginning, why mark-to-market accounting isn’t the cause of the problem, argues for letting banks fail, and makes the case against the large increases in government spending.

I share the skepticism and caution of both Cochrane and Roberts with respect to the financial bailout and the likely short-term and long-term effects of large amounts of government debt-financed government spending, and this discussion captures those ideas clearly.