Jeff Miron needs to take a sabbatical. He needs to get occasionally out of his ivory tower and his adherence to Chicago/Austrian economics at all costs.

Bankruptcies as a solution, indeed! Gack!

Theoretically it is not so bad for our economy with airlines’ bankruptcies – as he uses as an example – but it is likely disastrous for the massive but now all failing financial linchpins integral to our economy to declare bankruptcies.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

Miron must have overlooked the proud flag carrier PanAm that for over half a century circled the world, but is no more. As is Eastern. As is nearly 110 upstart airlines that appeared briefly after the airlines were deregulated in 1978, and quickly or eventually all went into oblivion. Lots of investor money lost. More importantly, lots of employees – office, maintenance, cabin, and flight crew – on the street. Has Miron ever been, “on the street?” Doubtful.

But I suppose if he hasn’t lost money or his job, it’s OK… as long as it happens to someone else.

(But airline bankruptcies are a very weak example of his, and not comparable to our current major macroeconomic credit crises.)

While he does not delineate between chapter 7 (liquidation – investors lose all, vendors lose a lot, and employees lose all) and chapter 11 (reorganization, common stock holder lose all, preferred and bond-holders lose some, and employees lose about half), neither is desirable. But chapter 11 has cheaply and fortuitously allowed several airlines recently to eradicate their long accrued employee promised pensions that were promised for decades. Now the taxpayer through the PBGC picks up the airline’s tab, but at only 25 –30cents on the dollar.

Miron also overlooks perhaps conveniently the massive bailout the government gave to failing airlines following 9-11. The rapidly established Air Transportation Stabilization Board (ATSB) under President Bush was designed to keep airlines solvent and out of bankruptcy with massive loan guarantees – not unlike our current credit/financial situation. It is what government does, and should do.

The ATSB “bailed out” a number of airlines following 9-11. They saved investment and jobs. Moreover, the Treasury through warrants tied with the loan guarantees actually made money.
Perhaps I should contact Harvard economist Miron and discuss this ….

Leadership? Long gone at this point. And I don’t have to be an economist to know this ain’t cricket being played.

i shall now have to re-trench and more closely examine my feelings on this topic.

i’m not an engineer, but i played one for four years in college, so i’m just going with a thumbnail sketch of major competing stress factors at play here, but i’m still of the fixed opinion that market forces with align themselves in fairly short order. this ain’t no tulip bubble.

Just sayin’…

Billions? I can’t understand how anyone could be cavalier about 700 of them…but I have a science background.

We didn’t get here overnight, but we did with the institution that now garners about the lowest ratings of any group in the country (and has for at least a year now)…and they tell us they have to fix it overnight.

Sorry. Something this big need a serious, well considered battle plan, not a quick fix of massive socialism. Some quick action…most likely, but to stabilize it and do what the Surge did…give breathing room for the Govt to then get ti right. And besides…how often do government projections of this scale ever flush out in the taxpayers favor?

Sorry again…bad track record of “The Institution” who begs us to do as they say and to “trust them.”

Might I suggest Gen Patraeus may be a good one to consult at this moment…if he wasn’t busy helping another nation bail itself.