Should AIG Have Been Allowed to Fail?

Complete video at: http://fora.tv/2009/03/17/The_Economic_Landscape_How_to_Spot_an_Upturn

Economists Ward Hanson and Michael Lehmann disagree on whether the government should have bailed out AIG. While Lehmann warns that "the contagion would have spread" if AIG failed, Hanson says AIG demonstrates a "systematic failure of the regulatory structure."

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A panel of professors discuss how to spot an upturn in the current economic landscape at the Seventh Annual Marketing Forum hosted by The Economist in San Francisco.

Speakers include: Ward Hanson, Policy Forum Director, Stanford Institute for Economic Policy Research; and Michael Lehmann, Emeritus Professor of Economics, University of San Francisco. Moderated by Martin Giles, Senior Business Correspondent, The Economist. -- Economist Marketing Forum

Ward Hanson studies the economics and marketing of high technology, especially the impact of information technology on business and policy. He is a Fellow at the Stanford Institute for Economic Policy Research Center for Employment and Economic Growth as well as SIEPR Policy Forum Director. His recent writings include "Recovery.gov: Using the Internet to Accelerate and Improve Fiscal Stimulus," available on the SIEPR website. He published his most recent book on the impact of high technology on business practice, Internet Marketing and Ecommerce, in 2007. Dr. Hanson received his Ph.D. in Economics from Stanford University, and has been on the faculty of the University of Chicago Business School, Purdue University School of Management, and Stanford Universitys Graduate School of Business. He has served in the U.S. Department of Energy, and assisted the Obama campaigns Economic Growth and Innovation policy efforts.

Prof. Michael Lehmann obtained his Ph.D. from Cornell University and taught at the University of San Francisco in traditional and on-line venues. He is the author of The Irwin Guide To Using The Wall Street Journal, which sold 250,000 copies in seven editions. Prof. Lehmann also developed a popular seminar, Be Your Own Economist, on business and investment conditions, that he offers to investors, corporations and professional groups. The San Francisco media frequently interview Prof. Lehmann on current economic and investment conditions. You can read his blog at beyourowneconomist.blogspot.com.

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[briantotse3]

Many, many other companies/banks and people relied on AIG.

[judoskeleton]

Regulation? When has regulation ever caught any of these blow ups? Its regulation that formed corrupt ratings agencies. Its regulation that created the gse. Its regulation that set interest rates so low that banks didn't have to worry about risk. Get the government out of the financial, and housing markets.

[starfireucsd]

What a crock of shit.......

[DeletedDelusion]

Prof. Michael Lehmann may not care about the bonuses of the CEO's of the failed banks, it's his good right.

On the other hand, I don't think his view is predominant among the majority of people.

The bonuses may only be a very small part of the bailout money, but I think the actions of these managers are detrimental to social freedom and stability.

[carthfhuil]

Obviously the TARP zombies just have to go away (as corporate entities). Of course the assets will be left behind for more capable owners. Bankruptcy sounds like a win-win to me.

[carthfhuil]

Well said. It's amazing that so many "economists" don't actually understand how markets work. Obviously the market "worked" in this case, in spite of the efforts of the government. Companies that borrowed and lent beyond anyone's capacity to pay it back are now technically bankrupt. They should be bought by more capable hands and their debts liquidated. Putting the debt on us only zombifies the Treasury and the economy as a whole.

[hasatum]

Wow, two guys manage to sound like they're saying opposite things yet I don't agree with either one. Why are we left with deciding whether to help government bail them out or help the government regulate? What about neither? If all these businesses were stupid enough (or corrupt enough) to put all their eggs in one basket and deal in fruity derivatives trading, we must let them pay the price. Otherwise we'll inevitably be left with worse businesses and government than we already have.

[valhala56]

Your exactly right, that is the simple answer. They work for enties more powerfull the average Joe & Jane America.

They see us here as we see Sheep, to be used, only important is far as what they got out of us, now it is our duty to keep silent and get ass raped. Sorry for the mental picture, but I think an ass raping is going to be mild to what we are eventually going to pay.

[winstonsmith00]

I agree

[drogden]

Also, most Americans were against the bailout obviously, but it still happen. Why? Because they don't work for us. They work for someone even more powerful then them.