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A New Hope
Organizations and Markets — ... by prominent, mainstream economists and other experts explaining that a market economy in which profits are private while losses are socialized is, well, not a market economy at all but a socialist or corporate-fascist state. See, for example, statements by Luigi Zingales, John Cochrane, and Richard Epstein, among others. Maybe the Empire can be defeated after all. (Apologies to Seth MacFarlane for modding his image.) Update: Casey Mulligan is also quite good. Posted in - Klein -, Classical Liberalism, Political ...

A Note of Optimism
Greg Mankiw's Blog — From a new blog by University of Chicago economist Casey Mulligan: In order to find good predictors of non-financial sector performance, and GDP growth generally, we look to the non-financial sector itself. One of those predictors is the profitability of non-financial capital, or the “marginal product of capital” as we economists call it. The marginal product of capital after-tax is a measure of how much profit (revenue net of variable costs and taxes) that each unit of capital is producing during, say, the last year. When the marginal product of ...

Casey Mulligan is now blogging
Marginal Revolution — Here.  Casey is a very well-known economist at the University of Chicago and he works on public choice.  Here are many of his papers.  And here is his post arguing that the real economy is not so closely linked to Wall Street.  Hat tip to Greg Mankiw.

Why I Oppose the Bailout
QandO — ... As University of Chicago economist Casey Mulligan points out, if there is no bailout, it’s Wall Street, not Main Street that will take the brunt of the punishment. This isn’t 1929, folks, and the non-financial sector of the economy seems to be doing fine. Why? ...

Wall Street will drown alone
Maggie's Farm — ... Mulligan at Supply and Demand makes the case for the delinkage of Main Street and Wall Street economies (h/t, Marginal Rev). One quote: ...history has shown that the non-financial sector can do well when the financial sector does poorly, and vice versa. ...

Nationalization of US Credit Markets: Where Is the Analysis?
Organizations and Markets — ... . Second, even if credit markets are tight, does it matter? Any predictions about the long-term effects are, of course, purely speculative. Sure, borrowers like cheap and easy credit and tighter credit markets will leave some borrowers worse off. But what are the magnitudes? What are the likely effects on the economy as a whole? (Possibly zero.) What are the possible scenarios, what is the likelihood of each, and how large are the expected effects? Where is the cost-benefit analysis? After all, the seizure of Fannie and Freddie, the takeovers of AIG and WaMu, the modified ...

Why the Stock Market Drop Doesn't Prove that Congress was Wrong to Reject the Bailout:
The Volokh Conspiracy — ... . What makes the present situation different from many past crises is that the power grab has - so far - failed. UPDATE: University of Chicago economist Casey Mulligan provides a helpful summary of the reasons why the performance of Wall Street generally and finance firms in particular isn't a good predictor of the condition of the economy as a whole.

Poof!
The Volokh Conspiracy — ... and Casey say that the bailout was just a transfer of wealth from taxpayers to shareholders. Maybe. But most taxpayers are shareholders, and the return seems pretty good. Even if we confine ourselves to the U.S. stock market, a return of $800 billion on an investment of $700 billion (actually, a lot less, given that money is used to purchase assets that will eventually be sold again even if at a loss) is not bad. If we count the world’s $2.5 trillion, the return is quite excellent. (I realize this is not a controlled experiment, but we have to use whatever information is ...

Scrivener.net — ... Casey Mulligan tell us just the opposite. He says in substance that the rest of the economy today is hugely larger and more productive relative to "Wall Street" than it was in the 1930s, that its performance today is largely independent of Wall Street's. He says that if Wall Street goes down it will go down alone, and the government bailing it out will only make matters worse. "The Treasury and the Fed should let Wall Street drown alone, to be replaced by new financial service providers who can swim as robustly as non-financial American businesses." ...