Today at Harvard, it is almost impossible to flunk out.When Harvard�s future dean of admissions and financial aid was applying to the College in 1962, the first two teachers he asked for letters of recommendation refused.
�They wouldn�t write for Harvard because they thought it was a bunch of Communists, a bunch of atheists, a bunch of rich snobs, and if you went there you�d flunk out and you�d lose your soul,� said William R. Fitzsimmons �67.
These institutions� viability with anything like their current operating model depends on the implicit federal guarantee of their several trillion dollars of liabilities. It is appropriate at a time of crisis in the mortgage markets that they become, as their regulator put it last week, the �lender of first, last and every resort�.
It is not appropriate that their shareholders� �heads I win, tails you lose� bet with the taxpayer be expanded for this purpose. Given their past and prospective losses, their regulator � supported by the Treasury, the Fed and, if necessary, Congress � should insist that they stop paying dividends and raise capital promptly and substantially as they expand their lending.
I wake up, groggy, bed-headed, pajamaed. Lying next to me, fully dressed on top of the bed is Gregory Mankiw, the economist. "You're Greg Mankiw," I intelligently remark.
He springs out of bed and stands up. "Would you like to discuss consumer surplus and tariffs?"
"Why are you here?" I ask.
"Don't you remember the Make-a-Wish Foundation?"
Well, isn't this rich: Max Baucus of Montana and Chuck Grassley of Iowa, chairman and ranking member, respectively, of the Senate Finance Committee are suddenly in a lather that taxpayer funds might be implicated in the Federal Reserve's rescue of Bear Stearns. Would that be the same Max Baucus and Chuck Grassley who have made careers out of protecting and enhancing the lavish system of import restrictions, price supports and other subsidies that have transformed American farming and ranching into a vast socialist enterprise?Continue reading here.
