Last week Harvard economics professor Greg Mankiw posted an email from an unnamed economics professor on his blog chiding his fellow economists for being too nonchalant about the current financial situation and the proposed government bailout of banks, and included this ominous sounding warning:
A LOT of payrolls get paid at the end of the month. The next for many companies is September 30. Three different people with hugely relevant knowledge said to me today words to the effect of: “Why don’t your economist buddies want [insert fortune 100 company/companies here] to be able to pay their employees on Tuesday. If Washington doesn’t do something now, they won’t be able to”. That just scared the hell out of me. I can go into more details if you like, but all of them involve the four horsemen of the apocalypse.
After it was posted, these comments were cited by several bloggers and others as evidence that the proposed bailout plan had to be passed immediately.
It is hard to judge the credibility of what an unnamed economics professor says he was told by some unnamed third parties about the financial situation of some unnamed Fortune 100 companies. The warning might be legitimate, or it might be a bit of scaremongering. Fortunately, this particular warning contained an easily testable prediction: if Washington did not pass a bailout by September 30th, some Fortune 100 company would be unable to meet payroll.
Well, September 30th came and went, and no bailout was passed. I haven’t seen anything about any Fortune 100 companies being unable to meet payroll. Did it happen and I just missed it?
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