TPS

First, my bias up front, I teach in HE at a state college. Your post is much like most of what is posted here--it starts with the bias of the presenter. Yes, higher ed needs to change, but the criticism that the right-wing mr murray levels misses the point on what a college education is about. It's not about providing a technical skill that can be "mastered" by some test. If you want that, go to Bryant & Stratton. A college education, a LIBERAL ARTS college education, is about teaching critical thinking skills that, for the most part, don't get taught at 90% of K-12 institutions in America. Yes, HE is over-burdened with "core requirements", and much of that has to do with the poor education that happens in K-12--we have become remedial teachers for HS to large extent. My belief is that we need to minimize the GenEd core courses, and then allow students to do more things that do matter to their future. Corporate America doesn't want (or need) people who have a degree in some specialized technical skill (ok, they need accountants), but they do want people who know how to research topics, critically assess issues, communicate, collaborate, and continually try to learn (a short list). What specific degree teaches that? None. An overall LIBERAL ARTS education should focus on these skills, and for the most part does. If I were king, I would minimize the core requirements to about 6-8 courses (out of the total of 40 requred), then stongly suggest students do double majors, minors, create their own second majors from multi-disciplines, spend a semester abroad, etc. I am in the lion's den. Yes, there are a lot of people who are afraid of change, and are in this because they are protected, but there are just as many, if not more, people who continually try to keep up with the latest in their disciplines, technology, etc., who try to provide students with the skills--not some techinical job--necessary to compete in the 21st C. You have to be able to quickly adapt to a radically changing economic environment, and teaching a "competency" doesn't teach you the skills necessary to adapt and succeed in this environment. So yes, we need to change; but, we we should continue to teach the "skills" that are permanent, not some bull sh-- that you memorize to pass some bull sh-- test. And majors like history, english, philosophy, etc. teach these skills. How many CEOs do you think got thier undergraduate degree in business?

What crap! YOu don't say a thing about the Pats, and how they will suck because of how they looked last night. How can anyone believe your crap analysis? And, where's your gossip about Peters? I can't believe you're a TE whore as well? If this is the crap that passes for tbd analysis, then I'm going to stop posting here... You should stick to American Idol Simon....hehehe

I'll have to find that passage and see the context again. So I'm not sure where you stand now? You support regulation or not? NOt sure where you get this? The S&Ls were deregulated starting in 1980. It's one of the reasons always cited for the crisis. I disagree a bit on the "biggest problem with the models." You've got the industry creating models to estimate risk based upon past behavior. Two inherent problems: one, the industry is profit driven, so there's always a bias to under estimate risk; two, past data (which models are typically built upon) can't estimate the risk of the new types of securitized "assets." I do agree for a different reason about your "borne out of nonexistent regulation" point. The history of financial innovation is related to regulation. Once you create a regulation, finance finds a way around it in order to generate more profits. Securitzation, as Wray pointed out, was a way to circumvent regulation (capital requirements). Make the loans, generate fees from said loans, then "securitize and sell." Over the past 20-30 years, banks have been focusing on generating more "fee income" than interest income. Don't necessarily disagree with the first part. The second, I'd say that finance always creates instability (that's the main point in minsky). There will always be another "fad" where "finance" underestimates the risk because of the desire for greater profits. Thanks for the response. I wasn't trying to generate any discussion with this, just thought some might find it interesting. Minsky was one of the few "practical theoreticians" of his time, and I'd certainly recommend picking up his book "Can IT Happen Again?" A collection of his articles, which are still relevant today.

I've mentioned several times that my economic views were heavily influenced by the late Hyman Minsky. Attached is an article (somewhat lengthy) by one of his former students on the current financial crisis from a "Minskyian perspective." It may be a bit daunting for those who aren't as familiar with finance. A Minsky(ian) analysis

Not denying the severity of the situation. The point I made previously is that we are testing the limits of policy, both monetary and fiscal. Hale is saying essentially what I said, that fiscal policy needs to take a greater role to stabilize homeowners and defaults which are the root cause of the financial crisis. Yes, there is a perfect storm, but if policy makers remain aggressive, I believe they can limit the impact. I fully expect another round of tax cuts for the lower and middle classes. In times of crisis, policy makers revert to demand side policies.

Someone else who understands you have to solve the root of the financial crisis: David hale

Someone needs to organize a TBD outing (coordinated to the home opener) so we can find out who counts all of their strokes and who doesn't... :-)

Unless you own your own business and can directly use savings to expand, there is no direct connection between the "savings of the rich" and investment by corporations; it's indirect. The rich "financially invest" in stocks, bonds, real estate, art, precious metals, and various liquid accounts. increased stock prices make it more attractive to raise new equity, and increased bond prices lower interest rates, but the investment decision by corporations is driven by profit expectations (being able to sell the increase in products or services). Then, even if they do decide to "invest," there's the question you raise about "where" they locate...

I don't think Dems have ever said that lower taxes don't impact the economy (if so, please find me a quote). You allude to the difference, and it's pretty straight-forward. The top 20% of income earners spend about 75-80% of their income (20-25% savings rate); the bottom 60% spend more than their incomes; and the other 20% spend all of their income (0 savings rate). If your philosophy is that demand drives the economy, then you need to cut taxes on those who spend the most--it makes perfect sense. If you believe in supply-side stimulus, then cutting taxes for the top makes more sense. That's why I've always argued for cutting the payroll (SS) tax.

Right. This would be like JFK having LBJ as his vp--don't turn your back Barack!

You'll find him/them at one of these places: steely dan

How far back do you want to go with that "key line?" Why is it that we subsidize industries that rely on oil (trucking, airlines, highway system, etc.) but let Amtrak starve? Why do we subsidize oil extraction, but tax it at the pump? Maybe congress isn't "do nothing," maybe they do it for the interests that support them most? Isn't that a novel thought...

Something to support the "Drane view." Phase 2 This will test the limits of modern fiscal and monetary policies. In my view, the problem is that the focus has been too concentrated on bailing out the financial sector, when the the "bail out" needs to go to the "source," households/consumers. The housing market has to be stabilized, and there needs to be a more permanent tax cut for those who spend--I'd suggest a significant cut in SS taxes until this is over. And of course some incentives for business investment... While the Fed is selling off assets to fund its bail outs, as long as the government's deficit continues to increase, guess who'll be buying...

You don't think there's a difference? Maybe not as much anymore on the asset side, but the source of funds? Should the FDIC insure $X for investment banks now too? I'm sympathetic to your view here, but I still think they are very different animals and need different types of regs. However, I think one common area would be capital requirements (maybe not the same % though).

Update2: it'll be interesting to see what happens this week with the futures prices... Impact of speculators?

If you mean making the "loan facility permanent," yes. Getting back to the original point of the thread... increased margin requirements This may make it tough on the "little guys," but not the institutional speculators.

Did someone ever say China was harmless? I thought it is pretty much taken for granted that they are the next major threat to the US--the CIA has stated this. This aritlce is not surprising to me. As for Chavez and Colombia, Venezuela and Ecuador responded to Colombia's attack on FARC inside Ecuador. The combined forces of both countries can not match Colombia. The threat in S.A. is that we have lost influence in nearly half the countries as the left has won election after election. And the "threat" is that they are nationalizing resources once owned by private companies, many of them US. I'd blame the current admin because of their myopic focus on Iraq.

Here's a nice little piece on the Fed's role so far and possible future regulation. Kohn

Drane, Here's a nice little piece on expected bank failures I just came across. 150-300 failures? Yeah, gg, what do you do besides post here a lot? Agree about the asset "thingy." They are swapping good for bad assets on the one hand, then, if necessary, they can buy the good asset back in order to provide (more) "liquidity" necessary for the institution to meet its cash flow obligations.

Hmmm...missed this one. My focus is on Friedman's (and monetarism) contention that there is a close relationship between money growth (as defined by M1, which MF used) and inflation. While Volker's Fed tried to use this (MF's "monetary rule") in the early 1980s, they gave up because the relationship was not tight enough to use as a strict policy. No (advanced country's) monetary authority follows Friedman's "monetary rule" any longer because it's just not accurate enough. Most use "inflation targets" and use changes in interest rates to pursue their target. while my buddy colon is correct that the value of money is a function of the price level (inflation), he doesn't seem to understand what money actually is. btw colon, if you define inflation as including increased prices of assets, then maybe we're closer than we think. Here's the key: when gold was money, if you doubled the quantity from a new discovery, sure, you'd have inflation in the classic sense. Today, most of the money supply (M1) is made up of demand deposits and growth of M1 is a function of loans. Just as a new loan can expand the supply, paying off a loan contracts it. Yes Ad, it's much more complex than this, but the concept is that what we think of as "money" is not something permanent once its created, as in the gold example. And, if one expands the definition of "money" to credit, there's a hell of a lot of "money" being destroyed right now. signed, the sophomore

This from the guy who believes in the helicopter theory of money? You've also crossed the line !@#$. DC and I never agree!

My portfolio is 55% global natural resources, 15% emerging markets, and 30% cash. Overall up about 11% ytd.

I'll have to do a search and see how many of us have been annointed as "not a complete idiot" by my new friend DC. Oh, wait, Darin said he still hates me. Nevermind...

Congratulations SD, welcome to the "I'm not a complete idiot club!"

Another area of agreement. Strange days indeed... Seems to me there is a serious misunderstanding around here of how "money" is created.