Article of the Week: 8 Mar
Congratulations to Jake Niemyer, winner of Article of the Week (8 Mar)!
A.I.G., Where Taxpayers’ Dollars Go to Die
This is a fascinating article about insurance giant AIG and the immense difficulties they face in staying solvent. New York Times reporter Gretchen Morgenson gives an in-depth description of the poor decisions AIG made on its path to near destruction. The main problem AIG has is its inability to pay back the money owed on derivatives they have sold. Unfortunately, they did not have enough collateral to pay back the buyers back when a huge number of payments defaulted. It is clear that it would be disastrous for AIG to fail, but it is unlikely taxpayers will see any of the money back that they have unwillingly invested.
A.I.G., Where Taxpayers’ Dollars Go to Die
This is a fascinating article about insurance giant AIG and the immense difficulties they face in staying solvent. New York Times reporter Gretchen Morgenson gives an in-depth description of the poor decisions AIG made on its path to near destruction. The main problem AIG has is its inability to pay back the money owed on derivatives they have sold. Unfortunately, they did not have enough collateral to pay back the buyers back when a huge number of payments defaulted. It is clear that it would be disastrous for AIG to fail, but it is unlikely taxpayers will see any of the money back that they have unwillingly invested.
posted by Professor Cramton at
6:05 AM
18 Comments:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a487Kmeq1Eog
This article explains this recession might not recover until 2010. Many economists previously predicted that the economy would recover in the second half of 2009. Roubini, a NYU professor, says the recession might last a total of 36 months.
Ayesha Qadeer
http://www.nytimes.com/2009/03/02/opinion/02krugman.html?_r=5
The columnist, Paul Krugman, explores the different reasons for the economic slump, which he primarily refers to is because of the unaccounted for building of debt over the past few years. Krugman refers to a speech given by Ben Barnake four years ago, titled 'The Global Saving Glut and the U.S. Current Account Deficit." Krugman highlights points made Barnake in the speech which are also evident today.
http://www.newsweek.com/id/185814
In this article, the Peruvian economist Hernando de Soto writes about the effects of toxic paper in the recession and the need to rearrange and restore the trust in financial paper.
This article explains why bank nationalization might be the only solution to our current problems. It explains why pessimism is overtaking our economy and contributes to the lack of of a recovering engine. It finishes with a comparison of our situation to that of the Great Depression.
http://www.workers.org/2009/us/economic_crisis_0305/
This article explains why bank nationalization might be the only solution to our current problems. It explains why pessimism is overtaking our economy and contributes to the lack of of a recovering engine. It finishes with a comparison of our situation to that of the Great Depression.
This article talks about the insurance giant A.I.G, reported loss of $ 61.7 billion dollars, the biggest quarterly loss in history as U.S stocks fall and the government continues handing out tax payers dollars for bailouts.
http://www.nytimes.com/2009/03/03/business/03aig.html?hp
This article talks about the insurance giant A.I.G, reported loss of $ 61.7 billion dollars, the biggest quarterly loss in history as U.S stocks fall and the government continues handing out tax payers dollars for bailouts.
http://www.nytimes.com/2009/03/04/business/04dead.html?pagewanted=2&ref=business
Debt Collectors make sure to leave no stone unturned, or in this article's case, leave no debt of the deceased unpaid. DCM Services, a law firm that specializes in collecting the deceased debts, discusses it's procedures, and the next of kin of the deceased. Kept me interested and a bit of a dark humorous article.
http://news.yahoo.com/s/ap/20090226/ap_on_go_pr_wh/obama_budget_energy
I heard about this on NPR this morning and found an article that explained some of it. Basically, Obamas plan is to cut middle class taxes and increase clean energy research. He will do this by auctioning off pollution permits to coal burning companies. With coal burning companies prices going up, so will the cost of all coal energy..car, house, etc. People will find other sources of energy. Some say that this will just raise daily costs to normal Americans, but others counter that argument saying that it will come back to them in the tax cuts.
http://www.rferl.org/Content/Islamic_Banks_Unhurt_By_Toxic_Assets_But_Could_Suffer_As_Crisis_Evolves/1503409.html
A couple economists talk about how and why the Islamic banks have not been negatively hit with the Credit Crisis and the Toxic crisis that the western banks have suffered. The key thing that I got out if it was that the Islamic banks don't overly invest by risking on investments where they can suffer huge losses. They rely heavily on collateral. Another thing that really stood out was, "So it is very much based on relationships, on analyzing risks, and understanding the risk and the relationships in the specific projects or company that you are looking to finance and getting comfortable with that. People need to go back to fundamentals." by the expert Neil Miller.
Why the Fed's TALF Is Bad for America
http://seekingalpha.com/article/124342-why-the-fed-s-talf-is-bad-for-america
this article talks about why TALF is a bad plan. Ciovacco points out some reasons for that.Putting money in is not a solution for the economy. Under TALF, the Fed is becoming a giant prime broker for hedge funds and private equity firms, which does not solve problems but distort free market.
Janee Banks...
http://www.businessweek.com/bwdaily/dnflash/content/mar2009/db2009036_138924.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis
This article discusses the unemployment situation and how the end to the economic slump is unfortunately nowhere in sight.
"The Crisis of Credit Visualized" by Jonathan Jarvis
http://vimeo.com/3261363
This video provides an explanation of the causes behind the credit crisis in simple terms.
http://mlis.state.md.us/2008rs/misc/FinancialCrisis.pdf
GREAT ARTICLE!!!
This is a report from the department of legislative services. It takes an indepth look at the causes and effects on the economy but then focuses on the affects on the state of Maryland. Read pages 24 - 28 to see the affect the economy has had on maryland. It is an excellent summation of all that is happening in the U.S and Maryland.
http://money.cnn.com/2009/03/08/news/international/summers/index.htm?postversion=2009030821
This article speaks of the need for the world to increase demand as a whole. The article says that this is the only way for the economy of not only the USA but of all nations to be brought out of the doldrums that we are in. Because there is such globalization going on, the next meeting of the G20 should be to focus on every nation putting an emphasis on demand, which will help the recession felt by every nation.
Overall, great article! Short and to the point, clearly stating what must be done.
“The Second Derivative May Be Turning Positive”
Although this article is a few weeks old, I thought it to be extremely relevant to class since we recently discussed second derivatives. This article discusses the mathematical term, second derivative, to explain the economy. Meaning, despite the economy’s “spiraling down” it is doing so in a slower manner.
http://www.economist.com/finance/displaystory.cfm?story_id=13145616
http://www.nytimes.com/2009/03/08/business/08gret.html?_r=1&ref=business
This is a fascinating article about insurance giant AIG and the immense difficulties they face in staying solvent. New York Times reporter Gretchen Morgenson gives an in-depth description of the poor decisions AIG made on its path to near destruction. The main problem AIG has is its inability to pay back the money owed on derivatives they have sold. Unfortunately, they did not have enough collateral to pay back the buyers back when a huge number of payments defaulted. It is clear that it would be disastrous for AIG to fail, but it is unlikely taxpayers will see any of the money back that they have unwillingly invested.
This article talks about how the economic downturn is hitting Iraq and Afghanistan veterans harder than other workers — one in nine are now out of work — and may be encouraging some troops to remain in the service, according to Labor Department records and military officials.
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