It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
This weeks videos are an economics lecture on America's Bubble Economy and a BBC documentary on how the super rich use other people's money to ....create bubbles. (Scroll down to see both videos.)
First up is Super Rich: the Greed Game by BBC reporter Robert Peston. It's from March, 2008, thus amazingly prophetic.
is an examination of how remuneration practices at private equity, hedge funds and banking encouraged excessive risk-taking.
The first important point to grasp is that bankers, the private-equity partners, the hedge-fund managers were all using other people’s money for their deals.
Investment bankers invested the capital of the banks for which they worked. Hedge-fund and private-equity executives invested their backers’ funds.
And they topped this up – they “leveraged” their deals – by borrowing enormous sums.
In some cases, they put modest amounts of their own wealth at risk. But their personal exposure to these deals was usually paltry.
The structure of their remuneration represented – in many cases – a rigged bet for them: heads they won, tails everyone else lost.
Now onto something a little more in depth, Economist Thomas Palley, giving a talk at the (fabulous!) New America Foundation on America's Bubble Addiction
Does America have a flawed pattern of growth?
For over two decades, growth has depended on asset bubbles and rising indebtedness. Business cycle recoveries have been marked by jobless recoveries and stagnant wages for most Americans.
The only way to escape this defective pattern, argues Thomas Palley, is to correct the problems in the macro economy. Join Dr. Palley to discuss these issues and his new paper, "America's Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession."
I think it's very important to study what these economists, such as Palley and Gomory are recommending as structural policies changes. Right now the crisis is waning and it appears we are back to business as usual...for the moment. This implies to me we must try to gain more public support than ever before for economic structural change, as the immediate financial danger has receded from the public consciousness.