Deciphering the Latest Business Research
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In this video interview, David M. Smith, PhD, Associate Dean of Academic Affairs and Associate Professor of Economics at the Graziadio School of Business and Management discusses the impact of the American Reinvestment and Recovery Act so far, the fate of female and older workers in this down economy, and which sectors of the California economy are likely to bounce back. Continue reading ‘The State of the New Economy’
Joetta Forsyth, PhD
Our financial crisis came about because of flawed thinking about how to help the poor.
Financially sophisticated parents would never tell their children to borrow to the ceiling to buy a house or anything else. And yet, lawmakers thought that the way to help the poor was to encourage them to borrow heavily. The mass inducement to the poor to borrow beyond their means was nothing short of an act of incredible cruelty. So how can we help the poor and get out of the mess we’re in?
There has been talk about bailing out homeowners so that they can make their mortgage payments. But this is just more of the same flawed thinking. Imagine the misery of just being able to make payments year after year. Dinner consists of macaroni and cheese, entertainment is renting a movie once a month, life revolves around hovering on the brink of disaster. These mortgage bailouts aren’t “relief,” they’re an act of cruelty designed to extract the maximum possible. And in-trouble homeowners throw good money after bad, hanging on in the hope of a bailout…
We need to let borrowers who got in over their head default.
The transition back to an apartment will hurt, but then life can begin again. Cash will be freed up for consumer purchases and saving for a comfortable retirement—possibly replacing the car that should be scrapped anyway. Instead of an economy full of people who don’t have a spare dime due to their mortgage payments, we will have an economy of people who can spend again. This will stop the layoffs. The more people who have jobs, the more of a base we will have to tax, which, ultimately, will help us pay off the massive debt being incurred. Jobs are everything; they are the key.
Yes, this will cause real estate prices to fall more. But propping up prices is worse.
Continue reading ‘It’s Time to Hit the Reset Button’
Linnea Bernard McCord, JD, MBA Peter Drucker, the famous management consultant, who is credited with creating the professional field of management, died a few years ago at age 95. He was the quintessential non-emotional thinker—a voracious reader who observed dispassionately what was going on around him without bias or preconception. He invented the word “knowledge worker” decades before it became a reality.
When asked how he could “see the future,” Drucker is reported to have said that he didn’t see the future; he simply saw what already existed today that others could not and would not see.
While attending university in Germany, Peter Drucker worked as a journalist. Adolf Hitler had already clearly outlined his vision of the world he wanted to create in his book, Mein Kampf, and Drucker had read every word.
As soon as Hitler took office as Chancellor of Germany in 1933, Drucker left Germany because he “saw the future.”
Instead of wishing and hoping that Hitler would not be as bad as his book indicated he would be, Drucker dispassionately evaluated the situation as it was. By acting unemotionally on the facts at hand, not what he hoped the facts would be, Drucker escaped the fate of 12 million people who later died in German concentration camps.
Continue reading ‘What You Need to Know About the Future’
Joetta Forsyth, PhD
Listeners from across the country submitted questions to Graziadio School faculty during the conference call on America’s Financial Crisis this Tuesday.
With over 200 participants on the call, there were too many questions for the panel to answer in the short time.
Below are responses from panelist, Dr. Joetta Forsyth, Assistant Professor of Finance, to just some of these questions. (Read why she believed a bailout was necessary)
Now that Congress has passed the bailout plan, we are working on answering more of these questions and posting the responses shortly.
1. The Bush Tax Cuts mixed with a boom economy and lack of fiscal leadership led to the largest deficit of our time and the current economic condition. What would you do as the incoming President to improve our situation?
I have a different interpretation of what happened. There are a number of factors that lead to this crisis, and the list is staggering:
Continue reading ‘Questions on the Financial Meltdown Answered (1)’
John Paglia, PhD
The recently approved bailout is yet another attempt to prop up the markets with an election around that corner that will only delay and worsen the inevitable pain ahead…
There is definitely a lack of trust and confidence in the markets, but it is due to the blatant lies and unethical representations. How many times have we heard an NAR (National Association of Realtors) economist call the bottom in housing? How many times have we heard the reporters on CNBC call a bottom in the equity markets? How many times have we heard phrases like “subprime is contained,” “we’re comfortable with our capital position,” “we have adequate liquidity,” and “the economy is fundamentally sound?”
The benefits of this package are being oversold to Main Street. And many don’t realize that a large part of this funding will be channeled to foreign banks through our domestic institutions. Furthermore, distribution of funds will not be exclusively through reverse auction; therefore preferential distribution—both in funds provided and responsibilities assigned to select agents—is a negative consequence. It is a disaster in the making and we will be left with a really bad hangover in a few months once we realize what happened.
Continue reading ‘Why I’m Against the Bailout’
Joetta Forsyth, PhD
The United States is facing the greatest financial crisis since the Great Depression. Financial institutions are failing, as is confidence in the financial system.
U.S. Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Henry Paulson have testified that Congress must act immediately to bail out troubled financial institutions, or we could face a financial collapse. There is much furor over the proposed $700 billion bailout, which didn’t get the required number of votes today to pass the House. Why, taxpayers ask, should people who were responsible and didn’t buy a house that they couldn’t afford, pay to bail out people who did, along with Wall Street fat cats? Exacerbating the problem is the fact the some of the people who are viewed as contributing to the crisis are now asking Americans to trust them to solve the crisis, using what could be an enormous amount of taxpayer dollars.
I share the same fury. And there is plenty of blame to go around. However, I would like to focus on the immediate problem. We are being told that something has to be done immediately, or we might have a financial collapse.
Continue reading ‘America’s Financial Crisis’
