Econ final

ECONOMIC CRISIS COVERAGE

By: Sarah, Brittney, Sam, Ahrang, Sahrish

• World’s largest weekly news magazine, owned by Time Warner

• Different from daily periodicals• Most famous feature is its annual “Time

Person of the Year” cover– Not necessarily given to 1 “person”– Honor is given to the person who, for good or ill,

has most affected the year

TIME

Good Articles

• Honest and Accurate• Unbiased• Explain situation clearly• Provide historical context• Ask tough questions• Foresee future problems • Appeal to those who have an economic

background as well as to those who do not

“America’s House Party” June 5,2005

• “Even the bullish Lereah is concerned about the loose lending practices. Such trouble would have repercussions for the whole economy. If enough homeowners become swamped by their debts and have to sell, prices would drop, creating a reverse wealth effect and fueling a slowdown.”

“Will the Housing Bubble Burst in 2007?” (Time, Feb. 22, 2007)

• “The bubble seems not to be a major concern.”

• “…a few terms to keep an eye on, such as ‘sell my house fast,’ and ‘how to stop a foreclosure’

• …the housing bubble alarm might finally ring true.”

“With Fannie and Freddie, the US Is Bailout Nation” (September 11, 2008)

“With Fannie and Freddie, the US Is Bailout Nation” (cont.)

• “Americans not versed in financial- market arcana can be forgiven for scratching their heads at this time”

• Poses and answers questions– “What are Fannie and Freddie again?”– “How will this bailout affect my mortgage?”– “Who gained the most from this deal?”


• “By making more money available for mortgages, this should push the rate down even more…providing support to the reeling housing market”

• “There’s still a giant supply of unsold houses, and prices are still high relative to rents and incomes. So don’t expect a big housing rally.”


• “They got away with holding only tiny capital reserves to insure against losses.. because mortgages were supposed to be safe”

• “Central banks and investors throughout the United States and around the world… believe them to be virtually risk-free”- Paulson

• “Paulson felt he had little choice but to make perception a reality”

How Financial Madness Overtook Wall Street

• September 18, 2008 • Clearly outlines the course of the crisis • Easy to understand • No speculation for future

“How AIG Became Too Big to Fail” (March 19, 2009)

• This article explains not only the reasons of AIG had to be bailed out but also the consequences of the bailout

• How We Got Here• “The idea is that in a global economy so tightly linked that

problems in the U.S. real estate market can help bring down Icelandic banks and Asian manufacturers…”

• $165 million in the bailout funds for retention bonuses to executives

• Bailing out the bailed out• The biggest beneficiary, Goldman Sachs

• The Great Clawback • “The main target for the opprobrium is Geithner”

Clear for the average citizens• “Although a CDS (credit-default swaps) is an insurance

policy, AIG was selling something far more exotic. Say you buy a house…”

• It was “the opposite of what insurance companies are supposed to do.”

Point out the government’s mistakes during the crisis (a bigger picture)• His “failure to reckon quickly with the existence of

large retention bonuses for AIG employees in the Financial Products division is perplexing.”

• “Geithner understands the deeply complicated world of global finance far better than the lawmakers…”

Ben Bernanke Person of the Year 2009

• “His creative leadership helped ensure that 2009 was a period of weak recovery rather than catastrophic depression”

• Made mistakes, but helped economy more than he hurt it

Ben Bernanke: Person of the Year

• http://www.time.com/time/video/player/0,32068,57543987001_1948061,00.html

Room for Improvement• Questioning authority more forcefully• Always asking “how did we get here?”• Providing course of action for the future on

national and individual levels

Econ final

Business

Transcript of Econ final