The Shrinking Economy

No understanding of the current economic crisis is complete without an understanding of derivatives. The Cyber Advisor explains what they are, and how they sunk the financial system. Then, is America headed for a smaller but stronger financial system? And learn about a company that really seems to be doing things right.

Episode Segments:

The State of the Economy We will hear Timothy Geitners testimony before congress, as he explains that the financial sector will be smaller, but stronger. Isnt that the problem Mr. Geitner?, our economy is getting smaller. In the next part Ilian Mehov of Insead, the Business University in Paris discusses how to deal with toxic assets. He believes, and we concure that the best way is to unload those assets on a bad bank. Just like we did during the RTC crisis of the 1980s.
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Three Dimensions of Derivatives. No understanding of the current economic crisis is complete without an understanding of derivatives, or as Warren Buffett called them: these financial instruments of mass destruction. We go back into the CSPAN archives for an interview with Legal Scholar Michael Greenberger as he gives an excellent explanation of just what derivatives are, and how they sunk the financial system. Next we bring you up to date with Julien Le Nobel from Asian Pacific Clearing, as he discusses efforts to standardize these investment vehicles. You may not have known that most derivatives are not traded on an exchange. Its been a free for all market with everyone paying for counter party risk. And William Bartmann, former head of Commercial Financial Services discusses the future of FNMA and Freddie Mac, the epicenter of mortgage market problems, and the origination the underlying collateral for most derivatives.
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An Economic Success Story We have a great story about New Fairfield, CT a small town that understands budgeting. In this time of governmental shortfall, they managed to finish the year with a surplus, give most of their employees a raise and achieve a AAA bond rating all at the same time. How did they do it? They budgeted to their income. Are you listening California?
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