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We look back at the podcasts we've done in 2011 and tell you what we got right, what we got wrong and how everything turned out in Wisconsin and Iceland. Plus, we try to to figure out why that Rihanna song that cost so much money, bombed on the radio.
NPR: Planet Money PodcastMoney makes the world go around, faster and faster every day. On NPR's Planet Money, you'll meet high rollers, brainy economists and regular folks -- all trying to make sense of our rapidly changing global economy.
Like most central bank chiefs, Ben Bernanke tends toward understatement. But when he testified before Congress earlier this year, Bernanke went big.
"On January 1, 2013," he said, "there's going to be a massive fiscal cliff of large spending cuts and tax increases."
One of the biggest parts of the fiscal cliff is the expiration of the tax cuts passed by President Bush and extended by President Obama. If Congress doesn't act before the end of the year, taxes will go up for most Americans.
Simon Johnson, our guest on today's show, thinks that would be a good thing.
"Our critics say we are proposing a large, middle-class tax increase," Johnson says. "To which the answer is, yes. We are."
He argues that a tax hike is necessary to pay for Social Security and Medicare, programs which are projected to become significantly more expensive in the coming decade.
Johnson teaches economics at MIT and co-wrote the new book White House Burning.
On today's show, we follow a couple guys who run a pizza shop in New Orleans as they buy their first Facebook ad. We visit a business in New Jersey that sells Facebook "likes" in bulk. And we check in with a business school professor who explains what Facebook would have to do to live up to its valuation — which, even after its post-IPO fall, is still roughly $90 billion.
Ashley Dias is 26 years old. She has cystic fibrosis. About six weeks ago, her lungs gave out. She was rushed to the Cleveland Clinic and told she'd need a lung transplant to survive.
Lungs are a scarce resource. But unlike many scarce resources, lungs aren't for sale. So doctors have had to develop a system to allocate them.
Ashley's life depends on that system.
Every single dollar bill in the world — every $20, every $100, everything — is printed on paper made at one small mill in Massachusetts. That's been the case for 130 years.
On today's show, we visit the mill. We hear the story of the guy who jumped out a hotel window to win the government contract to print all that paper. And we ask: Will anybody be using paper money in 50 years?
On today's show, we visit beautiful Lafayette College in Easton, Pennsylvania.
Price of one year at Lafayette: $55,688. Up 63 percent from the price a decade ago.
At least, that's the sticker price — the price you get if you add up tuition, room and board, and all the fees listed on the school's website.
But there's a huge gap between the sticker price and what the average student actually pays after figuring in grants and scholarships.
That's true at private colleges around the country. Nationwide, the average sticker price is more than twice as high as the price students actually pay, and the gap is getting wider.
It turns out, it makes economic sense to have a high sticker price and offer lots of discounts. On the show today, we explain why.
We're in a gym full of high school students. The gym is at the headquarters of the New York Federal Reserve, just a few blocks from Wall Street. The students are here for the High School Fed Challenge.
If you're a high school student and you dream of holding the U.S. economy in the palm of your hand — if you want the power to control interest rates and to print money out of thin air — the Fed Challenge is for you.
On today's show, we sit in on the finals — and hear from a bunch of teenagers about what Fed policy means for them.
Ian Bremmer calls his big idea "G-Zero." Here's how he described it in an essay last year:
We are now living in a G-Zero world, one in which no single country or bloc of countries has the political and economic leverage — or the will — to drive a truly international agenda.
On today's show, we take a world tour with Bremmer to find out who thrives and who struggles in a G-Zero world.
Bremmer is the president of Eurasia Group and author of a new book called Every Nation for Itself: Winners and Losers in a G-Zero World. For more, listen to our G-Zero podcast from last year.
On today's show, we bring you three Planet Money radio stories:
1. Pay Your Taxes: A Cautionary Tale
When IRS agents raided the house of rapper Young Buck, they seized all his things: his white leather dining chairs, his watches, his craps table, his tattoo kit. Even his refrigerator. The Nashville artist, who was once part of 50 Cent's G-Unit, owed hundreds of thousands of dollars in back taxes.
2. On The Million-Dollar Trail Of A Mystery SuperPAC Donor
The superPACs raising money to support presidential candidates have few restrictions. They can accept checks for any amount. One rule they do have: They must reveal who donated money.
3. We Stand At The Doorstep Of A Foreclosed House. Then We Go In.
In Florida, the foreclosure process takes 861 days, on average.
That means houses often sit in limbo for more than two years after the owner stops paying the mortgage. Maybe the homeowner is still living in the house. Maybe he's renting it out. Maybe squatters are living there, or maybe it's empty and falling down.
In New York City, roughly 3,000 food trucks compete for the business of hungry office workers. Being in the right spot means the difference between fortune and ruin.
There are many rules to finding that perfect parking space. Here are six of them:
On today's show Robert Smith rides along in the Rickshaw Dumpling truck, driving from deep within Brooklyn to the heart of Manhattan in search of hungry customers.
Legislation in Congress would get rid of dollar bills and replace them with coins. Proponents say coins are easier to use and save the country money in the long run. The bill people say none of this is true.
Should we kill the dollar bill?
On today's show we go deep into the nature of money itself, and we find a clear answer to this question.
We haul in a giant box of coins, talk to the guy who actually makes dollar bills, and watch a Senator try to use a vending machine.
Traditionally, when we think about bad behavior, we think about character.
But psychologists who study bad behavior — who study, say, fraud in the business world — have found that that character doesn't explain everything. They've found that a lot of unethical behavior can be explained by cognitive errors — errors that affect almost everyone.
On today's show, we talk to a man who started out as an upstanding businessman, and went on to commit bank fraud involving millions of dollars. It drove several companies out of business and resulted in the loss of around a hundred jobs.
We try to figure out why he did it, and what it means for the rest of us.
Iceland has about as many people as Staten Island. It also has its own currency, the krona. This raises a question: Does it make sense to have a currency that's only used by 300,000 people?
After the country's economy blew up in the financial crisis, the government put the krona on lock down. Now, they're trying to decide whether to stay with the krona, or abandon it, and use someone else's currency.
Today's show features special guest host Baldur Hedinsson, a former Planet Money intern who recently moved back to Iceland. We also hear from his sister, who is working in a town where people walk around with rifles to ward off polar bears.
And we talk to Robert Mundell, who won a Nobel for working on questions like the one Iceland is facing.
How do you make money manufacturing a dry, bland cracker that a tiny percentage of the population eats just one week a year?
On today's show, we go inside the matzo business.
A rabbi at a matzo factory explains why matzo is supposed to be hard to make. A Manischewitz exec tells us why all the rules for making kosher matzo are a boon to the company. And, perhaps inevitably, we explain what all this has to do with the 21st century economy.
On today's show, we eat artisanal beef jerky, sort through the wreckage of the financial crisis, watch Nancy Pelosi raise money, and meet high priced nannies.
It's is a collection of our recent radio stories. Here's more:
- A Revival In American Manufacturing, Led By Brooklyn Foodies
- Wisconsin School Districts Saved After Bad Investment
- On Tour With Nancy Pelosi, Fundraising Rock Star
- The $200,000-A-Year Nanny
David Unkovic is a thoughtful, mild-mannered guy who was appointed to save Harrisburg, Pa. The city had gone broke, and it was Unkovic's job to figure out how to fix things.
We visited Harrisburg a few weeks back. We talked to Unkovic. We talked to some of the people in Harrisburg who were suing him. And we visited the incinerator, a boondoggle that drove the city to bankruptcy.
Then, last week, Unkovic quit. "I find myself in an untenable position in the political and ethical crosswinds," his handwritten resignation letter says. "I wish the citizens of Harrisburg well in their ongoing quest for fiscal stability and good government, both of which they truly deserve."
Since resigning, Unkovic has gone missing. And he hasn't returned our calls or emails.
If you serve in Congress, you have two jobs: Making laws, and raising money to run for re-election.
It turns out, that second job — raising money to run for re-election — is a lot easier if you serve on certain Congressional committees.
On today's show, we reveal which committees are a fundraising goldmine. And which committees actually make it harder for Congressmen to raise money.
The show is a preview of our hour long special this weekend on This American Life — Take The Money And Run For Office.
On today's show, we hear the story of a 16th century German weavers' guild. They were savvy political operators, who knew how to push their competitors out of the market. They set up a system of fines, wage ceilings, and public rebukes that would be the envy of a modern cartel.
It's a tale of economic monopoly and discrimination. Of inequality and conflict. And it's a story of how businesses can stifle innovation even today.
Our guest is Sheilagh Ogilvie, an economic historian at Cambridge.
The U.S. has a really conflicted history with the income tax. For most of American history, there was no income tax at all. At one point it was ruled unconstitutional.
Today, income tax is the federal government's main source of revenue. That raises a question: How did something that was once so strange to us become so central?
The answer includes a few wars, a Supreme Court justice on his deathbed, and Donald Duck.
Willow Tufano is a 14-year-old girl who recently bought a house in Florida for $12,000.
Willow and her mom split the cost of the house, which they're now renting out. Willow saved up money by selling stuff from foreclosed homes on Craigslist; she plans to buy out her mom's share in the next few years.
We did a radio story about Willow earlier this month. The story took off. Since it aired, Willow has been on Ellen, CNN and ABC News.
On today's podcast, we hear the original radio story. And we hear more from the neighborhood where Willow lives. It's a place where people who bought at the top of the bubble — including Willow's family — live next to people who bought identical homes at a fraction of the price.
And we discuss whether a 14-year-old girl buying a house is a sign that that housing market has finally bottomed.
On today's show, we talk with a former manager at Countrywide Financial. Cynder Niemela describes what life was like inside the giant mortgage lender back in 2006. It's not pretty.
Mike Hudson, an investigative reporter with the Center For Public Integrity, is our special guest host for the show. He picked through the wreckage of the housing crisis and talked to dozens of people at big mortgage companies to find out what the mortgage industry was like back then.
Today's show, in three bullet points:
- How the European Central Bank finally used its super power.
- What that has to do with a guy who owns a bar on the coast of Spain.
- And why this may not be the end of Europe's debt saga.
On today's show, we visit Fulper Farms, a family-run dairy in New Jersey. It's a bucolic setting — white farmhouse, rolling hills, etc. But behind that peaceful image lies all the roiling tension, rising inequality and economic volatility of the 21st-century economy.
We meet Claudia, the prized, high-tech cow. We meet Claudia's less-accomplished neighbor, Cow #6. And we learn why even a barn full of Claudias wouldn't be enough to keep a family-run dairy afloat.
The Church of Jesus Christ of Latter-day Saints teaches that each Mormon in good standing should tithe 10 percent of his or her income.
"That's written in stone, and preached from the pulpit," says Gordon Dahl, an economist at the University of California, San Diego, who is Mormon.
But while the church is very precise about that figure — 10 percent of income — it does not tell its members what income means.
"Which is really interesting to us economists, because we want to know how people define income," says Dahl.
As anyone who has ever done their taxes knows, figuring out what counts as income is harder than it sounds.
On the show today, we look into how Mormons figure out how much to tithe, and what that tells us about how people think about income and taxes.
Today on the show, we visit a giant pool of money — worth trillions of U.S. dollars! — at the People's Bank of China, the country's central bank.
To understand how the money got there, we talk to Jacky Jiang and Rosalia Yang, a pair of very friendly exporters who show us around a factory where they make fake-wood flooring.
They tell us about the changes China is going through, and explain why that pool of money might soon start flowing back to the U.S.
Today, in the second of our two-part series on private equity, we take another look at Bain Capital — the firm co-founded by Mitt Romney.
Last Tuesday, in the first part of the series, we looked at a deal Bain did during Romney's tenure that went bad. Today, we tell the story of a deal that turned out better.
And we dig into the arguments about private equity's broad role in the economy.
"History is a battle between creditors and debtors," Philip Coggan says on today's show. "Every so often these two clash, there is a crisis and the whole system is remade."
Coggan, who writes the Buttonwood column for the Economist, is author of the book Paper Promises: Debt, Money, and the New World Order.
"We had a crisis in the 1930s, in the 1970s and we've got another one now."
We're not even close to resolving the latest crisis, according to Coggan. The debate over debt is "what politics and economics are going to be about for the next 10 years," he says.
Are private-equity firms job-destroying monsters? Or are they knights in shining armor, riding in to fix troubled companies and make the economy work better?
When you have a presidential candidate who used to run a private-equity firm, the arguments tend to shed more heat than light.
So we decided to look at what private equity firms actually do — by telling the stories of two companies purchased by Bain Capital, the private equity firm co-founded by Mitt Romney.
On today's show, we look at a deal gone bad. On a future podcast, we'll look at another deal that turned out differently.
Romney's campaign wouldn't comment on tape for the podcast, but they did send us this statement:
"Mitt Romney spent 25 years as a businessman and entrepreneur. ... At Bain Capital, he helped launch and guide a private equity and financial services firm. Bain Capital invested in many businesses; while not every business was successful, the firm had an excellent overall track record and created jobs with well-known companies like Staples, Dominos, and Sports Authority."
When you walk around a big city in China, it feels like an entrepreneurial free-for-all — guys selling stuff on street corners, lots of little shops, everybody hustling.
But when you pull back the curtain on the country's economy, you find the government everywhere. The government owns, among other things, the country's biggest cell phone carrier, the three biggest airlines and the four biggest banks.
Those state-owned banks in particular play a central role in the country's economy.
Chinese people have one of the highest savings rates in the world, and they don't have many options for investing the money they save. So they put lots of their money in ordinary savings accounts at those state-owned banks.
The banks, in turn, lend a lot of that money out to other government-owned companies, typically at very low interest rates. Those companies go out and build lots of new stuff. All that building contributes a huge chunk of China's growth.
But the building can't go on forever. In fact, China may already have built too much stuff with borrowed money.
What should the government pay for?
On today's Planet Money, we pose that question to Charlie Wheelan, author of the book Naked Economics, and one-time Congressional candidate. (He lost).
He gives us the econ 101 answer: The government should definitely pay for something if it's a public good, which Charlie defines as "something that we all need that will make our lives better, but the market will not and cannot provide."
The textbook example is a lighthouse. Other examples of public goods include national defense and autopsies. Everyone benefits from the medical knowledge autopsies provide, but it's not really in any individual's interest to pay for an autopsy.
Somehow, this fact leads us to call 1-800-AUTOPSY.
Note: Today's podcast originally aired in 2010.
On today's show: Four genius ideas.
These ideas, as it happens, have all appeared in Planet Money radio stories. But they've never been on the podcast.
- A Man. A Van. A Surprising Business Plan.
- Rethinking The Oreo For Chinese Consumers
- What Do The Dow's Daily Swings Mean? Not Much.
- How A Computer Scientist Tried To Save Greece
Can we have a banking system that provides good services to people at reasonable rates? A banking system that doesn't bring down the global economy every few decades?
Anat Admati thinks we can. She's a finance professor at Stanford, but she never paid much attention to banks until the financial crisis. (This is not unusual in the superspecialized world of academia.)
After the crisis hit, Admati started reading up on banks. And, in a basic banking textbook, she came upon a single line that changed her career.
"I sat in my office and I thought, 'Something is really wrong in banking.' "
On today's show, Admati tells us what she thinks is wrong in banking — and how she thinks we can fix it.
This is what it's like to host the Super Bowl: For one weekend, your city is the focus of the sporting universe. Fans flock in droves. They eat at your restaurants and sleep in your hotels. They buy the "I ♥ [your city]" t-shirts.
The NFL estimates that hosting the country's premier sporting event will give the local economy a $300-400 million jolt.
Economist Victor Matheson doesn't buy it..
In today's podcast, Matheson, a professor at the College of Holy Cross, presents the case against hosting the Super Bowl.
On today's show, we hear how a hobby turns into a lucrative one-man business — and how Apple's App Store is transforming the Internet economy.
The gist is super simple. In fact, it's something that's been going on in the physical world for thousands of years: Giving people a convenient way to buy cheap products.
Our guest on the show is Marco Arment, one of the founders of the blogging platform Tumblr. A few years back, Marco launched a little side project called Instapaper.
On the podcast today, we get a glimpse from inside the room where money changes hands. Jimmy Williams used to lobby for the powerful National Association of Realtors.
Williams tells us about some of the ridiculous issues he's lobbied for, the steady flow of money that congresspeople need, and how he wants to take down the crazy campaign finance system.
It's the 11th hour for Europe's debt crisis. Again.
Greece still can't pay back all the money it owes. So it's trying to cut a deal with its creditors. (Again.)
We've been wondering for years: Who are the people who loaned money to Greece? Are they suckers? Brilliant investors?
On today's podcast we find someone who loaned Greece money: Hans Humes. He runs a hedge fund called Greylock Capital Management. Turns out, his office is just a few blocks away from ours.
Humes is one of the guys trying to hammer out a deal with Greece. He explains just how complicated the negotiations are — and how, even among people who loaned Greece money, there are huge divisions.
Katy Perry killed it on the pop charts last year. She went No.1 five times. She was the most played artist on the radio. But the record industry is so weird, it's hard to know whether this kind of success translates into huge amounts of money for her label.
How much did the label spend on Katy Perry? And how much did they make?
On today's show, we try to figure it out.
It seems like there's always some country or another that the United States is imposing sanctions on. The reasons change, but the idea is always the same: economic coercion.
This month, it's Iran. In response to Iran's alleged pursuit of nuclear weapons, President Obama signed a law that punishes banks for doing business with Iran's central bank. This makes it difficult, in theory, for Iran to sell its oil around the world.
You can see why sanctions are so appealing for the U.S. government: Rather than go to war to stop Iran's nuclear program — to risk American lives — the U.S. can block money from going in and out of the country. That makes life miserable for the Iranians and, in theory, persuades them to give up their nuclear ambitions.
But do sanctions work? Have sanctions ever really worked? Today, we talk to Gary Hufbauer, author of the book Economic Sanctions Reconsidered. And we hear a first-hand account of what life in Iraq was like under the sanctions of the 1990s.
In 1978, a group of farmers in a Chinese village called Xiaogang wrote a secret contract and hid it in the roof of a mud hut.
They were afraid the document might get them executed. Instead, it wound up completely transforming the Chinese economy.
On today's show, we travel to Xiaogang, and hear the farmers' story.
American manufacturing is dead, right? Not exactly. The dollar value of what we make here keeps going up and up. But the success of American manufacturers has come at a cost. The number of manufacturing jobs in this country has collapsed as factories replace workers with machines.
Today on the podcast, we're going to take a trip to Greenville, South Carolina, where factories filled with bright shiny machines sit just across the train tracks from shuttered old mills. It's the perfect place to answer the question — what is the state of the low skilled American worker?
You rarely see lard on menus. There aren't shelves and shelves of it in every supermarket. In this country, we've sort of lost touch with the once beloved pig fat.
On today's podcast, we ask — who killed lard? Was it Upton Sinclair? His novel, The Jungle, contained a memorable passage about the men who cook the lard and perhaps fell into the vats.
Or should we blame William Procter and James Gamble? It was their company which created a new alternative to lard — the "pure and wholesome" Crisco.
Sometimes it feels like all we talk about at Planet Money is how the economy is going down the tubes.
Not today. We visit a few people who have been doing well this year. There's a guy who buys and stores gold for investors, companies that sell off inventories when stores go bankrupt, and a guy in the coconut water business.
On today's podcast, we take a page from radio newscaster Paul Harvey and tell you "the rest of the story."
Giving and receiving gifts can be a joyful thing — unless you're an economist. All those books that will never be read and ties that will never be worn are hugely inefficient.
To investigate a possible solution, we went to a seventh-grade classroom at a public school in Brooklyn.
The students were already familiar with the issue.
"This is kind of silly, but I got a Power Ranger," Tadre Jones said. "I was grateful, but I didn't really like it."
So we had no trouble conscripting 10 kids to participate in an economic experiment that aimed to improve the efficiency of gift giving.
Jack Abramoff, the former lobbyist, is out of prison and available for interviews. On today's show we talk to him — not about his crimes, but about the legal kind of lobbying that goes on every day. And we find out, how much do companies benefit from the business of lobbying.
If you're looking for the beginning — and, possibly, the end — of the European financial crisis, you can find it in a single building: The Greek statistics office, at 46 Peireos Street in Athens.
We visited recently and found what may be the world's most high-stakes game of office politics.
On one side: The technocrats, led by Andreas Georgiou, who was appointed last year to run the office.
On the other : The old guard, including Konstantinos Skordas.
Georgiou's technocratic ways — like reporting Greek deficit figures directly to European authorities — have landed him in hot water with the old guard.
His email was hacked, he says. His workers went out on strike. And now he faces a criminal investigation that could lead to life in prison.
Earlier this year we reported on the pileup of more than a billion unwanted $1 coins in government vaults. It was the result of a law passed a few years back that ordered the mint to create coins honoring each U.S. president.
Today, the White House said it will end the program. A small number of dollar coins will continue to be minted for collectors, but the coins will no longer be put into circulation. The shift will save an estimated $50 million a year.
On today's podcast, we visit a vault full of unwanted dollar coins and talk to the lawmakers who created the program.
Last week, American Airlines became a member of a club it hoped never to be a part of — major airlines that have declared bankruptcy. Before American came Pan Am, Delta, United, Northwest, US Airways, and Continental.
Sure, fuel costs are high and planes are expensive — but why is it that the industry continues to lose money year after year? By economist Severin Borenstein's count, domestic airlines have lost $60 billion dollars in the last three decades.
Even airline executives don't deny it. Bob Crandall, the former CEO of American, famous for calling it a "nasty, rotten business," says he used to tell his employees not to buy the company's stock. Why? "Because airlines don't make money," says Crandall.
On the show today, Crandall tells us why running an airline is so darn hard, and Severin Borenstein explains why all these bankruptcies are actually good news for us passengers.
European governments have turned their eyes skyward looking for a hero to save them from financial collapse. But the signal they've sent into the skies over Europe is not the usual one in the shape of a bat, it's the initials E-C-B, the European Central Bank.
On today's podcast, we'll tell you about the ECB's super powers and explain why they are so reluctant to use them.
On today's show, we go shopping. We're bringing you stories about how we spend our money and what these purchases teach us about economics.
Why Amazon Loses Money On Every Kindle Fire: The Kindle Fire is a book store, a movie theater and a record shop. And Amazon's the one selling the books, movies and music.
Why A New York Cheese Buyer Hangs On The Euro's Fate: Most of the cheese at Murray's Cheese Shop comes from Europe. And the cheese buyer's bonus hinges on the future of the euro.
The Income Gap, Explained With Candy Corn: The numbers detailing the income gap between rich and poor can be difficult to grasp so we use candy to help explain.
Plus, a story about the kinds of things governments pay for:
When Governments Pay People To Have Babies It's a strategy some countries have adopted to boost falling fertility rates. Here's why it often fails.
Last month here in New York City, two taxi medallions, the metal plates that make it legal to dive a cab in the city, sold for $1 million each.
On today's podcast, we try to answer the question — why? What makes these little pieces of metal worth so much?
To get the answer, we go back to the 1930's with Graham Hodges, professor of history at Colgate University. Hodges says it all has to do with a famous and violent strike where cabs were set on fire in Times Square.
Plus, we check in with Canadian economist and Bloomberg reporter Ilan Kolet to see how a taxi medallion stacks up against some of today's most popular investments. (Spoiler Alert: The taxi medallion beats out gold, by a lot.)
For today's show, we've collected four Planet Money radio stories that never made it to the podcast. Think of it as an early Thanksgiving buffet:
What A Coin Toss Has To Do With The Housing Market — A simple experiment helps explain why there's still a glut of houses for sale, five years after the housing bubble popped.
Why Are Wedding Dresses So Expensive? — A better question, according to one economist: Why are brides willing to pay so much?
Requiem For Pork Bellies — The life and death of pork-belly futures, explained by a trader in Chicago's meat pit.
Spaceflight Is Getting Cheaper. But It's Still Not Cheap Enough. -- Elon Musk wants us to live in other planets. First he has to make space flight affordable. So he took the fortune he made in Internet start-ups and started his own rocket company.
Financial planner Carl Richards tells us how he got sucked into the financial mess just like the rest of us and shares what it taught him.
Gary Loveman used to be an economics professor at Harvard Business School. He studied things like the development of the private sector in Poland.
Now he runs Ceasars Entertainment Corporation, a giant gambling company. But he still thinks like an academic. He likes to say there are three things that can get you fired from Caesars: Stealing, sexual harassment and running an experiment without a control group.
On today's show, he tells us how he got from Harvard to Caesars, and explains the surprising results of some of his real-world experiments.
Nevada's an economic disaster zone, with the nation's highest rate of both unemployment and foreclosures. But a few towns strung along I-80 in the middle of nowhere are doing great.
The reason: They're in the middle of Nevada's gold mining country, which has boomed as the price of gold has risen.
On today's show, we visit one of those towns. Elko, Nevada is indeed a happy place. But there's an undercurrent of anxiety.
When you get to the edge of town, you can see why: There are all these ghost towns nearby that boomed when the mines were running, then faded to nothing when the gold ran out.
On today's show, we talk to a guy named Lord Wolfson of Aspley Guise. He's a British CEO, and he's offering a $400,000 prize to the person who comes up with the best plan for countries to leave the euro.
Also: The story of another European currency union that fell apart a century ago, and the lessons it holds for the euro.
Today on the podcast, the story of one of the most destructive and mysterious food shortages in recent memory.
The most mysterious thing about this shortage of rice: There was more than enough to go around.
It is the epic story of a shortage that wasn't.
In this global caper of good intentions gone wrong, there are shadowy trade deals, corrupt government officials, and warehouses full of rice in a country that didn't want it.
On today's show, we go inside the rooms in Washington where the daily grind of campaign finance — Congressmen, lobbyists, money — takes place. At least, we try to go inside the rooms. Several times.
And we talk to Jimmy Williams, a former lobbyist now working on campaign finance reform. He describes what it's like to meet with a Congressman when you're a lobbyist and your PAC hasn't been donating to the Congressman.
On today's show, we hear the story of a steel-cage match between two economists. The fight has been going on for most of a century now, and it's never been more relevant: Keynes versus Hayek.
It's a Deep Read interview with Nicholas Wapshott, the author of the new book Keynes Hayek: The Clash That Defined Modern Economics.
Economists love economic growth. It's an essential driver of rising living standards.
But on today's show, we wrestle with a question we've heard a lot from our listeners: Is economic growth bad for the planet?
We talk to one economist, Herman Daly, who argues that economic growth is in fact environmentally unsustainable.
And we hear from a second, Robert Mendelsohn who says economic growth and a healthy environment can co-exist — but who argues we should include the effects of pollution in the price of electricity.
We got our hands on a secret government report outlining what once looked like a potential crisis: The possibility that the U.S. government might pay off its entire debt.
It sounds ridiculous today. But not so long ago, the prospect of a debt-free U.S. was seen as a real possibility with the potential to upset the global financial system.
Today on the show, we hear from the economist who wrote the report. And we look at how things turned out so, so differently.
Germany and France are a couple tied together by fate.
In the beginning, they were always at each others' throats. At last, they realized they weren't so different. So they stopped fighting and tied themselves together through — what else? — money.
On today's show, the story of France and Germany — the relationship on which the fate of Europe depends.
It seems unlikely that Greece will be able to avoid defaulting on its loans. The real question is how the default will happen — will it be clean and organized or messy and catastrophic.
The nightmare scenario Greece most wants to avoid is what happened in Argentina. A deep recession and doomed dollar peg forced Argentina to suspend payments on its debt, leaving its lenders high and dry.
Today on the podcast, a cautionary tale for Greece.
On today's show, we talk to Daniel Yergin, one of the world's most influential thinkers about energy.
We talk about the future of energy in America, and about Yergin's new book, The Quest.
Yergin's previous book, The Prize, looked at the businessmen and politicians who fought to control oil around the world. The Quest looks beyond oil to alternative energy. The heroes are the engineers and scientists of the energy world — the geeks, in other words.
We went downtown this week to talk to the protesters at Occupy Wall Street.
We asked people why they were there. We heard lots of different answers.
We went to the big nightly meeting, which lasts for hours. Everybody has something to say. Along the lines of:
Should we buy some sleeping bags? Why does that guy get to run the meeting? What if we just buy fabric and make our own sleeping bags?
This kind of back and forth, people told us, is the whole point of Occupy Wall Street. It's not a movement; it's a venue. Standing around, talking about what everybody wants — this is a model of how the protesters want society to be.
This being Planet Money, we immediately wondered: Can an entire economy run on group participation? How could that work? It turns out, there's an economist named Robin Hahnel who's been working on this problem for 40 years. And he has a proposal that he thinks would be perfect.
He calls it participatory economics.
On today's show, we visit a place where global economic forces converge: Colo, Iowa.
The price of farmland in Iowa has doubled in the past few years. People rush to outbid each other at real-estate auctions, and land owners become millionaires in a matter of minutes.
We look visit an auction, look at the broader economic picture, and ask an unavoidable question: Is it a bubble?
In the 1980s, Satyajit Das worked for a finance company that owned a large stake in an airline.
Das got the airline to start making speculative bets on the price of oil. That decision was good for the bottom line: One year, the company made more money from trading than it did from selling tickets on its planes.
But in the long run, Das says on today's show, this was part of a much larger shift in the global economy — and that shift turned out to be a disaster.
For today's show, we've collected four Planet Money radio stories that never made it to the podcast.
A Slow Motion Bank Run In Europe: Fear can wreck a banking system and cause havoc in an economy. That's why the recent worries about big French banks are so important, and so scary.
The Twist, Explained: Chubby Checker and the Fed's latest effort to push down interest rates.
A Shrinking City Knocks Down Neighborhoods: Youngstown, Ohio, gave up on the idea that a city needs to grow. Now, the city is trying to figure out how to shrink.
The Indie-Rock Club Behind Omaha's $100 Million Boom: A couple college friends decided Omaha needed a music venue. The community they created led developers to remake a whole neighborhood.
Germany's parliament votes next week on whether to go ahead with the next phase of the Greek bailout.
On our recent trip to Germany, we talked to lots of people who think parliament should block the bailout. That's understandable, given the painful changes Germany went through to get its own house in order a few years back.
But a surprising number of people told us they do support a bailout — often for very idealistic reasons.
"We need Greece, we need Spain, we need Italy," a cab driver told us in Frankfurt. "It's the ending of war and it's the beginning of a new future. It's the dream for European peoples."
On today's show: Toxie, Planet Money's pet toxic asset, died last year. But we learned recently that she may rise from the grave.
And she could theoretically earn us $75,000 — which is astonishing, given that we bought her for only $1,000. If we do make a profit, all the money will go to charity.
Toxie was (is!) a mortgage-backed security — one of the complicated financial instruments that were the heart of the financial crisis. When we bought Toxie, we bought into a pool of thousands of mortgages around the United States.
Recently, that particular pool became the subject of a lawsuit.
According to the lawsuit, the mortgages in the pool were a lot shoddier than they were supposed to be.
The unemployment rate is disastrously high in the U.S. and much of Europe. But the rate in Germany is just 6 percent — and it's declining.
We spent a week in Germany learning their secret recipe. On today's show, we hear the how country transformed its labor market a few years back — and how it still has the scars to prove it.
In a classic game of chicken, two cars race toward each other. The loser is the person who swerves out of the way of the oncoming car.
As it turns out, chicken is something that game theorists have devoted a lot of thought to
Chicken is also a pretty good metaphor for the way Congress handled the debt-ceiling debate.
On today's show, we talk to Steven S. Smith, a political scientist at Wash U. who studies Congress for a living. He takes us deep inside the debt-ceiling-as-game-of-chicken metaphor. And he explains why the supercommittee may actually work out a deal.
In Germany, a cab driver can quote you the inflation rate off the top of his head. A big bank has a contest to guess how much a basket of groceries will cost in 10 years. And a newspaper editor says: "There are two things in German psyche that are important: monetary stability, and soccer."
On today's show, Caitlin and Zoe report from Germany, where the fear of inflation runs deep. It goes back to the years after World War I, when Germany experienced one of the most catastrophic bouts of hyperinflation in the history of the world — an economic disaster that helped lay the groundwork for the rise of the Nazis.
On today's show: A financial crisis that began with the popping of a huge housing bubble and led to a stock market plunge and a banking crisis.
That's right. It's a show about Japan in the 1990s.
We talk to Adam Posen, who argues that the U.S. can learn a lot from Japan's mistakes. Posen is an economist at the Peterson institute and the Bank of England.
Everybody's worried about Europe's economy. What's the worst that could happen?
Bank runs, political riots and falling governments, for a start. Also, the end of the euro as we know it.
On today's show, David Beim, a finance professor at Colubmia's b-school, lays out a worst-case scenario for Europe.
Europe is borrowing money to bail out countries that got in trouble by borrowing too much money.
On today's Planet Money, Satyajit Das explains that European countries aren't actually putting their own money into that big euro-zone bailout fund. Instead, the fund will borrow from investors around the world — the same investors who are growing wary of lending to a bunch of countries in Europe.
What's more, the fund will be guaranteed by the countries that use the euro. So the more the fund is used, the more countries that are already struggling — countries like Spain and Italy — will be on the hook for potential losses.
Note: This podcast originally aired December of '10.
With their current leader, Moammar Gadhafi, on the run, Libya needs to start thinking about its next big challenge — what to do with the massive amount of wealth they as a country possess in oil. It sounds strange to worry about a huge influx of money, but almost all countries that find oil suffer from the natural resource curse.
There is, however, one notable exception — Norway.
An Iraqi geologist named Farouk al-Kasim advised Norway on how to organize its oil industry, and he is credited with helping it escape the resource curse.
Today on the podcast, he tells us how he did it.
The hacker group Anonymous has been grabbing headlines this year for attacking the websites of Sony, the Egyptian government and Bay Area Rapid Transit (BART).
Unlike other cybercriminals, the group doesn't appear to be hacking these websites for financial gain — so why do they do it? Why do they spend so much time and effort shutting down these sites?
Today on the podcast we talk to some close observers of Anonymous to find out how they operate and what they want.
Switzerland's economy is in great shape. Low debt. Low unemployment. Tons of exports.
In recent months, this economic strength has created a huge problem for Switzerland. Panicked investors around the world, who see Switzerland as a safe haven, have been buying Swiss francs like mad.
That made the value of the franc shoot up — which in has caused big problems for Switzerland.
On the show today, we look into the franc's crazy rise.
For years, Estonia played by the rules and did everything exactly the way it was supposed to. It made cut after cut and, just a few months ago, the country finally got what it wanted: It joined euro.
Despite the euro's troubles, Estonia's still doing well. It has the highest growth rate and the lowest public debt of any EU country.
On today's podcast, we talk to Estonia's president.
Every day, all around the world, people do business in U.S. dollars — even when their business has nothing to do with the U.S.
The dollar is the international language of money. It's essential for global trade.
This provides huge benefits for the United States. U.S. businesses can trade in their own currency. Our government can borrow money more cheaply. Mortgages and student loans are cheaper, too.
For the moment, the dollar's dominance seems secure. Safe-haven currencies like the Swiss franc are too small to replace the dollar. And bigger currencies like the euro and the Chinese renminbi have problems of their own.
On today's show, we hear about how people use the U.S. dollar Brazil and South Africa. And we talk to an economist who says the dollar's days as the world's lone reserve currency may be numbered.
You would never look at a map of the Hudson River, point to the spot where the Tappan Zee Bridge is, and say, "Put the bridge here!"
The Tappan-Zee crosses one of the widest points on the Hudson — the bridge is more than three miles long. And if you go just a few miles south, the river gets much narrower.
Our question for today's show: Why did they build a three-mile-long bridge when they could have built a much shorter, cheaper bridge nearby?
Our search for an answer leads us to a forensic engineer, the Statue of Liberty, and a governor who wanted to be an opera singer.
Italy is in trouble. The country is getting sucked into Europe's debt crisis, and leaders around the continent are trying to figure out what to do about it.
On today's show, we talk to a few Italians who describe how common tax evasion is in Italy, and how big the unofficial economy is.
We also talk to Andrew Balls, head of European portfolio management at PIMCO — a guy whose job is figuring out whether to lend money to Italy.
He says Italy isn't in such bad shape. Yes, it's debt is high. But its annual deficit is small, it didn't have a housing crisis and its banks are in decent shape.
Italy's problem is that investors are getting nervous about its neighbors — Spain, Greece and Portugal. And that tends to spill over.
Patents are supposed to promote innovation. But in the world of software and the Internet, they're having precisely the opposite effect.
Tech companies are spending billions of dollars to buy up patents — not to drive innovation, but to defend themselves from potential lawsuits. There's a legal war on in Silicon Valley, and patents are the weapons.
We talked about this issue recently on This American Life and All Things Considered. On today's podcast, we ask: How much is the patent war costing us? And what does it mean for innovation in America?
For answers, we talk to Jim Bessen, an entrepreneur and researcher, and Eric Maskin, a Nobel-prize-winning-economist.
Today's podcast is a recording of the live show Alex and Adam did in DC this week. In keeping with the vibe of the nation's capital, they go big, and talk a lot about "America."
Key themes:
1. Disco destroyed America.
2. Now there are two Americas: Broken America and American Dream America
3. A three-step plan for solving America's problems.
Let's assume that the U.S. government raises the debt ceiling, and the country keeps paying its bills next month.
It's still very possible that one or more rating agencies will downgrade the country's credit rating.
On today's show we ask: Would a downgrade matter?
We revisit a question we asked last year: How do you rate a country?
And we talk to one expert who says a downgrade of America's credit rating would make for splashy headlines, but would likely have a relatively small impact. Most of America's debt is held by big institutional investors — and those investors do their own research, and don't tend to be swayed much by what rating agencies say.
On today's Planet Money, more twists and turns in our story about the more than one billion dollar coins sitting unused in government vaults:
We talk to self-described 'travel hackers' who use frequent-flier mile credit cards to buy dollar coins and pile up miles.
And we learn that the U.S. Mint — just today! — said it would stop letting people use credit cards to buy the coins.
Also on the show: Why they love U.S. dollar coins in Ecuador.
Say you're a country with a decent-size national debt. Everything's going fine: Investors are willing to lend you money at a low interest rate, andyou can pay your bills without too much trouble.
But then investors get nervous and start demanding higher interest rates. All of a sudden, you have to devote more and more of your money just to pay off your debt.
Your economy starts to falter, and investors demand still higher interest rates. Now you're really in trouble.
What causes this to happen? Is there some magic threshold that countries cross before they get into trouble?
On today's Planet Money, we put that question to Ken Rogoff — a Harvard economist and an expert on the history of sovereign debt crises. We talk to Rogoff about three countries in particular: Greece, Italy and the U.S.
North Korea relies on charity to feed its starving people. But the country's elites like their luxuries — imported wine, fine china, dancing shoes.
To buy those things, they need foreign currency. (North Korean currency is worthless outside of North Korea.) To get foreign currency, they need to sell things to the outside world. But North Korea's industrial base is a disaster, and the country doesn't grow enough food to feed itself.
On today's Planet Money, we look at the ways North Korea's leaders have managed to keep foreign currency flowing into the country. Their strategies include manufacturing drugs, counterfeiting U.S. dollars, and selling gigantic statues to foreign leaders.
Bitcoin is a new kind of currency. But unlike, say, the dollar or the yen, it's not backed by any government. Also, you can't hold it in your hand or put it in your pocket; it exists only on computers.
Bitcoin is supposed to be cash for the Internet age — anonymous money that anyone can use without using a credit card or going through a bank.
On today's Planet Money, try to get our hands on a few bitcoins, which turns out to be harder than it sounds.
We dig into some basic questions that come up when you're creating a new currency from scratch.
And we buy lunch.
On today's show, we tell the story of a secret battle that's been going on for more than a year: Creating the song of the summer, the music industry's holy grail.
Our case study is Rihanna's "Man Down." The story starts in the spring of 2010, when Rihanna's label flies in songwriters and producers from around the company for a "writing camp" — a pop-up version of the old hit factories that churned out pop tunes.
Writing camp is expensive. But the real money doesn't start flowing until after the song is done.
*Correction: An earlier version of this podcast used the incorrect version of Jennifer Lopez's, "I'm Real."
In the seventies and eighties, the Antar family ran Crazy Eddie, a popular electronics chain known for its frenetic commercials.
The business was crooked from the start, but the fraud got more serious when the family took the company public in the 1984. In 1987, the Securities and Exchange Commission investigated the family and discovered years of inflated profits and overstated income.
On today's show, one of the masterminds of the fraud, Eddie's cousin Sam Antar, explains how they did it and why it worked for so long.
Every time the Fed's key policy committee met last year, almost everybody in the group agreed on what the Fed should do.
On today's Planet Money, we talk to the one guy who, meeting after meeting, cast the lone "no" vote: Thomas Hoenig, president of the Kansas City Fed.
Hoenig thinks the Fed is repeating mistakes of the past, keeping interest rates too low for too long. That risks creating another bubble — and another crash, he says.
On today's Planet Money, we travel to a place where people are trying to live without government interference. A place where you can use bits of silver to buy uninspected bacon. A place where a 9-year-old will sell you alcohol.
It's the 2011 Porcupine Freedom Festival, known to its friends as PorcFest. It's the summer festival for people who think we should return to the gold standard and abolish the IRS.
On today's Planet Money, we visit an underground vault that's full of money nobody wants.
The money — bags and bags of dollar coins — is the result of a 2005 law that requires the U.S. Mint to print a series of coins bearing the likeness of each U.S. president.
The problem is, people don't really like dollar coins. So more than 1 billion dollar coins are now sitting, unwanted, in Federal Reserve vaults around the country. By the time the program wraps up in 2016, the Fed will be sitting on 2 billion unwanted coins, according to the Fed's own estimates.
Unemployment is still dangerously high. But things are looking up for both households and companies.
On today's Planet Money, economist Mark Zandi says households have been steadily reducing their debt over the past few years. Companies slashed 8.5 million jobs in the recession and their productivity has soared.
But one thing that Zandi is still worried about: the federal government's long-term deficit.
In the 16th century, coffee shops prominently displayed coin boxes with the phrase "to ensure prompt service" written on the side. If you wanted your coffee in a hurry, you dropped a little something extra in the box, and made sure the waitress saw you do it.
This, according to at least one version of history, is where tipping began.
But today, we tip after we get served, not before. And, according to one expert we talk to on today's podcast, the quality of service we perceive makes a tiny difference in how much we tip. (The weather has a comparable influence on tip size.)
According to one theory, when you get down to it, we don't even tip for good service. We tip because we feel guilty.
If you know the right people — and if can get other criminals to vouch for you — you can go online and buy huge bundles of stolen credit cards.
As it turns out, Planet Money knows the right people.
On today's show, we sit in with Keith Mularski of the FBI. Mularski got so deep into this world that he wound up running a major criminal website.
He takes us to a giant online mall for stolen credit cards, where vendors offer discounts for repeat customers and banners advertise hacking and phishing tutorials.
Take a bunch of 3 year olds from poor families. Randomly divide them into two groups, and give one group free access to preschool. Then follow both groups for 40 years. This is what the researchers in the Perry Preschool Program did, starting in the early 1960s.
The results were astonishing. Kids from the preschool group were less likely to be arrested and more likely to have a job. Among those with jobs, those who went to preschool made more money than those who did not.
Other studies show similar results.
On today's today's Planet Money, we talk with James Heckman, a University of Chicago economist. Based on the data from these studies, he argues that using public funds to pay for poor kids to go to preschool actually saves the government money in the long run.
There's a lot of hand waving in economics. People make big-picture arguments and throw around equations, but often there's not much good evidence to work with.
MIT economists Abhijit Banerjee and Esther Duflo do experiments to try to figure out how to improve the lot of the world's poor. Their goal isn't so much to make big, sweeping statements as to find clear answers to specific questions.
On today's Planet Money, we talk to Banerjee and Duflo about their new book, Poor Economics.
On today's Planet Money, we hit the streets of Manhattan with economist Tim Harford. In his new book, Adapt, Harford argues that success always starts with failure.
Harford takes us on a failure tour of New York. Highlights include a Gutenberg Bible (turns out the Bible business wasn't so good to Gutenberg) and the Woolworth Building (Woolworth's had some great innovations in its day, but eventually got beat by big-box stores).
And perhaps inevitably, we wind up on Wall Street.
For hundreds of years, Europe and the U.S. had what Fareed Zakaria calls "the secret sauce" — a powerful combination of capitalism, the rule of law, individual rights, science, technology and education.
Today, the secret sauce has spread around the world. And it's driving rapid economic growth in scores of countries in Asia, Africa and Latin America.
On today's Planet Money, we talk to Zakaria, author of The Post-American World, about what the rise of the developing world means for the U.S.
Every political candidate promises to create jobs. But when Scott Walker was campaigning to be the governor of Wisconsin, he put a finer point on it.
He promised to create 250,000 jobs during his first term. His strategy for doing that is a familiar one: tax breaks for businesses that make new hires, and for companies that relocate to Wisconsin.
We recently traveled to Wisconsin to talk to Scott Walker and businesses around the state. Turns out, it's very hard to figure out which jobs were created because of Walker's programs, and which would have been created anyway.
On today's Planet Money, we take a look at the International Monetary Fund.
What does the IMF actually do? Does the world need the IMF? And what do the charges against Dominique Strauss-Kahn mean for the future of the institution?
Jonathan Coulton is a rock star for geeks. He used to work as a computer programmer. But now he writes songs about white-collar zombies and lovesick programmers.
He doesn't have a record label, but he makes about $500,000 a year from his music. He tours, licenses his music, and sells songs and merch from his bare-bones website.
On today's Planet Money, we talk to Coulton about his work.
Jacob Ganz and Frannie Kelley from NPR Music are our special-guest co-hosts. The core question: Is Coulton a fluke, or is he a new model of how to make a living as a musician?
Last fall, we embarked on our latest adventure in investment journalism: We bought a gold coin.
On today's show, we sell that coin, and find out whether we made or lost money (the question is more complicated than it sounds).
And we try to figure out whether we're in the middle of a gold bubble.
On today's Planet Money: The legend of the national debt. Where the debt came from, what happened the one time we paid it all off, and why Congress created the debt ceiling in the first place.
On today's Planet Money, we talk to Ali Tarhouni.
He fled Libya 40 years ago after speaking out against Moammar Gadhafi. "I was given a choice to leave the country or go to jail," he says. His name wound up on a Gadhafi hit list in the 1980s.
His life settled down over the years, though, and he landed a job teaching microeconomics at the University of Washington. But when the civil war started in Libya, Tarhouni returned home and quickly became the finance minister for the anti-Gadhafi forces. His job, among other things, is to figure out how to get money for the rebels.
On today's Planet Money: The economics of the Middle Ages.
Knights are extortionists. Guilds knock down your house if you don't play by their rules. And you have to wait until the black death kills a third of Europe before anything changes.
Tough times.
There was a brief moment — post-Friendster, pre-Facebook — when MySpace was a big deal.
How did that happen? And why was the moment so brief?
The answer involves porn, spyware, and total ignorance. On today's podcast we talk to Julia Angwin, author of Stealing Myspace: The Battle to Control the Most Popular Website in America.
Note: The interview originally aired in a podcast in August of '09.
It's called "Iceland" for a reason. Polar bears sometimes wind up there floating by on chunks of ice. In the winter, there are only a few hours of daylight each day.
Reykjavik feels like you took a European city — coffee shops, fancy cars, orderly streets — and put it on the moon.
Which raises a question: How did a barren, icy island become a thriving, modern economy?
The short answer: Fish, energy and books.
Remember that school we visited in Haiti last year? The one without a schoolhouse?
After we did a story on the school, listeners donated $3,000. The principal thought it was enough to build a schoolhouse. But, as we reported last fall, that money was only enough for a foundation and some concrete blocks.
We thought that would be the end of the story. Then we got an email from a listener named Tim Myers.
On today's show, we talk to Tim about what he learned on a recent trip to Haiti — and we hear how much he thinks it will cost to build the school.
Also on the podcast, a very special Planet Money Indicator: A decade of U.S. home prices, sung as opera. For more on that project, read our post from earlier this afternoon.
The very rich have planes and helicopters and yachts. They can go wherever they want, whenever they want.
On today's Planet Money, we pose a question being debated in state capitals around the country: Do the rich flee high-tax states?
Iceland — the whole country — has about as many people as Lexington, Kentucky. It also has its own currency, the Krona.
So during the boom, Iceland's banks got rich by going abroad — by borrowing and lending in euros to customers around Europe.
When the crisis hit, that led to a big problem: Iceland ran out of foreign money.
On today's show: The Planet Money team heads for Iceland with the help of Baldur Hedinsson, our Icelandic intern.
We get there just before the big election, when the people will vote to decide whether to pick up the tab for mistakes bankers made before the financial crisis.
Lots of fancy economists write about the economics of illegal drugs. Here's a paper from a Harvard guy. Here's another co-authored by a couple Chicago guys.
One thing missing from those papers: Actual drug dealers.
So for today's podcast, we run some economic theory by Freeway Rick Ross (pictured), who was one of the biggest crack dealers in LA in the '80s and '90s.
Have we got a deal for you!
An entire show about coupons, Groupons, and the economic history of cheapskates.
Act now, and we'll give you 40 minutes worth of economic wisdom in just 25 minutes.
Every politician promises to create jobs. On today's Planet Money, we ask: What does that mean?
As you may have heard, it's Fannie and Freddie week on Planet Money.
On Tuesday's show, we described the rise and fall of Fannie Mae and Freddie Mac.
Today, we try to figure out what comes next. This raises a central question: Should taxpayers be on the hook when people take out mortgages and don't pay them back?
It's Fannie and Freddie week on Planet Money!
They're two of the strangest companies in U.S. history — and their bailouts cost taxpayers more than the bailouts of AIG, GM, Citigroup, Bank of America and Goldman Sachs combined.
On today's Podcast, we tell the story of the rise and fall of Fannie Mae and Freddie Mac.
Should NPR receive federal funding? On today's Planet Money, we try to look at the question through the cold, hard lens of economics.
We go back to an idea we covered in a podcast last year: public goods.
Here's how an expert defined a public good on that show:
"...something that we all need that will make our lives better, but the market will not and cannot provide..."
Sounds simple enough so far. But as we wade into the details, things start to get murky.
The crisis in Japan is a horrible human tragedy. Is it also an economic disaster?
There are big, short-term economic problems. On today's show, a man who works at a major Japanese truck and bus manufacturer describes widespread factory closures and disruptions in the supply of parts.
But in the long-term, for all of the suffering, Japan's economy is likely to bounce back from the disaster.
On today's Planet Money, we read the thing you've never read: your credit card agreement. And we pose the question: Does it really have to be so long and complicated?
We talk to a lawyer who says yes, it really does have to be so long and complicated. We talk to a consultant whose job is to make it simpler. And we ask 4th graders to read a credit-card agreement and tell us what they think.
(RERUN)
We look at the world through the eyes of Matt LeBlanc, an efficiency expert (or lean expert), who runs around with a stopwatch and equations, trying to figure out how to eliminate waste in our economy. He finds it everywhere. LeBlanc says sometimes people love him and thank him. And sometimes not.
In their latest five-year plan, China's leaders set a remarkable goal: Slower economic growth. It's a recognition of problems like environmental damage and rising inequality that have come with rapid growth.
Does more money bring more happiness? Economists have been arguing over the question for decades (and everybody else has been arguing over it forever).
Economist Justin Wolfers of the Wharton School, has spent hours poring over happiness surveys from 155 countries across the globe, and he says the data is clear: more money means more happiness.
On today's Planet Money, Wolfers talks about his research and explains its implications for public policy.
When Reading, Pennsylvania fell on hard times a few years back, city officials sold off a lake. They raised property taxes and refinanced their debt. But it wasn't enough: The city couldn't get its budget deficit under control.
So, halfway through his second term, the mayor decided he couldn't deal with the problem. He threw in the towel and basically asked the state of Pennsylvania to declare Reading a financial disaster area.
On today's Planet Money, we visit Reading to find out what happened next.
In Spain, if you don't pay your mortgage, the bank can come after you for everything — your car, your wages, whatever.
In many parts of the U.S., it's not like that. If you don't pay your mortgage, the bank can take the house back, but that's it.
On today's podcast, we ask: Which system is better?
When Egyptians rose up against their government, the Egyptian military protected them. When Libyans rose up against their government, the military started shooting.
On today's Planet Money, we try to figure out why the responses were so different.
On today's Planet Money, we hear the words of ordinary man — Benjamin Roth, a lawyer in Youngstown, Ohio — trying to come to grips with the Great Depression.
Benjamin's son, Daniel, joins us to read excerpts from his father's diary and tell us the back story.
Franklin Delano Roosevelt ignores the advice of America's big-name economists — and listens instead to a guy who helped take care of the trees on his estate.
Montagu Norman, head of the Bank of England, gets a coded message at a critical moment — and completely misunderstands what it means.
On today's Planet Money: The gold standard and the Great Depression.
It's gold standard week on Planet Money!
On today's show, we visit the charming curmudgeon and respected finance writer James Grant. He says we should go back on the gold standard.
His basic argument: Under the gold standard, money holds its value. Central banks can't create (or destroy) money at a whim.
"At bottom, I'm not all that interested in money," Michael Lewis tells us on today's Planet Money.
On the show, we talk about the long arc of Lewis's work.
In the '80s, he wrote a book about the people who created mortgage-backed securities. Last year, he described people who bet against mortgage backed securities and got rich when they collapsed in the financial crisis. In his next book, he'll profile some of the places that got hit particularly hard in the crisis.
In the big finance bill passed last year, Congress left lots of details for the regulators to hammer out.
On today's Planet Money, we see what all that hammering looks like. We sit in on the bank regulators' book club, and we visit a public hearing full of finance-industry people.
Also on the show: Why would a Burger King franchise in Arkansas be interested in derivatives regulation? Bloomberg News has the answer.
So far, the Egyptian military has largely sided with the protesters in the streets of Cairo. This is not only because the military supports the people; it's also because the military sells the people lots of stuff.
On today's Planet Money, we look at the Egyptian military's deep business ties to everything from dishwashers to resort hotels. And we consider how those ties influence how the military responds to the crisis.
On today's podcast, we talk with Nicholas Phillipson, the author of "Adam Smith: An Enlightened Life."
Besides learning about the intellectual and political world Smith inhabited, we hear a bit about the man himself — how he wasn't just awkward but a bit of a mama's boy.
This was supposed to be a very exciting week for Planet Money: The week the Financial Crisis Inquiry Commission came out with the single, definitive story, explaining the financial crisis once and for all.
That didn't happen. Instead, the commission fractured along partisan lines, and we got three separate stories.
On today's podcast, we talk to commissioners from both sides, and we find that they agree on an awful lot. But in the end, they can't agree on the moral of the story. And that winds up being a big difference.
On today's podcast, we consider a plan to dramatically grow the US economy. The plan has nothing to do with banks, stimulus, tax cuts or the Federal Reserve. Instead, the plan focuses entirely on — public school teachers.
Economist Eric Hanushek has been researching education and the economy for four decades. In a recent study, he tried to put a monetary value on good teaching.
Almost half of all the duties collected in the U.S. are on apparel or footwear, and the laws that govern the importing of these goods are extremely complicated.
We've talked about tariffs before on the podcast, but now that we've got our own Planet Money t-shirt in the works, we're paying much closer attention. Since it's likely at least some part of our t-shirt will be made abroad, we wanted to know exactly what to expect.
On today's podcast, we consult with trade lawyer Michael Cone, and visit the lab where customs officials check to make sure importers are following the rules.
In the last few months, we've done stories about how actions taken by Ireland, Greece, Spain, and even a European bailout fund have threatened the future of the entire Eurozone.
On today's show, we bring you the story of one country that played by the rules and did everything exactly the way they were supposed to. One country that made cut after cut, after cut in hopes of gaining access to the special club of the euro -- Estonia.
Estonia officially surrendered its kroons and moved to the euro this week so we figured it was a perfect time to ask the country's president if he thought all those sacrifices were worth it.
The 30-year, fixed-rate mortgage -- the bedrock of American home ownership -- is a weird loan.
In an ordinary market, you'd have to pay a really high interest rate to get a 30-year fixed, if you could get it at all. Only the intervention of the government -- and the creation of Fannie Mae -- turned the loan into America's plain-vanilla mortgage.
On today's Planet Money, Bethany McLean and Joe Nocera (authors of All the Devils Are Here, a book on the financial crisis) walk us through the 30-year-fixed and the history of Fannie and Freddie. And they talk about where we go from here.
Last month, we asked you to participate in our economics experiment. On today's podcast, we dive into the results.
Everybody who participated saw the same three animal videos. But people were randomly assigned to two different groups. One group was asked to pick the animal they thought was the cutest. The other group was asked to pick the animal that they thought was most likely to be voted cutest by other participants.
We used to talk about the G-7 -- the world's seven biggest economic powerhouses. Every so often, the leaders of the G-7 countries would get together and hash out the important issues facing the global economy.
That grew to become the G-20, which included big players in the developing world (China, India, Brazil). In the heat of the financial crisis, the G-20 made a good show of cooperation.
But as the crisis has faded, so has the cooperation. What's left is a world where there's no clear economic leadership. That creates a new set of problems, David Gordon says on today's Planet Money.
Gordon, research director at the consulting firm Eurasia Group, calls this new world "G-Zero."
Spain's financial system is in trouble. Too many banks made too many bad loans. Part of the solution, the government has decided, is to consolidate -- to have relatively healthy banks buy relatively sick ones.
On today's Planet Money, we meet Angel Borges. He's a banking consultant in Spain, and he's played the role of merger matchmaker for many of the regional banks known as cajas. But the mergers haven't been particularly smooth or efficient.
For more on Spain's cajas, listen to our podcast from last week (#239).
The fate of Spain's economy may lie in a couple dozen savings banks called cajas de ahorros. These banks hold more than 50 percent of Spanish bank deposits and many are in danger of failing.
On today's Planet Money, we explain why these tiny Spanish banks pose a threat to the European and global economies.
Gift-giving makes economists crazy. It's so inefficient!
So we wondered: Is there a way to make the holiday season both more efficient and more joyful?
On today's Planet Money, we try to answer that question by conducting a wildly unscientific experiment. We go into a seventh-grade classroom and give a bunch of kids some small gifts -- candy, raisins, fig newtons.
Then we ask them how much they value what they got, and if they can think of a way to make everyone better off, without buying any more gifts. They quickly arrive at a solution: trade.
Behold, the power of economics!
Economists love to point out that the simplest products -- a pencil, say -- are the results of an incredibly complex system.
On today's podcast, we talk to the economist Tim Harford, who once marveled at the beauty and complexity hidden in a cup of cappuccino. But now, he questions if that complexity is always good.
Today on the podcast, why a horrible economy can be really good for pursuing your dreams.
We talk to listener, Becky Mumaw, who wrote to us when we asked people to share how they think they'll fair in the post-crisis economy.
Becky and her boyfriend Nick Westervelt had dreamed of being farmers one day, and recently, they made that dream come true by purchasing a farm in upstate New York.
The farm's former owners had a food concession business that failed during the recession, so Becky and Nick were able to buy the land fairly cheaply. The downturn in the job market also made it easier for Becky and Nick to pursue the farm. Without many good job prospects, they felt comfortable walking away from the career paths they would have pursued in good economic times.
But that's not the case for everyone. For some of Becky and Nick's friends -- a dancer and a painter -- the recession has made life very hard.
A few months back, we bought a tiny gold coin. The idea was to understand gold and its role in the history of money. That coin got us thinking about this really basic question: What is money?
The question led us to Yap -- a tiny island in the middle of the Pacific Ocean, where for hundreds of years people used giant stone discs as a form of money. As it turns out, those stone discs say a lot about the meaning of money.
If you don't believe us, just ask Milton Friedman.
The world's biggest economies spend a summer plotting in secret, over French wine, to make the dollar worth much, much less.
You guessed it: The Plaza Accord!
On today's Planet Money, we tell the story of the 1985 deal -- and reflect on what it says about today's currency wars, and about government efforts to set the value of money.
Europe is borrowing money to bail out countries that got in trouble by borrowing too much money. On today's Planet Money, Satyajit Das explains that European countries aren't actually putting their own money into that trillion-dollar bailout fund. Instead, the fund will borrow from investors around the world -- the same investors who are growing wary of lending to a bunch of countries in Europe.
Earlier this year, we reported on l'Artibonite, a rice-growing region in Haiti. The people there were suffering because an influx of free rice from foreign aid groups destroyed the market for their crop.
Listeners responded, donating some $3,000 to support a school that figured prominently in the story. That's about 10 years of wages for the average Haitian.
The principal, Enselm Simpliste, thought he could use the $3,000 to build a schoolhouse.
We recently visited the school to see how things were coming along. The news is bad: All the money has been spent, and all there is to show for it is a foundation, some concrete blocks and some rock and sand.
In the teeth of the financial crisis, the government of Ireland decided to issue a blanket guarantee, promising to make good on all the debts of all its banks.
That guarantee, we know now, has worked out very badly for Ireland.
On today's Planet Money, we hear the story of how Ireland's decision also had huge consequences for Europe and the U.S.
Okay we admit it, we stole our idea to make a t-shirt and report every part of the process from Pietra Rivoli, who wrote the book, The Travels of a T-shirt in a Global Economy.
Pietra followed the story of her t-shirt across three continents and along the way she learned about the many factors outside the market that impacted its production.
Out of all the elements on earth, why does gold hold such a privileged place in human history? Is it just a fluke, or is there something more fundamental going on?
On today's Planet Money, we try to find out.
According to a recent report from the Social Security Board of Trustees, the program's trust funds have $2.5 trillion in them. But there's an argument about whether or not that $2.5 trillion actually exists. So in today's podcast, we take a look at just what are the Social Security "trust funds."
What should the government pay for?
On today's Planet Money, we pose that question to Charlie Wheelan, author of the book Naked Economics, and recent Congressional candidate (he lost; here's his underwater ad).
He gives us the econ 101 answer: The government should definitely pay for something if it's a public good.
For two years, we've waited for someone from the financial world to apologize for their role the financial crisis. On today's Planet Money, Jacob Kosoff steps up. Kosoff used to work as an economist for Freddie Mac, and his job was to promote homeownership. He managed an online calculator designed to help people determine whether to rent or buy a house. But Kosoff says there's a big problem with the calculator -- and he's sorry he didn't work harder to fix it.
The economy won't be healthy until the housing market bottoms out. It may take another year.
On today's Planet Money, economist Mark Zandi tells us what it will take for the bust to end -- and sketches out housing's profound influence on the broader economy.
We need four bales of cotton to make the Planet Money t-shirt. On today's Planet Money, we go shopping in Texas and Brazil -- and find a long-running trade war. We meet a Brazilian who took on the world's largest superpower, a Texas cotton farmer who's tired of hearing the Brazilians complain, and a guy named Renato -- a.k.a. Retaliation Master.
Music: Johnny Cash's "Cotton Fields"
Back in May, we announced on the podcast that we'd be making a Planet Money t-shirt. Then we got swamped in the details. This week, though, we're back with two podcasts on the t-shirt project. Today, we look at the economics of design. And we explain why ripping off other people's fashion ideas is a good -- and, for the moment, perfectly legal -- strategy for us to pursue.
Music: Avett Brothers' "Kick Drum Heart"
On today's Planet Money, we go shopping with George Minichello.
George is one of hundreds of federal employees who goes to stores all over the country and record the prices of thousands of different things. A bag of romaine lettuce. A boy's size-14 collared shirt made of 97 percent cotton. A loaf of white bread.
Their work drives the consumer price index, a key economic indicator known to its friends as CPI. The index measures inflation in the U.S., and it influences everything from Social Security checks to the price of school lunches to how big your raise will be next year.
How does a guy whose mom is a heroin addict -- a guy who drops out of high school, has a kid, and starts working a minimum-wage job at a fast-food restaurant -- climb out of poverty? On today's podcast, we hear the answer from Katherine Newman, a sociologist who studied 300 fast-food restaurant workers in Harlem in the early '90s.
On today's Planet Money, we make a radical change in our investment strategy: We buy gold. And we find that our new investment raises some unsettling questions.
Music: Dispatch's "Flying Horses."
#219 Planet Money: Would You Rather Be Rich In 1900, Or Middle-Class Now?Tue, 12 Oct 2010 19:36:34 -0400
On today's Planet Money, we hear from Tim Taylor, an economist who starts out his econ classes with this question. He says about 2/3 of the students choose B.
There's no right answer here. But, Taylor says, there is an implicit lesson.
The U.S. is the world's biggest manufacturer -- way bigger than China, according to the National Association of Manufacturing. So why doesn't it feel that way? On today's Planet Money, we visit two factories to find out.
Music: V.V. Brown's "Quick Fix"
On today's Planet Money, we meet a single mother who makes $16,000 a year -- and who managed to fund a vacation at a Caribbean resort with an interest-free loan from one of the world's largest banks.
Edith Calzado gets credit cards with teaser zero-percent interest rates -- then transfers her balance before the rate ticks up. She signs up for store cards to get discounts -- then pays off her bill on time. She gets food stamps and lives in subsidized housing. Her son is doing well in school.
She may be the single most successful and productive beneficiary of government assistance you'll ever meet.
But when she talks about people on traditional welfare -- cash that's given to mothers with babies -- she sounds like Ronald Reagan attacking welfare queens
Brazil's economy is booming now, but for most of the 20th century it was an economic mess. In the 80s and 90s, Inflation was so high that grocery stores were raising their prices every day. So the government brought in in four economists who had been talking to each other for years about how to fix Brazil's inflation problem. Their solution: Create a currency that doesn't exist. No coins, no bills.
Music: Hey Marseilles' "Rio."
An animated funeral for Toxie, our toxic asset.
#215 Planet Money: What's Better For Helping The Poor -- Greed Or Charity?Tue, 28 Sep 2010 21:27:31 -0400
Is it OK to raise money from rich investors, who expect to make a profit? Muhammad Yunus, the father of microfinance, says no. If you have investors who expect profits, you'll ultimately turn into something more like a loan-shark than a do-gooder. Vikram Akula, founder of SKS Microfinance -- a company that had an IPO earlier this year -- says raising money from profit-seeking investors is the only way to spread microfinance quickly around the world. On today's Planet Money, Akula and Yunus hash out their differences.
Music: Stars' "Your Ex-Lover Is Dead"
We are gathered here to day to commemorate the passing of Toxie, Planet Money's toxic asset.
The first to speak will be Wit Solberg, the investor who helped us buy Toxie. Wit also invested in Toxie -- and, like us, he lost more than half his investment.
We'll also hear from Samir Noriega, an analyst who served as Toxie's doctor. He was the first to diagnose Toxie back in April and to name the cause of death this week: home loan modifications. In other words, lenders helping homeowners out and forgiving debt.
Last week, we had a socialist, Richard Wolff, on to explain what Socialism actually is and what a true Socialist government might look like these days. Today, two libertarians explain what libertarianism is and what they like and don't like about the Democrats and Republicans.
Despite what you may have heard, Barack Obama, Nancy Pelosi and other top Democrats aren't socialists. And the top Republicans in Washington aren't free-market libertarians. But given how freely everybody's throwing those terms around these days, we're wading in to get a deeper understanding of what they really mean. On today's Planet Money, we talk to an actual socialist -- Richard Wolff, professor emeritus at the University of Massachusetts -- about socialism. Coming next week: Libertarianism.
Music: Billy Bragg's "The Red Flag."
A few years back, when the housing market was going nuts, people didn't know we were in the middle of a gigantic bubble.
That, of course, is how we wound up with Toxie, Planet Money's pet toxic asset.
On today's podcast, we travel back to 2005, the year Toxie was created from thousands of home mortgages.
And we talk to Lisa Liberator-Kinney, who bought a home in Bradenton, Florida during the bubble -- and whose mortgage wound up in our toxic asset.
We got all excited about school starting up again. So on today's podcast, we reached out to a bunch of econ profs and asked them to give us their best stuff -- the stories they tell to try to hook their students on economics.
Music: Magic Bullets' "Lying Around."
Today, we hear from Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives.
Das' book was written before the financial crisis, but if you read it when it came out, not much of what happened during the crisis would have surprised you. It's a very detailed, very cynical account of what actually goes on inside Wall Street banks.
On today's Planet Money, listeners suggest ways to cut the federal budget -- and experts evaluate their suggestions. Among the ideas: Get rid of manned space flight, cut "welfare and warfare," and stop paying Social Security benefits to high earners. This is the first of several stories we'll be doing in the coming months on government spending, and the way things like earmarks, subsidies and entitlements affect our lives.
Music: Gomez's "How We Operate"
Over the past few years, the Fed bought $1.25 trillion* of mortgage bonds.
It was a big move for the central bank, intended to prop up the housing market. But in all the discussion about the program, we never heard anybody explain how you actually buy all those bonds.
On today's Planet Money, we go inside the Fed to find out.
The answer involves a plain room with four small cubicles, a Nerf hoops net and a table-tennis trophy.
Financial trickery! Self-dealing! CDOs! On today's podcast, we return to the last days of the housing bubble. Our story: A group of bankers knew there were serious problems in the market for subprime mortgage investments. But rather than wind the business down, they sped it up -- prolonging the bubble, and ultimately making the crisis worse.
Music from The Delays' "Long Time Coming."
On today's Planet Money, we talk to people who've been inside those rooms. And we unpack the latest Basel rules -- regulations that are supposed to apply to banks around the world, and that are due later this year.
(Spoiler alert: They'll probably make the system safer. But they won't end financial crises.)
It's really, really hard to create the right kind of economic incentives -- even if you're a professional economist, and all you're trying to do is teach your kids to use the toilet.
On today's Planet Money, we talk to Joshua Gans, an economist at the University of Melbourne -- and his 11-year-old daughter. He explains the system he constructed and rules he enforced. But like tiny Wall-Street bankers, the kids figured out how to work the system for maximum advantage.
Today, we hear from Nassim Taleb, the former Wall Street trader who published a book called the Black Swan back in 2007.
The book argues that most economic models fail because they don't take into account rare, high-impact events that wind up driving history. (Taleb calls these events Black Swans.) The argument came out looking pretty good after the 2008 financial crisis.
Earlier this year, a new edition of the book came out, with a new section called "On Robustness & Fragility." Among other things, the new section includes a prescription for withstanding a Black Swan.
The short version: Get rid of debt.
On today's Planet Money, we leap 30 years into the future, a time, if current trends persist, when China's economy is bigger than America's.
What does it look like?
We're watching Chinese reality shows dubbed into English, and taking life-saving drugs invented by Chinese scientists. We're exporting more goods to China's growing middle class.
The yuan probably has not supplanted the dollar as the world's reserve currency (and even if it has, it's not the end of the world).
And Chinese people are still much poorer, on average, than people in the U.S.
The network neutrality debate, which has been burning up the comments section of many a tech blog for several years now, hit mainstream media this week when Verizon and Google released a joint proposal for new legislation regulating the internet.
The debate really boils down to the economics of the internet. How it operates, and who pays. On today's podcast, we put on flame-resistant suits and dive in. We talk to two economists to find out what net neutrality will mean for the future of the internet.
Right at this very moment, you and I, and the rest of the country are participating in one of the great economics experiments of all time. An experiment to test whether John Maynard Keynes' prescription for how to get out of a global depression actually works. The Obama administration calls it the American Recovery and Reinvestment Act, you probably know it as the $787 billion stimulus package.
Keynes wrote about the idea of stimulus in his 1936 book, The General Theory of Employment, Interest and Money.
His theory simply put, was this -- sometimes economies go into a recession and they can't get out, they get stuck in a kind of recession whirlpool and the best way to get them out is a swift kick by the government in the form of spending. The idea being that if the people aren't spending money, the government needs to borrow it from them and then spend it for them.
Today on the podcast, we try to answer the question was Keynes right? Did the $787 billion stimulus package worked?
Playing Monopoly is one of a child's earliest opportunities to manage their own "money" and learn basic economic concepts. As such, it is frequently cited as an effective teaching tool. Daniel Hamermesh, professor of economics at the University of Texas at Austin , and a self-described "monopoly veteran," uses it at the college level, to teach his intro economics classes about marginal benefit. He explains it this way, when you put the first 2 or 3 houses on a property in Monopoly, you get big increases in rent, but adding house number 4 and a hotel only bring dwindling returns. He's also got his own strategy for playing at home with his grandkids "the green properties are losers" and "never buy the utilities."
If Daniel Hamermesh is Monopoly's economist champion, Russ Roberts of George Mason University, is its economist defector. While Russ admits to playing as a child, these days he says the only time it's played in his house, is when he wants to teach his kids "how bad" its lessons are. In a 2006 Morning Edition commentary, Roberts said about the game "...only Marxists look at the world of capitalism the way the game of Monopoly does, as an unrelentingly gloomy system of exploitation where the rich eventually wear everyone else down."
On today's podcast, we pit Daniel Hamermesh and Russ Roberts against Alex Blumberg and Robert Smith in a heavily edited game of Monopoly to find out what lessons the game has to offer and who has the best strategy for winning.
Historians say it was the spring waters that brought President Franklin Delano Roosevelt to Warm Springs, Georgia, in the 1920's. FDR, who suffered from polio, was said to have used the springs for physical therapy. Around town however, another story circulates, FDR was fond of the region's moonshine.
On today's Planet Money, we travel to Warm Springs to find out if the rumors are true. Did FDR really buy moonshine during Prohibition? Did he really violate the Constitution he had sworn to protect?
In our quest for truth, we meet the daughter of FDR's favorite fiddle player and an economist, who explains how Prohibition, a divisive moral issue, became a celebrated business stimulus plan.
What's the price of a pelican? The total for a turtle? The dollars for a dolphin? Its not a philosophical question anymore. The BP oil spill killed hundreds of these animals, and the Feds want to make darn sure that BP pays the total bill. But coming up with a precise economic value for wildlife has stymied economists and scientists for decades. There's no market for most of these animals. No catalog for endangered species. No eBay or Craigslist for migratory birds.
That's not going to stop us from trying, though. Today on the podcast, we come up with 5 different ways to put a pricetag on a pelican.
Recently we learned from a group of reporters at the Sarasota Herald-Tribune that one of the mortgages in Toxie, our toxic asset, was part of a real-estate scheme being investigated by the FBI. It's a scheme that allegedly involves $200 million in fraudulent loans.
So we traveled to Florida to find out how the scheme worked. The reporters there told us it all centered around a man named Craig Adams, who was flipping houses back and forth among a circle of friends and business associates. The people in the circle would buy homes for higher and higher prices, taking out larger and larger loans from the bank and then divide that money amongst themselves.
Our latest payment from Toxie was supposed to arrive this week. Once again, we got zero dollars and zero cents.
Our little toxic asset isn't quite dead yet. But it's been months since we've seen a payment.
So before she's gone, we figured we'd try to learn what she's all about -- not just loan-to-value ratios and unpaid mortgages, but actual houses and actual people. People who aren't paying us back.
Max Marion-Spencer is 18 and unemployed -- despite having applied for jobs at Quizno's, McDonald's, Arby's, Food Lion and Dollar General.
His grandmother, Alice Terry, is 62, and works as a high school teacher.
On today's Planet Money, Max and Alice join us to interview for a fake job.
Fake-job title: Human manifestation of an economic trend.
The trend: In the U.S. workforce, teenagers are now outnumbered by people who are 65 or older.
A decade ago, Philip Morris commissioned a study that found smokers in the Czech Republic were actually saving society money.
A big part of the savings: Smoking tends to kill people while they're still young, saving society the long-term costs of caring for them as they get older.
Perhaps not surprisingly, this finding blew up in the company's face.
On today's Planet Money, we tell the story of the study. And we look more broadly at the economics of this stuff.
That big finance bill everybody's been talking about since forever is about to become law.
But as it turns out, the bill doesn't answer some fundamental questions. How much money will banks have to hold as a safety cushion? Unclear.
Which big companies (besides banks) will be subject to new regulations? The bill doesn't say.
On today's podcast, we talk to Rep. Barney Frank, one of the guys whose name is on bill.
He argues that Congress has to leave lots of issues to the regulators' discretion. And, he says, the bill's effectiveness is largely in the hands of future leaders.
"In democracies, there are no guarantees," he told us.
On today's Planet Money: the criminal underworld, the nature of human happiness, and the economics of LeBron James.
With special guest Mike Pesca, insight from Tyler Cowen, and a Planet Money Indicator on China's currency.
On today's Planet Money, we meet Jonathan Bush -- former ambulance driver, former co-owner of a birthing center, and cousin of a former President of the United States.
More to the point: He's also the CEO of athenahealth, a public company that doctors pay to manage their billing.
Medical billing is ridiculously complicated. Each insurance company has its own set of rules. The industry still seems stuck in the '80s in some ways: The average doctor gets about 1,000 faxes each month, according to Bush.
In some ways, health care just is complicated. Still, some insurers seem to make it more complicated than it has to be.
Athenahealth deals with more than 1,700 different insurance companies. And it's put together a "Pain-in-the-Butt index" that ranks insurers based on how hard it is to deal with them
First, we hear from Yvrose Jean Baptiste, the Haitian businesswoman left destitute by the earthquake.
When we first met her in February, all she had to her name was a tub of chicken necks she was selling for a few pennies each. Now, she has money in the bank and her own stall in a bustling market.
Then: mangoes. Earlier this year on This American Life we told the story of how hard it was to build a little place where farmers could wash and store their mangoes.
We thought it would never happen. But -- right after that story aired -- construction began. A local leader even convinced the young men in the village to dig up 27 miles of unused pipe - for free - and move it so that it can supply water to the center.
Mervyn's a tire repairman in a Kingston slum. He took scrap parts from an old Lincoln and turned them into a machine that retreads tires. It works great.
Mervyn's shop is a shack, and he's totally outside the formal economy. If he wanted to get a loan -- say, to expand his business -- he'd be out of luck.
Michael Lee-Chin's a billionaire. He's the chairman of a big Jamaican bank, a guy who flies in on a helicopter for an interview.
On today's Planet Money, we talk to both guys. And we explain why it's so rare for guys like Mervyn to get loans from guys like Lee-Chin.
We wade into the economics of the art world to find out why a dead shark costs $12 million, and a photo of steel wool that looks like a tornado costs $1,265. Plus, we talk about some of the last-minute changes to the big finance bill that cleared a conference committee today.
Today on the Planet Money Deep Read, we talk with Raghuram Rajan, former chief economist at the IMF, about his new book Fault Lines: How Hidden Fractures Still Threaten The World Economy.
Alex Blumberg reports from Jamaica, where low-tech tomato farmers struggle to compete.
You remember the natural resource curse. It's the idea that being rich in natural resources -- oil, gold, lithium, whatever -- can actually harm a country's economic development.
On today's Planet Money, we talk to a couple economists who are pushing what sounds like a simple way to break the curse: Give the money directly to the people.
They recently took the idea on a road show to Africa, to try to convince a couple oil-rich countries to give it a try. It didn't go so well.
The people selling rice in Port-au-Prince say business is terrible. So we travel to l'Artibonite, Haiti's rice country, to learn more.
There are lots of problems with Haiti's rice market. Since the earthquake, free rice from foreign aid groups has made it harder for Haitian farmers to sell what they grow.
Even before the earthquake, they had a hard time competing with foreign rice, which is produced using high-output, modern farming techniques that aren't available in Haiti.
Economists have been writing for decades about "regulatory capture" -- the idea that regulators are "captured" by the industry they're supposed to be watching over, and wind up serving industry's interests.
In a famous paper published in 1971, the economist George Stigler wrote:
...as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit.
That notion still holds sway.
In the years leading up to the savings and loan crisis of the late '80s and early '90s, for example, the industry persuaded Congress to make the regulations more lenient. A decade later, Congress went along with another industry push to leave many derivatives largely unregulated, and to allow consolidation in the finance industry.
On today's Planet Money, we discuss high-frequency trading, in which people program computers to buy and sell stocks in quick succession under certain, pre-defined circumstances. The idea is to profit from fleeting changes in the price of a stock. High-frequency traders include big banks and tiny little companies. And they're all trying to be even faster than each other.
A few years back, all the high-frequency traders were trying to get a one-millisecond edge over everybody else. Today, they're angling for a one-microsecond edge.
In India, there are a handful of billionaires, and 400 million people without electricity.
On today's Planet Money, we ask the question: With India's economy growing at 8 percent per year, why are so many people there still so poor?
We hear from economists, and from Umrao Singh, a 75-year-old cobbler who lives on the street in Delhi.
This is the first episode in a new series we're trying out. The Planet Money Deep Read will feature in-depth conversations with big thinkers.
Today on the Planet Money Deep Read, we talk with Ian Bremmer, president of Eurasia Group, about his new book: The End of the Free Market.
#182 Planet Money: What If Everybody Chipped In To Pay Off the National Debt?Tue, 01 Jun 2010 16:47:29 -0400
Back in the '80s, Kay Fishburn had a dream: Americans would band together and make voluntary donations to the government to bring the national debt way down. She became something of a minor celebrity.
On today's Planet Money, we check in with Fishburn. And we talk to an economist, who explains why it would be a bad idea for Americans to raid their savings accounts to pay off the national debt.
It's all part of our ongoing quest to understand this whole gifts-to-pay-down-the-debt thing.
On today's podcast, we take a field trip to Barney's. (Do you have any idea what they charge for a t-shirt there?) Our guide is Claire Hamilton, a trend analyst at a company called WGSN.
And we talk to Ed Jay, a senior VP at American Express. He gathered data about 100,000 people who used their AmEx card to donate to public radio, and told us what other kind of stuff they bought.
"When this bill becomes law, the joyride on Wall Street will come to a screeching halt," Harry Reid said last week, after the Senate passed its big finance reform bill.
Today on Planet Money, we dig into the "Volcker Rule" -- the bill's ostensible ban on banks trading with their own money. And we look at the question:
Will the joyride really come to a screeching halt? And would it be a good thing if it did?
We bought her for $1,000 early this year. The mortgages she's made of were going sour at an alarming rate. When enough of the mortgages went bad, she would die.
On today's Planet Money: Toxie -- Planet Money's mortgage-backed toxic asset -- is in a coma.
During the credit boom, lots of payday loan stores sprang up in Mansfield, Ohio.
You'd expect that all those companies would have competed with each other, driving down interest interest rates for borrowers, But that didn't happen; they all charged, basically, the same price.
The lack of competition may have been the unintended consequence of a law that was supposed to protect borrowers.
There's this weird thing in the movie business: Almost all movies lose money. Except they don't, really.
On today's Planet Money, Edward Jay Epstein, the author of a recent book called The Hollywood Economist, explains the business of movies.
As a case study, he walks us through the numbers for "Gone In 60 Seconds." (It starred Angelina Jolie and Nicolas Cage. They stole cars. Don't pretend like you don't remember it.)
In Athens, everybody has a story about how easy it was to borrow money after Greece joined the euro and interest rates plummeted. On today's Planet Money, Chana Joffe-Walt brings back a few of those tales.
Her cab driver upgraded from a Toyota to a Mercedes. Paul Emmanuelides, who owned a couple bars, borrowed 7 million euros to build an industrial brewery. People borrowed money to go on vacation -- then refinanced the loans. "It was like manna from heaven," one lady says.
Where did all the money come from?
A lot of it came from Newport Beach, home of the giant bond fund Pimco. Adam Davidson was there last week, and he spoke with Mohamed El-Erian, Pimco's CEO.
First, an NYU finance professor talks about yesterday's wild market swings. Turns out, a sort of "circuit breaker" that's supposed to settle the market may have backfired.
Then, we go behind the scenes at Standard & Poor's to answer a question that's been on our mind lately: How do you rate a country?
Also answered in the podcast: Do agencies think twice before lowering a country's rating to junk?
So Maria Bartiromo let her trademarks lapse on "Money Honey." Sensing a huge opportunity to make a killing in the visor business, we swooped in and applied for our own Money Honey trademark.
You can read the application here, on the Web site of the U.S. Patent and Trademark office. It's good for caps and visors, as well as "headbands against sweating."
We were super excited, until we talked to a few intellectual property lawyers. They told us that a trademark isn't enough.
There's this whole other thing called a "right of privacy."
In Jamaica, people don't fear the tax collector. On today's Planet Money, we hear from Kimala Bennett, an entrepreneur who decided that should change.
Her goal is to get all the Jamaican entrepreneurs who think of themselves as hustlers to straighten up and turn into proper business people. Her inspiration, naturally, is CNBC's Donny Deutsch.
David Kestenbaum tries to figure out why there's so much bureaucracy in India. He comes up with a few possible answers — legacy of colonialism, pretext for bribery, machinery of democracy. He also brings back a few pictures of red tape in action.
#171 Planet Money: How An Indian Entrepreneur Learned To Love Paying BribesFri, 23 Apr 2010 15:57:01 -0400
Gagan Singh was 22 years old when he started a small business in Delhi, India, delivering telephone and Internet service. To get the business going, he needed to string up some wires and get licenses from the government. To make that happen, he had to start bribing people.
Singh had to bribe, basically, everybody: the lineman, the junior engineer, the senior engineer, their bosses. He hated it it. He didn't even want to be a businessman; he wanted to be an artist.
We dive into the SEC's lawsuit against Goldman Sachs, and Goldman's emphatic arguments in its defense. We consider the similarities between this case and that Magnetar story that aired recently on This American Life.
And our long quest to unite financial reporting with Broadway theater continues. (Spoiler: It's a dramatic reading of a Goldman executive's convoluted answer to a key question about the case.)
For more, listen to a recording of the conference call Goldman hosted this morning, and read our posts explaining the SEC's case and hashing out one piece of Goldman's defense. You can also read the SEC's complaint and Goldman's response.
A toxic asset — very much like our own Toxie — goes bad. And a New Jersey carpenters' union fund that bought a piece of the asset tries to figure out if there's someone to blame.
On today's Planet Money, we hear from a carpenter, a lawyer and a guy who owns a pub in London. Oddly enough, the pub owner could be the one bailing the carpenters out.
The lead singer of the band OK Go, famous for the video where they dance on treadmills, talks about the economics of Rock and his band's decision to leave their label and start their own record company.
We landed a rare broadcast interview with William Dudley, the president of the New York Fed.
The classic Fed stance has been that there's not much that regulators can do about the economic bubbles that grow and pop. Dudley disagrees — at least, he says, fighting bubbles is worth a shot.
The Federal Reserve owns the biggest mall in Oklahoma, and it's looking to sell.
The mall is one of the many, many assets the Fed bought to bail out Bear Stearns a few years back. The assets were bundled into a special company called Maiden Lane I.
Also on the bank's shopping list: A bundle of home mortgages that's closely related to Toxie, Planet Money's toxic asset. (Does that make us, like, in-laws with the Fed?)
For the most part, the Fed owns financial stuff like loans and swaps. The assets it bought as part of the Bear bailout included a mortgage on the Crossroads Mall in Oklahoma City. When the owners of the mall defaulted on the mortgage, the Fed foreclosed.
So if you're looking to buy yourself a mall in Oklahoma, you might check out Crossroads. As the listing notes, "this lender owned distressed asset ... can be purchased at far below replacement cost." It includes an AMC theater as well as a "former JC Penney (vacant)," and a "former Steve & Barry's (vacant)."
So there was a big shipping bubble that inflated about the same time the housing bubble did. It grew for some similar reasons — a go-go economy, easy credit, a belief that prices never decline, etc. And, like housing, it's now turned ugly.
Ships that cost more than $100 million a few years back now go for $40 million — and the rates for freight have fallen accordingly. Ship owners have gone bust, and their ships have been taken by the bank and sold at auction.
That's Lynn Tilton up there. She runs a $7 billion private equity firm called Patriarch Partners that specializes in scooping up companies teetering on the brink of bankruptcy.
On today's podcast, we visit with Tilton. And we go inside Spiegel, the catalog company Patriarch bought last year.
The FDIC swoops in and closes a failing bank. Then what?
Last year, Chana Joffe-Walt told the story of a bank failure. In today's podcast, she follow up with the main players.
The FDIC guy who closed the bank down gets choked up when he thinks back on it. And Todd Zalk — who was so connected to his job that he wore his bank name tag months after the bank closed — describes how it felt when a former colleague pleaded guilty to hiding bad loans.
President Obama signed the health-care bill today. You know this. So what does it mean?
Millions of uninsured people will get health insurance. Millions of people with high incomes will pay higher taxes. Medicare spending will grow a little less. But the broader issue of rising health costs will remain a problem.
Today's podcast explains all that, with the help of uninsured manfriend and some very bad jokes.
s China manipulating its currency? What does it even mean to manipulate a currency, anyway, and how does a country do it?
On today's Planet Money, Alex Blumberg and David Kestenbaum explain with help from economics professor Paul Wachtel and entrepreneur Imran Karim.
Adam Davidson and Chana Joffe-Walt, who've been reporting in Haiti, talk to Prime Minister Jean Max Bellerive. He runs the government's day-to-day affairs; President Rene Preval is the head of state.
They interview Bellerive at his official residence, and while they're talking, a U.S. Army helicopter flies by. It's a reminder of the massive foreign presence in Haiti. And it's not just the military; all sorts of people from around the world looking at everything from Haiti's ports to its health-care system.
But as plans for what Bellerive calls Haiti's "refoundation" get hashed out, there's some tension between the Haitian government and the international community.
In today's podcast, Alex and David talk with Reps. John Campbell and Brad Miller about what went into the House finance bill. They also talk about derivatives and resolution authority with Mike Konczal, the finance guy behind the blog Rortybomb.
We wanted to really understand how this whole housing bust/economic catastrophe is playing out. So we sent David Kestenbaum and Chana Joffe-Walt to Kansas City, where a former Wall Street guy named Wit Solberg runs a shop that buys and sells toxic assets.
Wit sold them a $1,000 sliver of a toxic asset he'd bought for $36,000. The asset — a bond made up of residential mortgages — was marked down from the pre-crash price of $2.7 million.
Of course, it's marked down for a reason. About 15 percent of the homes in the bond are in foreclosure, and nearly half are behind on their payments. The foreclosures will continue to mount, and at a certain point our asset will be wiped out. But until then, we'll get monthly payments. If we make it to Thanksgiving, we could double our money. (We'll be giving any profits to charity, by the way.)
Could the Greek crisis spell the end of the Euro? No way, says Berkeley economist Barry Eichengreen.
Eichengreen, says that if the Greek parliament were to even discuss the possibility of going back to Greece's old currency, the Drachma, it would send people running from Greek bonds.
Eichengreen's got plenty more to say about the Euro. He argued recently that European countries should put in place a system for Euro-zone bailouts, complete with "temporary control of the national budget by a committee of 'special masters' appointed by the European Union." (Somehow, this idea seems unlikely to gain much traction with European governments.)
The economies of Jamaica and Barbados — two countries with very similar histories — have grown far apart in the last several decades.
That difference in GDP shows up in all sorts of ways, Planet Money's Alex Blumberg found on a recent trip to both countries. Today, we get the first installment: What schools look like in each country. A principal in Jamaica keeps her school running with help from neighborhood volunteers, a donation from a Jamaican pop star and some funding from a U.S. aid program. A principal at a similar school in Barbados says government funding does a pretty good job of meeting the school's needs
Adam Davidson takes a road trip to Vegas, via Haiti.
When Adam and Chana Joffe-Walt traveled to Haiti recently, they kept hearing about "Magic" — a big clothing trade show in Vegas that the Haitians hoped would be a post-earthquake boon for their apparel industry.
So Adam went to Vegas for the show. But Haiti, as it turns out, is only a bit player on the Vegas scene, swamped by the likes of China, Bangladesh and Egypt.
And the real star of the show turns out to be Ron Kirk, the U.S. trade representative. What Haiti (and everybody else) really wants is a sweet trade deal with the U.S.
Greece is scrambling to get its national debt under control. Investors are already nervous. So what would happen if Greece actually defaulted-- if it simply stopped making payments on its bonds?
Investors would go beyond nervous. They might even panic. Particularly because Greece isn't alone among European countries when it comes to being heavily indebted. Investors would start demanding higher interest rates on bonds sold by countries like Spain, Italy and Portugal. And then they, in turn, could default.
At least, that's what Ken Rogoff, Harvard prof and former chief economist at the IMF, says in today's podcast.
His description reminded us of what happened after Lehman Brothers went bankrupt; panic ensued, and a bunch of other big companies fell apart. So if push comes to shove, will Greece be like Bear Stearns — saved from default at the last minute — or like Lehman Brothers?
Last week on This American Life, our own Alex Blumberg had a story about corporate personhood. The idea was actually pitched by Alex's dad, who was pretty upset about the recent Supreme Court ruling that essentially said: "Hey, giant companies are like people. So they get to spend money on political campaigns just like you and me."
It was Alex's father's dream that motivated him to the bottom of this issue. He wanted Alex to call up Exxon Mobil and say: "Who do you think you are?"
Alex's story went on the radio-- but halfway through the crew over at TAL cut it off. They thought it was too boring. We here at PM felt otherwise. Apparently you did too. We got lots of emails and tweets from listeners asking for the rest of the story. So today, we bring you Alex's full story on corporations as people. We also check back in with his dad.
We meet Yvrose Jean Baptiste, a small-time Haitian wholesaler. Yvrose has a unique business model. She borrows money from a microcredit bank and every two weeks takes a bus to the Dominican Republic border, where she buys a bunch of produce and products to bring back to Port-au-Prince. She then lends out her goods out to various small shop owners and people who sell things on the street. She gives them two weeks to sell everything and then comes back to pick up the money.
Yrose says it's been a successful model in the past, but the earthquake has been a big hit to her business. Most of her inventory has been destroyed and now she has to scramble to pay the loan back.
We meet "Mango Man," Jean Maurice Buteau who heads JMB exports in Port-au-Prince. Jean Maurice buys mangoes from rural Haitian farmers and sells them to the US. Unfortunately, between the mango farm and his office near the port, almost half the mangoes get damaged. If Jean Maurice could just get his farmers to put their mangoes in plastic crates, he says he could double his revenue and the farmers' income.
We take a look at why a simple idea like plastic crates, is in Haiti, not so simple at all.
We look at the world through the eyes of Matt LeBlanc, an efficiency expert (or lean expert), who runs around with a stopwatch and equations, trying to figure out how to eliminate waste in our economy. He finds it everywhere.
LeBlanc says sometimes people love him and thank him. And sometimes not.
Adam and Chana are on the ground in Haiti. And despite the general misery and constant funerals, Adam tells us people there are starting to talk about how to rebuild the country and the economy, maybe in a better way. The world helped rebuild Indonesia after the tsunami, and Rwanda after the genocide. But Haiti's troubles run deep, and have existed for decades.
Economist editor,Tom Standage, says if you want to get a good picture of world history, you should look at spices.
In his book, An Edible History of Humanity, Standage writes about how tall tales of carnivorous birds and flying snakes let Arab middleman charge Europeans inflated prices for cinnamon and pepper for years. Standage says it wasn't until an Indian ship went adrift in the Red Sea that the Europeans realized there was an easier route to get all those spices they had been craving.
We hear from Mary Kinsley, a lawyer in Phoenix who works at a legal help-line for people with real estate questions. She says her unit gets around 100 calls a day, almost all from people asking about foreclosure.
Mary says that starting last year, the questions changed dramatically. In 2007 and 2008, callers couldn't pay their mortgages but wanted to Mary to help them find a way to keep their houses. Now most callers aren't trying to avoid foreclosure, instead they want Mary to help them bring it on as fast as possible. It's called strategic default, where the borrower owes so much more than the house is worth, that it makes more sense to just give the keys back to the bank.
Fourteen states have adopted medical marijuana laws. We talk to Harvard economist Jeffrey Miron about what happens when drugs move from the black market to the open market.
Do they get 100 times cheaper? Or maybe, instead more expensive? Miron talks about the economics of prohibition, and reveals his drug of choice (which is legal) and one he would like to try (which is not).
We bring you a story about a cable television producer from New Jersey, a podcasting libertarian economist, an international pop superstar and the two dead economists who brought them all together.
Plus, some really great music.
On today's Planet Money:
We take a closer look at proprietary trading, which is under attack by the latest proposal from the Obama administration. The new banking regulations proposed by the president call for a ban on commercial banks engaging in potentially risky trades with their own funds-- or, in some cases, your funds. So we called up MIT Sloan School of Management professor Andrew Lo to shed some light on the murky world of 'prop trading', as the cool kids like to call it.
We debate the merits of the so-called "Cadillac" tax, a proposed tax tax on expensive health insurance plans. Jonathan Gruber, an economist at MIT, is a champion of the tax. He says charging consumers a bit more for pricey plans will make them think twice about rushing off to the emergency room for a swollen knee. Plus, he says it could mean a few extra dollars in your pocket. Gruber reasons that if employers are spending less on benefits, they'll put more money into paychecks. Not everyone agrees with Gruber including today's special guest. He says the tax will only make employers richer and hurt the middle class.
On today's podcast the exciting conclusion of our two-part examination of Denmark's unusual economy, part free-market, part huge welfare state. Denmark's government truly takes care of its people when it comes to things like health care and education. All that cost money though. A recent headline in a Copenhagen newspaper read "Denmark wins highest tax competition." Yes, in 2009 the country had the highest taxes in the world, the most dramatic example being car purchases, which are taxed at 200 percent.
We take you to Denmark, land of bicycles, pigs, Ikea-like furniture and economic indicators that seem too good to be true. Denmark has one of the lowest poverty rates in the world and lowest income disparities. At one point the jobs picture was so good unemployment dropped below 2 percent, something some economists would tell you should be impossible. Despite having the highest taxes in the world, Denmark's economy has grown steadily. Plus, Danes are the happiest people in the world, at least according to one analysis.
We go inside the "dirty unspoken world" of bill collectors with listener John Goebel. Goebel's been in the collection industry for a few years now. He started collecting second mortgages and car loans in college and now works part-time trying to recover subprime credit card debt.
He says the hardest part of his job is navigating the landmines of emotion that come with each call. He's been hung up on, sworn at, yelled at by children and about once a week he has to listen to someone just completely break down.
As great figures from history go, John Maynard Keynes should consider himself lucky, at least when it comes to his biography. His biographer, Lord Robert Skidelsky, is one of the best. His three-volume biography of Keynes is not only comprehensive (1000+ pages) — it's also funny, insightful and, frankly, a little raunchy.
Skidelsky has a new book about Keynes out, called Keynes: The Return of the Master. We talk with him about how Keynes developed the ideas that (at least according to some people) got us out of the Great Depression.
We hear and read stories of corruption every day, but finding cold hard data on the subject is so hard that MIT economics professor, Ben Olken, had to go dig up roads in Indonesia to get some. Olken and his team set out to measure the amount of raw materials that went missing when the government gave local villages money for projects like building roads. The study required the researchers to not only dig up roads — but also to build a few of their own.
How does the U.S. rank in terms of corruption compared to other countries? Transparency International puts us 15th on its Corruption Perceptions Index, which "measures the perceived level of public-sector corruption in 180 countries and territories around the world."
Jermyn Brooks, chair of the group's business advisory board, tells us how we landed there and what we can do to climb up.
We continue our conversation about how economics and technology have shaped the news business.
NPR media correspondent, David Folkenflik, stops by to tell us Microsoft and News Corp. owner, Rupert Murdoch, are in talks to give Microsoft's new search engine, Bing, exclusive access to Wall Street Journal content. The deal could bring Murdoch's media company millions of dollars and give the Bing a real chance compete with Google.
We may think of our independent press today as being the result of political awakening and noble efforts by those seeking truth, but that's not the whole story. University of Chicago economist, Matthew Gentzkow, says we've progressed not just because of good intentions, but because of basic economics. Gentzkow explains how advances in printing helped newspapers expand their audience beyond just one political party.
We announce the winner of our economic abstract translation contest and find out what the paper's author really meant by "hybrid translog cost functions." Plus, we reach out to Aaron Edlin, one of the editors of the Economists' Voice, to get his take on how much jargon we really need.
Another very special radio competition. We sent Adam Davidson, Chana Joffe-Walt and Alex Blumberg to the International Council of Shopping Centers' New York Conference and challenged them to bring back the best economics stories they could find. Listen to their stories, hear our panel of celebrity judges weigh in and then decide who you think should be the winner.
On today's Planet Money:
Adam Davidson chats with the intrepid David Kestenbaum about both the theatrics and real policy debates going on at the current climate conference in Copenhagen. First, meet a biker who powers up music with his feet for outdoor dance sessions and, with the late Friday announcement that a global agreement of some sort has been reached at the conference, listen to the potential promises and pitfalls of a key aspect of the deal — a "cap and trade" carbon reduction plan.
On today's Planet Money:
In an ongoing investigation by ProPublica, a non-profit investigative newsroom, in collaboration with NPR's Planet Money, reporters found that almost three years since banks starting taking losses that led to the worst financial crisis since the Great Depression, the Securities and Exchange Commission is still asking basic questions about what happened. Planet Money's Adam Davidson and Chana Joffe-Walt and Propublica's Jake Bernstein and Jesse Eisinger talk about the story, published Wednesday on NPR.org.
On today's Planet Money:
Adam Davidson and Alex Blumberg chat with Amartya Sen, a Nobel Prize Laureate in Economics, about his new book, The Idea of Justice, and its critique of the theory of social justice. Sen spends time in his book, and on the podcast, talking about what he sees as common misinterpretations of Adam Smith's oft-cited but perhaps more complex embrace of an absolute free market.
The Planet Money team hits the streets of New York to check out why stores clump together.
Our own David Kestenbaum is currently on route to Copenhagen where he will be spending several days reporting at the Climate Conference. David gives us an early windup of what he expects to be looking out for, including details on how much money countries plan on putting up to modernize energy economies across the globe. Plus, one very passionate delegate from the Solomon Islands.
Russ Roberts, George Mason University economist and host of EconTalk, explains why he thinks is economics is an imperfect science.
Roberts says he has come to believe it's impossible to predict future economic conditions because good data is so hard to come by and even harder to compare. So what about all his fellow economists who seem to have an opinion on almost any topic? Roberts says they should come out and tell the truth, that their policy recommendations are based on philosophy and ideology, not on empirical data.
An American journalist in Japan, Jake Adelstein, has spent a decade covering the world of organized crime. He talks about how the business of the yakuza groups has changed over time and how tighter government restrictions have pushed the Japanese mob into more "traditional" investments.
The announcement earlier this week, that Dubai World, a company owned by the government of Dubai, was hoping to delay payment on $26 billion in debt sent stock markets across the world plummeting. Analysts were watching to see if investors would pull out of banks and investment firms with exposure in the Middle East or flee risky markets altogether.
By now, fears of Dubai's credit crisis spreading outside the country appear to have abated, but questions about Dubai remain, like, "what in the world were they thinking?" Dr. Christian Koch of the Gulf Research Center, says Dubai has a good economic strategy, but things got too crazy, too quickly. To Jane Meikle, a Canadian who has spent the last four years living in Dubai, sure the place went a little crazy, but that's part of what makes it so great. She talks about the upside of life in a gulf state boom town, where everyone is from somewhere else.
Economists see climate change as a tragedy of the commons problem. We benefit by putting carbon into the atmosphere because it means cheap electricity and cheap gasoline. In the short term, we save money but eventually if we continue, we'll all suffer.
Nobel prize winner Elinor Ostrom says the answer to fixing rising temperatures has to come from the people not the government. But reducing our carbon emissions is expensive and some economists wonder if we're willing to pay for it. To answer that question, German zoologist, Manfred Milinski come up with a game that tests how much we would be willing to pay now to save the Earth later. Joined by a special group of NPR staff, the Planet Money team plays his game and get a surprising result.
Economist Joel Waldfogel says giving gifts people don't want isn't just bad for the recipients, it's bad for the economy. According to his research, billions of dollars are wasted each year because of holiday shopping. A professor at Wharton, he has spent years surveying his students about how much items they received as gifts cost and how much they would pay for the same items. Based on those surveys, Waldfogel says the spending others do for us produces about 20 percent less satisfaction than the spending we do for ourselves.
Despite the title of his book, Scroogenomics: Why You Shouldn't Buy Presents For The Holidays, Waldfogel says he doesn't want to end giving gift, in fact he enjoys it. He says he just wants us to think harder about who we are buying for and maybe choose a gift card over that reindeer sweater.
Nuhu Ribadu spent years fighting corruption in Nigeria. From his early days in the Nigerian police force to his later years as Chairman of the Economic and Financial Crimes Commission, Ribadu battled the corruption that strangled his country's economic growth. He had some success for a while, but after two attempts on his life, he was forced to leave his home country and come to the United States. He shares the stories of his struggle and says he hasn't given up yet.
We continue our search for answers about why MRI prices can differ so greatly. This time we travel from New Haven, Conn. to Japan, where an MRI costs only $160. Why? Well, it's because of the government, the quality of the machines and as we'll hear from neurologist Dr. Michiko Kimura Bruno, because Japanese people really love MRIs.
NPR business correspondent Frank Langfitt headed to China a few weeks ago expecting to find a triumphant people. The Chinese economy has recovered much more quickly than many parts of the world and Langfitt says he thought people would be gloating. But that just wasn't the case, instead Langfitt found himself being comforted by the Chinese about the strength of the United States.
Many people he spoke to said their country still has a long way to go before overtaking the U.S. economy. Part of the reason, factory workers in the southern part of the country have seen layoffs that Langfitt says, just can't be compared to Detroit. Returning to factories he had visited years ago, Langfitt found doors locked and furniture strewn about outside. Why's that? It's simple — Americans have stopped buying.
Last week two Bear Stearns hedge fund managers were acquitted on charges of fraud, stemming from the collapse of two funds they managed in 2007. The government alleged the men knowingly misled investors about the health of the funds by lying about how much money they had personally invested in them and how many redemptions they had. The defense argued that comments made by the men in personal emails were just strategy talk. WNYC reporter Lisa Chow covered the case, she joins us to talk about the verdict and what it may mean for future trials.
Jeremy Anwyl, the chief executive of Edmunds.com, defends his company's latest report about the effectiveness of the much-hyped and recently closed Cash for Clunkers program. Edmunds found the program added only 125,000 in sales at a cost of $3.5 billion, or $24,000 per new car.
But Austin Goolsbee, a University of Chicago economist currently serving as a member of the Council of Economic Advisers, doesn't think those numbers are right. His analysis puts the number of Cash for Clunkers sales closer to 450,000.
Economist and Planet Money regular Simon Johnson thinks it's time to break up the big banks. Simon says the current regulations aren't enough to prevent another crisis and we need to do something more drastic. Former head of the Federal Reserve, Paul Volcker and Mervyn King, head of the British central bank, agree, but that hasn't convinced Martin Baily of the Brookings Institution. Baily, who was chairman of the Council of Economic Advisers during the Clinton administration, is worried about the unintended consequences of bad regulation. He says the risk simply isn't worth it.
When people talk about the current economic crisis they bring up the
Great Depression and Japan's lost decade, but the world's history of
'financial folly' spans much larger, through eight centuries and 66
different countries. In their new book, This Time Is Different,
economist Ken Rogoff of Harvard, and Carmen Reinhart of University of
Maryland, tell the stories of financial crises from medieval currency
debasements to the recent subprime mess. Reinhart says our current
troubles are nothing new, and what's worse, she predicts we're doomed to
repeat the mistakes of our predecessors.
How can one hospital charge $800 for an MRI while the stand alone clinic down the street charges $450?
We visit two MRI centers in Pensacola, Florida to find out.
When the government created the Medicare system in 1965, they were so desperate to get doctors into it that they allowed them set their own fees.
The fee for service system was good for doctors, who now got paid for giving health care to the poor and elderly, but bad for the government. The crushing weight of doctors fees soon sent government budgets out of control.
Ten years later, President Ford thought he had the solution, cap the fees paid to doctors. Unfortunately capping fees just caused another problem, overtreatment.
It wasn't until the late 1980's that an economist from Harvard, Professor William Hsiao, finally came up with method to determine competitive prices for doctor's care — the relative value scale. Though this scale is used today, the problem of over paying doctors still exists. Hsiao, says that's because special interests have gotten a hold of his scale distorted it.
The world's governments have given a trillion dollars in aid developing nations since WWII, and yet in some countries, particularly in Africa, the economic situation is just as bad or worse than it's ever been.
Columbia economist and former economic adviser to the Bush administration, Glenn Hubbard, says it's time to change the way we give aid to Africa. Hubbard, co-author of The Aid Trap: Hard Truths About Ending Poverty, advocates a modern day Marshall plan, which would give money directly to local businesses instead of government.
Economics teacher Heather Hanemann has developed a curriculum based on several of the Planet Money podcasts. We visited her classroom here in Manhattan to see what the kids thought about the show and hear how the financial crisis has played out in their lives.
GMAC is on the way to achieving the special distinction of three federal bailouts. The financial institution has already received $12.5 billion in assistance, for which the government has taken a stake of nearly 35 percent in the company.
Columbia economist Charles Calomiris says the GMAC case is a textbook example of the dangers that come with taxpayer bailouts. Calomiris says the government ends up giving money to keep a foundering bank afloat. The bank takes what's known as "resurrection risk," the economic equivalent of football's Hail Mary pass.
There's more. Senior Vice President Paul Merski of the Independent Community Bankers of America says that with government backing in place, GMAC is getting an unfair competitive advantage.
Since the start of the financial crisis, the U.S. government has put $50 billion into General Motors. After GM emerged from bankruptcy this year, the public owned 61 percent of the stock of the newly reconstituted company.
How much of that $50 billion will the American taxpayer get back? CEO Fritz Henderson says business at GM is getting better, which is at least a hopeful sign for repayment. But the situation at GM is so complicated, Henderson says, that he can't say yet how much money GM will be able to return to the public coffers.
Longtime auto analyst John Casesa has crunched the numbers we have. He says GM would have to do everything right, in a strong economy, to pay back what it owes.
Meanwhile, a Congressional Oversight Panel report says the public will get back less than half the money it used to bail out GM and Chrysler.
This month, Indiana University professor Elinor Ostrom became the
first woman to win the Nobel prize for economics.
Ostrom explains her groundbreaking research into the public management of natural
resources. The political scientist argues that people should be empowered to
organize themselves in small ways that scale up to a global network. Government can
be helpful in doing that, but people shouldn't rely on it alone.
Human beings aren't the only creatures who make economic decisions. It turns out that monkeys do it, too. Scientists have observed our primate kin exchanging goods and services and adjusting prices.
Ronald Noe, a professor of primate ethnology at the University of Strasbourg, says the vervet monkey of southern and eastern Africa uses grooming as a kind of currency. Vervets determine the value of food providers and divide their attention according to the law of supply and demand.
Gregory Schiedler works for a foreign oil company in Angola's capital Luanda. He lives in a gated community, gets driven to work everyday and is responsible for spending one billion dollars in the next year. Gregory has very little interaction with Angolans except for one, the teenager who sells him chewing gum.
Minguito works on the streets of Angola selling cigarettes, shoe shines and gum to foreigners like Gregory and anyone else who wants to buy them. He's tired of working on the street and running from the police, but he says he feels like he has no choice.
Retired U.S. diplomat Herman Cohen explains why billions of dollars of oil money flowing into Angola have done little to help the people who live there.
On today's Planet Money:
We give a sneak preview of our upcoming This American Life special on health insurance.
How much would you pay to protect someone or something you love? Kristin Zorbini Bongard and her husband love their pet hedgehog, Harriet, so much that they spend about $80 a year on health insurance for her. Even with the coverage, they shelled out $1,911.20 for the hedgehog's cancer treatment.
Economist Tim Harford, the Financial Times' Undercover Economist, who admits to not being a pet person, says the problem with pet insurance is not that it's for pets. It's that it causes waste, because you're spending someone else's money.
On today's Planet Money:
You've got economic riddles, and economists have answers.
First up, Emily Oster of the University of Chicago Booth School of Business tackles the question about minimum wage. Why is that cities that have raised their minimum wages so often have lower rates of joblessness and healthier economies?
Second, Robert Frank of Cornell wrestles with the question of why software companies set such widely varying prices for essentially the same software.
On today's Planet Money:
Ian Bremmer of Eurasia Group and professor Kishore Mahbubani of the National University of Singapore take us on a brief world tour.
Mahbubani, author of the New Asian Hemisphere, argues that the most of the world is preparing for China's coming global dominance. It's a psychological adjustment that Americans aren't yet ready to make.
Bremmer, author of The Fat Tail, says that if the Chinese economy remains state-controlled, American businesses won't get a level playing field. But Americans shouldn't necessarily fear the rise of China, because the U.S. and China will continue to need each other for many years to come.
Human beings have always loved their children, but at certain times in history they really needed them, for economic reasons.
Mick Watson, chair of the psychology department at Brandeis University, explains how economics have impacted parenting styles from our early days as hunter-gatherers to today's modern industrial society.
You've seen those crazy-looking medical bills, the ones with row after row of prices and treatment codes. How about one that says the service cost $1,200, except your insurer paid $400 and you the patient owe nothing? Where did that other money go?
Doctor bills are complicated enough to make you go looking for a Harvard health care economist. Which is just what we did. Today, professor Joseph Newhouse fields your questions.
During the Great Depression, people began ditching capitalism for alternative ideologies like communism or socialism. That hasn't happened during the Great Recession, despite people saying that capitalism's flaws are on full display. Socialist parties have been losing ground across Europe. In Germany, for example, the Socialist Democratic Party just made its poorest showing in elections since World War II.
Eurasia Group's David Gordon says the political right is doing well in Europe these days because it has co-opted issues that traditionally belonged to the left. Where the left remains popular, as it does in Latin America, successful politicians have moved to the right. Meanwhile, he argues, the left lacks a compelling narrative about what caused the economic crisis.
The U.S. Senate Finance Committee twice voted down a measure to have the government offer a health insurance plan — the so-called public option. In countries like England and Canada, the public option is a fact of life. Taxpayers put money into the system and everyone automatically gets health insurance from the government, in what's known as a single-payer system.
Should the government run our health insurance? Donna Smith of the California Nurses Association says it should. Smith, whose personal insurance nightmare figures in the Michael Moore documentary Sicko, says a single-payer system would get care to more people and save money.
Stuart Butler of the Heritage Foundation says government shouldn't become everyone's insurance company. Butler, who's from the U.K., says single-payer care is no cure-all.
Health care cooperatives are insurance companies owned by ordinary patients who buy in. The Senate Finance Committee is working on a $6 billion measure, pushed by Sen. Kent Conrad (D-N.D.), that would set up health care cooperatives across the nation. The idea is to have cooperatives take the place of the public option, in which the government would set up an insurance plan to compete with ones from private companies.
A health coop that saves you money may be something of a unicorn, says reporter Keith Seinfeld of Seattle's KPLU. Seinfeld belongs to a health care cooperative already, one of only two in the country. He says he doesn't see his own Group Health Cooperative as being better than other providers at controlling costs. What's more, the input from its 600,000 members may not amount to much when only 3,000 of them choose to vote.
With an expert opinion from Tim Jost, a law professor at Washington and Lee, who says health coops are expensive to start and run. Their main benefit: They make people happier.
On today's Planet Money:
Rich nations and developing ones in the G20 got together in Pittsburgh this week to discuss the fate of the world. Also, how to fix it.
Among the key issues was how to give emerging markets a meaningful seat at the table. For starters, the G20 will now replace the G8, which includes only leading nations. David Gordon, head of research at Eurasia Group, says that's a start, a small one.
Meanwhile, NPR's Scott Horsley ventured out past the protesters in search of an alternative G20 scene.
We revisit the show that fathered our podcast — The Giant Pool of Money.
In that show, Adam and Alex set out to explain a simple question: "Why would the financial services industry rush to make lots of loans to people who couldn't pay them back?" They traced the mortgage chain from the people who took out the loans to those who re-packaged them and sold them off. That show aired in May of 2008 several months before we knew the extent giant financial collapse we were headed for. Today we visit two of the people featured in that piece. Richard, a Marine who was facing foreclosure, and Jim Finkel, a CDO manager, to see they've fared in the downturn.
Meet Jacob Hacker, the father of the "public option." Hacker, a Yale political science professor, introduced the notion of the federal government offering a health insurance plan that would compete with ones from private companies.
President Obama calls the public option a means of pressuring private insurers to keep policies affordable, while critics say it would put them at an unfair disadvantage.
Now Hacker takes a turn defending his big idea, saying that a public plan would cost less to run and be able to bargain for better prices.
Right now someone out there is writing a new line in the Harmonized Tariff Schedule, a 35 percent tariff on Chinese tires. President Obama announced the new tariff last week, angering the Chinese, who quickly responded with promises to investigate tariffs on the US poultry and automotive industries.
The tariff tussle has sparked fears of a trade war between the US and China. Arvind Subramanian, economist at the Peterson Institute, says the new tariff may add to messy trade relations, but it will have little impact on the marketplace. That's good news for poultry producer Eric Joiner, who says he depends on China for sales of his chicken paws.
Much of this economic crisis has been caused by strange financial products that fell between the cracks of regulatory agencies. As we now know, more regulators didn't always make things better, they often made things worse.
Adam Davidson and Alex Blumberg tell the story of the SEC and the CFTC, two agencies that have fought hard to stay apart while the products they regulate grow more and more intertwined. Both Republicans and Democrats agree the two should become one, but former House Financial Services Committee chairman Mike Oxley says the chances of that happening are about as good as him beating Tiger Woods.
Highlights from our live debate on financial regulatory reform, hosted by Planet Money and the Pew Charitable Trusts
- Bob Litan and Scott Talbott duke it out over what to do with financial institutions that are too big to fail.
- Adam Levitin and Diane Casey-Landry sound off on a proposed Consumer Financial Protection Agency.
- Darrell Duffie and Mark Brickell dispute the future of derivatives.
With special appearances by Alice Rivlin, Martin Bailey, Charles Calomiris, Peter Wallison and Adam's dad, Jack Davidson.
Co-payments for prescription drugs are one of the ways health insurance companies try to contain costs. Co-pays for generic drugs are often cheaper than for brand name option, so consumers opt for the drug that's cheaper for the insurance agency.
But some drug companies have come up with a way to undermine the system. They're handing out "co-pay assistance cards," which are basically like coupons for prescription drugs. They offer you a discount on the co-pay of a particular brand name drug, making the brand name effectively cheaper than the generic.
It may sound like a great deal for consumers, but the Wall Street Journal's John Rockoff, says the coupons come with some hidden costs.
On today's Planet Money, Adam Davidson and Alex Blumberg spent the summer of 2008 working on the story that would launch Planet Money — a Chana Joffe-Walt report about the connection between Chinese windmills and U.S. airplanes.
But a funny thing happened on the way to that first feature: in a terrifying series of financial calamities last summer, the global economy darned near died.
What began as the month we all started thinking about Too Big Too Fail turned into Planet Money's first crazy, crazy year. You were there. Celebrate it with us in this anniversary podcast.
We've been talking lately with medieval historian Philip Daileader about how very little fun it was to live in 12th century France.
Now, thanks to a nudge from listener Alan Munter, we're looking at the state of economic life in Asia. Historian Kenneth Pomeranz says pre-industrial China was no picnic, either. Life expectancy in the lower Yangtze River Valley was probably about 35 in the year zero, Pomeranz says, and it was probably about the same in 1800. At least from the 1,000 on, people began spending more time at work, but without much to show for it.
Yet Pomeranz, author of the The Great Divergence: China, Europe, and the Making of the Modern World Economy, says it was one of the best places on the planet for poor people to live until the eve of the industrial revolution.
A listener wants to know why Ticketmaster charges a convenience fee if you want to print out the tickets you buy online. After all, it's your ink and paper, and you're not asking Ticketmaster to mail your purchase.
Economist Emily Oster of the Chicago Booth School of Business has been decoding the universe for us, and she's got an answer for you. It's got to do with the network effect, locking up a market and — of course — supply and demand.
If you've got an economic riddle for Emily Oster, e-mail it to us at planetmoney@npr.org.
Much of the debate over changing the U.S. health care system concerns the Americans who can't get care. But a majority of Americans have insurance of one type or another, and for them, the health care system often more closely resembles an all-you-can-eat buffet. As a consumer, you don't have to worry too a great deal about the price, to a point, because your employer pays much of your premiums and the insurer picks up much of the medical cost.
David Goldhill, author of an Atlantic article called "How American Health Care Killed My Father," calculates that the average cost of a family's health insurance over a lifetime is $1.7 million. Goldhill proposes that Americans pay for routine care up to $50,000 over their lifetimes, and then be required to build health savings accounts that would cover the rest.
Goldhill's idea strikes Richard Kirsch of Health Care for America Now as very dangerous proposition. He says you can't treat medicine like any other commodity.
If any single player is driving the process for reforming financial regulation on Capitol Hill, it's Rep. Barney Frank (D-Mass.). The chair of the House Financial Services Committee tells Adam Davidson that bipartisan consensus on the issue is beyond reach.
As you'll hear in this interview, Frank is an intense lawmaker with very definite ideas about politics and the art of the possible.
China's all over the headlines these days, as its economy recovers faster than the U.S. one. World newspapers trumpet the communist nation's rise, with stories like "Asia recovery show's China's ascendance" and "China to surpass U.S. 'within a decade.'"
Analyst David Gordon, head of research at Eurasia Group, says it's true that the Chinese responded to the global recession with a fast, effective stimulus program. The rest is hype, Gordon says, since the China's economy is nowhere near big enough or dynamic enough to save the rest of the world.
Plus: Listener Aimee Ennis checks in from her interrupted subdivision in Clover, South Carolina, where the developer is — gasp! — building homes again.
If you find MySpace more chaotic than Facebook, that's no accident. Founders Chris DeWolfe and Tom Anderson wanted to create a site that's just as disorienting as your average nightclub, a crazy landscape of musicians and models and Hollywood desire, says Julia Angwin, author of Stealing Myspace: The Battle to Control the Most Popular Website in America.
DeWolfe and Anderson came to their social networking juggernaut from the world of porn and spyware. Their greatest asset? Complete ignorance, Angwin says. Not knowing what to fear, the entrepreneurs just dove in. It gave them a great beginning — and an Achilles heel.
Doctors know plenty about you and your ailments, but what do you know about them?. Robert Krughoff, of Consumer Checkbook, has a new website, Patient Central, that uses detailed survey information obtained by actual patients to measure doctor performance.
Sometimes a little bit of information can be too much. Naked Economist Charlie Wheelan says knowing our genetic makeup is good for us but bad for the insurance industry. Wheelan argues that as soon as our insurance pool is "corrupted" by this information, healthy people will begin to opt out and people likely to get sick forced to opt in at higher rates.
Before Bernie Madoff, there was the Antar family. The Antars ran the popular "Crazy Eddie" electronics chain, which was known for its frenetic commercials and low prices. The business was crooked from the start, but the fraud got more serious when the family took the company public in 1984.
Eddie's nephew Sam Antar was one of the masterminds of the fraud. He explains how the family managed to cheat investors out of millions and why the scheme eventually fell apart.
We started our debate on financial innovation a few weeks ago with Mike Konczal and Charles Calomiris. Today Tyler Cowen of Marginal Revolution and Felix Salmon of Reuters join Mike to answer the question: has financial innovation in the last 25 years has been positive or negative?
Felix Salmon says that financial innovation was a good thing — until about 25 years ago, when it became a way for bankers to get around regulation. Tyler Cowen says that it's not financial innovations that caused economic calamities — it's the leverage — banks being able to borrow huge amounts of cash with little money down. While Mike Konczal argues that it's all about competition: if a rival bank comes up with a new innovation, you need to compete whether it's dangerous or not.
Imagine two identical hospitals, side by side. One charges patients a little, and the other piles on the bills. Where do patients get better care? Researchers say that, overall, there's no connection between the intensity, quality or cost of treatment and how well patients fare.
That's one of the biggest challenges in fixing health care — patients, doctors and insurance companies aren't all playing with the same information. As patients visiting a doctor, most of us are like drivers taking a car to the mechanic. If we had the know-how, we'd fix it ourselves, but we don't and so we have to rely on someone else's judgment.
With appearances by Deborah Kimbell of the Dartmouth Institute for Health Policy and Clinical Practice, Chana Joffe-Walt's mom, a sunglasses vendor in Manhattan, and mechanic Ari Cohen.
Some days, you just have to wonder why the world is the way it is. Emily Oster is making a career out of training the lens of economics on just that question.
Oster talks about her economic of analysis of AIDS and risky behavior in Africa, and she answers a riddle from a Planet Money listener. That riddle: Why, when prices are flat or falling, are restaurants piling more food on our plates?
Does the existence of hope unfulfilled make for a worse life? Medieval historian Philip Daileader says it might. People in places like 12th and 13th century France lived far more constrained economic lives than we do, but they had no expectations that their situations would ever improve.
The cost of health care is rising faster than our economy is growing — it's an economic train wreck waiting to happen. The debate over fixing that situation rests on a couple of key questions, namely how do we get coverage for everyone and how do we control costs.
That second question turns out to be much harder to answer. For all the talk about healing, a hospital is also a business. Cutting costs at a hospital falls to a hospital administrator like Daniel Kearns. He worked at a string of hospitals in the Southwest. Kearns says the hardest part of his job was dealing with doctors, like the one who wanted baseball season tickets for his family and the one who wanted a helicopter for transportation.
Those may sound wacky, but Harvard health economist Tom McGuire, says neither patients, doctors nor hospitals have real incentives to trim expenses because they're all spending someone else's money.
A lot of folks want to know who's to blame for the Great Recession. Investment manager Liaquat Ahamed says he knows who's to blame for the Great Depression.
Ahamed, author of Lords of Finance: The Bankers Who Broke the World, blames that economic collapse on the boneheaded policies of the leading central bankers. Ahamed says much of the problem stemmed with a return to the gold standard.
The recession's showing signs of up, but the credit crisis isn't over. Banks still aren't lending like they used to, to families or businesses.
Ira Jersey, head of U.S. interest rate strategy at RBC Capital Markets, can tell you why. Put simply, it's that families and businesses have borrowed too much already. They're continuing the long, slow and painful process of paying the debt down or writing it off.
Congress has been arguing for months now about the best ways to overhaul the American system of financial regulation. It's a tough conversation, because regulation can be bad in a couple of ways.
First, regulation can be ineffective, in which case it fails to prevent the outcomes it was designed to block or causes more problems than it solves. Second, regulation can overreach, in which case it stifles financial innovation.
After newfangled financial products nearly brought down the global economy last fall, you might think it's not so bad to stifle financial innovation. But financial innovation has also led to prosperity. Atlantic writer Mike Konczal and Columbia Business School economist Charles Calomiris argue the pros and cons of Wall Street creativity.
Almost a year into the financial crisis, we ask foreign policy analyst Ian Bremmer to take stock of America's position in the world. Bremmer, author of The Fat Tail and president of the risk consulting firm Eurasia Group, says America has lost some of its power.
Bremmer gives two reasons for that. First, he says, other countries have recovered from the crisis more quickly. The second, he says, is that the crisis has forced U.S. leaders to pay more attention to domestic affairs and play a less active role on the global stage.
On the upside, Bremmer says this is a great time to invest in Iraq.
Before governments had regulators with suits and briefcases, says College of William and Mary history professor Philip Daileader, they had knights. The Lancelots of real life went around the kingdom forcing people to pay whatever the knights decided they owed. It was a brutal economic approach.
If you think the knights were tough, be thankful you never faced the guild system. It existed to eliminate competition and benefit producers at the expense of consumers. Craftspeople fought each other for control and tried to limit access to the market — at their own expense, it turned out.
Goldman Sachs carries a certain mystique on Wall Street. The firm is known for hiring the brainiest people and paying them well. A number of its former executive have gone into politics, including former CEO Henry Paulson, who became President Bush's Treasury secretary, and former CEO Robert Rubin, an adviser to Presidents Clinton and Obama.
This week, Goldman finished paying back its $10 billion federal TARP loan — with taxpayers pocketing a return of 23 percent. The firm also just released a fantastic report on its earnings, totaling $23 billion for the first half of 2009. Goldman is setting aside almost half of that money for paying its 30,000 employees. In rough terms, that amounts to almost $400,000 for each worker.
Lucas Van Praag, a Goldman spokesperson, answers questions about other ways Goldman received government help and why it's rewarding the staff so richly after getting a hand from Uncle Sam.
Plus: The stunning results from our Economic Radio Story Showdown.
The rational school of economics holds that markets make sense. Sure, some people and businesses trade on raw, crazy emotions, but the mistakes cancel each other out. In the end, the rational school argues, market prices make sense.
And then there's real life. Anyone who has spent any time looking at the stock market has to think there's at least a decent chance the whole thing is crazy — prices pinging around, investors making crazy bets, regulators trying to figure out who's flouting the byzantine rules.
Justin Fox, a writer for Time and author of "The Myth of the Rational Market," talks about teddy bears, bubbles and Alan Greenspan.
It looks like business lender CIT will be saved from bankruptcy by a $3 billion loan from its bondholders. The bondholders decided to step forward with the offer after the Treasury Department and the FDIC turned down the company's bids for help — apparently the government decided this institution was not too big too fail. Bill Dunkelberg, chief economist with the National Federation of Independent Business, explains how CIT got into trouble in the first place.
Details of the deal are still being worked out and there is no guarantee the plan won't fall apart. A collapse of CIT could spell disaster for many of the nation's retailers who depend on the company for financing. National chains like Dunkin Donuts are clients and the company has even touted its aid to donut franchisees. Planet Money intern Matt Katz hit the streets of New York to find out what a world without donuts would look like.
Robert Frank, author of the Economic Naturalist's Field Guide, lays out the benefits and problems of merit based pay using the Planet Money Staff as an example. Plus: we asked you to share your stories about how you get paid. Today we hear from real estate agent Rachel Nelson, who says she likes working on commission, and mechanic Raymond McMormick who pays his staff using a piece rate system.
Adam Davidson, Chana Joffe-Walt and David Kestenbaum visited New York's Fancy Food Show with a directive: bring back the best economics story they could find in just 60 minutes. The starring ingredients: olive oil, vanilla beans, and roquefort cheese.
You can listen and vote for your favorite fancy food story at npr.org/money.
As U.S. job losses mount, so do calls for another round of economic stimulus spending by the federal government. So far, President Obama says it's not needed. Stay tuned, says Eurasia Group's U.S. policy analyst Sean West. He argues that the administration will have to take some kind of action to get the economy going again. It's just that they might not call it a stimulus plan.
Plus: Sen. Kent Conrad (D-ND) wants to know exactly what caused the economy calamity we're now living through. Conrad sponsored legislation to create the Financial Crisis Inquiry Commission, a panel with economic experts and no elected officials, to study the matter. The group returns with its findings ... in 2010.
The planet's rich nations met this week to discuss, among other issues, ways to help the planet's poor nations.
But those poor nations have their own group. It's called the anti-G20, in a nod to the G20 collection of industrialized states. The anti-G20 met at the U.N. last month, where Nobel Laureate Joseph Stiglitz and Martin Khor explained what keeps impoverished countries down. Answer: Their debt to the IMF and wealthier nations.
Plus: a second look at the surprisingly complex financial lives of the poor, with a focus on burial societies and very alternative banks.
Economists at the World Bank calculate that 2.5 billion people live on $2 a day, but what exactly does that mean? In the developed world, living on so little would be almost unthinkable. For 40 percent of the global population, $2 a day is a reality that must, somehow, be made to work.
In their book Portfolios of the Poor, Daryl Collins and co-author Jonathan Morduch uncover the surprisingly complex financial lives of the most destitute people.
Should good teachers make more than bad ones? The Obama administration says the nation needs to start rewarding merit, and economist Michael Podgursky of the University of Missouri agrees. It's just that there's no simple means of carrying that out.
Plus: A listener has an economic riddle. If colleges compete for students by making it easier to get degrees, then employers can't necessarily tell who's better qualified. What would an economist call this problem and how can it be fixed? Robert Frank, author of the Economic Naturalist's Field Guide, has an answer.
South Carolina Governor Mark Sanford made a decision last month -- stay home and fulfill his public and family roles, or sneak off to Argentina for a visit with his mistress. Sanford chose the latter, of course, and economist Tim Harford argues it must make some kind of sense. Harford writes the Dear Economist column for the Financial Times and is the author of the Undercover Economist.
Plus: They paid off one mortgage and are considering another.
It can be hard to find someone who has actually paid off a 30-year mortgage these days. Be it low interest rates, college tuition for the kids, or an opportune refinancing moment, there are plenty of reasons most people never get there. One Seattle couple tells the story of how they managed to pay the whole thing back.
Plus: Many people are pleased that Bernie Madoff will spend the rest of his life in prison. WBUR's Curt Nickisch tells us why the city of Boston is patting itself on the back at the news.
New York state is in the midst of an investigation into a pension scandal involving alleged kickbacks, but the trouble with pension funds doesn't stop at corruption. WNYC's Lisa Chow, who has been reporting on the scandal, explains how public pension funds get invested in private equity. Once your money goes in, good luck finding out where it is or how it's doing.
New York state is in the midst of an investigation into a pension scandal involving alleged kickbacks, but the trouble with pension funds doesn't stop at corruption. WNYC's Lisa Chow, who has been reporting on the scandal, explains how public pension funds get invested in private equity. Once your money goes in, good luck finding out where it is or how it's doing.
When most Americans think about financial collapse, they flash back to the Great Depression. The Germans are haunted by another ghost — hyperinflation. As countries around the globe pump money into the world economy to try to fix it, fears of inflation are once again growing. Josef Joffe, editor of Die Zeit, explains why history is still haunting German chancellor Angela Merkel. Plus: these days even safety net jobs are hard to come by.
President Barack Obama's plan for overhauling regulation of the U.S. financial system calls for eliminating the Office of Thrift Supervision. David Kestenbaum visits the OTS to get the mood from employees, but only finds one person willing to talk, spokesman Bill Rubbery.
Plus, our podcast about tariffs last week prompted a lot of you to ask "Are they really so bad?" Today economist Arvind Subramanian of the Peterson Institute weighs in.
President Obama's new plan to regulate the banking system may sound different from the moves of the 1980s and 1990s, but it echoes the Presidential responses to earlier crises.
Plus: arguments on the role of regulation from two economics professors.
President Barack Obama unveiled his plan for overhauling regulation of the U.S. financial system. We get responses from two bank lobbyists, two lawmakers and an actual economist.
You may have heard something about the new iPhone. But have you heard about the Harmonized Tariff Schedule? That's the giant book of guidelines by which import specialists like Brett Ewing and Jim Henderson classify everything from wood flooring to handheld gizmos for importing into the United States.
Iran's Presidential election might come down to the country's economy, and Iran's economy might come down to one book by the Ayatollah Mohammed Baqir al-Sadr. Sayed Mohsen Naquvi of the non-profit Independent Visions says Sadr's book will influence Islamic thought on government and economics for centuries to come.
Plus: why investing in space isn't just for NASA anymore.
Chapter 11 bankruptcy is a wonderful tool, says GM CFO Ray Young, whose company is now in the process of restructuring. And hey, it went so well for Chrysler.
If you happen to be one of the jilted creditors, bankruptcy doesn't seem quite so wonderful. Clown Mandy Dalton says a mall operator that went bust still owes her $200 for a family fun day. She talks it over with bankruptcy lawyer Jay Strock.
Voters in Lebanon picked a coalition backed by the U.S. over one supported by Hezbollah in elections on Sunday. In the weeks before the vote, Ben Gilbert of Executive magazine says he began hearing reports of people offered plane tickets and even cash to vote a particular line. Gilbert says both sides seem to have been courting voters, at an eventual cost of $1,000 a vote. He explains the economics of buying someone's ballot.
Plus: Robert Frank on why automakers turn bigger profits on big vehicles like the Hummer.
We're launching our fourth special on This American Life this weekend. The show covers the people and agencies who were supposed to be watching out for the economy, and why all that watching failed to stave off the financial crisis.
Chana Joffe-Walt and David Kestenbaum reveal two fascinating bits you won't hear anywhere else. The first concerns Darrel Dochow, a regulator whose tenure stretched from a bank at the heart of the Keating Five scandal to the collapse of IndyMac. The second is about Mabel Yu, a bonds analyst who warned her company to stop buying mortgage-backed securities.
Plus, an interview with Jon Swan, one of the Harvard students behind the MBA Oath, and a farewell to our fabulous editor Jonathan Kern, who's retiring. He has some advice for you.
If you've felt, say, in the last nine months or so that people who work on Wall Street make too much money, we've got a guest for you. Ariell Resheff, an economics professor at the University of Virginia, says you're right, and he can prove it.
And we got a message on our apology line from a mortgage industry veteran who says he's at least a little bit responsible for the financial crisis. And he's not sorry.
Congratulations, Americans, you're on the road to car company ownership. General Motors filed for bankruptcy protection today, in a deal that calls for the U.S. government to own 60 percent of the automaker.
That works out to something like $192 per taxpayer.
NPR's Frank Langfitt says two big questions remain: When will GM make money again, and how much will the United States lose?
When you arrive as a tourist in North Korea — yes, it's been done — they don't tell you the news, says Curtis Melvin. They tell you the state of the economy. And yes, they do have one. Melvin knows because it tracks it on his blog, North Korean Economy Watch. One of his biggest boosts comes from Google Earth, which lets him watch what passes for economic development.
And a look at the "efficient market" hypothesis, which helps to explain why, in the long haul, Jim Cramer and company fare as well as anyone else on Wall Street.
Chrysler went to bankruptcy court in New York City today. At issue was the question of whether Chrysler can sell a significant portion of itself to the Italian automaker Fiat. As Frank Langfitt tells us, there's much more at stake, not just for Chrysler, but for GM and the future of American capitalism.
Plus: A mother and son find common ground in savings.
Shipping executive Per Gullestrup wanted to rescue a crew of sailors from pirates demanding $7 million ransom. He ended up forging an unlikely business relationship with the negotiator, marked by mutual respect and the gift of three camel calves.
Plus: A refinancing success and a haiku medley.
Imagine this whole darned economic crisis, or at least a major strand of it, started at a pink hotel in Boca Raton. A bunch of bankers from JP Morgan met there in 1994 to consider the future, and decided credit derivatives were it. Gillian Tett, the Financial Times writer and author of Fool's Gold, says the rest is history, miserable history.
Plus: A mom tells about being forced to choose between giving up a job and living part of the week away from home.
Three months ago, Jeff Neilsen sat in his Salt Lake City living room and listened to President Obama announce a new program for homeowners who need to rework their mortgages. He applied to his lender, Wells Fargo, and heard almost nothing. Julia Gordon of the Center for Responsible Lending says his experience is all too typical. She suggests the system is plainly broken.
Neilsen is one of 6 million U.S. homeowners are flirting with foreclosure. NPR's Chris Arnold reports that in half those cases, foreclosure appears to benefit no one involved — not the families and not the banks. With Alex Blumberg, he visits one loan servicer, Ocwen, that reworks 75 percent of its troubled mortgages, as opposed to the industry average of 10 percent. (Chris and Alex produced a segment about this for This American Life.)
Plus: From the suburbs of Chicago, a firefighter reports a remarkable change since the recession began.
Credit card companies have decided to become your pal, before it's too late. If they chat you up instead of sounding threatening when you call, they figure, you might pay them back first. That's the message from New York Times reporter Charles Duhigg, who just published What Does Your Credit Card Company Know About You?
While they're getting friendly with you, credit card companies have managed to learn a thing or two about exactly your ways. For starters, they're never happier than when customers buy premium bird seed, or put their kids' pictures on their credit cards. But if they hang out at Sharx, an upscale pool hall in Montreal? That's bad news.
With a special guest appearance by Sharx regular Laura Roberts.
What happens when you take giant international corporations and try to give them a single regulator? Mike Roster, a bank regulatory lawyer, says you get a whole lot of folks being overly polite. Part of the problem, Roster says, is that people too quickly forget the disasters of the past.
Plus: Before there was Bernie Madoff, there was Ivar Krueger. In his new book, The Match King: The Financial Genius Behind a Century of Wall Street Scandals, Frank Partnoy reveals a riot of scandal that we'd all do well to remember.
One set of not very popular folks is now suing another. It's bond insurer MBIA versus financial giant Merrill Lynch. At issue: whether the latter misled the former into selling insurance way too cheaply. Securities lawyer Zachary Rosenbaum decodes the briefs.
Plus: Listener Renee Rico responds to the Elizabeth Warren interview.
We're going to file this one among very few others for Very Intense Planet Money Interviews. Bailout monitor and Harvard law professor Elizabeth Warren sat down with Adam Davidson this week and went at least 15 rounds over what's really wrong with the economy and what should be done to fix it. Warren, chair of the Congressional Oversight Panel, says the problem is as much a credit crisis as a slide in conditions for average American families.
Plus: An office indicator you might recognize.
In the best tradition of The Bachelor, financial institutions get to choose from a small flock of regulators. Those regulators collect fees for their work, so they're hot to woo potential companies. The Planet Money Players, with special guest Dina Temple Raston, show you how it's done as they vie for the affections of one Adam Isaac Gavidson, better known as AIG.
Bonus: A listener indicator from the office.
Figuring a little cushion couldn't hurt, West Virginia's Centra Bank got involved in the Troubled Asset Relief Program. Then CEO Douglas Leech decided the restrictions weren't worth the hassle and moved to repay the money. Getting out cost the healthy bank $750,000, for complicated reasons. Now David Kestenbaum has the chance to live his radio dream: Stopping his NPR story midway so he can explain it for the rest of us.
And clown Mandy Dalton says it's tough out there, buying $300 funky shoes in the middle of a deep recession and a swine flu panic.
Chrysler headed for bankruptcy today, pushed there by President Obama in the latest twist in the surreal saga of the American automobile industry. NPR's Frank Langfitt checks in from his rounds of UAW union halls, where we hear from a Chrysler worker who says the cars his company makes just aren't good enough. Another worker says he's surprised a UAW health care trust fund ended up as a majority owner of the company, since he sat through days of votes on wage concessions without hearing a word about it.
Plus: We asked whether you bore any blame for wrecking the global economy, and whether you were up for apologizing on our Planet Money apology line. You were. We're leaving the line open.
This week Nassim Taleb, the economist who lives by the Black Swan Theory, joined Ian Bremmer of Eurasia Group and The Fat Tail in our studios. Taleb's message to the world goes like this: Never mind math to manage risk. End the bond industry. And render Wall Street as we know it illegal.
Plus: Laid-off from Microsoft, dad gets job.
Newspapers around the country are cutting their staffs and trying to figure out how to stay afloat. NPR's David Folkenflik checks the future with media entrepreneur Steve Brill and media thinker Jay Hamilton.
Plus: Blogger Ryan Avent's seriously bad timing.
Mortgage backed securities are a major part of the reason the economy is such a mess right now. So have the current troubles been enough to kill off securitization all together? Joe Nadilo, managing editor of Asset Backed Alert thinks not.
Plus, are the latest earnings reports from banks real or just a bunch of hocus pocus? And a listener letter.
Even pirates need a business plan. J. Peter Pham, an analyst of African affairs at the James Madison University, looks at the economics of guns, captains, and $2 million dropped into the sea in waterproof containers.
Plus: Treasury Secretary Tim Geithner meets Elizabeth Warren on Capitol Hill.
General Motors announced 1,600 layoffs today, part of its efforts to stave off bankruptcy. But with the White House setting a deadline of June 1, says Steve Jakubowski of the Bankruptcy Litigation Blog, GM is not exactly in the driver's seat.
Plus: Who wins in the government's latest, latest plan for banks. And a book review with gusto.
Major American banks have begun reporting, of all things, profits! Doug Elliot former investment banker at JP Morgan and now banking expert with the Brookings Institute, reveals what you should make of those numbers. Hint: We're all still looking at a world of pain, but at least the decline seems to be leveling out.
Plus: Supervisors, if the workers are sitting around waiting for the company to fold, expect a little gallows humor, OK?
Millions, billions, trillions, godzillions. There's a reason you can't keep it all straight. With help from Wisconsin school teacher Bob Peterson, the Planet Money Players calculate their way, in dollars per second, to the AIG bonuses.
Plus: A closer look at America's biggest creditor, China.
A couple of bigs from the Minnesota Federal Reserve wrote a book five years ahead of its time. Gary Stern and Ron Feldman's Too Big to Fail: The Hazards of Bank Bailouts hit the world in 2004. It's getting more relevant by the day.
Plus: Enron's mark-to-market scandal and a look at the Nantucket classifieds.
The Wall Street Journal says the Treasury Deparment is now aiming to extend help to life insurers as part of the TARP program. It's a complicated endeavor, one that runs the gamut from your premiums to mortgage-backed securities. Rolfe Winkler of Option Armageddon walks us through.
Plus: An IT recruiter reports wage cuts of 30 percent and more.
What's a lovely coat in London got to do with delicious pita in Cairo? Take the new fashion for not shopping, add a huge toll for the Suez Canal, and you've got your answer, in wheat.
Plus: A self-employed listener checks in.
Gather 'round, economy nerds. This week the Financial Accounting Standards Board gave banks a break from mark-to-market accounting. Alex Blumberg and Adam Davidson tease apart the knotty questions of what this means, why this matters, and who won what.
Plus: China gets almost nothing it wanted out of the G20 summit. And listener Aimee Ennis checks in from a neighborhood on hold.
For ordinary folks just trying to save money, feeling safe is all about the FDIC. Chana Joffe-Walt tracks an FDIC takeover of a failed bank. Then John Bovenzi, the FDIC's chief operating officer, tells us why his agency can still handle the load.
And economist Adam Posen has the good seats for the G20 economic summit in London.
President Barack Obama has a plan for the American automobile industry, as Chrysler and GM seek more loans from the government. Chrysler plant worker Joe Grassi considers the news that Washington wants his company to partner up with Fiat. Yale Law School professor Jonathan Macey says the government was right to ask GM CEO Rick Wagoner to step down, even if the request was unprecedented. Macey has been calling for Wagoner's ouster for months.
Plus: If Americans are saving too little and the Japanese are saving too much, how much would be just right? The market knows, says economist Kent Smetters of the Wharton school of business.
The Treasury Department released a framework for regulating the financial industry this week. The plan calls for creating a systemic risk regulator to manage "certain large, interconnected firms and markets." Adam Davidson lays out what that job might look like.
To analyze the effectiveness of the other plan the Treasury Department announced this week, the one to get toxic assets off bank balance sheets, you need to decide whether you think the banks have a solvency crisis or a liquidity crisis? Gregg Berman of Risk Metrics Group explains the difference between the two, using $50 million and an envelope.
Plus, in search of bad guys with Neil Barofsky, the Special Inspector General for the TARP.
Adam Davidson breaks down three theories on whether the Treasury's new plan for toxic assets will actually work. And our global recession anger tour takes off with stops in China, Sweden and Egypt. In China, NPR correspondent Lisa Lim gives us the view from students and teachers at the China Center for Economic Studies in Shanghai. Sweden comes to us, when Swedish Public Radio reporter Linnea Ericsson stops by the studio to talk layoffs and unions. And from Egypt, Dr. Hani Henry shares the story of Cairo's own Bernie Madoff.
The Treasury Department unveiled the details of a public-private investment program to help banks get toxic assets off their books today. The plan calls for using $75 to $100 billion from the TARP, Troubled Assets Relief Program, along with funding from private investors, to buy as much as $500 billion worth of these assets. In another Planet Money Radio Dramatization, David Kestenbaum and Caitlin Kenney explain how it's expected to work.
The new program already has its critics, but Columbia Business School professor and former investment banker David Beim isn't one of them. Beim says he thinks it's a good plan for the country.
Plus: The success of the program has big implications for the Obama Administration and Treasury Secretary Timothy Geithner. U.S. policy analyst Sean West of Eurasia Group tells us how he thinks it will play out, politically.
The Fed says it's going to buy over $1 trillion in mortgage backed securities and long term Treasury bonds to help get the struggling economy moving again. Alex Blumberg and David Kestenbaum explain how it's expected to help.
We keep hearing about all these toxic assets on bank balance sheets, but we've still got questions. How much is out there and how bad is it, really? Mike Thompson of Standard and Poor's gives us an inside look.
Plus: a visit to Detroit.
AIG CEO Edward Liddy testified on Capitol Hill today. Congress wants Liddy to hold back $165 million in promised bonuses, but Liddy says he can't. The conflict is raising questions about who actually owns AIG.
Meanwhile, the anger towards the insurance giant has been dominating the headlines this week, but not everyone is seeing red. Ian Bremmer of Eurasia Group says the government has much bigger fish to fry and that AIG outrage is a luxury we can't afford.
Plus, who deserves more blame --Wall Street or Washington?
Outrage is mounting over news that AIG used millions of bailout money for bonuses, but what about the 90 billion that went to its trading partners? Adam Davidson tells us where we should direct our anger. Plus, Chinese Premier Wen Jiabao says the U.S. needs to honor its promises. Economist Brad Setser of the Council on Foreign Relations says China has a lot to worry about.
Bernie Madoff woke up in jail today, after pleading guilty to 11 charges stemming from an enormous Ponzi scheme. How enormous? The most recent court documents put the figure at $65 billion.
In another amazing Planet Money Radio Dramatization, Alex Blumberg, Adam Davidson and David Kestenbaum act out a Ponzi scheme of their own.
With a cameo by Harvey Pitt, former chair of the Securities and Exchange Commission, who suggests that the estimate of $65 billion is "badly inflated."
Nationalizing banks wouldn't cripple the economy, says Raghuram Rajan, former IMF chief economist and current University of Chicago professor, but it would be a step too far.
Plus: Martin Wolf of the Financial Times considers where to lay blame for the economic crisis, and commerical real estate guy Jim Parrack talks about the trick to fielding requests for breaks on rent in Oklahoma City.
When Joshua Bearman was a third grader, he got locked out of the lunchroom economy. His classmates piled their jazzed-up, sugarfied, food/not food snacks on the table and traded until the best junk won, while Joshua sat on the sidelines with the sardines and raisins his family sent. Then, one magical day, he dreamed up the delicious cake futures.
Plus: The tax details of President Obama's plan to save the economy and the environment. And an laid-off intern architect fights off the blues.
U.S. unemployment hit 8.1 percent in February — unless you count the underemployed, too, in which case it's 14.8. Economist Howard Rosen of the Peterson Institute for International Economics takes your questions about the real picture, COBRA, and which industries might be hit next.
Plus: Ken Rogoff of Harvard says the economy's not so bad, if you look back over eight centuries or so. And Planet Money editor Jonathan Kern reads his "Villanelle for Uncertain Times."
The Obama administration has repeatedly called nationalizing the banks the wrong approach. U.S. policy analyst Sean West of Eurasia Group says the White House is still leaving the door open to that option, but quietly.
Plus: Defining the "velocity of money," and a listener checks in from his very good life.
Quick: If anyone had asked you six months which company Americans should save first in an economic crisis, would you have named AIG? As of today taxpayers are on the hook for well over $100 billion to prop up the ailing insurer. But what if the U.S. hadn't decided to rescue AIG? Gregg Berman of Risk Metrics considers an alternate scenario.
Plus: Our search for new economic indicators leads to the New York Stock Exchange.
William Isaac calls himself the only person in America who has ever nationalized a bank. Isaac, who led the FDIC during the Savings and Loan crisis of the 1980s, doesn't recommend it.
Plus: Economists reveal what they heard in Treasury Secretary Tim Geithner's interview with Planet Money, and an architect watches her business disappear.
If any single human being stands at the center of the global economic crisis, it's U.S. Treasury Secretary Tim Geithner. This afternoon, Geithner took his hands off the intricate machinery long enough for an interview with Adam Davidson.
As you'll hear, the pairing of titan and reporter made for quite a dance.
Bonus: Producer Katia Dunn describes the scene in Geithner's office, where an aide helped to keep the Treasury secretary on message.
If any single human being stands at the center of the global economic crisis, it's U.S. Treasury Secretary Tim Geithner. This afternoon, Geithner took his hands off the intricate machinery long enough for an interview with Adam Davidson.
As you'll hear, the pairing of titan and reporter made for quite a dance.
Bonus: Producer Katia Dunn describes the scene in Geithner's office, where an aide helped to keep the Treasury secretary on message.
Citigroup spent the weekend in talks with the U.S. government over a plan to convert the taxpayers' holdings from preferred to common stock. Rolf Winkler of Option Armageddon walks guest host Uri Berliner through what that means.
Plus: Janos Samu of Concorde Securities gives a brief history of Europe's own subprime crisis. And PTA president Caroline Raye makes up for shortcomings at an elementary school in Gainesville, Fla.
President Barack Obama this week unveiled a $275 billion plan to prevent homeowners from going into foreclosure.
The questions now range from whether it's big enough to whether it's aggressive enough. Robert Shiller of the Case-Shiller Index calls it a crucial part of America's social compact. Amir Sufi of the University of Chicago Booth School of Business fears it may not be tough enough to make banks or homeowners play.
Plus: Your Twitter questions galore.
With some of the biggest U.S. banks looking, um, insolvent, we're hearing more talk about nationalizing them. Hey, it worked for the Swedes, right? Leif Pagrotsky, vice chairman of the Swedish central bank, says his nation isn't quite a perfect model for Americans.
Bonus: Economist Paul Krugman, winner of the Nobel Prize, takes questions from the Twitter crowd.
You're kidding me, thought Simon Johnson of Baseline Scenario, after reading an analyst's call for the U.S. to pay top dollar for toxic assets — or else. Johnson and Adam Davidson call up the person who wrote it, Joseph LaVorgna of Deutsche Bank.
Plus: Adam put himself through a viewing of The International, a supposed thriller. For real edge-of-your-seat cinema, he says, listen to this tale from John Moscow.
When the previous Treasury secretary, Henry Paulson, announced his plans for saving the economy, professor Jeremy Siegel of Wharton gave him an F-. We asked Siegel to grade the performance of the new Treasury secretary, Tim Geithner.
Plus: Adam Davidson and Alex Blumberg pick apart the Geithner plan, starting with the question of what it really takes to rescue a bank.
On Tuesday, U.S. Treasury Secretary Tim Geithner is expected to unveil the government's latest plan for helping troubled banks. Early reports say it's something of a public/private partnership. Economist Adam Posen of the Peterson Institute says the big problem is that American leaders still are getting tough enough on banks.
Plus: A Vermont selectman says his townspeople have been hypnotized by the promise of a stimulus check.
A rule designed to protect the U.S. textile industry from Chinese exports just expired. The big loser, says Rachel Lousie Snyder, author of Fugitive Denim, may be the makers of pajamas - in Cambodia. Plus: Simon Johnson talks national debt, and a San Francisco radio host says he was stunned by the number of calls from listeners on a special segment about looking for work.
Lately, we're hearing from economists that they don't much like the nearly $900 billion stimulus bill now before Congress. Kent Smetters of Wharton puts the smackdown on the Congressional Budget Office. Then Steve Fazzari of Washington University calls it a disappointing, if standard, grab bag of programs. Plus: People line up in Times Square for free money from "Bailout Bill."
Japan spent the 1990s slogging through the economic doldrums, complete with soup kitchens and homeless camps. Economist Adam Posen of the Peterson Institute says the misery could have been cut to three years if policymakers had acted boldly. Posen, author of Japan's Financial Crisis and Its Parallels to U.S. Experience, says the Obama administration needs to get more aggressive with banks, and in a hurry.
Plus: The $800 billion stimulus bill now before Congress contains a little money for oversight of the spending — a perhaps very little, reports Adam Davidson. And a Finnish Facebook group fights a message to spend, not save.
President Barack Obama says that only government can pull America out of a recession this severe. Obama calls his plan for stimulus spending of well more than $800 million a new idea, but Adam Davidson and Alex Blumberg say this kind of public spending relies on an old theory. John Maynard Keynes wrote it up in 1936 — and this recession marks its first real-world test.
Plus: Questioning the economics of the Super Bowl, people ditching furniture on Craigslist, and naming the economic crisis.
The latest idea for saving U.S. financial institutions is to have one big bank mop up all the toxic assets and figure out a way to sell them. Economist Larry Ausubel says it's doable. Plus: Felix Salmon of Portfolio hates on ex-Merrill Lynch CEO John Thain, and a listener rations sawdust - for a very good reason.
Russians have gotten almost accustomed to an economy that grew rapidly, until this year, that is. Now, as David Kestenbaum reports, people there are struggling with what to call the new economic climate. Andrei Illarianov, former adviser to President Vladimir Putin and now of the Cato Institute, says neither media nor the government wants to call it a crisis.
Plus: Iceland's government became the second to fall as a direct result of the economic crisis. Icelandic National Broadcasting's Bjorn Malmquist reports on what some are calling a revolution.
Which would you rather have happen to you — a layoff, a pay cut or a furlough? As companies look for ways to slash costs without canning workers, more of you are reporting that you're being asked to take short periods off without pay. Listeners Elizabeth Call, Daniel Cross, and Sarah Yarrito wonder what will happen next, and economist Howard Rosen worries. Plus: A newly laid-off Microsoft worker gets advice from his kids.
Which would you rather have happen to you — a layoff, a pay cut or a furlough? As companies look for ways to slash costs without canning workers, more of you are reporting that you're being asked to take short periods off without pay. Listeners Elizabeth Call and Daniel Cross wonder what will happen next, and economist Howard Rosen worries.
Plus: A newly laid-off Microsoft worker gets advice from his kids.
The U.S. government has thrown hundreds of billions of dollars at banks, but the banks say they're still in trouble. What will it take to save them? Simon Johnson, former chief economist of the International Monetary Fund, says about about $1.5 trillion, maybe — whatever it costs for Plan A plus Plan B.
Plus: a bank lobbyist can't rule out nationalization, and a report on Treasury Secretary-designate Tim Geithner's confirmation hearing.
As President-elect Barack Obama prepares to take office, historian Eric Rauchway looks back at the lessons of FDR's first 100 days. And a listener from North Dakota says he is seeing the opposite of gloom and doom in his local economy.
John Ewan of the British Bankers Association leads a TED spread party by telling us all about LIBOR — it's fun, really.
David Kestenbaum wonders just how global this global recession really is — hey, Liberia's growing.
And a Florida man reveals his latest strategy for finding a job.
A number of listeners have asked us to look at what's happening inside our own industry — media. Magazines have been shutting down, newspapers are canceling home delivery and furloughing staff, publications are moving online, radio networks are laying off workers. Which is just the half of it, really.
Economist Anita McGahan, author of How Industries Evolve, studies what's known as punctuated change. She says the line between shifting and dying is not always apparent, at the time. But the first company to figure out what comes next wins.
Bonus: A newspaper carrier says the print edition he delivers is now too light for him to throw it onto porches properly.
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If you can't get a loan from a bank, maybe you can get one from your friends or family. That's the idea, loosely, behind a peer-to-peer lending site like Prosper.com. Clay Shirky, New Media professor at New York University and author of Here Comes Everybody, says it appeared to be working, at least until the SEC shut it down.
Plus: From Dayton, Ohio, an amazing layoff story.
If you add up all the U.S. currency out there, it's about $900 billion. But where is it? Economists Ken Rogoff and Richard Porter say a lot of it is overseas, and much of the missing currency helps people avoid paying taxes. The good news: It helps the economy.
Plus: Money trader Will Aston-Reese gives the (improving, but still not great) view from his desk. And a laid-off worker wonders if she can get even a low-wage job.
President-elect Barack Obama headed to the place least receptive to his economic policy today, George Mason University. Obama was there to pitch his plan for economic stimulus. Russ Roberts tells us why he and the other economists at George Mason don't think it's such a great idea. Plus, a critique of the government's response to the current crisis from a man who knows a lot about central banking.
If you're an American and your gas stove won't light, you start by calling a repair company or checking to make sure you paid the bill. If you're a European, you might start by blaming Russia.
That nation's state-owned Gazprom appears to have cut the supply of gas to neighbors from Romania to Austria. It's the second time in recent years that Russia has turned off the spigots. Meanwhile, in Africa, Nigeria is burning off 20 billion cubic meters of natural gas a year — because it has no way to ship the stuff to market.
As Eurasia Group analyst Geoff Porter tells it, some in Europe would like to build a pipeline from Nigeria through Northern Africa and across the Mediterranean. It's a bit of a pipe dream, but one player has shown some interest in the region — Russia's Gazprom.
Renee Edlund, 26 and living in Houston, takes a hard look at the prospects for finding a job. She gets help from economist Simon Johnson of Baseline Scenario. Plus: A listener checks in from Centerville, Ohio, and Mike Pesca reads a book with an amazingly long subtitle.
With the incoming Obama administration planning for a $700 billion economic stimulus, the question now is whether a wave of government spending will revive the economy.
For answers, we turn to the example of President Franklin Delano Roosevelt. If you're like me, you first encountered FDR in history class as the hero of the Great Depression. Lately, though, some people have renewed debate over whether FDR and the New Deal saved America or made matters worse.
We'll start with historian Eric Rauchway, who considers a world in which FDR had done nothing.
Some weeks, Planet Money listeners have hopped all over us for using too many free-market economists. Now, David Kestenbaum sets one free-market thinker against an ideological opposite, a Keynesian. These two forces have had only one proper fight — the Great Depression. Both claimed victory.
It's Russell Roberts, who wants to keep government out of the economy, versus Steven Fazzari, who thinks it's time for a stimulus package. Who's right? Your future could depend on it.
An incoming president faces a downturn in the economy. He gathers the best and brightest economists, and they get to work on a stimulus program of government spending. No, we're not talking about President-elect Barack Obama. We're talking about President John F. Kennedy, whose policies author Robert J. Samuelson says ultimately backfired.
The Washington Post op-ed columnist looks at the long-range consequences of Kennedy's deficit spending. Samuelson, author of The Great Inflation and Its Aftermath, says even the smartest folks make mistakes. The worst of it, he argues, is that you sometimes need decades to see the effects.
Satyajit Das says the old economic order got obliterated this year, and without a new one in place, no one really knows what to do. Bill Bernstein, neurologist and genius economic historian, has an idea. Bernstein backs a style of playing in the market called "passive index investing."
The economy is sending surprising signals, not all of them easy to decode. A Brooklyn printing company says business is down, but a certain kind of salesperson still buys big. A California man wonders why his mall's Christmas tree looks so puny. And recycling folks out West say they suffer when consumers put off buying that new TV.
Call it a mystery solved. We've been promising to figure out who slipped language into the $700 billion bailout that allows the federal government to buy stock in banks. Now, David Kestenbaum reveals all, in conversations that include lawmakers Spencer Bachus, Barney Frank and Jim Moran It all happened in on the floor of the House of Representatives. Bonus: Why did U.S. Treasury Secretary Henry Paulson need all those M&Ms?
Listeners have been writing in with their stories of reductions in overall pay — whether in tips, 401k contributions or hourly wages. Economist Howard Rosen of the Peterson Institute considers the bigger picture.
On Tuesday, the Federal Reserve cut its key interest rate to the lowest on record. On Wednesday, Simon Johnson, former chief economist of the International Monetary Fund, explains what the federal funds target rate is, why anyone would want to change, how you do that, and what it means. Bonus: He loves the Mardi Gras feel of it.
The Federal Reserve sliced its benchmark interest rate to the lowest on record. Housing starts notch a historic low. Consumer prices fall again. But Ian Shepherdson says we're still not in deflation yet. Nor are we near the bottom. Plus: A Barnard professor explains the kind of trade a Bernard Madoff might have been making. It's complicated, but you'll get it.
New York investment manager Bernard Madoff stands accused in a $50 billion Ponzi scheme at his firm. As Felix Salmon of Portfolio explains, Madoff wasn't running a hedge fund. But in hindsight, things might have turned out better that way.
The U.S. Senate turned back a rescue plan for the Big 3 automakers, sparking more cries that the industry is too big to fail. But as historian John Steele Gordon tells us, we've heard that one before — from the American makers of steel.
The Old Order Amish of Lancaster County, Pennsylvania almost never use credit. The one exception is when they buy a farm, and for that they turn Bill O'Brien. The mortgage broker says he has never lost money on an Amish deal, though he does put a thousand miles a week on his car.
An Oregon woman bought a house at the peak of the market, just before prices began to tumble. Back in school, she keeps up with the monthly note — painful as it is. Now she wonders whether she can stop paying the mortgage and get help in the bailout. An economist gives his take on that.
The loss of jobs looks typical, says economist Ian Shepherdson, but the drop-off in consumer spending makes this recession unlike any he has ever seen — anywhere, anytime. Plus: What you learn from a Craigslist tour of Washington State.
Small decisions by consumers and companies are reshaping the economy we live in. Eric Hansen, a clothing distributor, says these days even people who have money and jobs aren't spending. Hansen's orders have been drastically cut. This week, he's selling stock for cheap in a Manhattan sample sale.
Two workers wrestling with layoffs turn their attention to an argument that's standard fare for academics: Namely, that a flexible economy is a healthy economy. If companies can't fire people, argues one economist, they won't hire them, either.
New claims for unemployment benefits dipped a bit last week. Economist Karl Case says you can't draw too much on numbers about jobs, though, because no one really knows how many people are working — and how many wish they were.
President-elect Barack Obama says his plan for economy will create 2.5 million jobs. Economist Russell Roberts, of George Mason University, says the government just shifts money from one part of the economy to another, so the net effect is minimal.
Plus: A husband and wife at the University of Florida own their home — but don't know where they'll end up working.
We don't usually listen to our family members when they offer financial advice. But what happens when your family member happens to be Planet Money host Adam Davidson?
Adam tells his cousin, DJ, that he's facing economic danger. A finance professor says not so fast.
The Bureau of Economic Research officially declares that not only is the U.S. in a recession, but it has been in one since December 2007. Meanwhile, in Zimbabwe, hyperinflation is swallowing the economy whole. Plus: If you sell your house for less than you paid for it, where does the money go?
Ammon Shea, author of Reading the OED, defines "money." Literally. Adam Davidson takes former Treasury Under Secretary Peter Fisher out for street food, plus a mindblowing curbside chat on which kind of money is what.
In the first part of our series on the nature of money, we talked about money as relationship. Today, we look at what happens when your sugar up and leaves. Where, oh, where does the money go? Plus, a divine Economist House Call with Simon Johnson and a Presbyterian pastor from California.
We spend a lot of time worrying about money, working for money, spending money, saving money — but what, exactly, is money? Where does it come from? Where does it go? Today, we begin a series that we hope will answer those questions (and, you know, more). First up: Economist Niall Ferguson, who describes money in a rather surprising way.
The president of Euro Pacific Capital and frequent TV commentator spent the past few years telling anyone who'd listen that America was heading for a recession. Now Peter Schiff tells us what he expects next. Plus: a listener asks whether the recession may have a silver lining... for the planet.
A bipartisan group of lawmakers says it's ready to bail out the auto industry. Congressional Democrats say show us the plan and we'll show you the money. Plus: Adam Davidson reveals what's bothering him about the stock market.
U.S. officials are now deciding which banks should get a potentially life-saving injection of public capital, and which shouldn't. A bank analyst says the government is "playing God" with the banks — and maybe playing politics, too. Plus: a song about a central banker's dilemma.
French President Nicolas Sarkozy is hailing a G-20 declaration that credit ratings agencies be monitored as a victory. A banking professor says the declaration means nothing without enforcement. And a journalist in China calls capitalism a mixed bag.
Listeners wrote to ask us what happened to all the private mortgage premiums that were paid to help banks in case of foreclosures. An insurance expert says they'll only be of limited help.
With Black Friday fast approaching, things
aren't looking bright for retailers. Retail sales saw the biggest drop off on record last month. The good news: the FDIC is now insuring gift cards. Plus: finance professor John Cochrane says he doesn't get what all the fuss is about.
Twenty of the world's industrialized and emerging economies are gathering in Washington this weekend. One poverty expert tries to ensure that the little guys won't be left out.
The largest auto maker in the U.S. is now worth less than Footlocker. Is bankruptcy an option? And we look at how a one line change in tax code brought in billions for big corporations.
President-elect Barack Obama wants to give the auto industry more help. One economist says they need it to survive. And an auto worker from Detroit calls for an economist housecall.
China has committed $586 billion to try to help the economy. It's not a bailout. It's a stimulus package. Plus: trying to buy a sweet potato on the streets of Beijing.
The full version of our collaborative reporting project with the New York Times. David Kestenbaum has a story about schools, Adam has a story about an Irish bank, and Alex Blumberg has a story about municipal bonds.
The Treasury Department gave its first report to Congress on the bailout this week. So far, it's given banks $115 billion in capital. And a new study examines how the political pasts of a company's board of directors affect its stock prices.
President-elect Barack Obama now has to deal with the economy. Listeners give him some ideas. And an urban planner says economic pain in the suburbs helped push Obama over the top.
A listener asks "what's so bad about lower prices anyway?" An economist answers.
Five school districts in Wisconsin borrowed, invested and lost an awful lot of money. A few months ago, the IMF was laying off workers. Now it's scrambling to save the world. And a listener checks in with a picture from the local coffee shop.
If there's any corner of the financial world where angels fear to tread, it's credit default swaps. Alex Blumberg leads the way in, with an amazingly understandable primer. Satyajit Das follows up by answering listener questions.
The American economy appeared to shrink in the third quarter of 2008. With so many economists believing that pattern continued, it may be time to call this a recession. Plus: An Economist House Call for a guy who'd like to retire.
As expected, the Federal Reserve lowered the interest rate we all care about by another half point, to 1. Economic historian John Steele Gordon says the idea is to get people to borrow money again — responsibly this time, please. Plus: What's a yen-carry trade?
A survey finds consumer confidence at its lowest level in 35 years. An economist walks us through the wreckage. Plus: A guy in Rhode Island says he has stopped spending money. Simon Johnson, economist, diagnoses the trouble with that.
They binged on debt — some of it for building factories and such, some for flat-screen TVs. Now the foreign investment that made it all possible has turned for home, leaving the countries of emerging markets in trouble deep.
A listener in Portland, Ore., tells us she was laid off on Thursday. But never fear. MIT economist Simon Johnson, of Baseline Scenario, is ready to help. Plus: What's a Wall Street circuit breaker? And what's a healthy bank?
Federal Reserve Chairman Alan Greenspan tells Congress how his worldview got upended. An economist eyes the hedge fund trouble to end all troubles. And a political analyst says our global situation was a long time in the making.
An Icelandic ex-patriot says, no, her nation won't starve. That's true, says an Icelandic reporter, but the thrill's still gone. Plus: David Kestenbaum rings up a report on the next crisis, and Adam Davidson gets an unlikely nod for . . . Treasury Secretary.
Mark Cuban owns the Dallas Mavericks, a cable network and the brand-new BailoutSleuth.com. Plus: We answer a listener question about auctions and credit default swaps. Hang in there; we're all catching up.
A listener asks where the money went, and whether it was ever there in the first place. An economist explains. It has to do with deleveraging. With an additional stop in Seattle, for a postal worker's view of the economic crisis.
Yes, we're scared in the United States. We can feel a recession coming. But in Iceland, folks are living out an astounding economic collapse. Plus: The wizard of Wharton tees off on Henry Paulson, and a listener asks what a write-off is.
Inflation went down last month, which turns out to be unnerving instead of good news. That's partly because consumers are keeping their money in their pockets, even with cheaper prices on the shelves. Plus: An expert gives us a tour of one bank's balance sheet.
Economists whack the McCain and Obama plans around. And meet the listener who got an unpleasant surprise in his credit card statement — the company lowered his limit $500. He says he never saw it coming.
Federal officials today announced they were using the $700 billion bailout to buy shares in banks. The idea is to get money into them quickly so they can start lending money again. It's a big idea — and a smart one, many economists say — but the devil is in the details. We hear one of the earliest objections.
Wall Street set a new benchmark today. Oct. 10 marked the first time the Dow Jones Industrial Average has traveled a thousands points in a single day. Meanwhile, the wheels of the great bailout machine rolled forward. A listener asks everyone's mortgage question. And a panhandler finds his niched in the faltering global economy.
Thanks to a little-noticed provision that's sort of in the $700 billion bailout, the U.S. Treasury says it's preparing to partially nationalize the banking industry. It's a big deal. And not everyone we talked to thinks it will work.
The U.S. lowered a benchmark interest rate today, along a slew of central banks in other countries. Amir Sufi says the fix may lie in getting people to spend more money, somehow. Simon Johnson objects to Europe's patchwork response to the financial crisis. And David Kestenbaum finds a guy who knew the bailout boss way back when.
The U.S. lowered a benchmark interest rate today, along a slew of central banks in other countries. Amir Sufi says the fix may lie in getting people to spend more money, somehow. Simon Johnson objects to Europe's patchwork response to the financial crisis. And David Kestenbaum finds a guy who knew the bailout boss way back when.
If you got a truncated version of the Oct. 7 Planet Money, here's the real deal. We're making stops in Iceland, New York City and the Federal Reserve.
If you got a truncated version of the Oct. 7 Planet Money, here's the real deal. We're making stops in Iceland, New York City and the Federal Reserve.
Stocks in Europe tanked enough to make America's trading freefall on Monday look not so bad. But don't be fooled. The global economy needs a fix. It's just not necessarily going to like the medicine.
In a special appearance with This American Life host Ira Glass, Adam Davidson wrestles with the $700 billion question. Plus: A talk with an advocate for a tax break on children's wooden arrows, and a currency analyst gets gloomier after news from Europe.
William Longbrake, former CFO of Washington Mutual, says he first started worrying about the housing market in 2002. He gives Adam Davidson and Alex Blumberg the inside view of WaMu's collapse, and his take on the Wall Street bailout.
Rep. Peter DeFazio has his own answer to saving Wall Street. The Oregon Democrat calls his bill the "No Bailouts Act." He says the method has been proven to work and could cost almost nothing.
As Congress continues to talk about a possible rescue of Wall Street, the stock market bounces back a little. One voter tells us everyone is looking out for themselves, while two economists look for a bailout the public would be willing to buy.
Stocks fell 778 points — the biggest point dro in one day ever — after the House of Representatives spike a rescue of Wall Street. A group of economists reveal how scared they are — and how scared they think you should be. The news is not great, but we haven't yet reached calamity.
Economists and players on Wall Street say the American economy suffered a near-death experience last week, when the credit market began seizing up.
As Congress moves toward agreement on a bailout of Wall Street, a listener asks where all the money went. Plus: What, exactly, is money?
Rep. Brad Miller of North Carolina says he knows something needs to be done to save the economy. He's just not sure it's this bill, by Friday. Plus, an economist considers how much time is left to act.
Economist Tim Adams worked under President Bush in the U.S. Treasury. He says traders didn't understand what they were trading, and regulators didn't see what was coming.
The Bush Administration is asking Congress to buy up bad assets on Wall Street — and hand over a lot of power. Yale Law professor Jon Macey says he has never seen anything like this.
With Congress determined to pass a $700 billion bailout bill for Wall Street this week, bank lobbyist Scott Talbott gives us his view of the action. He wants the economy back on his feet — but he wants no limit on pay for the boss.
The U.S. Treasury Department and members of Congress are considering a $1 trillion plan to buy up bad assets on Wall Street. Economist Raghu Rajan says that looks like a move made in panic to him. He blames election-year politics, and proposes a way for Wall Street to save itself.
Ralph Reed provides one of the clearest takes on the financial crisis that we've yet heard, and then switches over to politics. Plus, more questions from listeners and answers from us.
Alex Blumberg takes a peek at the arcane Wall Street practice of naked short selling, while Adam Davidson considers what happens when the Street takes a break from moral hazard.
With the insurance big AIG on the ropes today, questions from listeners poured in. Mike Pesca joins Adam Davidson and Laura Conaway for another round of answers to queries from inquiring minds on Planet Money.
The financial world — and more to the point, the rest of us — woke up Monday morning to a whole new Planet Money. Lehman Brothers filed for bankruptcy. Merrill Lynch sold itself to Bank of America. And the questions came pouring in. We answered as many as we coul d in 22 minutes.
Whatever the cost to taxpayers, foreign financial ministers tell us the U.S. Treasury had no choice but to save Fannie Mae and Freddie Mac. They say it was either act now or face economic Armageddon.
Economist Brad Setser obsessively studies the way China buys American debt. If the buying stops, he says, the American economy would be in trouble — and the laws of economic logic suggest that's almost inevitable.
