Okay, you made it through tax day. Everything's going to be okay after all (I hope). For freelancers like me, the estimated tax business just keeps on coming. As soon as I take a sigh of relief, I've got another check to sign straight to the government. Which, honestly, I feel okay about these days. We're in a tough spot, I actually respect and trust the president, and I want things like public education and health care to be prioritized using my hard-earned money.
Here's something I don't feel okay about: as I've been reading the last six months of economic news, I've become discomfiting aware of how scant my economic knowledge is. Truth be told, I never took micro or macro economics, but if I had, my guess is that I would want to take it again. As is, I just want to take it for the first time. I'm feeling grossly unprepared to analyze all of this bubble bursting, bailout, stimulus, IMF, GDP, and what the fuck.
This all came to a head because I was hanging out with Erin Smith who had co-organized the recent Legal Momentum panel (check out Kyla's great post on it) featuring Heather Boushey, Linda Hirshman, Mimi Abramowitz, and Irasema Garza. Apparently our old pal Hirshman made a crack about the fact that she feels like feministing should stop posting pictures of our pets and start covering cold, hard economic news more often.
Monty isn't going anywhere Linda, but you've got a point here. I have made an effort to talk about the economy (as have others on this blog), but I usually feel like I'm trying to speak a language I only went to one semester of classes in. In other words, my economese sucks.
So what am I going to do about it? Read Suzie Orman? Probably not. I don't just want a personal finance guide and her vibe freaks me out. I want to really understand the big picture. Anyone have a book recommendation? I honestly don't want to invest a huge amount of time in this economic education project, but I do want to feel equipped to understand what's going on. Anyone else conquer feeling less than literate on the economic front and have advice for the rest of us?
And for funsies (sorry Linda), check out Kristin Wig's amazing Suzie Orman impression:
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I felt the same way. I highly, highly recommend This American Life/Planet Money's shows about the economy to get a basic understanding of the roots of the problems. They explain the jargon (that can be very excluding in itself) and the actual problems in a very simple and entertaining matter. Not only do I feel well versed in the current economic issues, but they also enabled me to have an opinion on the subject. Listen free...
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=375
Came in to suggest this. This is such a great primer. They cover the basics and apply them to current issues without being condescending and sometimes even make it fun!
Follow their blog too.
This American Life has done a few really great stories on the economy and they are about the only things I have heard/read that actually make sense to me. I always feel like I am groping in the dark when it comes to this stuff.
Here is one that recently won a Peabody: http://www.thislife.org/Radio_Episode.aspx?episode=355
Good to see you talking about economics. I'd strongly advocate that all women attending college should take at least the intro micro and intro macro courses as part of their general ed requirements. It's part of the basic cultural knowledge that anyone obtaining a higher education credential should acquire.
That said, having taken college level econ wouldn't do that much to improve your understanding of the current crisis. The macro stuff would help a bit, but you need to get pretty far along in macro before you start learning anything that actually describes anything about the real world (to the extent that anything in macro does so). Beyond that, understanding a lot of issues with the current situation is more about understanding finance than understanding economics.
If you really do want to learn more about economics, though, why not take an econ course through MIT's free opencourseware?
http://ocw.mit.edu/OcwWeb/web/home/home/index.htm
I have never heard of this, but it's very cool.
Thanks a lot for sharing the link!
"That said, having taken college level econ wouldn't do that much to improve your understanding of the current crisis. "
I agree. For me though, taking those made it much easier/more enjoyable for me to continue learning those things on my own. I don't think I would feel as inclined to if I hadn't.
As usual, I found NPR to be the answer for all of my problems. The whole show they did in february devoted to this topic was dumbed down to the extreme, but it was great, because they explained every single term you only sort of knew the meaning to. It's impossible to listen to this without 1) enjoying it and 2) coming away with a thorough understanding of the economic basis of the problem
http://www.thisamericanlife.org/radio_episode.aspx?episode=375
whoops, I was late to the game.
Thanks everyone! A friend told me about Planet Money and I forgot so this was the perfect reminder.
Nothing to do with the current crisis but a really good economics book is "The Undercover Economist" by Tim Harford. I found this book a really interesting and accessible read. It is all about the application of economic principles and logic to every day life.
I did study economics at uni but that was a long time ago and I never much like the subjects. This book was a lot more engaging.
Tim Harford also has a blog - I've not read it, I just discovered it googling to find the details of the book - but you might want to start with some of his blogging to see if you like his writing style.
I hope you keep posting to let us all know how you go with this.
Best thing to do is learn about the nature and history of money:
http://mises.org/books/moneybankingfed.pdf
Short version: money and wealth aren't the same thing, but the economy has a tough time telling the difference between the two. When you increase money without a corresponding increase in wealth, the economy will act like it's wealthier than it is (boom) and then regret it later when it realizes the mistake (bust).
This lining of thinking is generally dismissed as being pushed by a bunch of crazies because their policy recommendations to not include giving more economic power to government, but perhaps a few people can put their political biases aside and read with an open mind. These "crazies" were amongst the few people to actually foresee the current financial mess and not get caught off guard.
The two main results of a 'sound money' policy would be: less profits for bankers, and government spending would be harder. Personally, I wouldn't shed any tears over either consequence.
The Austrian School is worth knowing, but you do have to be aware that they have an agenda. They are very conservative and oppose pretty much any government spending.
SOME economists that subscribe to Austrian ideas predicted the crisis, but others were caught off guard as well. Also, some economists, like Robert Shiller, and Nouriel Roubini that don't subscribe to Austrian ideas also predicted the crisis. It's not just that 'they're crazies', the notion of 'sound money'/gold standard was tried during the Depression and was a failure back then. They also, for example, predict inflation when the government increases the money supply, not deflation as we are now seeing.
I think they're an important part of the debate, and some of their ideas on how interest rates can be too low make sense, but it's just one part of the puzzle.
Well, everybody has an agenda, so that's not really an argument. And there are alternative viewpoints to your other statements such as deflation, and sound money being a failure in the Depression. People really just need to read and consider arguments for themselves. (if it seems like I'm just dodging debate with you, it's because I have those enough in other forums. The goal of my post on this site was to offer up a viewpoint for consideration.)
Them having an agenda isn't an argument, it's just that throwing someone who is just learning about economics into Austrian theory is kind of like giving articles on existentialism to someone just starting to learn about feminism. Yeah, it's got something to contribute to the field, but it's just one (controversial part) of it. The idea that objections to their view just come from a 'bunch of crazies' who dismiss them out of hand for political considerations, is simply false. Even the Austrians would admit tha they have intellectually serious opponents.
"The idea that objections to their view just come from a 'bunch of crazies' who dismiss them out of hand for political considerations, is simply false."
It's also not what I wrote. I actually wrote that Austrians are frequently dismissed as a bunch of "crazies", not that anybody who dismisses their works is.
And you proved my point to some extent in that your immediate reaction was to respond with "they have an agenda" which has nothing at all to do with whether they're right or not.
What you wrote:
This lining of thinking is generally dismissed as being pushed by a bunch of crazies because their policy recommendations to not include giving more economic power to government
When you say "generally dismissed", most people are going to read that "pretty much everyone" who dismisses them does so because "they are a bunch of crazies." Like if you write the line "liberal feminists are generally dismissed by Concerned Women for America as being too far from religion..." I'm not going to think there's a huge contingent of CWA women who don't dismiss liberal feminists.
In any case, my post was not to shut you down, but just to provide some context that they come from one minority viewpoint side of the debate. The same could be said about Marx, but most people already know who he is.
FYI, I do not dismiss them out of hand. I've read their writings and think they have some important contributions, like I wrote in my first post.
But a lot of their stuff has been floating around recently, I think because it doesn't require math to understand and they've got a large number of pretty committed people to follow their views. But people who are just starting to learn about schools of economic thought could easily get the idea that the thinking is more mainstream than it is.
Well, not to go round and round on this, but I did write pretty clearly dismissed AS a bunch of crazies, not BY a bunch of crazies.
And, with all due respect, I still take issue with insistence on mentioning that the ideas are "controversial" (your previous post) and "a minority viewpoint". I'm not sure exactly what "context" this provides. In the current circumstances we can't afford the luxury of not considering a viewpoint seriously because it's not mainstream. In fact, anything which WAS considered mainstream during the leadup to this crisis is what should be greeted with the most scepticism.
Well it's because their ideas are not mainstream and there are unusually strong value judgments and policy prescriptions attached to them. I mean the front page of Mises right now features a polemic in support of "total, and full privatization of all roads, streets, highways, byways, avenues, and other vehicular thoroughfares."
They are political in a way that a lot of financial and economic commentators aren't, and they have an institutionally vested interest in defending the correctness of the ideas of someone (Mises) who's passed away and can't change his mind any more.
That's a little stronger than just saying that Dean Baker's a Democrat, or Tyler Cowen's a Republican.
Again, the same thing could be said about Marx, but most people already know that he's a very political thinker as well as an economic thinker.
That's NOT to say that their ANALYSIS is necessarily wrong, or shouldn't be read, or taken seriously. But I do think that they mix politics with analysis to a very high degree and it's very, very difficult to buy into one without the other. This is a pretty progressive blog and I think people who are just being introduced to these ideas might be interested in being aware of this, and STILL be able to read their analysis with an open mind (as I did).
Alright, now I'm really out. I almost regret this entire thread. Sorry if you felt attacked, that wasn't my intention at all.
Let's be fair, the failure of the gold standard as sound money policy was in large part due to the attempt to fix the price of gold in order to encourage stability. Ironically, this led to instability as countries traded for the assured price of gold, devaluing the new global reserve currency, the US dollar.
This political manipulation of the gold standard, twined with the inherent inability of a tangible resource to provide worldwide currency stability, assured the failing of the gold standard. While having a global reserve currency standard hardly solves all the problems of global currency stability, it does do a damn sight better than the gold standard.
That said, the gold standard is not all that Mises promoted. Of course, considering he argued for a 100% deposit reserve, there's no doubt he stood against fractional banking -- which no Austrian economist has, to this day, coherently explained in terms of the continuing viability of our economy.
Let's be fair, the failure of the gold standard as sound money policy was in large part due to the attempt to fix the price of gold in order to encourage stability.
Yeah, but the definition of the gold standard is "a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold."
And yes, they do push it pretty hard. I mean, the most famous pro-Austrian politician today is probably Ron Paul, and that's why he got into politics in the first place.
Yeah, but the definition of the gold standard is "a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold."
Key phrase: "a region's common media of exchange." The gold standard, as it initially existed, was different for every region and/or currency. The problem arose when the gold standard was tied to the US dollar after/during the Depression. Therefore any devaluing of gold would directly affect the US dollar before any other currency, making America particularly susceptible to any rampant gold activity, thus making the whole standard vulnerable to America's political will and landscape.
Though the gold standard is representative of Austrian Economics, it's not all the theory is.
The gold standard, as it initially existed, was different for every region and/or currency.
No it wasn't. If the United States pegs gold at $20.67 per ounce, and Britain pegs it at say 4 1/4 pounds per ounce, the dollar to pound exchange rate is fixed, by definition at $4.86 per pound (as it was at the onset of the Depression). Since almost every capitalist country was on the gold standard at the time, their currencies were all convertible with one another at fixed rates.
But we're kind of hijacking the thread, and I need to get back to work, so I'm going to stop responding now. ;)
The problem arose when the gold standard was tied to the US dollar after/during the Depression.
Gold was pegged to $20.67 before and during the Depression. In 1933 FDR broke the standard and repegged it at $35 an ounce, where it stayed until 1971.
Even if you shan't reply, I'm too argumentative not too :)
the dollar to pound exchange rate is fixed, by definition at $4.86 per pound (as it was at the onset of the Depression)
Point well made, but the distinction is still clear -- while there are fixed fiat conversion rates between countries, the gold standard was not consistent between nations. I see what you're saying, that the fiat standard is fixed for a specific valuation of gold. But ignoring fiat element, gold did not have a global standard. Which is, as I think about it, perhaps a silly perspective considering fiat currency is intrinsically used with the gold standard.
Regardless of the valuation, gold was still not pegged to the US dollar until after WWII. The point was just that the tie to the dollar (and subsequent hard valuation) introduced permanent vulnerabilities into the concept of a global gold standard.
*apologizes for hi-jacking!*
"...which no Austrian economist has, to this day, coherently explained in terms of the continuing viability of our economy."
I think it's been fairly coherently explained as there should be a clear distinction between demand and time deposits, with only the latter being funds that banks can lend out for capital.
"...which no Austrian economist has, to this day, coherently explained in terms of the continuing viability of our economy."
I think it's been fairly coherently explained as there should be a clear distinction between demand and time deposits, with only the latter being funds that banks should lend out for capital.
Distinction well made. Thanks for reminding me!
Really important point, thanks for making it. I read a comment in Rolling Stone that compared American's lack of understanding re: economics to societies where the lower classes where forbidden to learn to read. The ruling classes maintained power because they prevented their "subjects" from thinking for themselves. The article argued that, as long as Americans remain ignorant economics, our illiteracy will doom us to be tyrannized.
I am way paraphrasing, and the original author phrased the idea with a lot more finesse, but the overall image was really powerful to me. Am looking forward to the suggested reading.
I was an economics major in college and even I don't understand a lot of what is going on... and I still don't even though I actually kind of like reading about economics and have tried to do a lot of reading on this crisis. I doubt anyone understands it completely.
I've come to this blog recently as a sort of refuge from the doom and gloom in the news, but I do agree that, part of the reason is that it seems like a bubble from the real world here. I would love to see more writing on the economic crisis here, and how it impacts women especially.
What I most recommend is this video by CNBC called
"House of Cards"
What I like is that they begin by looking at individual families that bought houses, and how their loans got send to the finance companies, that sent it to Wall Street, and rated by the rating agencies, and sent abroad. They look at every piece of the puzzle step by step... I think in a pretty fair and balanced way. But they also focus down on individual stories so you don't fall asleep from just numbers. It's about an hour and a half, but time as well spent as reading any book.
The Washington Post also has a pretty good series from last year called "What Went Wrong". It really shows the failure of regulation going back to the 1980's and the development of financial derivatives starting with the deregulation of the 1980's.
There are many good blogs out there, including Naked Capitalism, Calculated Risk, the Baseline Scenario, Brad Setser, and Paul Krugman.
If you're really looking for books, I would suggest Depression Economics by Paul Krugman, Fixing Global Finance by Martin Wolf (a bit thick, but he basic gist is clear), and The Dollar Crisis by Richard Duncan (which was written six years ago, and predicted much of what has happened.)
I recommend Richard Lipsey"Positive Economics"
(positive as opposed to normative)
the Economist newspaper/ magazine;
Galbraith...
Micro -economics is fairly well worked out and the theories seem to work well, absent major changes in how people think. But macro - which is where most of these problems are - is far from.
I'd also recommend marxist theory - but I'd struggle to pick particular writers. Maybe Gramsci.. But the wikipedia article is a good place to start. This looks like a very large version of the regular crash cycle capitalism goes through - Marx predicted that they would get bigger until the last one could not be recovered from.
I've read Ian Welsh for years, at the now-defunct BOP News, The Agonist, Firedoglake, Huffington Post, and now at his home site, IanWelsh.net.
Ian writes for laypeople, not economists, and he is great about answering reader questions.
It's like an ongoing masterclass in economics, and certainly keeps me up to scratch.
I gotta say this...I understand you may not like Suze Orman's vibe, BUT...the woman's got lots of sense and she does deliver information in an understandable and practical way. I feel that one of the reasons why I am as comfortable financially as I am is Suze Orman's book for the Young, Fabulous, and Broke. I am not broke, but I don't make a load of money either and the book was really solid advice on every aspect of financial life.
Another book that I love is Money is My Friend by Phil Laut. It's not an economics book. Straight up personal finance with a bit of psychology mixed in. But once again, made a huge difference for me and how I manage my finances.
And yes, I agree. More finance posts would be very cool :)
Before anyone takes Suze Orman's advice at face value, I recommend reading James Scurlock's article If You Knew Suze Like We Know Suze (You wouldn’t listen to her advice) in Slate.
Validity of his arguments aside, I was immediately put off by his lede: "How a bottle-blond former waitress and self-described '55-year-old virgin' with a taste for the good life became the financial messiah for millions of Americans..."
Yeah, he was pretty intense with the sexism!
Would he have written an article about a MALE financial adviser with a lede like that?
Of course not!
So he has to start out by attacking her hairstyle, and her looks, and her former occupation and her sex life!
As valid as the rest of the article may be, that sexist lede totally kills it's credibility!
Exactly. I read about 2 paragraphs and clicked back. That's a baffling link to post on a feminist site.
OK, I can seriously tear this article apart. First of all, no show has a target audience of EVERYONE. Her show is targeted to a specific target audience, which I happen to belong to: anyone who has been financially impacted by the media & the rest of society (certain friends, neighbours, etc.), who tell you to buy buy buy and material possessions matter (e.g. conspicuous consumption, anyone?)! Her advice is seriously sound advice for me and so many others! To straight off dismiss her first thing in the article based on the fact that there are people outside of that target audience and that her show does not provide for them is ridiculous. That is marketing 101 stuff, and I would know, it was my major! Second, the article bashes her for saying one thing on the show (how to be financially responsible) and then turning around and being a spokewoman for luxury items, etc. I can see this point, but if you are actually listening to her on the show, then you will be able to say no to anything she is selling just as well as anything anyone else is selling. I understand it is hypocritical, but I have yet to see anything hypocritical IN HER SHOW. I have only been watching her for 6 months now, so perhaps there are things I don't know - but I DVR her show every single week so I haven't missed a single one in that period, and she has NOT advocated for stocks more than bonds. In fact, she has straight up said on her show that she has all her money in government backed bonds, and had half of a show about what kind of GB bonds she has and recommends. I have seen nothing to the contrary from her. Finally, stocks are not inherently bad, the majority of the time they make people money, and she advocates staying in stocks if you are young, NOT NEAR RETIREMENT. I am 25, and I KNOW I shouldn't pull my money from the stock market - that would be foolish. You don't buy stocks when they are high and pull out when they are bottomed out! I have time to see my stocks multiply exponentially over the years, and that is exactly what I'm going to do. Suze is exactly right that when stocks are down, you can buy more for your money, and if you have time to see it turn around, you will see your money multiply! Of course, this is not a 100% game - it is stocks - and nothing is guaranteed, so there will be a few who may not benefit from this, but that is the best advice to give! If you don't know that stocks are a gamble and you COULD lose your money, you've got more problems that Suze just can't address.
That article was bullshit, i'm sorry to those who actually believed it. There were so many red flags and no well drawn-out conclusions. My financial situation has benefited A LOT since listening to her. But that's just it: I listen to her ADVICE on her show, and I don't go buying things I don't need anymore, including anything she's selling! I look at my finances, no one else's, and determine if I have the money or not. How is having a MINIMUM 6 month emergency fund, well-funded retirement account, and a more sane sense of handling my money NOT good advice???
Sorry to kinda hijack the thread with this comment, but I can't let bullshit be spewn like that. I don't think Suze is flawless, but all you need is to put on your thinking cap, people!!
Yeah, you can find a lengthy rebuttal of that article here.
Karl Marx, Capital.
Definitely - if you want to understand what's going on with capitalism, that's a good place to start!
Read that one, but still don't feel like it prepared me with the language I need right now.
I owe you an apology. I was being a little facetious.
My point, which was stated more eloquently by fem-econ below, was that you can't separate the political from the economic, and many of the things you were being told to read above were (intentionally or not) pro-capitalism. There's not really a "neutral" view of economics, and my friends in the CLS movement think there's a lot of overlap between things like patriarchy and the sort of dominant economic theory we have in the west, based on domination, control, ownership, etc.
I suggested "Capital" (though any of Marx's works are great and I highly recommend them!) as way of pointing out that there are alternatives to neoclassical economics out there that are just as warranted of study, if only to balance the political perspectives.
The anthology "Feminist Legal Theory" has some good essays about the intersection of law, economics and politics I found really interesting to read.
There are many different and conflicting theories grouped together under the title of economics. The stuff you learn in micro and macro is generally neoclassical economics, which although often presented as a 'scientific' and singular truth is just as political, subjective, and contested as any other theory. The current crisis is actually challenging much of the dominant paradigm of economics because of its inability to explain recent events.
Here's an alternate explanation of the crisis, and the dynamics of capitalism in general, from a Marxian perspective:
http://vimeo.com/1962208
Suze Ormond does have this hypercaffeinated style (like she drank 100 cups of black coffee before the taping)- and it can be really annoying.
But, she does give some practical personal financial advice.
And she does it in a very gentle loving way.
She'll let people go on and on about their impractical plans - like taking out a second mortgage to buy a horse, or taking out a loan to go to a Star Trek convention when they don't have a job (two actual questions) - and she'll gently explain to them that NO, they can't do that because they can't afford it.
Also, she's good at gently explaining to stay at home moms that, if their husband is making less money, they have to go out and get a job, like it or not.
She also emphasizes again and again the importance of living within your means, instead of going deep into debt to buy luxuries.
Oh, one other thing - you made a comment about paying your taxes - "...I want things like public education and health care to be prioritized using my hard-earned money."
I want that too - but with President Obama sending 20,000 more troops to Afghanistan, leaving non combat US troops in Iraq indefinitely, and preparing for an invasion of Somalia, most of our federal tax money will continue going to pay for war (which has been the case since 1940, under every president, Democrat or Republican).
"...and preparing for an invasion of Somalia"
Way to totally invalidate your points.
Well, what do YOU call the US Navy's present aggressive actions in Somalian territorial waters?
It sounds like a second edition of the Gulf of Tonkin* incident to me.
So it actually validates my point!
* back in 1965, President Johnson had the US Navy engage in provocative behavior off the coast of North Vietnam. When the North Vietnamese reacted, it gave Johnson an excuse to intervene in the civil war in South Vietnam.
I call it the protection of our sovereign resources from non-Somalian government sanctioned piracy.
Comparing North Vietnam to the almost totally insolvent Somalia is, I think, disingenuous.
Ronin -
The American Navy is in Somalian territorial waters, without permission of any Somalian authorities.
They are attacking Somali volunteer coast guardsmen who are defending Somalian territorial waters from the sludge tankers and fishing trawlers who are despoiling their environment.
According to a recent opinion poll, 70% of Somalians support their efforts.
Beyond that, the US Navy is in another country's territorial waters, meddling in their internal affairs!
What part of that don't you understand?
It's called IMPERIALISM ronin, and its' why most of the world hates us!
If a foreign navy was killing US nationals in American territorial waters, would it not be aggression?
And, for the record, they are not "our" resources IF THEY ARE PHYSICALLY LOCATED IN OTHER COUNTRIES!!!
Do you not see what's wrong with that kind of imperialist logic?
"The American Navy is in Somalian territorial waters, without permission of any Somalian authorities."
Yes, they only have permission from the UN and the 'government' of Somalia (http://news.bbc.co.uk/2/hi/africa/7432612.stm).
"If a foreign navy was killing US nationals in American territorial waters, would it not be aggression?"
If a foreign navy killed US nationals who were holding civilians as hostages, because the US was unable, or unwilling to do so, yes, it would still be aggression, but it would be justifiable aggression.
"They are attacking Somali volunteer coast guardsmen who are defending Somalian territorial waters from the sludge tankers and fishing trawlers who are despoiling their environment."
By attacking a vessel carrying food for African refugees? How does that protect Somalia?
"Beyond that, the US Navy is in another country's territorial waters, meddling in their internal affairs!"
Internal affairs stop being internal when you attack nationals of a foreign nation, no?
The problem is not so much what Suzie Orman says to any particular situation. The issue is that while yes, it's true that taking out a loan to go to a star trek convention when you have no job is a bad plan, she doesn't address things like truly having no money, no way to get a job. her advice is fine where it's applicable, but it's only applicable to a privileged subset of the population
You do have a point - but, for that actually quite large subset of the American population who do have enough money to cover basic expenses and have some money left over, her advice makes a lot of sense.
So, if you're on Public Assistance and live in the projects or a trailer park, Suze Ormond doesn't really have any useful advice for you.
But, if you live in a heavily mortgaged suburban home, and have enough of an income to cover all of your expenses (plus a wallet full of plastic to pay for the extras) then Suze Ormond DOES have a whole lot of tools to help you not go broke.
I am about 1/2 way through a graduate degree in economics, which does help.
I second the recommendation for the NPR / Planet Money podcasts.
Don't get too hung up on "perfect understanding." (Macro)-economics depends a lot on models, and since the map is not the same as the territory, NOBODY understands it all perfectly.
Paul Krugman's blog over at the NYT is a good general economics read, though perhaps a little wonkish.
You might try posting specific questions and seeing who can help you &/or point you to better info....
Personal finance is NOT the same as economics. Veternarians do not do the same kind of work as butchers. (No double meaning there, just an example!)
Anyway, that's probably enough for now...
An attempt to explain the current economic crisis using only one economic term (fractional reserve banking)*:
Fractional reserve banking is more or less self-explanatory. Whatever deposits you or I make, the bank is only required to keep a fraction in the vault. So say you deposit $100. If the fractional reserve requirement is 20%, the bank keeps $20 in the vault and uses $80 for investment. The investment may be in terms of stock market purchases or loans. In the typical case, the total money generated by the initial $100 is roughly quadrupled, meaning that from your $100, $450 is pumped back into the economy.
There are two reasons fractional reserve banking exists and, for the most part, works in our economy. 1) Investment is made possible without large-scale intervention. 2) Banks make money off of the interest on the many loans generated from the initial deposits.
What has happened in the past 10 years is a version (or rather, a perversion) of fractional reserve banking. What happens first is that a bank, say Bank A, has a certain number of loans. It decides to sell its current loans to Bank B, for money that it can use for more loans. There are two reasons why Bank B would buy loans that have a risk of not being paid off. 1) Bank B can sell off those loans to another bank. This reselling can go on and on and on, because of regulatory inadequacies in our markets, all the way to Bank Z. 2) Bank B, or any other bank, can buy insurance on those loans, which protects Bank B should any or all of the loans go south.
But there are two problems with this system. 1) The folks selling insurance on these loans aren’t required to keep any reserves on hand to pay off insurance claims. 2) The type of insurance on these loans are such that anyone can buy them, even those who don’t own the loans. Which means that when the loans do go south (as so many so clearly have), the insurance sellers can’t pay the claims to the almost innumerable insurance owners.
Thus we have a veritable black hole with innumerable insurance claims, most of which can’t be paid off by the insurance sellers.
*My apologies if this is presumptuous. (Or, being less passive, my apologies for being presumptuous.)
I absolutely think that economics and business basics are something that we as women should take the time to educate ourselves about. For me, it's been empowering much in the way that learning how to change my radiator hose was empowering or understanding football was empowering. (Not necessarily good examples for everyone, but you get my point, I hope. The realm of finances and the economy has typically been so male-dominated both in the world at large, and for many people domestically as well. So, big thumbs up on this post.
My few sources for self-education have been:
- Suze Orman (YF&B) -- yes, she's creepy but I saw her book at the library, checked it out and got a great deal of practical PF advice.
- Michelle Singletary of NPR & Washington Post -- I've never listened to her on the radio, but she has a weekly column and chat on WaPo that is truly AWESOME. check it out if you have not done so!
my law school also requires every entering student to take a business basic class, which i think is awesome and wish it were required in undergrad instead...
This is, BY FAR, the best video explanation EVER: http://vimeo.com/3261363
That was excellent.
Can't see the video because I'm outside the US.
I second the recommendation to look into Austrian economics. The basic axioms of the theory make a lot more sense to me than any other economic line of thought, especially that of Marx and Keynes, who despite, or perhaps because of, their utterly irrational ideas have had the most influence on 20th century economic thought.
A book, Meltdown, has been written for exactly the purpose of explaining the recent crisis in laymen's terms, though I haven't read it yet. Once I do, I'll make an effort to distribute it for free to anyone who wants to read it (within my politics budget) if it is as good as some Austrians are saying it is.
They also have a bit of material on the subject from their achieves available for free, if you don't care to "buy into" that school of thought just now.
I don't know how applicable it is outside of Canada (because it uses mostly Canadian examples), but Economics for Everyone is a good 101-type primer that avoids the perennial issue of econ 101 text books, which is that they tend to push the neoliberal economic theories at the expense of all others. This book is put out by the Canadian Centre for Policy Alternatives, which is a research institute that does work in areas of social and economic justice (they lean to the left). It might be worth a look, even for a comparative perspective.
Blegh on my borked link. Sorry about that.
We have been talking about the economy, how it effects women and highlighting the work of women whose voices should be heard on this topic at the Feminist Peace Network for several months, we are now on Part 12 of The Girls' Guide to the Economy, you can find all 12 parts (and there will be more) at http://www.feministpeacenetwork.org/?s=the+girls+guide+to+the+economy.
Brava Courtney!! Open minded, courageous, and obviously touched a nerve. Sixty comments! If only all my casual snark would have such productive consequences.
PS
The dog, Joie de Vivre (Joy to her friends) asked me to tell your readers that I didn't mean it about the dog. Anyone interested in a picture email Linda privately.
Brava Courtney! Sixty some comments, helpful, serious. This is the most important thing we could be discussing right now.
I wish all my snarky comments bore such fruit.
Linda
PS
Joie de Vivre, the dog, known to her friends as Joy, says to tell everyone I did not mean it about the dogs and that anyone interested in pictures can email me privately.