economy2-historyandterms

In //The New Yorker// of May 18, 2009, Nick Paumgarten writes a very dense article about the current financial crisis. This article -- which you will not read in its entirety for this class -- includes the following paragraph. We challenge you to become able to be at least //somewhat// conversant in not one or two but //all// (okay, maybe //almost// all) of the references Paumgarten embeds in this knowingly recondite list. Part of his point is that people don't know much about this stuff. Well, are we going to be satisfied with that?

This crisis is the culmination of events and trends reaching back, depending on your perspective, four, seven, seventeen, twenty-two, twenty-seven, thirty-eight, sixty-five, or a hundred and two years. The subprime-mortgage meltdown, the subsequent collapse of the wider real-estate market and then of securities based on real estate, and of the firms and funds holding those securities, and of the companies selling insurance against the failure of those firms, and, potentially, of the insurers' counterparties, and so on: you could say that all this is merely the finale to a multi-decade saga set on Wall Street and Main Street, in Washington, Riyadh, and Tokyo. The causes are technological, mathematical, cultural, demographic, financial, economic, behavioral, legal, and political. Among the dozens of contributors and culprits, real or perceived, are the personal computer, the abandonment of the gold standard, the abandonment of Glass-Stegall, the end of fixed commissions, the ratings agencies, mortgage-backed securities, securitization in general, credit derivatives, credit-default swaps, Wall Street partnerships going public, the League of Nations, Bretton Woods, Basel II, CNBC, the S.E.C., disintermediation, overcompensation, Barney Frank and Chris Dodd, Phil Gramm and Jim Leach, Alan Greenspan, black swans, red tape, deregulation, outdated regulation, lax enforcement, government pressure to lower lending standards, predatory lending, mark-to-market accounting, hedge funds, private-equity firms, modern finance theory, risk models, "quants", corporate boards, the baby boomers, flat-screen televisions, and an indulgent, undereducated populace. All these factors, very few of them mutually exclusive, conspired to make possible skyrocketing leverage, misperceived risk, and spectacular collapse. To tell the story of them all, in the proper context and detail, will require an Edward Gibbon. The fall of Rome, by comparison, was a local event. Much abridged, a few familiar words will do: debt, greed, hubris.

Some of these terms you already know. Here are a few hints to get you started. What can you add?
 * what is "red tape" a metaphor for?
 * when was the Glass-Stegall Act put in place, what did it try to do, when was it unraveled, and why?
 * what presidents are considered most responsible for deregulation?
 * what are the names of some of "the ratings agencies"? what does a rating agency rate?
 * "quants" are defined and linked-to on the "lingo" page of this wiki
 * you know the term "hubris" -- how is this story one of American hubris? Is there an individual whose name could go with this term? Rosin recently read a great book (albeit a 400-pager that is not for the faint-hearted) about one such example...
 * who are Barney Frank and Chris Dodd and Phil Gramm and Jim Leach?
 * what was Alan Greenspan's position (for many years)?
 * what happened at the Bretton Woods conference of 1944? -- that happens to be 65 years ago, by the way
 * "four years ago" = 2005
 * "seven" (years ago) = 2002
 * "seventeen" = 1992
 * "twenty-two" = 1987
 * "twenty-seven" = 1982
 * "thirty-eight" = 1971
 * "sixty-five" (see "Bretton Woods", above) = 1944
 * "one hundred two" = 1907
 * what does the S.E.C. do?
 * where is Riyadh and what does it have to do with the American financial system?
 * Edward Gibbon is the historian best known for writing the magisterial many-volume //History of the Decline and Fall of the Roman Empire// -- a Villanova scholar's website about it is here
 * the term "black swan" is explained in a classic Malcolm Gladwell //New Yorker// article from a few years ago: link to it here -- well, this is a link to the abstract of the article, which gives some nice clips from it, including the source of the term
 * [help out! find and add a link!]