Category Archives: Interviews

Interview in The Straddler

By James Kwak

The Straddler, an online interdisciplinary publication, has an extended interview with me, of all people, so you can see what I talk like.

This is one section I’m proud of:

“Middle class wages have been declining for ten years and stagnant for thirty years, and if you have a financial system that allows people making $15,000 a year to take out $400,000 mortgages, I don’t think that’s the fault of the guy making $15,000.  I think it’s the fault of the financial system.

“But, let’s say I’m a guy who makes $15,000 a year.  I realize, wow, I can get a $400,000 mortgage and I can live in this house for a few years, and if housing prices go up, I can flip it and I can actually make a couple hundred thousand dollars.  And let’s say I’m really clever, and I say, if housing prices go down, I’ll just walk away and I will have gotten to live in a really nice house for three years at no cost to myself.  I mean, that’s the worst, most cynical spin you can put on it, right?  But this is exactly what people on Wall Street do.  The person who is criticizing the janitor for doing this is the same person who thinks that businesses should exploit every legal opportunity to make profits.  So even if you attribute the worst possible state of mind to the guy making $15,000, he’s still just doing what any businessman should do under the circumstances.  But our national ideology somehow doesn’t allow us to think about it in those terms.”

Enjoy.

TV Doubleheader

Simon and I are both on Bill Moyers (first half) tonight. Then Simon is on Real Time with Bill Maher. Enjoy.

What I Didn’t Get To Say On Bill Maher Last Night

We could have talked more (or even the whole show) about the ideas of Mohammad Yunus.  His book, Creating A World Without Poverty, argues we should look beyond standard for-profit business and consider expanding the emphasis on “social business.”  This – among other things – preserves investors’ capital but doesn’t aim to make it grow, while serving pressing social needs with a business-like delivery model. 

Versions of these ideas came up repeatedly in a course I just finished running at MIT, with Anjali Sastry and other colleagues, in which more than 50 students put their business skills to work helping health care projects in Africa become more effective.  Muhammad is definitely right that more and more business people want to get involved in this kind of social space, and many social entrepreneurs welcome input/advice/any kind of serious contribution.

Ordinarily, we might dismiss a zero real rate of return as uninteresting to anyone who has other uses for their money – but Muhammad is quite eloquent on how such an investment is complementary to seeing more in your life and in finding ways to really help others. Continue reading

Real Time With Bill Maher, Tomorrow

Tomorrow evening I’m on Bill Maher’s HBO show, as part of a three person panel with Muhammad Yunus and Jon Meacham.  Bill runs a wide-ranging discussion covering pretty much anything that’s been in the news over the past week or so.  With Muhammad and Jon there, I’m sure we’ll get into issues of ethics and values – including whether we have let “the profit motive” become too central in our society.

In terms of other topics related to economics, my guess is we’ll talk about: Continue reading

Fun Interview with Simon

I know Simon very well, so I’m not particularly impressed very often, but I think his interview with Andrew Leonard of Salon is a fun read, even if you’re already familiar with his positions.

My favorite line?

What do we get out of the meta-financial crap? It’s not so clear that we got useful things. Did our ATM fees come down? No.

By James Kwak

The Real Halls of Power

Move over, Bill Moyers.* Simon is going to be on Stephen Colbert tonight.

If you have predictions about what Colbert is going to want to talk about, or ideas for witty comebacks, please post them. I believe Simon is traveling but will check in around 6 pm Eastern.

* Just kidding. Bill Moyers is one of our finest public servants.

Global Outlook After the Fed Cut

I talked yesterday with Steve Weisman, my colleague at the Peterson Institute for International Economics, about where the global economy is likely heading.  Steve asked very good questions about U.S. monetary policy and what effects it will have.  You can listen to our conversation here.

The Lawsuits Begin, Part 2

Yesterday I mentioned a lawsuit against Goldman Sachs (article by HouseingWire) alleging that Goldman misled investors in its mortgage securitizations. Here’s the complaint. It’s a fun read.

The allegations are pretty simple. As part of each securitization, Goldman had to produce a registration statement and prospectus. In theory, as any investor knows, you are supposed to read the prospectus before buying a security. The claim is that these statements and prospectuses (someone help me with that plural) contained false statements regarding the underwriting standards used when making the underlying mortgages. The bulk of the complaint (pages 12-28) goes originator by originator and compares the statements made about that originator’s lending practices in the prospectus to information that has since emerged about how these lenders actually made loans.

One thing that struck me was how open these prospectuses were about what was going on. For example, here’s a passage on Countrywide’s “no income/no asset” loans:

Continue reading

Simon on FLYP

FLYP, which I can only describe as an online multimedia magazine, has a “cover story” entitled “Now What?” on the challenges the country faces and various perspectives on what the Obama administration should do about them. Simon is interviewed (in video) for “pages” 7 (domestic economy) and 10 (global financial system), but there are also sections on foreign policy, energy, the environment, health care, and so on.

(I should add that FLYP is very slick and well-produced – you might enjoy browsing around the other stories and issues, although the user interface is not particularly intuitive.)

Worry Global, Talk Local

The global picture continues to worsen and Friday was a pretty bad day.  I took part in a good summary discussion hosted by Jeff Brown on the Lehrer NewsHour last night. The topics ranged from the rising dollar to falling oil prices to Treasury’s investments in insurance companies to loan modifications for homeowners.

But I don’t think anyone should throw up their hands, abandon their personal strategies, or think that any part of the sky is falling.  Here’s why. Continue reading

Want to Be on NPR?

One of my life’s ambitions is to be on This American Life. Now you can do the next best thing. NPR’s excellent Planet Money podcast is looking for people to talk about their personal economic situations; the hosts, joined by my co-author Simon Johnson, will talk about how you fit into the global economy and the financial crisis. It’s all explained here.

Nationalization?

See here for a range of views (including Simon’s). On balance, the government owns some shares – and it twisted some arms to get them – but the percentages are pretty low, it has no voting rights, the conditions are pretty light (basically just the limits on executive compensation), and the bottom line is that the banks got a pretty good deal relative to what they might have hoped for from private investors. Some will no doubt complain of socialism, but these investments give the government limited if any influence over bank operations.

Of course, the government still has the power of regulation, which most people expect (and hope) will be greatly strengthened.

Solving the Financial Crisis on MIT Podcast

Simon discusses the financial crisis and some possible solutions on an MIT podcast (11 min.).

A Viewer’s Guide for the G7 (Crisis) Meeting Today

For the reasons I laid out last weekend, the G7 meeting of finance ministers today could be pivotal.  The G7 and their close allies are the epicenter of the global crisis, and they most definitely have the financial resources and combined brainpower needed to turn things around, starting with bold, decisive action today.

They cannot do it with a Business-as-Usual approach, and there are already signs that some of them (US, UK) are inching in a more dramatic and even coordinated direction.  It would be unreasonable to expect them to make one gigantic leap today to a complete solution.  Even if major players now think this is the only sensible way to go, such a sudden move would be inconsistent with how G7 governments operate internally or interact with each other.  Nevertheless, there will be unmistakable signs today, in their communique and related communications, regarding how long we will have to wait for decisive action.

Here are three things to look for:

1. The extent of recriminations.  These are obviously unproductive at this stage.  If the German finance minister (Peer Steinbrueck) can refrain from saying negative things about the United States, that would be encouraging.

2. Statement of the problem.  Jointly and separately the language used to describe the severity of the situation is important.  In the Business-as-Usual approach, officials hate to use negative language about the direction of the economy, for fear it would be self-fulfilling.

3. Detail on next steps.  Ideally, there will be a road map, with a timetable on when different countries will adopt various kinds of measures.  If all they can agree on is a vacuous statement of principles, we are in trouble.

Update (by James): PRI’s The World led off Friday’s show with a discussion of the G7 and IMF meetings, including an interview with Simon.

Simon on Diane Rehm Show Today (10/9)

Simon will be a guest on the Diane Rehm Show (WAMU, syndicated on NPR) from 10 am to 11 am (U.S. Eastern time). This is a call-in show, so you’ll be able to ask questions of the panel at 1-800-433-8850 or drshow@wamu.org.

Update: You can now listen to the show here.