Why is Wall Street in shambles?
| 01 October 2008
As the global economy stumbles, a reliable lineup of Berkeley professors in business, economics, law, public policy, and the social sciences has become the A Team of expert commentators.
Berkeley’s deep expertise and impressive real-world experience has provided an unbeatable combination for the media. The Haas School’s James Wilcox, for example, was a chief economist at the Office of the Comptroller of the Currency during Bill Clinton’s second term; Professor of Economics J. Bradford DeLong also served Clinton, as a Treasury Department official; and the Goldman School of Public Policy’s Robert Reich was Clinton’s secretary of labor. And, of course, economists George Akerlof and Daniel McFadden are both Nobel laureates.
Berkeley professors’ comments, opinions, commentary, and letters have recently appeared in a wide range of publications, from Congressional Quarterly Today to The Washington Post, from Mother Jones to The Huffington Post. They are regulars in The New York Times and The Wall Street Journal, and you can hear them on NPR’s Morning Edition and watch them on CNBC.
Here’s a sampling of what Berkeley’s experts have had to say over the past few weeks:
On executive pay and the role it played in Wall Street’s meltdown Law professor Jesse Fried in The Wall Street Journal: “I don’t think we can rule out the structure of executive pay as a causal factor on the meltdown. A lot of the pay was based on bonuses based on year-to-year earnings.”
On what the financial crisis says about our values Professor Emeritus of Sociology Robert Bellah in The Washington Post: “The crisis is telling us something. It’s a symbol of our values imbalance. Extremist individualism runs against Christianity and other religions, too. There’s nothing religious about abandoned regulation, hatred of the state, and distributing goods only through the free market.”
On the future of the housing market Economics professor Barry Eichengreen in The Wall Street Journal: “The housing market still has further to fall, regardless of what we do with credit-default swaps and mortgage securities.”
On the now-failed financial bailout plan of Treasury Secretary Henry Paulson Seven Berkeley professors in a widely reported open letter to Congress: “As economists we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty for the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan: 1. Its fairness… 2. Its ambiguity… 3. Its long-term effects….
On a possible upside to the bailout Professor Brad DeLong in the Los Angeles Times: “It’s entirely within the realm of possibility that we’ll make money on this deal. Very senior people in charge of asset portfolios on Wall Street have said they are envious of the terms the government imposed on AIG. They think the Fed’s going to make a fortune.”
On what it all means to America’s families Professor of Political Science Jacob Hacker in the Columbus Dispatch: “What’s happening on Wall Street occurs alongside a very substantial slow-moving crisis for American families. More and more financial responsibility and risk have moved from the broad shoulders of government and corporations onto the backs of American workers and their families.”
A panel discussion with leading experts, including 2001 Economics Nobelist George Akerlof, will be held Thursday, Oct. 2, from noon to 1:45 p.m. in Booth Auditorium at Boalt Hall. Joining Akerlof will be Berkeley professors Brad DeLong, Aaron Edlin, Barry Eichengreen, John Quigley, and Nancy Wallace. The event, open to the public, will also be webcast.