ECON 252: Financial Markets

Lecture 26 - Learning from and Responding to Financial Crisis II (Lawrence Summers). In the second of his two lectures in honor of Arthur Okun, Professor Summers points out that real interest rates have been very low in the current subprime crisis. This indicates that the shock to the economy was more a financial breakdown shock than a disinflation shock. But financial breakdown shocks are not necessarily very harmful to the economy, so long as financial intermediation capital is not destroyed. In a financial crisis like the present one, financial firms are likely to take the step of decreasing their leverage, often by contracting loans, which creates its own risks for the economy. Regulators should place pressure on financial institutions to raise their capital and should intervene in near foreclosure situations, but should not attempt to support housing prices. (from

Lecture 26 - Learning from and Responding to Financial Crisis II (Lawrence Summers)

Time Lecture Chapters
[00:00:00] 1. Introduction and Recap
[00:02:51] 2. Understanding Recessions in Terms of the IS/LM Model
[00:12:35] 3. Financial Intermediation Capital: Essential for Economic Growth
[00:23:08] 4. U.S. Fiscal Policy Challenges and Objectives
[00:36:44] 5. Caution against Overdependence on Monetary Policy and the Federal Funds Rate
[00:48:12] 6. Obstacles in Introducing New Capital into and Increasing Direct Regulation of
....Financial Markets
[00:57:50] 7. Fiscal Policy Coordination in the International Context: Observations and Suggestions
[01:06:56] 8. Q&A: From Paulson's Proposal to Regulation of Lending and Leverage

Lecture 26 - Learning from and Responding to Financial Crisis II (Lawrence Summers)
Instructor: Professor Robert J. Shiller. Transcript [html]. Audio [mp3]. Download Video [mov].

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Lecture 01 - Finance and Insurance as Powerful Forces in Our Economy and Society
Lecture 02 - The Universal Principle of Risk Management: Pooling and the Hedging of Risks
Lecture 03 - Technology and Invention in Finance
Lecture 04 - Portfolio Diversification and Supporting Financial Institutions (CAPM Model)
Lecture 05 - Insurance: The Archetypal Risk Management Institution
Lecture 06 - Efficient Markets vs. Excess Volatility
Lecture 07 - Behavioral Finance: The Role of Psychology
Lecture 08 - Human Foibles, Fraud, Manipulation, and Regulation
Lecture 09 - Guest Lecture by David Swensen
Lecture 10 - Debt Markets: Term Structure
Lecture 11 - Stocks
Lecture 12 - Real Estate Finance and its Vulnerability to Crisis
Lecture 13 - Banking: Successes and Failures
Lecture 14 - Guest Lecture by Andrew Redleaf
Lecture 15 - Guest Lecture by Carl Icahn
Lecture 16 - The Evolution and Perfection of Monetary Policy
Lecture 17 - Investment Banking and Secondary Markets
Lecture 18 - Professional Money Managers and Their Influence
Lecture 19 - Brokerage, ECNs, etc.
Lecture 20 - Guest Lecture by Stephen Schwarzman
Lecture 21 - Forwards and Futures
Lecture 22 - Stock Index, Oil and Other Futures Markets
Lecture 23 - Options Markets
Lecture 24 - Making It Work for Real People: The Democratization of Finance
Lecture 25 - Learning from and Responding to Financial Crisis I (Lawrence Summers)
Lecture 26 - Learning from and Responding to Financial Crisis II (Lawrence Summers)