Today was dedicated to understanding the Global Economic Crisis. We had three classes addressing the issue from different perspectives, and then concluded with a lecture from Harvard Economics Professor David Moss, a current advisor to President Obama. You should have heard the howls and objections from the international students as they pinned the blame for starting this mess on the greedy Americans.
I think that now even I could explain what happened; how financial firms turned sub-prime mortgages into mortgage-backed securities, collateralized debt obligations (CDOs), and CDO-squared, and in doing so spun straw into gold, turning a heap of near-default mortages into something that could be resold as mostly AAA-rated securities. This was an amazing feat of financial engineering! Well, maybe not so amazing as it almost sent the entire planet into a depression.
We also spent more time talking macroeconomics including the U.S. current-account deficit. Here we are borrowing money from China to finance our current consumption, and our kids and grandkids will (probably) have to pay the debt back sometime (unless we get lucky). The situation was equated to Climate Change and our burning of carbon fuels in the U.S., and it was mentioned that our kids will have to pay for that too. We have a special day coming up dedicated to Climate Change and I can hardly wait. I am wondering if I will be able to change any minds on this subject.
So far I haven’t. I am here with a broad cross-section of nationalities that largely believe that the U.S. is taking unfair advantage of the planet and should pay. Their number one suggestion, which I have heard several times, is that the US should increase its fuel tax. This would have several benefits: reduced oil consumption, reduced carbon emissions, reduced trade imbalance, reduced current-account deficit, a balanced federal budget and greater fuel efficiency. I have tried to explain that I don’t believe Oklahoma and Missouri consumers are ready to give up their dooley-pickup trucks, and they just can’t seem to understand. I’ll keep working on this, though
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Not to mention that such a tax would only further strain all the industries that are still being the most productive (in today's strained economic climate). I am not surprised to hear that this is an international consensus, but it's not like U.S. has anywhere near the financial hegemony we once had. I don't think we influence things nearly as much as other countries like to blame us for (and we've proven that we'll capitulate and dole out guilt-money).
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