Word: ls
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...LS: I have taken a number of trips to meet with policy-makers. I visited China in the late fall and spent time with the central bank and people in the finance ministry and people involved with their development....Over the course of the spring, I spent some time in India discussing, among other things, issues related to reserve management and globalization issues more generally. I also visited Mexico where I discussed issues related to globalization and trade with President [Felipe] Calderon and the finance minister and the central bank governor...And then I’ve also been...
...LS: Less. And that—more than Faculty meetings—is something I miss about the time when I was president. But I really enjoyed teaching the globalization course [Economics 1400: “The Contents of Globalization”] this semester. And through the lunches and office hours, and the barbecue I hosted at my home, I felt like I was able to engage at least with a group of undergraduates who seemed to be intensely curious about things that I think are very important....Certainly, I hope to teach undergraduates for years to come...
...LS: The book will be on great research universities and their mission. It’s not an autobiography or a memoir, but it obviously will draw on my experience as president of Harvard in developing its arguments about great contributions that universities can make to the broader society. I think we’re some time away [from publishing]. I certainly expect that the publisher will have the manuscript sometime within the next year and I expect it will be published soon after that...
This is what you call a bad-debt problem. The U.S. banking system had a couple of big bad-debt problems in the 1980s (remember S&Ls? Latin-American debt?) and slowly, grindingly, expensively worked its way through them. But now most mortgages aren't sitting on the books of the lenders who made them. Instead they've been chopped up and combined into securities--with values contrived by complex mathematical models--and sold to banks, pension funds and other investors around the world. This securitization was supposed to spread risks more widely and more efficiently...
These firms face little of the interest-rate risk that bedeviled S&Ls. And they can shove most of the credit risk--the chance that a loan will go bad--onto the buyers of their mortgages. As a result, investors were initially willing to purchase only the lowest-risk loans--the good-credit, 20%-down variety. Fannie and Freddie still do that because they're required to by law. But in the past few years, private investors looking for higher returns began pouring money into iffier loans, underestimating the danger...