How to pay for cures

Do you want to cure cancer?   Diabetes?  HIV?  Imagine if there was a single pill for each of these diseases that one could take to cure the diseases.  That would be a clear clinical advance, it would save lives, and also save money form reducing the cost of treating these disease. Can we expect to…

When does diversification increase risk?

Why did the financial crisis occur?  One reason may be due to too much institutional diversification.  George Sugihara explains how even when individual institutions diversify, system-wide risk can increase exponentially. “Leading up to the crash, there was a marked increase in homogeneity among institutions, both in their revenue-generating strategies as well as in their risk-management strategies, thus…

The High Cost of Growing Older

In America, your health care expenses are taken care of when you get older…right?  We have Medicare after all…shouldn’t that pay for all my healthcare expenses? Not according to a recent article from Yahoo! Finance.  Here are some of the health care costs retirees face: Part B Premiums: For most people retiring in 2010, the…

Why Bush and Paulson are Wrong

President Bush’s speech tonight urged Americans to side with the Bush-Bernanke-Paulson worldview that a bailout is the only option.  Is it the only option? Luigi Zingales believes Henry Paulson’s decision to bail out Wall Street is a mistake.  Most economists agree that the government won’t get a “deal” when negotiating the price of risky assets. “In…

Financial Crisis!?!?!?!?!

In an attempt to stabilize the economy, the U.S. government has taken some significant actions.  Let’s recount.  The government has taken over Fannie Mae and Freddie Mac.  Combined assets: $5 trillion.  The government has “rescued” Bear Stearns by backstopping questionable assets valued at $29 billion.  The government has given a loan to AIG for $85…

Explaining the Mortgage Meltdown

NPR’s This American Life has a great episode (“The Giant Pool of Money“) explaining in a non-technical, entertaining manner how the “credit crunch” came upon us. The episode looks at all the parts of the mortgage-backed securities chain: home owners and borrowers, brokers, banks, rating agencies, Wall Street, and foreign and domestic investors. A special…