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global financial crisis

The things we do: The economic, social, and personal costs of optimism

Roxanne Bauer's picture

Construction worker for the Panama Canal expansion projectIt is now the second week of 2016 and many people are working (or struggling) to follow through on their New Year’s resolutions. Whether they have decided to run a marathon, travel more, or save money, many people endeavor to create positive, new habits while shedding existing habits they think are less positive.  These resolutions, though, tend to last one or two months, fading into the backgrounds of their consciousness as spring arrives. 
 
It’s a typical combination of the planning fallacy, unrealistic optimism, and a bit of self-regulatory failure.
 
And this sort of challenge is not specific to New Year’s resolutions or even to issues pertaining to individuals.  City councils frequently draw up budgets that are too lean, road construction frequently lasts much longer than expected, and advances in technology often require much more investment than planners expect. So what’s at work here?  Why is it that people have a hard time judging the amount of time, energy, and resources that a project will take?

Quote of the week: Ben Bernanke

Sina Odugbemi's picture

Ben Bernanke“Individually rational behaviour can be collectively irrational. And that’s why the regulators have to do what they can to constrain individual behaviour, so that it doesn’t lead to collectively irrational outcomes.”
 

- Ben Bernanke, an American economist currently working at the Brookings Institution. He served two terms as chairman of the Federal Reserve, the central bank of the United States, from 2006 to 2014. During his time as chairman, Bernanke oversaw the Federal Reserve's response to the late-2000s financial crisis. Bernanke wrote in his 2015 book, The Courage to Act, that the world's economy came close to collapse in 2007 and 2008 and that it was only the innovative efforts of the Federal Reserve, in cooperation with other agencies and agencies of foreign governments, that prevented an economic disaster greater than the Great Depression.  Prior to serving as chairman of the Federal Reserve, Bernanke was a member of the Board of Governors of the Federal Reserve System from 2002-2005 and proposed the Bernanke Doctrine concerning the source of deflation.  

Wayward Bankers: An Epic Accountability Challenge

Sina Odugbemi's picture

The global community faces an epic governance and accountability challenge: the big banks that we all use either directly or indirectly are out of control and nobody seems to know what to do about them. As we mark the fifth anniversary of the global financial crisis this month, it appears as if every new week brings news of a fresh banking scandal. The recent list: