Blueprint for a Modernized Financial Regulatory Structure

Here are some quick links to "hot off the presses" information on Treasury Secretary Henry Paulson's announcement this morning of a restructuring of the financial regulatory system.

The complete Blueprint (PDF format - 200 pages)
Summary Fact Sheet (PDF - 7 pages)

Main Regulatory Blueprint Initiative page

Transcript of Secretary Paulson's remarks

I'll have more to say after I review and digest the announcement.

For those in the class already thinking about a group project, a review and assessment of this blueprint sounds like an interesting one to pursue.

Paulson to make major announcement tomorrow

We've barely begun the new quarter and already there's major news on the US economic front. Tomorrow at 10am EDT, US Treasury Secretary Henry Paulson will "discuss issues relating to financial institutions and financial markets" according to the Treasury web site. The event will be webcast at www.treas.gov.

While details won't be released until tomorrow, analysts are already discussing the outline of Paulson's plan to restructure the banking and insurance regulatory agencies. Both the Times Online and BusinessWeek are calling the proposed changes "the biggest overhaul of the supervision of America's banks and insurers since the Great Depression."

The current system of oversight was the result of piecemeal additions of supervisory agencies and departments since the Civil War. The proposed system will consolidate much of the supervisory responsibilities in the Federal Reserve. Some agencies will be consolidated or possibly entirely scrapped and new ones may emerge.

The plan is generating a lot of controversy among economists and those involved in the regulatory agencies. Opinions are also developing along Democrat and Republican party lines. Most analysts agree that the plan is a long-range plan and that only a few, if any, of its recommendations could be implemented in 2008. Which parts of the plan are actually implemented may also be affected by the results of the presidential elections this fall.

Here's a link to the WSJ article.

Pre-Class Post 1

This is the blog of my class notes for ECO 509 - Business Conditions Analysis. The course focuses on Macroeconomics and is taught by Professor Jaejoon Woo. I added links to the official class web site on the side bar.

Course Outline
The course is divided into 3 units:
Unit 1. Overview of the World Economy and Macroeconomic Indicators

Unit 2. The Economy in the Long Run
I. National Income Accounts and the Balance of Payments System
II. Productivity and Growth
III. Money, Inflation, Interest Rates, Exchange Rates and Asset Prices

Unit 3. The Economy in the Short Run
I. AD-AS Model
II. Aggregate Demand
III. The Open Economy in the Short Run (time permitting)
IV. Monetary and Fiscal Policies, Budget Deficits and Government Debt

The text is Mankiw's Macroeconomics. Bookstore price is $150 new, $122 used. Amazon price is $103 new, about $60 used. Kind of a no-brainer, huh? There's also a Study Guide and Workbook available. The textbook has a companion web site with self tests, flashcards, a tutorial (set of powerpoint slides), a data plotter, macro models and a simulation game. You need to register (free).

There are also many outside readings, most of which are available for download online.

We'll have the Depaul usual:
4 lectures
Midterm (40%)
5 lectures
Final (40%)

The one unusual thing I noticed on the syllabus is that the midterm is a take-home test. A take-home exam is generally favored by students, but it may mean that it'll require more time, thought and analysis. The final is in-class, closed-book as usual.

Group Project
There's also a group project (20% of final grade) due on the day of the final. I'm interested in getting started on the project right away. It sounds like we can choose our own topic. It just needs to be approved by the professor. Here are a few of the things I'm interested in:

• The macroeconomic effect of raising the eligibility age for tax-payer financed benefits for the elderly (Social Security, Medicare, etc). This is my preferred topic. It's a hot topic and there's plenty of literature to work with.
  
• How macroeconomic indicators can be used effectively. (There's already plenty of discussion of their shortcomings)
• Counterfactual assessment of a 90/10 Social Security system
  
• How macroeconomic indicators influence US presidential elections
• Microcredit (Grameen Bank) and how it influences the macroeconomy
• Macroeconomics in online virtual environments (Second Life, WoW, Runescape, etc)
  

If you're interested in working with me in a serious way on one of these or any other topic for the group project, drop me an email and we can talk. I'm very interested in trying to use collaboration technology such as GoogleDocs to do the group project. If you're into that too, we'll work well together.