The lack of law enforcement in many regions has spurred looting that killed at least five people and injured hundreds. Some shop owners are taking up arms to defend themselves; others are closing down.
This morning in Stockholm, Sweden, three American men will be awarded the Nobel Prize in Economics. Yale's Robert Shiller and the University of Chicago's Eugene Fama and Lars Peter Hansen are being recognized for their at times conflicting research into how financial markets work.
Before he departed, Marketplace Morning Report host David Brancaccio spoke with Lars Peter Hansen. Click the audio player above to listen to their interview.
DB: Your work embraces the imperfection of economic models, but still allows you to get work done?
LPH: I view the work I've done related to statistics and economics as roughly speaking, how to do something without having to do everything. So economic models -- how any model by definition isn't right. When someone just says, 'Oh, your model is wrong.' That's not much of an insight. What you want to know is, is wrong in important ways or wrong in ways that are less relevant? And you want to know what does the data really say about the model?
DB: One example that comes to mind is we know a lot about climate change, but there's also a lot we don't know. What do you think your way of thinking about imperfect models would mean for making good decisions about an issue like that?
LPH: So that's a fascinating question. And this shows up not only in connections to economics and the climate, it also shows up in financial oversight and regulation. Early on, in discussions of financial oversight, people would say, 'Well, this is a very complicated problem, therefore it requires a complicated solution.' And at that step, I would say, 'Well, wait a minute. Just because it's a complicated problem doesn't mean the best course of action immediately is one that's complicated.' Because, you know, behind complexity you can slip indiscretion, you can slip in counterproductive measures that overstate our knowledge and the like. And an advantage of a more simpler approach is transparency as well.
DB: It would be nice, for instance, if you could eventually offer some guidance of which of those institutions are, in fact, too big to fail or more likely to fail.
LPH: Part of what we have to do, or part of what remains a challenge, is we have to be not scared of letting institutions fail. You know, extended bankruptcy from big financial institutions would just be a disaster typically, because this could have very big consequences. But we need to figure out better ways to get resolution when financial institutions are struggling in ways that aren't socially so costly to us.
Officials in China are worried that it has become too easy to get credit there, fueling what might be a speculative bubble. Some Chinese lenders have used borrowing between banks as a disguise for some of their riskier ventures. But interbank lending is a bedrock part of the legitimate financial system and some foreign banks are feeling caught up in China's crackdown.
The issue for China is the degree to which it happens and how much of it is in the murky world of the shadow banking system. The Chinese government is worried off-balance-sheet lending may be fueling bubbles in certain areas of their marketplace -- in particular, land prices and property prices.
Some foreign banks are involved in these off-balance-sheet lending activities. The difficulty is a lot of these non-bank institutions that are involved in shadow banking -- such as hedge funds -- can end up taking large risks. And that's what the Chinese government is worried about. Foreign banks could then get involved because they're used to dealing with those kinds of things.
During a 20-minute eulogy, Obama said Mandela was the "last great liberator of the 20th century."
Five federal agencies are set to reveal the long-awaited Volcker Rule, a centerpiece of the Dodd-Frank financial reform plan. The rule will limit proprietary trading, in which banks place bets with big trades, using their own money.
Banks and their attorneys will be poring over the document, and one of the things they'll be looking for is whether there is a requirement that CEOs and boards certify they’re following the rules. Robert Maxant, a partner with Deloitte and Touche who advises banks, says certification could make boards and CEO’s pay more attention.
"It does make them very acutely conscious of, you know, have we in fact fully and completely complied with the rule?” he says.
Maxant says banks are concerned about how much certification could cost. It could get expensive, if the rule also requires certification from accounting firms.
“There would be an independent, outside public accounting firm to make sure that everything is legitimate and correct,” Micah Hauptman, an attorney and Volcker Rule specialist at Public Citizen, says of that scenario.
He says that if everything wasn't correct, there could be consequences including lawsuits or criminal charges.
Diana Barrett is the only person I’ve ever heard compare philanthropy to bowling.
“You’re picking up that ball,” said Barrett, “and you can’t see what you’re hitting because you’re wearing a blindfold. So you kind of go voooomp! Did I hit anything?! You can’t improve it because there’s no learning curve. That’s what philanthropy is like.”
Having talked with Hal Ornstein who only just founded his own family foundation this past summer, I wanted hear from an experienced grant-maker: someone who could talk with me about the realities, and perhaps the pitfalls, of giving away lots of money.
“It really is difficult,” she said, “People laugh about that and say, ‘I’d like to have that problem.’”
These days Barrett runs a very successful foundation called The Fledgling Fund. It gives money to filmmakers who are making socially impactful documentaries, and then helps builds outreach campaigns around those films. She founded the fund in 2005. Four of her grantees have won Emmy awards and four others have won Oscars, including the makers of “Born Into Brothels,” a film about the children of Calcutta prostitutes.
The wealth that capitalized Fledgling was originally created by Barrett’s father, Joseph King, who has been called a pioneer in investment banking. Upon King’s death, his widow Gioconda King was advised to set up a foundation for tax reasons. The Gioconda and Joseph H. King Foundation was to aid immigrant populations in New York, and Barrett ran it -- or rather, she tried to.
“I thought it would be a way of bringing us together,” said Barrett, “Didn’t work. Every time I brought something up she had no interest whatsoever. To a certain extent, it exacerbated problems that we already had.”
This was the first of many lessons Barrett learned about philanthropy: family foundations are only as healthy as the family is.
“A lot of people have found that their family foundations are just being split into pieces because they can’t get along with their siblings,” she said, “I mean one sibling is really interested in saving wolves and the next one doesn’t care about wolves but he cares about whales. That’s a whole other market. Wolves and whales don’t run in the same market.”
Be it wolves or whales, Barrett says many of her philanthropic peers neglect to do their due diligence before they begin throwing money at their cause of choice.
“The big thing in philanthropy is that people say ‘find your passion,’ when you start a foundation,” said Barrett rolling her eyes. “Passions need to be educated. You’ve got to figure out what this passion is all about. Who’s in the field? You have to bury your ego. Very often I see people starting foundations thinking that the sun kind of sets on their head.”
Perhaps the most surprising reality: according to Barrett, grantees might seek to impress their benefactors by saying a program is going great when it isn’t.
“There are all sorts of issues that come into play that nobody tells you about,” she said, “Firstly there’s the power relationship. You have money. They don’t. There is no incentive for people to tell you the truth about what’s happening in an organization. No incentive to tell you that they used the money wisely. No incentive to tell you that they tried something and it failed.”
That’s the sort of information you need if you really want to make a difference, she said. To return to her bowling analogy, if you’re not getting the right feedback, or any feedback, about your philanthropic efforts, you might end up with nothing but gutter-balls.
Poly Implant Prothese was once among the world's leaders in supplying implants. But after its product was found to have a high rupture rate, a public health scare followed. Its founder was sentenced to four years in prison for fraud.
South Africans paused Tuesday to bid farewell to the country's first black president, but there was nothing somber about it. They sang and shouted and ululated, with some making themselves hoarse even before a memorial service at the country's biggest stadium.
This week marks the start of Computer Science Education Week, and part of that is a campaign called an "Hour of Code," where everyone from President Obama to Angela Bassett is urging kids to try computer coding for just an hour. Some in the tech world say it's about time.
After all, they say, to be a savvy consumer of technology, you have to understand how it works. That means knowing how to write programming code, says Douglas Rushkoff, an author and digital literacy advocate.
"In a course where kids are learning critical thinking and critical studies, they can be looking at and analyzing the biases of different media like websites, like social networks," he says.
Rushkoff says knowing how to build websites and applications will help kids understand that Facebook, for instance, isn't about making friends, but about data mining. He says it's important to know how digital programs work from the ground up.
Dan Hoffman, who teaches education at the University of Illinois at Urbana-Champaign, says some fear more computer education means less time for curriculum staples like english and science.
"There's always a battle being an educator as there's kind of that 'one more thing' phenomenon," he says. That is, another thing stacked onto an already full curriculum plate.
But he says if that one more thing is tech instruction, most teachers are all about it. So this semester he's teaching a brand new course: "Computer Programming in the K-8 Classroom."
Reed Holway served in Iraq, where he developed PTSD. His symptoms worsened back in the U.S. He got in trouble and ultimately received a bad-conduct discharge. Now Holway is stuck: He can't get medical care from the VA for the disorder that he says caused him to get kicked out of the Army in the first place.
BP is challenging hundreds of millions of dollars in claims that were filed after the 2010 oil spill in the Gulf of Mexico, saying some have no connection to the spill. But legal experts say the claims don't have to be spill-related and BP is relying on a friendly court to limit how much it will pay.
Women hold only about 17 percent of the seats on boards of directors of Fortune 500 companies, and they have an even smaller percentage of senior executive positions, according to a new study.
SABC, South Africa's public broadcaster, live streamed its coverage of Nelson Mandela's memorial service in Johannesburg.
With a mix of joyful, mournful and soulful music tens of thousands of South Africans and dozens of world leaders gathered in a huge soccer stadium to celebrate the country's emancipator. Nelson Mandela was remembered as an "incomparable force of leadership."
Coverage of the memorial service for Nelson Mandela in Johannesburg includes part of President Obama's speech.
Federal regulators on Tuesday unveil and vote on a final version of the so-called Volcker Rule. It's part of the Dodd-Frank regulatory overhaul and prohibits banks from trading stocks, bonds and derivatives for their own accounts. Defining what the rule covers has taken years of work.
Student activism is now at the heart of dissent against the state. But like Egypt itself, the movement is divided. Secular and Islamist protesters are closing down their campuses and demanding that the police be tried for their crimes.
Many Americans who live in rental properties can't keep up with the cost of higher and higher rents, according to a new study by Harvard's Joint Center for Housing Studies. The report finds that half of U.S. renters spend more than 30 percent of their income on rent. David Greene speaks with Chris Herbert, one of the report's authors, about why there isn't more affordable housing.
Eighteen current and former Los Angeles sheriff's deputies are facing federal charges, accused of civil rights violations and obstruction of justice. The indictments are part of an ongoing FBI probe into allegations of widespread abuse against inmates at county jails.
Under the agreement, Jordan would build a desalination plant and a pipeline would be built from the Gulf of Aqaba to the Dead Sea.