« Research on Financial Education and Youth | Main | The Positives (and Normatives) of the Healthcare Debate »
September 24, 2009
Financial Crisis Provides a Teachable Moment without a Lesson Plan
By Cindy Ivanac-Lillig
Economic textbook authors have been feverishly working on appendices to explain the current financial crisis. The challenge when describing the crisis is where to begin -- and frankly where to end. Was the cause:
• The housing boom?
• Misaligned compensation incentives?
• The repeal of Glass-Steagel Act?
• Our political and social momentum pushing greater home ownership?
• A global economic boom that led to massive amounts of money in search of “healthy” returns?
• The Fed holding rates at historic lows through the early part of this decade?
• Regulations not keeping pace with financial product innovation?
• The increase in sub-prime borrowers?
And if we say some or all of these events caused the crisis, does it become impossible and unruly to teach?
Well, I guess my answer is yes and no. It is complicated and that is an important part of the lesson. I have facilitated about a half-dozen sessions where educators discuss the financial crisis and how best to present it to high school students. What I try and do is make the different pieces they come up with make sense. I suppose the most important thing I want people to walk away with is that it is not one thing that caused this crisis. It is many things, and that’s probably why there will be other financial crises in the future. It is a combination of small events that lead to unforeseeable wide-spread consequences. This does not make it less important to study, but more important. It is the ultimate teachable moment – it underscores the value of studying the interconnectedness of our political, economic, and social systems.
Over the course of the last year, I have come across other blogs and opinions that I have found helpful and I wanted to share them with you. One of Marginal Thoughts’ regular commentators, Mike Fladien, has a blog that highlighted this article I found simple and yet insightful: “The Financial Crisis as Explained to My Fourteen-Year-Old Daughter.”
If your questions run more in the vein of regulations, I recommend a fairly easy-to-read entry by the Curious Capitalist where you can definitely get a flavor for both sides of the argument. If you have more specific questions about AIG, Bear Stearns, and Lehman’s involvement in the crisis, there is a good Freakonomics blog with FAQs on these subjects. Some other quick reads on the crisis more generally include this New York Times entry or this one from Askville(Amazon). And finally, if you have some time, you can watch renowned economics textbook author David Colander present his “Student’s Guide to the Financial Crisis” here, which I think is the best of the bunch (but the longest time commitment).
None of these recommendations is perfect, nor without its own controversial statements, but hopefully they will offer enough information so that we can all avoid summarizing the crisis in simplistic terms. After reading this, hopefully you will all bristle when you overhear someone saying the cause of this crisis can be boiled down to unworthy borrowers being granted mortgages.
Good luck to all of you, and please share resources that you have found helpful in learning/teaching about the crisis by commenting below. I look forward to hearing from you.
Posted by Cindy at September 24, 2009 6:06 PM
Trackback Pings
TrackBack URL for this entry:
http://www.chicagofedblogs.org/cgi-bin/mt/mt-t.cgi/66
Comments
Two others I would recommend are from the NPR show, This American Life. The first is
The Giant Pool of Money at
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1242
The second is Return to the Giant Pool of Money at
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=390
Posted by: Tim at September 28, 2009 9:42 PM
You’re blogging has really come on when I look back over previous posts. Actually I arrived here from a forum on an unrelated topic. Worth surfing sometimes. Thanks.
Posted by: Emily at June 26, 2011 8:57 PM
Post a comment
Commenting Policy:
All comments and links posted to FRBC blogs are reviewed. The Federal Reserve reserves the right to protect against spam, off-topic and profane comments and links; any such comments or links will be deleted and the domain address of the poster blocked.