Thursday, July 24, 2008

Grad School - The End is Near

Some of you who have followed me for a while know I am finishing up a graduate degree in Economics.


I intially began to study econ in 2002 trying to understand what happened in the dotcom bubble and how to keep it from happening again. Then we had the mother-of-all-bubbles in the housing mess and I was really curious to take my education to a higher level and I joined a Masters program in Econ in fall 2006. Fast forward two years and I am down to my last class. I will not write a memoriam until I complete it all but I can say it seems like just yesterday I was starting and today I am looking at the finish line. My understanding of economics has increased by magnitudes and I have a much more critical mind in determining what is happening in the economy today and actions taken by the various players.


For instance, Hank Paulson has been widely criticized for the Bear Stears bailout--or buyout, however you see it. Media reports that he wanted a very low price ($2) paid to shareholders to force them to take a loss and send a message of moral hazard throughout the markets - i.e. that companies that make bad decisions will have to pay. To the average lay person it looks like some people are walking away with stuffed pockets but sending a message out about losses definately causes a strong market reaction.

Economics has provided me with a large set of tools with which to better understand the markets and why people sometimes act the way they do, or a theory called rational expectations.

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