From Fuqua Professor Dan Ariely’s Predictably Irrational blog:

I would like to propose that one reason people oppose the government bailout is because they want revenge on the companies that helped lead us into this disaster. Even though they know they will lose money and it doesn’t help them at all, at a very basic level a part of them want to see the companies suffer. Read more.

I am not surprised that the Troubled Asset Relief Program (TARP) failed.

The paper that I put out on Friday detailed the numerous problems with the TARP. 

My paper argued that the TARP had at least three major flaws. Read the rest of this entry »

We have been trying to put out one fire after another and it is time to get ahead of the problem. 

One day it is money market funds, the next is Washington Mutual, and TARP over the weekend. We need a comprehensive set of policies and I hope my proposals are a step in that direction. Read the rest of this entry »

“Research Advantage” describes the benefits for students who learn from faculty members who are also some of the world’s leading business researchers. This means that new knowledge moves quickly from the research process into the classroom, where the latest research findings are integrated into teaching.

Today more than 300 Fuqua students experienced the Research Advantage first hand in a forum hosted by Campbell Harvey, the J. Paul Sticht Professor of International Business and Editor of the Journal of Finance. Harvey explained that the state of the financial markets, and prospects for employment in finance, are not as dire as they may seem.

View the town hall meeting (Quicktime required).

Professor Campbell Harvey provided video responses to Duke MBA students’ questions about the unfolding financial crisis.  View Harvey’s responses here.

Durham , NC — In late January 2005, Fuqua finance professor Cam Harvey traveled to Davos, Switzerland, for the world’s most important annual economic forum. From his panel discussion on corporate earnings to his encounters with senators and celebrities, Harvey shared his experience in journal form.

Read the rest of this entry »

The extraordinary risk will not be resolved by the nationalization of AIG or steps to make it easier to borrow from the Federal Reserve. We face the specter of the ‘night of the living dead scenario’ where there are hundreds if not a thousand financial institutions are operating today – but are dead if mark to market accounting was applied to their assets.

The Fed’s #1 priority right now is to reduce the probability of bank runs. If we see just one bank run, it could be contagious leading to runs on many banks. This is the nightmare scenario everyone wants to avoid. Read the rest of this entry »

We face the specter of the ‘night of the living dead scenario’ where there are hundreds if not a thousand financial institutions are operating today – but are dead if mark to market accounting was applied to their assets.

In years to come, the real story will not be the subprime crisis or some housing bubble, it will be the spectacular failure of risk management systems in our, so-called, leading financial institutions.

  Read the rest of this entry »