New Crisis Possible, But, Not Like 2008: Geithner

“Even with the challenges in the U.S. economy, America is a ‘lucky country.’ “

During a CNBC interview, former Treasury Secretary Tim Geithner said the market reforms after 2008 put “much more capital into the system” and “much tougher rules on risk-taking.”  He went on to say that the reforms are strong enough, if they’re not eroded, to buy this country a relatively long period of financial stability.

Although the American economy is doing relatively well and making steady progress at the present time,     a financial crisis will happen again at some point.  Still the structural reforms undertaken after 2008 can serve to mitigate any future damage.  Mr. Geithner concludes that if a financial crisis does happen in the future, the Federal Reserve and the government would need to act again.

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Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss how the economy affects the lives of the average U.S. citizen.
  • Point out specific steps the government took to stabilize the economy and the financial markets during the economic crisis that began in 2008.

Discussion Questions

  1. How does a healthy economy affect you and your family? How does a weak economy affect you and your family?
  2. At a time when many people believe the government is too involved in the lives of individuals and business, should the government take steps to stabilize the economy and financial markets during an economic downturn? Explain your answer.

Survey Says: Investors Are Getting Scared

“As world unrest surges and the stock market wobbles, investors have gotten nervous.”

At least three separate sentiment polls indicate stock investors are worried about the trouble in Ukraine, the Middle East violence, continuing projections for a long-overdue correction or worse in the financial markets, and frustration with Washington politics.

For example, respondents to the weekly American Association of Individual Investors survey indicated their strongest levels of pessimism in almost a year.  A survey by Investors Intelligence (which polls investor newsletter editors) indicates a drop in investor bullishness compared to the previous survey.  And, a Bank of America/Merrill Lynch survey of investment strategists indicated heavy bearishness on Wall Street.

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Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Reinforce the relationship between world affairs, the economy, and the financial markets.

Discussion Questions

  1. At the time of this post, the world situation is troublesome to say the least. What is the relationship between world events, the economy, and the financial markets?
  2. These three recent sentiment surveys indicate that there are more bears than bulls? How would you define a bear?  A bull?
  3. Even though the sentiment surveys indicate investors are pessimistic about the market, some analysts view the market’s bearishness as a buying opportunity. Why could pessimism in the financial markets signal a time for investors to purchase stocks or mutual funds that invest in stocks?