Archive for February, 2009

USA was 3 hours away from Economic and Political Collapse in September 2008 (Ref. Rep. Paul Kanjorski / Magnifico)

February 14, 2009

 

According to Rep. Paul Kanjorski (D) (PA-11), in mid-September of 2008, the United States of America came just three hours away from the collapse of the entire economy. In a span of 2 hours, USD 550 billion was drawn out of money market accounts in an electronic run on the banks.

 

Rep. Kanjorski: “It would have been the end of our economic system and our political system as we know it.”

Quote…:

I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on… Here’s the facts. We don’t even talk about these things.

On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of USD 550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped USD 105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of USD 250,000 per account so there wouldn’t be further panic. And that’s what actually happened.

If they had not done that their estimation was that by two o’clock that afternoon, USD 5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.

On the day the electronic run on the money markets happened, September 18th, the Dow Jones Industrial Average closed at 11,019.69. This was roughly two weeks before the huge market collapse during the first week of October 2008.

…Unquote.

Source: Magnifico Mon Feb 09, 2009 at 08:58:22 PM PST

 

NB:

In 1987 the stock market was capsized by an uncontrolled IT-driven stampede-like rally.

In 2008 the financial system was close to a collapse driven by similar mechanisms.

Obviously there is still something to learn – and these consecutive situations constitute a tremendous wake-up-call for the Business School and University community – with reference to comments on this blog 2 December 2008 on the Financial Meltdown by IMD-Lausanne and ASB-Aarhus professors Hamilton, Cossin, Bris, and Hildebrandt – focusing on experience as an important parameter in economics.

 

Hopefully the learning process will not contain further debate about martial law as has been the case recently in connection with the USD 787 billion stimulus plan.

Povl Tiedemann

February 2009

 

 

The road ahead for European management education

February 1, 2009

With nearly 70% of the European workforce operating in the services sector, often in high value-added industries, our political, economic and social space has a great need for capable and creative managers, adaptable and sensitive to other cultures and well trained for their current and future responsibilities.

 

If Europe does not want to be reduced to an imitative economy, it must redirect, at all levels, significant resources towards higher education in general and towards management education in particular. If we agree that there is a need for management science to change paradigms, there must also be changes in the way we train teacher-researchers.

 

This means a reform of doctoral programmes, which must become more multidisciplinary, interactive and closer to companies and to the whole of society.

 

Since vocations can come along at any stage in life, a system of pathways should be set up to enable highly skilled professionals to reorient towards teaching and research.

 

In the US, AACSB and a number of universities have already started thinking about the possible creation of “Executive PhD” programmes.

 

Check:

Global Focus – The EFMD Business Magazine issue 02 and 03 – 2008 for above article in full, written by Prof. Eric Cornuel, Director General and CEO of EFMD, as part of a two-part series on management education in Europe with some thoughts on how the sector might be restructured and revitalised. Check also www.deanstalk.net, 21 July 2006 for Stanford findings on this subject.

 

 

Povl Tiedemann

January 2009