Who to blame? Who to target in the search for the culprits behind the great banking crisis which has mutated from a calamity in private sector credit and derivatives markets into a broader, damaging economic and social disaster. Playing the blame game is easier armed with the benefit of hindsight. But with each passing day it becomes clear that what we have seen is a multi-tiered case study in market and governing failure. Ordinary citizens — whose pensions and living standards are now threatened and blighted by the folly of financiers blinded by their own hubris and greed — will not easily accept that the current generation of leaders are the people to lead us out of this mess.read more...»
Many thanks to Tim Mason for providing this helpful guide for students ahead of their papers. Tim welcomes all comments especially from centres who are experienced hands at the OCR course! Please leave your comments below.read more...»
I have put together my recent series of posts on exam technique for the AQA AS economics papers into a single word file - available for download by clicking the link below.
Part (c) explanation questions in the new AQA AS papers score 12 marks. For example in the January 2009 macro paper students were faced with this question:
“Extract B suggests that international studies ‘provide explanations for differences in labour productivity’. Explain two determinants of labour productivity.”
On the other question
“Explain two determinants of saving by households”
The examiners’report gives some important clues as to how to approach these questions and achieve high marks with the mimimum of fuss.read more...»
The second question on the AQA units 1 and 2 papers asks students to identify features of selected economic data - usually in the form of a chart and/or table. The question carries 8 marks. I produced a quick revision exercise on this aspect of the new paper a few weeks ago and it is available for download here.
The January 2009 Examiners’ reports make for important reading once againread more...»
There is an excellent graphic available on The Times website that would be well worth down loading, printing out and sticking in your folder or study wall. It is a summary of the budget given by Alistair Darling last Wednesday and the differences between the government’s economic outlook and the outlook put forward by city economists. Remember examiners love to see exam answers which are packed with current economic data.
The pdf of the graphic can be found here.
If you can get to the RSA on a lunchtime, this looks like a stunning opportunity. Thursday 21st May at 1pm
“Acclaimed economist Robert Shiller challenges the economic wisdom that got us into the current financial mess, and puts forward a bold new vision to transform economics and restore prosperity. The global financial crisis has made it clear that powerful psychological forces are imperilling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, ‘animal spirits’ are driving financial events worldwide.”
Will King, founder and CEO of King of Shaves is featured in today’s Sunday Times. He is to demerge the division of his company that produces shaving products under licence for other brands including Ted Baker. According to the article “this will allow King to focus on the manufacturing business, which last year expanded into making razors with the launch of the Azor. The product is designed to break up a market dominated by Gillette and Wilkinson Sword.”
Will is speaking at our National Conference for Economics Teachers and delegates will each receive a King of Shaves goody bag.
A Channel 4 programme due to air on Monday 20th April might be one for the departmental DVD library? How the Banks went Bust is due to be shown at 2000 hrs. Economist and author Will Hutton gives the definitive insider’s account of what went wrong. Talking to the key players in government, Wall Street and the City, Hutton unveils the true extent of the greed, ambition and reckless risk-taking that is now carrying the economy into the worst recession for a century. Is it really true that no one saw it coming? Or could the recession have been prevented? More details here.
A highly relevant piece from the BBC web site - carbon markets promise to be a key player in the fight against climate change, argues Professor Michael Grubb
During a spring clean I came across a book of hand-written teaching notes from my first two years at the chalk-face - 1987 and 1988. There were some pleasant reminders of time spent getting my hands dirty on the banda machine (do you remember the smell of those freshly printed pages?) and also numerous flashbacks to how dependent I was on getting the scissors out to cut useful articles, charts and tables to insert into student worksheets and handouts - has anything changed? Two images below take us back to the end of the Lawson Boom of the late 1980s.read more...»
Details of a new book by the International Editor of the Financial Times Alan Beattie
“The path to prosperity is rarely obvious and the sources of success are often unexpected. Time and again, world leaders have failed to learn the lessons of economic history, and their mistakes continue to have surprising and catastrophic consequences. In False Economy, Alan Beattie uses extraordinary stories of economic triumph and disaster to explain how some countries went wrong while others went right, and why it’s so difficult to change course once you’re on the path to ruin.”
False Economy: A Surprising Economic History of the World - available now for pre-order from Amazon
Diane Coyle’s blog over at Enlightenment Economics is superb for teachers who want to keep up to speed with new books on economics. In today’s blog she casts her eye on the plehtora of new titles covering the credit crunch - over ninety are listed by Amazon .... and counting! More here
Today’s Observer carries some hugely encouraging news:
Economics is a must study for students in recession
A surge in sixth-formers applying to study economics at university is being attributed to the global recession awakening a public thirst for knowledge about how the financial system works. Applications for degree courses beginning this autumn or next were up by 15% this January, according to UCAS, the Universities and Colleges Admissions Service. A spokesman for the Royal Economic Society said applications to do economics at GCSE and A-level were also up
Interest in the Royal Economic Society’s annual essay competition for sixth form economists is very strong this year. There is still more than a month before the final deadline for entries to be submitted. Here are the main details.
This link might be useful for colleagues wanting to add to their image library when teaching economic systems. Most of these images seem to hark back to the days of state planned output, rigid price controls, long queues and a distinct lack of choice! I love the image of a shelf of soviet astronauts - light years before Buzz came along!
A programme due for screening on BBC 4 this coming Wednesday could be a really useful teaching resource on the economics of farming.
This is a new documentary series looking at the history of 20th century farming in Britain opens by focusing on milk. In the early years of the century, 150,000 dairy farmers milked by hand and sold milk door to door. By the end of the century the 15,000 that were left were breeding cows that increased yields by 400 per cent and milk was sold through supermarkets.
A fascinating article from Nick Fraser (editor of BBC 4 Storyville) on economics, economists and the financial crisis. A mixture of scorn and cynicism - much of which is well targeted - but with rays of hope that a new breed of economists can emerge from the storm with fresh contributions to make
“We do need to tell economists how we want the world to be. And if economists are to fix our world, they need to know more about it.”
Here is his list of ten must read books on the crisis:read more...»
“When we emit greenhouse gases we damage the prospects for others and, unless appropriate policy is in place, we do not bear the costs of the damage. Markets then fail in the sense that their main co-ordinating mechanism – prices – give the wrong signals.”
Professor Nick Stern (Blueprint for a cleaner planet)
Carbon trading is an important part of the EU’s environmental targets – the challenge is to find policies that are EFFECTIVE, EFFICIENT and EQUITABLE.
This four page revision note provides some analysis and evaluation on the European Union emissions trading system - designed for AQA A2 economists but hopefully also useful for those preparing for the 2888 paper and for students preparing environmental questions for the Edexcel Board.
Revision on Carbon Trading:
In 2012 European airlines are scheduled to be included in the carbon emissions trading scheme for the first time. Aviation is a industry responsible for 650 million tonnes of CO2 annually - around two percent of global greenhouse gas pollution but this share is expected to rise in the years ahead and the industry has been under sustained pressure from stakeholders including the EU Commission and green pressure groups to do something to tackle carbon emissions.
The airlines have complained about being included in the EU scheme - they complain that participation will damage their competitiveness during a difficult time for airline businesses. Swiss International Airlines chief executive Christoph Franz has argued that including airlines in the EU-ETS could actually lead to more greenhouse gas emissions as airlines sought to fly around EU airspace.
But without signs of an active commitment to reducing their emissions, the industry may well find that it is subject to even tougher regulation in the years ahead and/or a specific pollution tax on aviation fuel as a means of ‘making the polluter pay’.
This week four of the world’s biggest airlines have supported a global scheme to curb carbon emissions - they are Air France/KLM, British Airways, Cathay Pacific, Virgin Atlantic together with the under-fire airport operator BAA.
The Aviation Global Deal Group is pushing for a global cap on aviation emissions to take effect in 2013 when the new climate deal to replace the Kyoto Protocol must be in place. A UN body would be charged with auctioning the C02 allowances with some of the revenue earmarked for financing lower carbon investments in developing countries and some to help fund development of sustainable second-generation biofuels for use in aviation.
Watch this airspace .... this is a really important aspect of the climate change policy domain within the European Union.
I recently came across the WallStats web site - there are some superb graphics here with an US-tilted economics and politics focus.
“The theories and principles behind economics are difficult for many to understand. However, many of the following blogs take this difficulty into consideration as they try to reach out to a broad audience in many cases. The list contains some of the most popular international perspectives, academic blogs and a list of “come-hither, I know you want to hear me out” blogs written by economists or by those who are mired in this field.”
The good news is that we make it into the list .... you will have to find out where! Plenty of very good blogs listed here and I have already added several to my own personal blogroll as a a result of going through them. I particularly like this one From Abba to Led Zeppelin which uses music lyrics to explain economics ideas!
Teaching colleagues who would like to have a free trial of our Economics VLE for the remainder of April are very welcome to leave me a contact email address and I will set up a trial account which gives access to the four courses we have at the moment - two for AS and two for A2 economics.
The Society of Business Economists is offering Economics teachers a substantial discount on their journal - read on to learn some more about the leading organisation serving business economists in the UK.read more...»
The Lex column in today’s Financial Times has a superb piece on why food prices may start rising again raising fresh fears of high food price inflation. The key is to understand the reactions of farmers to changes in prices and the decisions they make about whether to plant new crops on marginally productive land. See this short extract:
“The cost of corn, soya and wheat has fallen sharply from the levels they reached last summer at the height of the commodity boom. But lower prices mean lower returns per acre, so farmers are cutting plantings of marginally productive land to maximise profits…....This is precisely the set-up investors who worry about a rapid return of inflation fear: low prices lead to underinvestment and cuts in productive capacity. When the economy picks up, prices soar because suppliers – in this case, farms – cannot keep up with renewed demand.”
(1) How could you illustrate the process described above with supply and demand diagrams?
(2) Explain why price elasticity of demand and price elasticity of supply is relevant in explaining food price volatility
(3) What do you understand by the term ‘marginally productive land’?
Two of the key themes of the OCR2888 pre-release stimulus material this year are the causes and consequences of rapid food price inflation - something known to economists as agflation. 2007-08 witnessed a dramatic increase in the prices of many basic foodstuffs across the world. Agflation has many demand and supply-side causes (discussed in our toolkit publication) and the economic and social impact is hugely important not just for EU consumers and producers but around the world. This is highlighted by a number of global campaigns by organizations such as the World Food Programme and Save the Children.
A recent Save the Children press release for a food relief programme for people in Kenya makes the point better than I ever can:
“Poor people in the poorest countries were hit hard by the rise in food and fuel prices last year. The financial crisis will hurt them even more, and children are most at risk. Without a big increase in financial resources for the poorest countries, large numbers of children will fall into poverty, drop out of school, suffer ill-health or be more exposed to violence and exploitation.”
And now Save the Children is turning its attention to food poverty in the United Kingdom. This BBC article covers the issue but better to turn to this short video clip. Persistently high food price inflation creates winners and losers (someone somewhere receives the money down the supply chain) but the social consequences cannot be denied especially the dangers of malnutrition and its impact on education and health outcomes among the most vulnerable.
There us what looks to be a very promising series launching on Channel 4 next Thursday - With £25,000 in his pocket from the sale of his flat, Conor Woodman travels across four continents, trading in all kinds of products with the aim of doubling his money - Around the World in 80 Trades. This potentially could be an excellent resource to use alongside your teaching on international trade, commodity markets and globalisation. There is also a new book to accompany the series.
The EU single market has enlarged on several occasions – the most recent being 2004 (ten new countries) and 2007 (two new countries). For many countries of ‘New Europe’ the accession into the EU has been an event of major economic and political importance.
Enlargement occurred during a period of strong economic growth (driven by fast-growing exports in an era of globalisation) and low inflation and interest rates. One can argue that this was an opportune time to widen the single market – macroeconomic conditions were favourable.
But progress made by new EU members has not been even – most have achieved a degree of income convergence and have managed to bring down unemployment levels. But there have also been underlying problems – notably property bubbles, rising inflation and the effects of depopulation as migrant workers from central and eastern European countries in particular moved west in search of work and higher incomes.
From late 2007 onwards the global credit crunch and ensuing international slowdown and recession has hit the EU hard. The Euro Area is export dependent (more so than the USA) and economic and financial difficulties have spread into many of the new member states.
This three page revision note is designed for students preparing for their EU paper this June.
Here are some advice notes for students researching an entry for the RES essay competitionread more...»
UK trade in goods and services with fellow members of the European Union (EU) has deepened in the 36 years since we joined the European community. This revision note designed for A2 students taking the AQA paper looks at trade between the UK and the EU and in particular the fast growth of our exports of goods and services with the countries of ‘New Europe’. However the deep recession in the Euro Area is leading to a steep decline in the value of our trade despite a much more competitive exchange rate.
For our final meeting of the year we are delighted to welcome Hector Sants, Chief Executive of the Financial Services Authority - in effect Britain’s chief financial regulator!
In a year when so much of our economics teaching has been dominated by the credit crunch and the deepening financial and economic crisis, there can be no better person to quiz on what lies beneath the crisis we face today and how our financial system might evolve in the months and years ahead.
Hector Sants was appointed FSA Chief Executive in July 2007. Hector joined the FSA from Credit Suisse First Boston where he was CEO of Europe, Middle East and Africa and has extensive experience of the wholesale markets both in the UK and internationally. He joined CSFB in 2000 when the firm merged with Donaldson, Lufkin & Jenrette and was a member of CSFB’s Executive Board.
Teaching colleagues who would like to come to this meeting are most welcome, please let me know as soon as possible so that I can make arrangements.
Chief Executive of the Financial Services Authority
Thursday 23rd April at 8-30pm in the Egerton Room
South Park has numerous witty takes on the recession, the banking crisis and sundry credit crunch related issues! Here are a couple of examples:read more...»
One of the early questions in the new AQA Unit 2 macro paper is a data identification question worth eight marks. This short exercise available for download in a word file is designed to give students a little practice in writing good answers in a limited time frame.read more...»
Here is a word file of 50 questions covering a variety of macroeconomics topics that I have put together for my own students ahead of the main revision period. There are 25 for AS macro and 25 for A2. They are not designed to mimic exam questions precisely - we can do that with past paper home works - but instead they try to provide a framework for some revision sessions and a strategy that has worked well in the past is for students each to choose a question and then produce a one-sided answer plan which they can present in class and which can then be developed and amended in discussion.
Our new Macroeconomics ExamBuster is being published today ready for immediate shipping. It is a revision briefing that I give to my own students as a support for their revision and the 2009 edition comes to 43 A4 pages with over 60 charts and twenty separate topics. The Tutor2u Macro ExamBuster comes in pdf format and is supported by a free PowerPoint presentation containing all of the charts (updated to the end of March!). The resource is priced at £40 for a network licence that allows teachers to distribute to all of their students.
A Question of Macroeconomics
There is an excellent article in The Guardian today that considers the possible ‘green’ economic policies that may pull the global economy out of recession. There are some excellent evaluative points contained in the piece for students sitting the OCR 2888 European paper this summer.read more...»
This ten minute video clip provides background on the EU carbon emissions trading schemeread more...»
Right on CUE another recession story
Rileys are deep in the RED and their business looks SNOOKERED
Leaving their workers feeling BLUE
BROWN trouser-time for the suppliers who appear to have been SCREWED
A business that has seems to have gone to POT
Are there any buyers in the FRAME - does the business still have a LEG to stand on?
Will a government subsidy help to CUSHION the blow?
But some hefty fees for the administrators to POCKET
A big hat tip to fellow EconoMax author Mark Johnston for finding this superb article by Mark Buchanan in the current edition of the New Scientist. ‘Money - supposedly a dispassionate tool of exchange - stirs up big emotions and mental strife. It’s time economists’ models took this into account.read more...»
I have put together a set of seven practice AQA A2 Unit 6 (Macro) essay questions for my students to have a go at during the Easter holidaysread more...»
The FT’s Lex column has a super piece today on what is happening to the price of carbon credits in the fledgling EU emissions trading scheme.
‘Cheap permits will give companies little incentive to invest in clean technologies in the near term. However, a drop in output should make it easier for countries to hit their long-term emissions targets’
Despite the descent of the Euro Area economy into recession and in particular a sharp decline in industrial production, the price of carbon credits has jumped higher from February 2009 lows. Prices are volatile and probably remain too low to give proper leverage to companies looking to invest in clean-energy technology. The column can be found here - good for supporting a topic that figures prominently on the OCR 2888 pre-release materials and also on the AQA unit 4 and 5 syllabus.
There will be a veritable flood of new books on the financial crisis hitting the bookstores this summer. I reviewed John Calverley’s new book on Bubble Economies in an earlier blog and I am looking forward to getting stuck into two new books written from a UK perspective.read more...»
I have put together the fourteen supporting background data charts for our OCR 2888 June 2009 Toolkit into one PowerPoint presentation. This is available for download from this blog.read more...»
It is rare these days that I read a book from cover to cover in one fell swoop and, rather like the best essays from my pupils, either a book grabs me from the start or it all too easily finds its way onto the dusty shelves of my departmental library. John Calverley’s latest book ‘When Bubbles Burst, surviving the Financial Fallout’ has survived my in-built impatience and I recommend it to colleagues as one of the best books on the dramatic ending of the Great Stability and how the unravelling of financial and economic excess will affect our lives in the years to come.read more...»
Jon and Geoff have put in a tremendous effort to complete their superb revision and teaching toolkit on OCR A2 Economics Unit 2888 (Economics in a European Context) a couple of weeks early. All OCR centres who have pre-ordered the Unit 2888 resource should receive their CDs on Tuesday or Wednesday next week.
The Guardian’s datablog provides a good stream of economic and social data and might well be a useful resource for colleagues to access.read more...»
Last week I attended an INSET to discuss the new Cambridge Pre-U qualification - an alternative to A level which was introduced in September 2008 for first examination in June 2010. It was a fascinating day, and these were some of my main impressions of the discussions:read more...»
One of the sessions at the National Conference on the 18th of June will focus on being creative and artistic in the Economics classroom!read more...»
This morning I have read through the introduction to this year’s stimulus material with my A2 set. Here are some of the topic areas that came up during our discussion.read more...»
The stimulus material for the OCR June 2009 2888 paper was released today.read more...»
The causes of financial and economic crisis and distress are complex and multi-layered. There will be much written about it in the months and years to come and I suspect many of the best new writing will focus on neurological explanations for the behaviour of agents.
Two more video shorts from the Random Economist channel on You Tube.read more...»