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The economics Nobel is a cousin of the Nobel family.
It came into being almost 70 years after its literary and scientific partners, in 1969, and is technically known as the “Sveriges Riksbank Prize in Economic Sciences”. It is awarded by the central bank of Sweden, in honor of the eponymous renaissance man Alfred Nobel, who founded the prize.
Some scholars really don’t like economic prizeincluding one of Nobel’s descendants, who dismissed it as a “PR coup by economists.”
But hey, it still comes with a cash prize. And it’s also been quite helpful in reminding the world that economics as an academic field is, to be honest, a largely under-understood group of studies that are constantly evolving. and so transformative that it is almost useless outside of academia. (And I’d say with the utmost respect for economists, who, unlike journalists, know what they’re doing when they choose their miserable lives.)
The problem is like this: Ben Bernanke, the former Chairman of the Federal Reserve, who guided the US economy through the 2008 financial crisis and subsequent recession, awarded the Nobel Prize in Economics along with two other economists, Douglas Diamond and Philip Dybvig. (Congratulations to all the winners, along with apologies to Doug and Phil, who will forever be mentioned in the Nobel Prize headlines as “and two other economists.”)
Bernanke, who previously taught at Princeton and earned a PhD at MIT, received the award for her research into the Great Recession. In sum, his work demonstrates that bank failures are often a cause rather than simply a consequence of financial crises.
That was groundbreaking when he published it in 1983. Today, that’s conventional wisdom.
WHY IT IMPORTANT
Timing is everything here. The Nobel Committee has been known to play a political role (see: that time Barack Obama was awarded the Nobel Peace Prize just eight months after taking office). And right now, it is using its focus to draw attention to the high stakes gambling taking place at central banks around the world, most notably the Fed.
The rapid rise in interest rates, led by the US central bank, is making it difficult for markets around the world. And that’s bad news especially for emerging economies.
The United Nations agency warned earlier this month that monetary tightening – especially when it is strong and synchronized in major economies – could do worse damage globally than it does. with the 2008 financial crisis and the 2020 pandemic. It calls the Fed’s policy a “smart gamble” with the lives of the less fortunate.
HISTORY LESSONS
On Monday, Diamond, one of three new Nobel laureates, acknowledged that fluctuating rates around the world are causing market turmoil.
But he believes the system is more resilient than before because of the hard lessons learned from the 2008 crash, says my colleague Julia Horowitz.
“Recent memories of that crisis and improvements in regulatory policy around the world have made the system much less vulnerable,” Diamond said.
Let’s hope he’s right.
Oh hey, talking about the Fed is causing pain: We’re about to see massive job losses, according to Bank of America.
Under the rate hikes launched by Jay Powell & Co, the US economy could see its job growth rate halve in the fourth quarter of this year. Early next year, the bank is expected to lose about 175,000 jobs a month.
The lawsuit between Elon Musk and Twitter has officially stopped. The two sides now have until October 28 to work out a deal or once again prepare for a courtroom fight.
The big question now is all about money.
Here’s the deal: Even the richest man in the world doesn’t have this kind of cash. Musk’s wealth is tied to Tesla stock, which he can’t easily reduce for a variety of reasons. He needs to borrow money, which means he has to ask the banks for help.
With most accounts, he should be able to make that happen. But the Twitter deal is a tougher hit now than it was in April, when Musk said he had stacked more than $46 billion in financing, including two letters of debt commitment from Morgan Stanley and financial institutions another anonymous main, my colleague Clare Duffy writes.
Musk has spent the past few months cleaning up Twitter as he looks to drop his offer. Meanwhile, tech stocks have fallen sharply, advertising revenue is falling and the global economy is moving closer to a recession, denting investors’ appetite for risk.
Last week, Musk’s legal team said banks that had previously committed to debt financing were “working collaboratively to fund the end of operations”.
Understandably, Twitter is skeptic, with a lot of curves Musk has thrown at them since he joined the company earlier this year. The company raised concerns last week that a representative for one of the banks testified that Musk had not yet submitted a loan notice and “did not notify them that he intends to close the transaction, not the transaction.” refer to any particular timeline.”
What’s Musk’s Last Game?
No one knows, maybe at least Musk. But many legal experts who followed the case said Musk understood he would likely lose the trial and then be forced to buy out Twitter. He would rather buy the entire company than have it ousted by Twitter’s lawyers and cause more damage to Twitter in a trial.
And the banks might not be able to walk away even if they wanted to.
George Geis, professor of strategy at the UCLA Anderson School of Management.
Even if the banks succeed there, Musk may not yet be. The judge in the case could rule that Musk was at fault when the funds were lost – not a far-fetched concept after all the trash talk – and order him to sue Morgan Stanley for the money. or close the deal without it.
In short, it looks like Musk will end up owning Twitter one way or another. And with his only vague thoughts on what he’s actually going to do with it, there are plenty of unknowns lurking in Twitter’s future.
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