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Richard Smuckers Bonus Lecture

Richard Smuckers Bonus Lecture - Gregory Paulson wrote a...

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Tim O’Brien ACC 333—A (12:45) Bonus Lecture 10/25/10 I attended the Executive Speaker Series presentation on October 11 th , where Co-CEO Richard Smucker spoke on ‘Capitalism and Peanut Butter.’ Mr. Smucker took a great deal of time talking about current events—most importantly, the financial downturn. He talked about how people were betting against our housing market to fail, which contributed to the financial downturn of the U.S. economy. How did people do this? He gave us a very easy example to understand. First, you select an agent to help you choose a risky mortgage. You then sell the mortgages to other customers, such as big banks in Europe. Not knowing as much about the mortgage, AIG sells you insurance on them, giving you a small premium because they think it’s a low risk mortgage. Once the mortgages collapse you receive millions upon billions of dollars of insurance money.
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Unformatted text preview: Gregory Paulson wrote a book about these type of things titled, “The Greatest Trade ever made.” Mr. Smuckers talked about the book and related it to his speech. Our markets have become games of ‘speculation and betting’ instead of investing. He asked is this is legal and or ethical—that was up to us to decide. As a result of this type of market behavior, AIG has to be bailed out by the government using OUR tax dollars. The market needs to change its mentality of a ‘quick fix, large transaction, large trade’ market. He does not think that we will experience a double dip, as the economy is showing positive signs—but he did say that this type of ‘speculation’ needs to stop. This was the most interesting thing I took out of Mr. Smuckers presentation. It was very insightful and generally easy for a college student such as myself to follow....
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