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transcript16 - Financial Markets: Lecture 16 Transcript...

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Financial Markets: Lecture 16 Transcript March 26, 2008 << back Professor Robert Shiller: I want to talk today about monetary policy. First though, I wanted to just review some thoughts about Carl Icahn, who spoke on Monday. I thought he was very amusing. I'm again happy that you asked questions because that's when you bring out a speaker really well. I thought you could have given him more trouble. He is a controversial figure. What he does, as you know, is takes over a company and shakes them up and, in some cases, is accused of stripping their assets. But, it's all legal and you could make an argument that it's in a general good of our society that people do that. If a company--if its stock sells for less than its assets are worth, then the company maybe should be broken up and the assets taken and given somewhere else because the low stock price indicates a problem. I don't know how to evaluate everything Icahn has done, but some corporate raiders have been unkind to employees. Maybe it's not always the raider; it's that some employees had trusted in an implicit contract that they were offered by their employer. For example, the employer may have said verbally--or suggested to an employee--that if you do well, we'll promote you up and you will have various advantages in the future. Then an outside raider comes in and just fires the employee, so naturally the employee feels wronged. There are instances of that sort of thing. Again, it's like anyone who does important things, it's hard to judge the whole picture and on that I am sure he has created value for the economy. Someone suggested that we should bring in corporate regulators as well. I think maybe in the next year I'll do that to offset--I'm bringing in a lot of very successful finance practitioners and I don't have any regulators this year. Also, one of you asked, what literature do you read? He mentioned the Nicomachean Ethics , which I have never read--I don't know what that is. He also mentioned a poem by Rudyard Kipling called If . I didn't recognize what he was referring to immediately, but I looked it up and it's a famous poem that you must have seen--written in 1910--an inspirational poem. I put it up on the ClassesV2, not as part of the reading list, but it's under Resources, so you can read Kipling. Maybe he thought of that because it's really a poem--seems to be a poem of advice for young people because it ends up--the last line is--do you know the last line? Can someone recite it? What's the last line? "If you follow these instructions, you will be a man my son." So, that's the mode of thought he may have been in when he talked. Anyway, we have our second mid-term exam on Monday and it will be like the first mid-term, but it will be less mathematical. This part of the course had less technical apparatus than the first part of the course, so it will concentrate on the middle third of the course, up to this lecture. You have to read Fabozzi, et al. again
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transcript16 - Financial Markets: Lecture 16 Transcript...

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