MIT AgeLab Presents: An Introduction to Disruptive Demographics

Tue, 06 Mar 2012 15:30:14 GMT

In Part I of this series, Dr. Joseph Coughlin of the MIT AgeLab is featured in an interview conducted by Rohit Sakhuja of WMBR MIT Radio's Paradigm Shifts program. Check back soon for Part II: Envisioning Retirement Tomorrow. To learn more about the research of the MIT AgeLab, please visit http://agelab.mit.edu/ To learn more about the Paradigm Shifts radio program, please visit http://www.paradigmshiftsradio.com/

Shannon Roberts Presents CityBrowser Voice Navigation System

Tue, 06 Mar 2012 15:30:14 GMT

Shannon Roberts, MIT Class of 2009, describes a joint project she worked on with the MIT AgeLab, New England University Transportation Center and MIT's CSAIL Laboratory. CityBrowser is an in-vehicle navigation system with which the user interacts with via voice recognition, iDrive system and in-vehicle display. This research was made possible by the US Department of Transportation and BMW.

MIT AgeLab Presents: Envisioning Retirement Tomorrow

Tue, 06 Mar 2012 15:30:13 GMT

In Part II of this series, Dr. Joseph Coughlin of the MIT AgeLab is featured in an interview conducted by Rohit Sakhuja on WMBR MIT Radio's Paradigm Shifts program. Check back soon for Part III: The Future of Financial Services. To learn more about the research of the MIT AgeLab, please visit http://agelab.mit.edu/ To learn more about the Paradigm Shifts radio program, please visit http://www.paradigmshiftsradio.com/

MIT AgeLab Presents: The Future of Financial Services

Tue, 06 Mar 2012 15:30:13 GMT

In Part III of this series, Dr. Joseph Coughlin of the MIT AgeLab is featured in an interview conducted by Rohit Sakhuja on WMBR MIT Radio's Paradigm Shifts program. Check back soon for Part IV: The Business of Retirement Living. To learn more about the research of the MIT AgeLab, please visit http://agelab.mit.edu/ To learn more about the Paradigm Shifts radio program, please visit http://www.paradigmshiftsradio.com/

MIT AgeLab Presents: The Business of Retirement Living

Tue, 06 Mar 2012 15:30:12 GMT

In Part IV of this series, Dr. Joseph Coughlin of the MIT AgeLab is featured in an interview conducted by Rohit Sakhuja on WMBR MIT Radio's Paradigm Shifts program. Check back soon for Part V: Saving for Greater Longevity. To learn more about the research of the MIT AgeLab, please visit http://agelab.mit.edu/ To learn more about the Paradigm Shifts radio program, please visit http://www.paradigmshiftsradio.com/

Moving Miss Daisy: How the MIT AgeLab and New England UTC installed a VW Bug in a 2nd floor lab

Tue, 06 Mar 2012 15:30:12 GMT

In 2001, the AgeLab and New England UTC endeavored to move a VW Bug, to be used as a driving simulator named Ms. Daisy, into its second story lab. Here's how it happened. Available in 480p - Click for better quality.

The MIT AgeLab and New England UTC's AwareCar

Tue, 06 Mar 2012 15:30:12 GMT

The MIT AgeLab and New England University Transportation Center have developed the AwareCar to better understand driver state, the role of health & wellness, and in-vehicle systems as a means to improve driver performance across the lifespan.

MIT AgeLab: Housing for a Lifetime

Tue, 06 Mar 2012 15:30:11 GMT

The MIT AgeLab and The Hartford Advance 50 Team present Shaping Life Tomorrow: A Conversation on the Future of Aging, Business and Innovation. Shaping Life Tomorrow is a forum for business leaders, advocates, practitioners and researchers in the domains of transportation, social media, housing and health to discuss some of the challenges and opportunities that an aging population presents to business and to government. This event marked a 10 year relationship between the MIT AgeLab and The Hartford Advance 50 Team that focuses on research to improve the quality of life of older adults and their families. Part 1 of 4. Stay tuned for Part 2 coming very soon! http://agelab.mit.edu http://hartfordauto.thehartford.com/Safe-Driving/Expertise-On-Getting-Older/

FutureCast: Joe Coughlin interviews Scott Belcher of ITS America

Tue, 06 Mar 2012 15:30:10 GMT

President and CEO of ITS America Scott Belcher discusses the politics of older drivers with AgeLab's Joe Coughlin. The interview was part of the symposium Convergent Opportunities or Collision Course? Older Drivers, New Technology & Well-Being Behind the Wheel, hosted by AgeLab and the New England University Transportation Center.

FutureCast: Joe Coughlin speaks with AARP's Elinor Ginzler

Tue, 06 Mar 2012 15:30:10 GMT

AgeLab's Joe Coughlin interviews AARP's Elinor Ginzler, who discusses the changing lifestyles of baby boomers. This discussion is part of the AgeLab and New England University Transportation Center's symposium, Convergent Opportunities or Collision Course? Older Drivers, New Technology & Well-Being Behind the Wheel. More information can be found at agelab.mit.edu/driverwell-being

MIT AgeLab: Joseph Coughlin interviews Jeff Taylor of EONS.com

Tue, 06 Mar 2012 15:30:10 GMT

The MIT AgeLab and The Hartford Advance 50 Team present Shaping Life Tomorrow: A Conversation on the Future of Aging, Business and Innovation. Shaping Life Tomorrow is a forum for business leaders, advocates, practitioners and researchers in the domains of transportation, social media, housing and health to discuss some of the challenges and opportunities that an aging population presents to business and to government. This event marked a 10 year relationship between the MIT AgeLab and The Hartford Advance 50 Team that focuses on research to improve the quality of life of older adults and their families. Part 2 of 4. Stay tuned for Part 3 coming very soon! http://agelab.mit.edu http://hartfordauto.thehartford.com/Safe-Driving/Expertise-On-Getting-Older/

FutureCast: Donald Fisher discusses new findings in older driver behavior

Tue, 06 Mar 2012 15:30:09 GMT

Univ. Massachusetts and New England University Transportation Center researcher Donald Fisher speaks with Joe Coughlin, New England UTC Director, about his team's research into older driver behavior. The interview was part of the New England UTC and AgeLab hosted symposium, Convergent Opportunities or Collision Course? Older Drivers, New Technology and Well-Being Behind The Wheel.

FutureCast: Philipp Osl on housing options for older adults

Tue, 06 Mar 2012 15:30:09 GMT

AgeLab researcher Philipp Osl discusses current options in older adult housing while giving insights into trends and future needs.

Maseeh Hall (W1) Under Construction

Thu, 10 Feb 2011 13:18:35 GMT

W1 is a historic residence at the corner of Massachusetts Avenue and the Charles river that re-opened on 8/15/2011 as Maseeh Hall, a new home for 462 MIT undergraduates, named in recognition of a generous gift from Fariborz Maseeh (ScD '90). For more information on the project, please visit The Division of Student Life's news blog. In this video shot in January, 2011, Project Manager Sonia Richards leads a tour of Maseeh Hall under construction, accompanied by Housemaster Jack Carroll and Residential Life Associate Becky Kjaerbye. Video by Josh Kastorf.

Rebuilding Haiti

Fri, 29 Oct 2010 04:00:00 GMT

10/29/2010 4:00 PM 34"101Paul Farmer, Founder, Partners in HealthDescription: Difficult as it is to look beyond the acute misery of Haiti's current crisis, Paul Farmer proposes that aid agencies and others concerned with rebuilding focus on the nation's "old, chronic problems." There's no shortage of recovery ideas, he says, but these will go nowhere if they do not also advance the long"neglected, basic rights of Haitians. Farmer describes efforts to respond to Haiti's disastrous earthquake of January 2010, which killed hundreds of thousands, left 1.3 million homeless and much of the capital in ruins. Today, nearly a year later, the generous pledges of international aid have yet to materialize, says Farmer, and the peril has expanded to include a cholera outbreak. This picture is all the bleaker for the deaths of many of Farmer's collaborators. The earthquake destroyed invaluable "human infrastructure", says Farmer, including all the nursing students at Haiti's one public nursing school. Farmer has been working in Haiti for more than a decade, attempting to address not just malnutrition, HIV and tuberculosis, but larger issues such as Haitians' lack of access to clean water, public education and healthcare. He would like to see international aid groups and foreign powers involved with Haiti recognize these issues in a meaningful way. Farmer's long"standing strategy has been to engage Haiti's public sector, or what remains after years of military and U.S. proxy rule, in the fight for these rights. He says, "There is always a role for the promotion of basic rightsThe question is how to do this in the field, not just win an argument in seminar." The earthquake has profoundly deepened Haiti's need for essential public institutions. The 1,000"plus tent cities housing more than a million people in Port au Prince are swelling, not diminishing, because people cannot find potable water anywhere else, and most have no idea where their next meal will come from. Yet there is a push to expel people from their tents and tarps, says Farmer, as if that will somehow speed construction of more permanent residences. Many plans are afoot for such housing, he says -- but few that take into account the desires of Haitians, who should have agency in shaping their own future. Rebuilding Haiti, Farmer believes, means "rebuilding aid machinery which is very broken, and often a damaging thing." He is forging new alliances among Haitians and other aid partners, including Cubans and evangelical groups from the U.S., around water projects, and a new hospital that will be "big, green and public." Says Farmer, "We must make common cause with those seeking to provide basic rights." About the Speaker(s): Medical anthropologist and physician Paul Farmer is a founding director of Partners In Health, an international charity organization that provides direct health care services and undertakes research and advocacy activities on behalf of those who are sick and living in poverty. He is medical director of a charity hospital, the Clinique Bon Sauveur, in rural Haiti and he is also the UN Deputy Special Envoy to for Haiti, under Special Envoy Bill Clinton. Farmer has written extensively about health and human rights, and about the role of social inequalities in the distribution and outcome of infectious diseases. He is the author of Pathologies of Power (University of California Press, 2003); Infections and Inequalities (University of California Press, 1998); The Uses of Haiti (Common Courage Press, 1994); and AIDS and Accusation (University of California Press, 1992). In addition, he is co"editor of Women, Poverty, and AIDS, (Common Courage Press, 1996) and of The Global Impact of Drug"Resistant Tuberculosis (Harvard Medical School and Open Society Institute, 1999). Farmer is the recipient of the Duke University Humanitarian Award, the Margaret Mead Award from the American Anthropological Association, the American Medical Association's Outstanding International Physician (Nathan Davis) Award, and the Heinz Humanitarian Award. In 1993, he was awarded a John D. and Catherine T. MacArthur Foundation "genius award" in recognition of his work. Farmer is the subject of Pulitzer Prize winner Tracy Kidder's Mountains Beyond Mountains: The Quest of Dr. Paul Farmer, a Man Who Would Cure the World (Random House, 2003). Farmer received his Bachelor's degree from Duke University and his M.D. and Ph.D. from Harvard University. Host(s): School of Humanities, Arts & Social Sciences, Program in Science, Technology and Society

Financial Re-Engineering

Fri, 01 Oct 2010 04:00:00 GMT

10/01/2010 9:00 AM e14"633Bengt Holmstrom, Paul A. Samuelson Professor of Economics; Andrew W. Lo, Harris & Harris Group Professor, Director, MIT Laboratory for Financial Engineering; Robert C. Merton, Ph.D. '70, MIT Sloan School of Management Distinguished Professor of Finance; Jiang Wang, Mizuho Financial Group Professor of Finance; William Wheaton, Director, MIT Center for Real Estate, Professor, MIT Department of Economics Description: Like a contemporary "whodunit" with a global crime scene, the financial meltdown has left behind countless victims, and lots of pointing fingers. The reasons for the collapse are debated by this group of estimable economists, some of whom worry that without really understanding what happened, we are in for a repeat episode. Moderator William Wheaton starts the discussion by suggesting that the interconnected global system of financial markets may be inherently unmanageable and overly risky, due to its complexity. Andrew Lo sees both peril and promise in these markets. Securitization, the bundling and trading of debt assets, "effectively allows ordinary borrowers that typically had to go through banks to tap into the power of global capital markets." But there are "unintended consequences: Technological innovations outstrip our ability to understand them." Financial transactions in a world of 8 billion people can become too complex, leading to uncontrollable systemic risk and disaster, much the way small brushfires swiftly grow and consume millions of acres. Robert Merton does not believe the complexity of trading securities or derivatives is at issue, but rather, human management: "Get those people with antennas out of the financial system, and put in people with some common sense." Financial institution overseers need a "much higher level of skill set and training," says Merton. They don't need to be "quants," but require "intuition as to the risk characteristics of these instruments." This means understanding that risk often changes in a "complex, nonlinear way." The tools required by modern finance are there, and do work, he asserts, "and they're explainable without some off the shelf, weird theory." Bengt Holmstrom describes how most financial systems are structured around trust that adequate collateral exists in a product, even when "you have no clue what assets lie behind it." So "opacity is the very typical characteristic of liquidity and banking has never been, and no doubt will ever be anything but opaque." Yet there must be enough, or good enough collateral "so people don't have to ask questions." Back in 2006, when people began "to feel nervous about the quality" of securitized products, in 2006 and 2007, he says, they clung to faith in the products. With trillions of dollars rolling over every morning, "if you say 'Stop, guys, I just want to see the papers,' it's over. The market stops right there." Holmstrom thinks new science is required "to understand how a collapse like this happened." However the crisis emerged, panelists think more steps should be taken to avert another one. Jiang Wang believes a "critical step" would be gathering information "relevant to systemic risk," because the market does not currently provide sufficient information on that." Holmstrom's "first reaction --a Band"Aid -- is to pull back," raising collateral requirements in the markets. Lo suggests an independent federal agency along the lines of the National Transportation Safety Board to "focus on the science and engineering merits of various financial proposals, and to study and monitor the financial system to measure systemic risk in a convincing, compelling way." Merton believes it may be possible to track systemic risk better, using new methods of economic analysis, but ultimately believes, "We'll always have crises, not because we're stupid, but because we are willing to take risks to get the benefits." About the Speaker(s): William Wheaton holds a joint appointment in the Departments of Economics and Urban Studies and Planning. An authority on regional economics, Wheaton is a principal in a consulting firm that provides market analyses for development companies active in the market for commercial space. A member of the MIT faculty since 1972, Wheaton helped to develop the field of urban economics by pioneering the theory of how land, location, and housing markets jointly operate. He also specializes in the problems of urban infrastructure and local government finance. He has written numerous articles in scholarly journals throughout the world, and is a co"author of Urban Economics and Real Estate Markets, the first text book to cover both real estate applications and economics. Wheaton helped organize the MIT Center for Real Estate, and teaches the program's core course in Real Estate Economics. He was the first economist to apply econometric methods to the forecasting of real estate markets, and is a principal in Torto Wheaton Research, a globally"recognized real estate consulting firm that works with the real estate industry to analyze the fluctuations and trends of the market. Wheaton received a B.A. in Economics from Princeton University, and a Ph.D. from the University of Pennsylvania. Over the years he has worked with many U.S. governmental agencies, as well as the World Bank and the United Nations.Host(s): School of Architecture and Planning, MIT Center for Real Estate

The Economic Meltdown: What Have We Learned, if Anything?

Fri, 05 Feb 2010 05:00:00 GMT

02/05/2010 4:15 PM 32"123Paul Krugman, PhD'77, Professor of Economics and International Affairs; Woodrow Wilson School of Public and International Affairs, Princeton UniversityDescription: The U.S. has had more than 70 years to come to terms with the Great Depression, and we really thought we knew how to avoid another one, says Paul Krugman. "It wasn't supposed to be possible. Then came the current crisis." So how to explain the Great Recession of 2008? Krugman suggests a combination of factors: First, he thinks we "mislearned" some of the lessons of the Crash. We developed an "unwarranted belief that it was easy for the Federal Reserve to prevent the crisis." We forgot how difficult it is to get "policy traction" when financial markets are really unstable, and conveniently overlooked how things had "gone awry in the past" when we deregulated the banks in more recent years. We grew too literal"minded in our notion of banks, imagining "a big marble building with a row of counters, with Jimmy Stewart," when in fact, we'd created new institutions that used deposits to make innovative but sometimes disastrous investments. We didn't immediately recognize the 21st"century version of bank runs, which didn't involve mobs in the street but "investors refusing to roll over their repos." Not only did we get a replay of the collapse, but we're witnessing a replay of the response as well, including "obvious failures to understand the depth of the problem." Big government is again under attack, even though it has "protected the system from total meltdown." Just like the '30s, some say we've passed the worst -- when, says Krugman, "this thing ain't over." Many economists project years of higher unemployment, "years of huge suffering." And instead of acknowledging these continuing impacts with appropriate moves to support the economy, "we're withdrawing policies from the economy quite soon," he says, repeating another mistake from the past. Politics plays a large part in this sorry rerun. Officials feel they can only pass partial remedies through Congress. But in this case, "half a loaf may be not much better than none," because "if the economy still looks lousy when you do half"hearted policy, the conclusion of the political process is not that you need to do more of it, butthat the policy failed, so we can't do more." That's what happened with the stimulus. Krugman is deeply worried about what comes next, seeing us stuck with massive unemployment; people behaving as though we've avoided disaster, and returning to "the same rhetoric about private sector dynamism and the evils of big government;" and no political will to "change either the economy or the intellectual climate." About the Speaker(s): Paul Krugman received the Nobel Prize in Economics in 2008, for "his analysis of trade patterns and location of economic activity." He became a regular columnist for The New York Times Op"Ed Page in 1999. Krugman is the author or editor of 20 books and more than 200 journal articles and edited volumes, specializing in "new trade theory," which concerns international trade. Krugman's more recent scholarship involves economic and currency crises. He received the John Bates Clark medal in 1991 from the American Economic Association, which is awarded to "that economist under forty who is adjudged to have made a significant contribution to economic knowledge." Krugman received his B.A. from Yale University in 1974, and his Ph.D. from MIT in 1977. He taught at Yale, Stanford, and MIT, where he was Ford International Professor of Economics. Host(s): School of Humanities, Arts & Social Sciences, Economics Department

Deploying Our Gifts for the Betterment of Humankind: What Would Dr. King Say about Us?

Thu, 04 Feb 2010 05:00:00 GMT

02/04/2010 7:30 AM Walker Morss HallGerry Hudson, Executive Vice President of SEIU "Service Employees International Union; Dr. Susan Hockfield, President, MITDescription: Woven into the fabric of MIT life, says Susan Hockfield, is the "perpetual striving to be ever better." To this end, Hockfield has been laboring to create a "true culture of inclusion." Hockfield now has a tool to aid her efforts: a report on MIT faculty race and diversity -- the result of 2 _ years of study. It documents the sometimes painful experience of MIT faculty members of underrepresented groups, but also provides practical steps for ameliorating the situation. Strong mentoring of junior faculty is a starting place, so new hires don't immediately begin struggling in "a sink or swim environment," which is "terribly wasteful and harmful to morale." Hockfield hopes the report will spur a more open discussion of race at MIT. Ultimately, she'd like to reinforce the idea that strengthening MIT's diversity is "pivotal to helping us magnify and deploy our shared gifts for mankind." Gerry Hudson has long dedicated himself to the cause of organized labor, such as nursing home employees like his own mother. His vision was shaped in large part by what he calls "the real King message," exemplified in a speech given to the AFL"CIO in 1961. In this address, entitled "When the Negro Wins, Labor Wins," King made clear his battle was not merely against white supremacy and racism in America, but against poverty as well. "The achievement of civil rights," says Hudson, "was merely a means to building the right kind of movement," aimed at securing a "just society free of war and poverty." While King implored the AFL"CIO to join with him "in creating a coalition of conscience," labor leaders of the day turned a cold shoulder. So "the Negro was asked to go off and fight Jim Crow" without labor's support, says Hudson. This marked a momentous failure for progressive politics, he believes -- an abortive attempt to ally the civil rights movement to the cause of labor and economic justice. This failure was soon followed by the rise of the Dixiecrats and George Wallace, the loss of Democrats in northern states, and ultimately "the long nightmare of American politics that has swept the country for more than 40 years." The labor movement has also gone into decline, and "if trends continue, there will be no labor unions in 20 years in this country." Not coincidentally, wealth has become increasingly concentrated, and there is an "outrageous inequality" in society now. Hudson found solace in Barack Obama's election, and his embrace of King's message of a broad politics of hope. It was "a remarkable passing of the baton." Yet, a year after that election, Hudson still looks for the promised changes in health care, labor reform, and green jobs. He finally believes that the creation of a more just America, "in which wealth is more equitably distributed, in which every child, no matter who or where they are in this country, can flourish," will not happen unless all his listeners put their "gifts on the table." About the Speaker(s): Gerry Hudson leads the SEIU's long"term care work division, focusing on building a voice for the union's 580,000 long term care members. He is also concerned with issues of environmental justice, particularly the disproportionate impacts of environmental degradation on low"income and minority communities. He led the first"ever U.S. labor delegation to the United Nations' climate change meeting in Bali in 2007. Before Hudson came to SEIU in 1978, he worked at the Hebrew Home for the Aged in Riverdale, NY. He was elected executive vice president for District 1199 New York, and coordinated this group's incorporation into SEIU. Hudson has also served as political director of the New York State Democratic Party, and led the union's campaigns in support of Jesse Jackson's presidential efforts in New York.Host(s): Office of the President, MIT Annual Breakfast Celebrating the Life and Legacy of Dr. Martin Luther King, Jr.

Transportation Policy: Thinking Globally, Acting Locally and Walking the Talk

Tue, 20 Oct 2009 04:00:00 GMT

10/20/2009 4:00 PM 32"124Frederick P. Salvucci, '61, SM '62, Senior Lecturer, Center for Transportation and Logistics, MITDescription: Why do so many sustainable transportation programs turn out, like the Alice in the Wonderland parable to lead us down unexpected paths? Fred Salvucci observes that true sustainable transport requires making more than short"term fixes. A sustainable transportation program is built upon the pyramid of three "E"s: equity, environmental benefit, and economics. Maximizing on just one of these objectives imbalances the others, and leads to unintended and undesirable results. As a case in point, Salvucci notes that improvements in sustainable transportation can be made by either "fixing the automobile", or by "fixing the system." The "fixes" have included the mandate for improvement in CAFE standards, nationwide interest in adopting a California car standard, and the Cash for Clunkers program. These are all short"term responses as car ownership, and vehicle miles traveled continue to grow. Salvucci views public transport as a longer"term solution, and says that the government, universities, and other large employers have an important role in terms of turning the coin and incentivizing preferred modes of transport. He suggests that government policy and tax policies need to be aligned. He notes that transit resources need to be spread out widely and not benefit just a single region or provider. The early building of the National Highway System, a federal program that touched every state, received widespread support. Building a consensus for public transit and sustainable transportation policy is possible, just as it is "possible to sail against the wind". The state of Massachusetts and Boston, in particular, have shown this political leadership as Boston has managed to grow economically despite forgoing new above"ground freeways. A new initiative now exists in Boston, over the next five to 10 years, as all of the major bridges across the Charles River" with the exception of one" must undergo safety repairs. There will be an estimated 20% reduction in vehicle capacity, and together these bridges carry more traffic than the Central Artery. Salvucci urged planners at MIT to think of the Charles River Crossing project as a "pattern break-- an opportunity to demonstrate more sustainable transport modes in the face of the vehicle reduction. Boston and the MIT community have a new opportunity to undo the deeply embedded use of automobiles, provided we really believe, and wish to follow, the objectives of sustainable transportation. Host(s): School of Engineering, Transportation@MIT

Brooklyn: What is the ideal community?

Fri, 10 Apr 2009 22:38:04 GMT

Residents of Bed-Stuy, Brooklyn are being displaced as gentrification forces them out. In the face of a changing neighborhood, these Brooklyn voices describe their ideal community.

Brooklyn: For the Love of Brownstones

Fri, 10 Apr 2009 22:07:31 GMT

Two friends, one a lifetime Bed-Stuy Brooklyn resident, and the other a Harlem native, talk about their love of New York Brownstones.

CityScope Peru: Elizabeth's Story

Fri, 10 Apr 2009 21:12:15 GMT

Elizabeth is a 12-year-old girl from Tambo de Mora, Peru. in 2007, her town was destroyed by an earthquake. Hear her words, and see the pictures she has taken of her town in this short audio slideshow.

Observations on the Science of Finance in the Practice of Finance

Thu, 05 Mar 2009 05:00:00 GMT

03/05/2009 5:00 PM Wong AuditoriumRobert C. Merton, Ph.D. '70, MIT Sloan School of Management Distinguished Professor of FinanceDescription: There willbe a time "beyond crisis," asserts Robert C. Merton, who delves into the dense science of derivatives -- a field he has fundamentally shaped -- to explain how the vast global economic collapse has come about, and how financial innovations at the heart of the collapse could also be tools for reconstruction. Merton uses deceptively simple graphs to show how risk propagated rapidly across financial networks, bringing down financial institutions. While he admits the crisis "is very big and complicated," Merton boils a piece of it down to the use of put options, a derivative contract that's been around since the 17th century. This asset"value insurance contract, a guarantee of debt, is the basis for the credit default swaps widely adopted by financial giants in the last few years -- now widely regarded as a primary cause of the meltdown. It turns out, says Merton, that the put "makes risky debt very complicated, and treacherous" In these puts, if the value of assets goes down, the guarantee value goes up, so the value of the written insurance is worth more. The value of this guarantee is very sensitive to the movement of the underlying asset. When dealing with puts on the local level, this movement can be tracked and managed more easily. But when financial institutions manipulate bundles of assets (for instance, mortgage"backed securities), the increase in risk proves non"linear. Add some volatility, like the jolts posed by widespread drops in housing prices, and the difference between the decline in asset value and the value of the guarantee becomes enormous -- leading to mountains of debt and felling behemoths like AIG (insurer to lenders). Yet, Merton counsels not to blame the current crisis on put options, or too much complexity, but rather on incomplete understanding of the models of risk involved. It's not "bad and incompetent people" who have brought this about (although he admits there are plenty of those) but "a structural issue between financial innovation and crisis." We've essentially built a high speed train for which there's not yet an appropriate track. We've created instruments for manipulating financial risk without a thorough understanding of the underlying engineering. Derivatives are not going away, says Merton. We need regulators who understand these instruments, and perhaps a sovereign wealth fund intended to "maximize the expected return for risk for people of the U.S." Merton concludes with "something positive" -- a model of how to "weaken the tradeoff between pursuing comparative advantage vs. efficient risk," applied to the nation of Taiwan. About the Speaker(s): Robert C. Merton earned a bachelor's degree in engineering mathematics from Columbia University, a master's degree in engineering mathematics from the California Institute of Technology, and a doctorate in economics from the Massachusetts Institute of Technology. He then served on the finance faculty of the MIT Sloan School of Management until 1988, when he moved to Harvard Business School. Merton is a fellow of the American Association of Arts and Sciences, and a member of the National Academy of Sciences. He is also past president of the American Finance Association. He serves as co-editor of the Annual Review of Financial Economics and is a member of MIT Sloan Finance Group Advisory Board, among many other appointments. Merton was a founding principal of Long Term Capital Management, and is currently the developer of SmartNest, a pension management system that addresses deficiencies associated with traditional defined"benefit and defined"contribution plans.Host(s): School of Humanities, Arts & Social Sciences, School of Humanities, Arts & Social Sciences

Challenges to the Global Economy

Wed, 11 Feb 2009 05:00:00 GMT

02/11/2009 5:30 PM Wong AuditoriumMartin Feldstein, George F. Baker Professor of Economics, Harvard University; Simon Johnson, PhD '89, Ronald A. Kurtz Professor of Entrepreneurship, MIT Sloan School of ManagementDescription: If economic analyses earned ratings like movies, this event would receive an X for extremely disturbing. Two of the field's most prominent voices spare any sugar coating in their unsettling accounts of the world's unfolding economic crisis. Martin Feldstein had a hard time choosing which of the innumerable problems to focus on, he admits, but ultimately settles on near"term challenges faced by the U.S. First off, this downturn is atypical; past recessions generally resulted from the Federal Reserve responding to inflation by nudging up interest rates and slowing the economy. This one involves two disparate but interacting problems: "the weakness of aggregate demand and the dysfunctional character of the financial markets." In laymen's terms, consumers are declining to spend money, the housing market's hit the skids; and banks big and small have no clue the value of their balance sheets, so they won't lend money to any but the best bets. There are some impressive numbers involved: The U.S. GDP is less than $15 trillion. A $12 trillion fall in household wealth (a combination of stock market and housing losses) has entailed a $750 billion decline in GDP. The government's attempts to pick up slack in the credit market haven't to date brought private markets back to life, says Feldstein. "We're in a very awkward situation, where the Fed is moving well beyond anything a central bank has ever done before to act as a credit provider." The stimulus package doesn't come close to addressing the $750 billion hole in our economy: it's "a poorly designed program that delivers so little bang for the buck." Turning from "the bleak picture of the U.S. to the rest of the world," Feldstein sees a chain of events pulling all major financial centers down, leading to "a mutually reinforcing global recession." The nations most likely to avoid "being dragged down" by this crisis: China and India. Astonishingly, Simon Johnson promises "to be quite a bit more negative." The U.S. banking situation "is much worse than what Marty said." The system needs a complete recapitalization -- a simple solution -- but practically impossible due to "the power of the banking lobby." Europe's banking system is even worse off (poster child: Iceland). European bank losses are dragging down not just banks, but entire nations. Their governments can't pull together fiscal stimulus packages, either. While "Europe is in denial," emerging markets like Russia have seen their reserves plunge, and are making stark decisions about "which of their people get bailed out." And don't think the IMF can come to the rescue; it has a meager $250 billion to loan, and is trolling for additional money from Western pockets, which just now have very big holes in them. Johnson's grim conclusion: Economists are reaching a consensus about the possibility of a very long period of slow or no growth: "There's a danger we could lose a decade." About the Speaker(s): Martin Feldstein is also President Emeritus of the National Bureau of Economic Research. He served as President and CEO of the NBER from 1977"82 and 1984"2008, and continues there as a Research Associate. From 1982 through 1984, Feldstein was Chairman of the Council of Economic Advisers and President Reagan's chief economic adviser. He served as President of the American Economic Association in 2004. In 2006, President Bush appointed him to be a member of the President's Foreign Intelligence Advisory Board. In 2009, President Obama appointed him to be a memer of the President's Economic Recovery Advisory Board. Feldstein is a member of the American Philosophical Society, a Corresponding Fellow of the British Academy, a Fellow of the Econometric Society and a Fellow of the National Association of Business Economics. He is also a member of the Trilateral Commission, the Council on Foreign Relations, the Group of 30, the American Academy of Arts and Sciences, and the Council of Academic Advisors of the American Enterprise Institute. Feldstein has received honorary doctorates from several universities and is an Honorary Fellow of Nuffield College, Oxford. In 1977, he received the John Bates Clark Medal of the American Economic Association, a prize awarded every two years to the economist under the age of 40 who is judged to have made the greatest contribution to economic science. He is the author of more than 300 research articles in economics. Feldstein is a director of two corporations (American International Group and Eli Lilly), and an economic adviser to several businesses and government organizations in the United States and abroad. He is a regular contributor to The Wall Street Journal and other publications. Feldstein is a graduate of Harvard College and Oxford University. Simon Johnson is also a senior fellow at the Peterson Institute for International Economics in Washington, D.C., and co"founder of a website on the global economic and financial crisis, BaselineScenario.com. He is co"director of the National Bureau of Economic Research project on Africa and President of the Association for Comparative Economic Studies (term of office 2008"09). From March 2007 through the end of August 2008, Professor Johnson was the International Monetary Fund's Economic Counsellor (chief economist) and Director of its Research Department. In 2000"2001 Professor Johnson was a member of the US Securities and Exchange Commissions Advisory Committee on Market Information. Johnson is an expert on financial and economic crises. As an academic, in policy roles, and with the private sector, over the past 20 years he has worked on crisis prevention, amelioration, and recovery around the world, in both relatively rich and relatively poor countries. He is on the editorial board of the Journal of Financial Economics, the Review of Economics and Statistics, the Journal of Comparative Economics, and Cliometrica (a new Journal of Historical Economics and Econometric History). Johnson earned his B.A. from the University of Oxford, his M.A. from the University of Manchester, and his Ph.D. in Economics from MIT.Host(s): School of Humanities, Arts & Social Sciences, Center for International Studies

The New Paradigm for Financial Markets

Tue, 28 Oct 2008 04:00:00 GMT

10/28/2008 3:30 PM KresgeGeorge Soros, Chairman, Soros Fund Management; Ricardo Caballero, PhD '88, Ford Professor of Economics and Department Head, MITDescription: George Soros extends his "theory of reflexivity" from abstraction to application in the realm of investing. His book, The New Paradigm for Financial Markets, offers a timely look at the credit crisis that reached crescendo in 2008. His views fall between prescience and vindication. Nevertheless, he concedes fallibility: "With all my great, deep understanding, I don't always get the markets right." In conversation with Ricardo Caballero, Soros recounts the formative experience of his life -- surviving the German occupation of Hungary -- "a far from equilibrium situation." He credits his father for recognizing that "the normal rules don't apply" and falsifying documents permitting the family's escape from fascism. Soros attributes his intellectual development during college to the philosophy of Karl Popper. This led him eventually to question the economic postulate of "perfect knowledge and perfect competition." He concluded that markets do not exist in a vacuum nor spontaneously self"correct. Thinking participants introduce friction, inevitably influencing outcomes for better or worse. Soros characterizes this phenomenon as the cognitive function interfering with the manipulative function and vice versa, thus the reflexivity of his theory. "Path dependence is very much due to imperfect understanding," he states and "actions have unintended consequences." Time and again Soros has anticipated financial bubbles and capitalized on opportunities he foresaw. Caballero elicits his ideas on bubble formation and collapse. Soros's metaphor is "people go on dancing even though they realize that the music is about to stop." He says the most common bubble is real estate where the misconception is that value "is independent of the willingness to lend." Soros asserts that a "superbubble has been growing for at least 25 years," periodically manifested by the international banking crisis and Latin debt in the early '80s; 1997's emerging market crisis; the Internet technology explosion; overleveraging that created the housing bubble; and escalating oil and commodity prices. He also faults financial innovation and securitization of debt. "People became very loose in their lending habits" and increased risk "by separating agent from principal." Soros's prescription for a sounder financial system begins with reducing troubled mortgages to 80% of current value, thereby minimizing foreclosures and preventing further decline of housing prices. He also recommends recapitalizing banks to encourage lending, and lowering the reserve requirement to 6%. His ultimate suggestion sounds simple enough: "Stabilize the global economy." Soros admits markets will always tend toward bubbles. He places responsibility on regulators to rein this in, adding "that would require the use of judgment and they're bound to get it wrong because they're human." About the Speaker(s): In addition to launching Soros Fund Management, George Soros also established the Open Society Institute, a foundation making grants to foster democracy, human rights, and socioeconomic reform. Born in Hungary in 1930, he survived the Nazi occupation and escaped the ensuing communist regime to England. He was educated at the London School of Economics and was a disciple of philosopher Karl Popper. After relocating to the United States in 1956, he undertook a career in investing, the success of which has enabled his worldwide philanthropic efforts. Soros developed a "theory of reflexivity," which has shaped his approach to investing by anticipating financial bubbles. He is a frequent essayist, and the author of nine books on finance, investment, global capitalism, and political philosophy. His most recent book is The New Paradigm for Financial Markets _ The Credit Crisis of 2008 and What it Means. Ricardo J. Caballero is Ford International Professor of Economics and head of the Department of Economics at MIT, and a National Bureau of Economic Research (NBER) research associate in economic fluctuations and growth. A native of Chile, he received his B.S. and M.A. in economics from the Pontificia Universidad Catlica de Chile and his Ph.D. from MIT. His academic interests are macroeconomics, international economics, and finance. His current research focuses on global capital markets, speculative episodes and financial bubbles, systemic crises prevention mechanisms, and dynamic restructuring. He has been a visiting scholar at the European Central Bank, the Federal Reserve Board, the Inter"American Development Bank, the International Monetary Fund, and the World Bank, among other institutions. His work has been published in prominent economics journals. Host(s): School of Humanities, Arts & Social Sciences, Economics Department

Rebuilding the City of New Orleans: Working Across Sectors to Achieve a Common Goal

Wed, 30 Jan 2008 05:00:00 GMT

01/30/2008 11:30 AM 32"123John Fernandez, '85, Associate Professor, Department of ArchitectureDescription: It took John Fernandez more than a year just to begin to understand the political players and competing interests in New Orleans, and so it is no surprise to him that coming up with a common goal for rebuilding the city, much less a "resource efficient one," proves elusive. Nevertheless, Fernandez and other MIT researchers aspire to make post"Katrina New Orleans a successful case study of a city "becoming green," perhaps serving as a model for other urban centers, particularly those facing climate change challenges. Fernandez became deeply involved in New Orleans' struggle when he was invited to examine the city's public housing units, most of which had been condemned without inspection. He discovered that the vast majority were either habitable or recoverable. The "decided lack of a civic voice" forced the city's poorest to abandon their homes, often for FEMA trailers. Now, New Orleans Office of Recovery Management seems to be moving in a more progressive direction, according to Fernandez, looking to rebuild the city in a way that balances the needs of different stake"holders and applies real science to urban design. Fernandez and his colleagues have developed a software tool to help city policy"makers make informed decisions about approaches to rebuilding. The researchers use material flow analysis, measuring inputs and outputs of material and energy, durability of housing stock, cost data on building types, energy use rates, waste generation rates. They also apply data on population and employment, housing needs and growth priorities. With this tool, New Orleans urban planners can model an entire green city, or target specific neighborhoods. Modeling like this can provide incentives for designers, engineers and home builders to focus on innovations in such areas as water recovery, onsite energy production and home resilience. Fernandez describes a house that rises when water lifts it during dramatic flooding. Ultimately, Fernandez hopes to "increase urban resource efficiency" in New Orleans and beyond. His tools attempt to make this possible by first precisely verifying how different kinds of buildings reduce carbon emissions, energy use, and construction materials, among other things. While making new, green buildings will have a critical impact on our use of energy, Fernandez notes that the biggest opportunity lies in improving energy use in existing buildings. City governments, as well as academics, must rise to the challenge "in addressing barriers to a green, urban future." About the Speaker(s): John E. Fernandez has been a member of the faculty since 1999, teaching in the design studio and numerous technology courses. His research has focused on the materials and physical elements and components of the assemblies and systems of buildings. A culminating publication of his research of the past several years is the newly published book, Material Architecture: emergent materials for innovative buildings and ecological construction (2005, Architectural Press: Oxford). Fernandez began his architectural career in New York City where he was a senior designer in the firms of Kohn Pedersen Fox and Polshek and Partners. He is a principal of Lampietti"Fernandez Architects with his wife, Malvina Lampietti. He is a graduate of MIT (BSAD '85) and Princeton University (March '89). Host(s): Office of the President, MIT Energy Initiative

Financial Markets: Outlook 2007

Thu, 25 Jan 2007 05:00:00 GMT

01/25/2007 7:00 PM KresgeLiz Claman, Anchor, CNBC; Axel Bichara, SM '88, Atlas Venture; Benjamin Howe, America's Growth Capital; Frederick Lane, Lane, Berry & Co.; Deborah Kuenstner, Fidelity InvestmentsDescription: There's a lot of money to be made in the coming year, say these practitioners from different areas of finance, offering just a few notes of caution. They offer a grab bag of investment tips for average consumers and entrepreneurs in this annual Enterprise Forum event. Frederick Lane sees the baby boomer generation accumulating capital, lugging around hefty pension plans and generally looking for good homes for their money. He says, -The greatest way to not make money is to go in the market and get out.... The truth is, the best thing is to stay in." Investors -need to be cautious about when the top is the top." He sees a healthy economy in general: -I don't think we have a big problem in this country, because guess what, our standard of living keeps going up and up and up. Most of us could lose a few pounds, tighten our belts a bit, make do with fewer cars, fewer boats and vacation homes." Deborah Kuenstner doesn't see -unbridled optimism, like the 1999 environment," where everyone jumped into investing. This is a good thing, because it means -a broader and healthier market." Indeed, she says, -For the economy to slow down this year, it's not a bad thing." She points to difficulties with actively managing a portfolio: -I don't think the dynamic in marketplaces will change and active stock picking become easier until we have a clearer idea which way the Fed is going, and not living data point to data point." She also notes that average -Americans have lots of challenges," including a slowing housing market and slow wage growth. -The party continues, and it looks good on most fronts," says Benjamin Howe. He points out that index funds are -outperforming smart money managers across all metrics." He's worried by the fact that -consumers are pushing credit cards above historical levels," and that -competition from certain countries will continue to accelerate." The U.S. has lost on the manufacturing front, and India and other nations are moving into finance and technology in a big way. Valuations of overseas companies are growing fast. In the U.S., alternative energy is -where we're seeing far more funds going -- explosive companies doing advanced battery technology for cars, or energy management. There are massive amounts of dollars going into that." -There are many next big things," says Axel Bichara, whose VC company -takes the long view." While the -amount of capital being deployed is quite high," Bichara doesn't see this turning into -another bubble." He views the whole digital media world, -the monumental changes in how content is produced and consumed," offering -at least another five to 10 years of investment opportunity." He perceives a strong entrepreneurial surge coming from India and China, which is a factor for the companies he invests in and who they partner with. -The conclusion we came to, our kids need to learn Mandarin, and not French." About the Speaker(s): Liz Claman joined CNBC in April 1998, after spending three years as an anchor/reporter for NBC affiliate WHDH-TV, Boston. During that time, she also served as contributing correspondent for the NBC-syndicated daytime show, RealLife. Prior to that, Claman was an anchor at WEWS-TV (ABC) in Cleveland , where she won an Emmy Award for Best Morning Anchor for her work on the two-hour morning show, Morning Exchange. Claman began her on-camera career at the ABC affiliate WSYX-TV in Columbus, Ohio, first as a reporter and then as weekend anchor. Since joining CNBC, she has anchored a variety of programs. Her first book, The Best Investment Advice I Ever Received" (Warner) came out in November 2006. Claman holds a bachelor's degree in French language from the University of California at Berkeley, as well as a Certificat Superieur from the Universite' de Paris, La Sorbonne. Host(s): Alumni Association, MIT Enterprise Forum

Housing the Lowest Income Americans: The Past, Present and Future of Public Housing

Sat, 07 Jun 2003 04:00:00 GMT

06/07/2003 9:00 AM KresgeLawrence Vale, SM '88, Professor and Head of the Department of Urban Studies and Planning, MIT School of Architecture and PlanningDescription: Vale provides a historical overview of public housing in America and shares insights from his most recent book Reclaiming Public Housing. He shows provocative images from early advertisements to demonstrate some of society's long held attitudes toward public housing and those who live in public housing. He analyses government policies as they evolved to provide housing to "reward people who are most deserving" of assistance, or to provide housing assistance as a "coping mechanism". About the Speaker(s): Larry Vale is Professor and Department Head, Department of Urban Studies and Planning in the School of Architecture and Planning at MIT. He attended Amherst College, and received the S.M.Arch.S. degree from MIT and a D.Phil from the University of Oxford. He has been a Rhodes Scholar and a Guggenheim Fellow, as well as the recipient of the 1997 Chester Rapkin Award from the Association of Collegiate Schools of Planning. He has taught at the MIT since 1988. Host(s): Alumni Association, Alumni AssociationTape #: 16604 and 16605

Reverberations: Mexico City's 1985 Earthquake and the Transformation of the Capital

Mon, 18 Mar 2002 05:00:00 GMT

03/18/2002, 5:30, 10-485 Diane E. Davis In this lecture, Diane Davis examines the impact of Mexico City's 1985 disastrous earthquake on the social, spatial, and political character of Mexico's capital city. Davis discusses the earthquake's implications for social movement, the character of land use and property ownership, and the legitimacy of the capital city's political leaders and major construction contractors and argues that sometimes physical disasters such as earthquakes can produce profoundly unanticipated beneficial effects. In addition to empowering urban citizens to organize on their own behalf to challenge a corrupt and highly bureaucratized local government, (and thereby accelerating the urban democratic transition) Mexico City's earthquake also helped expose the political biases of government authorities and weakened the strong hold of street vendors and the informal sector on the local economy and land use. As a result, Mexico City now is governed by a democratic and more socially responsible government committed to fostering citizen participation, building new low-income housing projects, and "rescuing" Mexico City's historic cultural heritage, all with the aim of recapturing the social and symbolic centrality of the downtown area, where the earthquake produced most damage. School of Architecture and Planning, Joint Program in City Design and Development T11119

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