University of Massachusetts Boston ScholarWorks at UMass Boston Financial Services Forum Publications Financial Services Forum 8-25-2014 Perspectives on the Global Financial Crisis From Emerging Managers and Public Policy Makers [Full Version] James L. Grant University of Massachusetts Boston, [email protected] Follow this and additional works at: http://scholarworks.umb.edu/financialforum_pubs Part of the Economic Policy Commons, International Economics Commons, Public Economics Commons, and the Public Policy Commons Recommended Citation Grant, James L., "Perspectives on the Global Financial Crisis From Emerging Managers and Public Policy Makers [Full Version]" (2014). Financial Services Forum Publications. Paper 33. http://scholarworks.umb.edu/financialforum_pubs/33 This Research Report is brought to you for free and open access by the Financial Services Forum at ScholarWorks at UMass Boston. It has been accepted for inclusion in Financial Services Forum Publications by an authorized administrator of ScholarWorks at UMass Boston. For more information, please contact [email protected]. Perspectives on the Global Financial Crisis From Emerging Managers and Public Policy Makers Full Version James L. Grant PhD Associate Professor of Accounting and Finance University of Massachusetts Boston And President, JLG Research August 25, 2014 ______________________________________________ FINANCIAL SERVICES FORUM COLLEGE OF MANAGEMENT UNIVERISTY OF MASSACHUSETTS BOSTON ________________________________________ Perspectives on the Global Financial Crisis From Emerging Managers and Public Policy Makers Edited Manuscript: James L. Grant PhD Associate Professor of Accounting and Finance University of Massachusetts Boston And President, JLG Research With Special Contribution from: Richard T. Selden, PhD Carter Glass Professor of Economics Emeritus University of Virginia Version: February 25, 2014 ([email protected]) © 2014 All Rights Reserved Worldwide Perspectives on the Global Financial Crisis from Emerging Managers and Public Policy Makers, James L. Grant PhD, Edited Manuscript, February 25, 2014. ([email protected]) © 2014. All Rights Reserved Worldwide. Page 1 Foreword This manuscript attempts to capture the perspectives of emerging managers and public policy makers as evinced in the perspectives of graduate students and others who were enrolled in my newly developed course on the global financial crisis—first offered in the 2010 Harvard Summer Economics Program--at a time when students were engaged in the midst and aftermath of the most severe U.S. and worldwide recession since the Great Depression of the early 1930s. The many perspectives gathered on the causes, consequences, remedies, and perhaps more importantly, a glimpse at student thoughts, concerns, and worries at the time--have been collected from the final paper that I assigned in the global crisis course over three cohorts of students including, (1) the Harvard Summer Economics Program of 2010 (Cohort 1), (2) A “Special Topics” course at the University of Massachusetts Boston during Spring semester 2012 (Cohort 2), and (3) the same course offered in the Harvard Summer Economics Program during the summer of 2012. While we have all heard the many opinions and perspectives on the global economic and financial crisis from academia, government, industry among others, we have yet to hear from emerging managers and public policy makers, as captured in this manuscript by the perceptions, beliefs, and positions of graduate students and others of similar standing who will likely hold the reins to managing the global economy and political and societal developments in the years to come. With this in mind, this manuscript attempts to fill the missing void of opinions and perspectives of the next generation of managers and public policy makers—as their opinions and views will likely influence the lives of all for years to come. Perspectives on the Global Financial Crisis from Emerging Managers and Public Policy Makers, James L. Grant PhD, Edited Manuscript, February 25, 2014. ([email protected]) © 2014. All Rights Reserved Worldwide. Page 2 About the Editor James L. Grant is Associate Professor of Accounting and Finance at the University of Massachusetts Boston and President of JLG Research. Dr. Grant has served as advisory analyst at major Wall Street firms including Credit Suisse Asset Management and GAM. Dr. Grant holds a PhD in Business from the University of Chicago’s Booth School of Business, and he has been a featured speaker at industry conferences on value-based metrics. Dr. Grant has served on editorial advisory boards including the Journal of Portfolio Management and the Journal of Investing (currently). Dr. Grant has published several articles in finance and investment journals and he has contributed chapters to investment books. Dr. Grant is the author of Foundations of Economic Value Added (Second Edition), the co-author of Focus on Value: A Corporate and Investor Guide to Wealth Creation, and co-author and co-editor (with Frank J. Fabozzi) of Equity Portfolio Management and Value-Based Metrics: Foundations and Practice. His writings on the value-based metrics approach to equity securities analysis have been adopted by the CFA® Institute. Dr. Grant is also Independent Director and Chairman of the Board of Directors of Centre Funds. Perspectives on the Global Financial Crisis from Emerging Managers and Public Policy Makers, James L. Grant PhD, Edited Manuscript, February 25, 2014. ([email protected]) © 2014. All Rights Reserved Worldwide. Page 3 Acknowledgements I would like to acknowledge Dr. Richard T. Selden, Carter Glass Professor of Economics Emeritus at the University of Virginia, a distinguished guest lecturer in the global financial crisis course that I offered in the Harvard Summer Economics Program. “Dick” taught two classes on macroeconomic theory and polices-in the context of the “Classical” (pre-Keynesian) and Keynesian persuasions-with application of how competing economic theories would relate to the causes, consequences, and prescriptive remedies of economic and financial crises in general and with specific application to the recent global financial crisis. Dr. Selden’s lectures on macroeconomic policy were highly regarded and appreciated by the students enrolled in the course. Included in this manuscript is Dr. Selden’s paper, “A Classical Perspective on Macro Policy,” which I invite all to read for a more comprehensive and balanced understanding of how competing economic theories--both Classical and Keynesian—apply to financial and economic crisis. I would also like to acknowledge the Harvard Summer Economics Program and the University of Massachusetts Boston for giving me the opportunity to develop and offer a timely course on the global financial crisis. I wish to thank Eric Pinsoneault and other graduate -research assistants at the University of Massachusetts Boston who helped me launch and continually update this manuscript. I also thank Gregory Scott and Joel Grant for comments provided on the papers as they first arrived. James L. Grant, PhD Perspectives on the Global Financial Crisis from Emerging Managers and Public Policy Makers, James L. Grant PhD, Edited Manuscript, February 25, 2014. ([email protected]) © 2014. All Rights Reserved Worldwide. Page 4 Editor and Instructor Papers: James L. Grant-Course Instructor, ECON S1945: The Global Financial Crisis, Harvard Summer Economics Program 2010, 2012; MBA AF697 Special Topics: The Global Financial Crisis, University of Massachusetts Boston, Spring 2012 --Grant, James L, A Perspective on US Regime Change and the Global Financial Crisis, Journal of Asset Management, October 2009 (http://www.palgravejournals.com/jam/journal/v10/n4/abs/jam200912a.html) Richard T. Selden-Invited Guest Lecturer, ECON S1945: The Global Financial Crisis Harvard Summer Economics Program 2011, 2012 --Selden, Richard T, “A Classical Perspective on Macro Policy” Mimeo, June, 2012 (with application to the global financial crisis; full text version included herewith following list of selected student papers) Perspectives on the Global Financial Crisis from Emerging Managers and Public Policy Makers, James L. Grant PhD, Edited Manuscript, February 25, 2014. ([email protected]) © 2014. All Rights Reserved Worldwide. Page 5 DISCLAIMER: The opinions expressed in this Manuscript on the Global Financial Crisis are based solely on those of the selected contributors. As such, the opinions of the authors along with their purported supporting data and evidence should not be interpreted as a guarantee of accuracy, nor for providing financial or investment advice in times of economic and financial uncertainty such as that which recently occurred during the financial crisis. While additional papers were submitted as part of general course requirements, not all papers are included herewith for several reasons including: formatting issues, incompleteness, lack of contact information, space limitations, and notably, to achieve a measure of balance among the collected papers from the student cohorts over the years 2010 to 2012. Student papers from the summer of 2011 were not included in this manuscript due to lack of contact information to obtain a representative sample of opinion from this cohort. Perspectives on the Global Financial Crisis from Emerging Managers and Public Policy Makers, James L. Grant PhD, Edited Manuscript, February 25, 2014. ([email protected]) © 2014. All Rights Reserved Worldwide. Page 6 A Perspective