In the question and answer period that followed Ben Bernanke’s speech today to the Economic Club of New York, the Federal Reserve chairman answered questions on why Lehman Brothers was allowed to fail, whether home prices are the root of the current problems and more. (Read the full transcript here.) Here are some highlights:

Bernanke speaks to the Economic Club. (Associated Press)

Lehman Failure

Lehman was not allowed to fail that in the sense there was some choice being made. There was no mechanism, there was no option, there was no set of rules, there was no funding to allow us to address that situation. The Federal Reserve’s ability to lend which was used in the Bear Stearns case, for example, requires that adequate collateral be posted so that we are not taking credit risk, we are lending against collateral. In this case that was impossible. There simply wasn’t enough collateral to support the lending. From the Treasury’s perspective, unlike the FDIC, deposit insurance fund, there were no funds, there was no option. We worked very hard over one of those famous weekends, with not only some potential acquirers of Lehman but we called together many of the leading CEOs of the private sector in New York to try to come to a solution. We didn’t find one, and therefore we were unable to do what we wanted very much to do, which was to prevent the failure of the company. Read more »

Backgrounds:

In Iran medical students are selected from high school graduates via a very competitive national
university entrance exam. New proposals have been seriously considered for admitting students from those with bachelor degrees. We assessed the opinions of different stakeholders on the current situation of admission into medicine in Iran, and their views on positive and negative aspects of admitting graduates into medicine.

Methods:

We conducted five focus group discussions and seven in-depth interviews with stakeholders including medical students, science students, university professors of basic sciences, medical education experts, and policy makers. Main themes were identified from the data and analyzed using content analysis approach.

Results: Read more »

The People’s Bank of China released the following statement on Saturday morning in response to the passage of the U.S. financial rescue package. China’s financial markets opened lower Monday after being closed last week for a national holiday.

The Chinese government has been closely following the development and consequences of the U.S. financial crisis. Recently, the U.S. government’s Emergency Economic Stabilization Act of 2008 has become a focus of world attention. President Hu Jintao has on many occasions said that China hopes for stability in U.S. financial markets and the healthy development of the U.S. economy, which is in the interests of the U.S. and in the interests of China, and is also beneficial to the healthy and stable development of the global economy.

We are pleased to see that, although there were some twists and turns, the U.S. Senate and House of Representatives have finally passed the bill. We hope that this bill can be speedily implemented and achieve positive results, in order to stabilize the U.S. and global financial markets and restore investor confidence. China and the U.S. share common interests in the stability of financial markets. China is willing to strengthen coordination and cooperation with the U.S., and also hopes that countries around the world can work together to overcome difficulties and preserve the stability of international financial markets.

Read more »

The U.S. may have the largest number of millionaires, but tiny Singapore rules the world when it comes to the highest concentration.

According to Boston Consulting Group?s latest Global Wealth report, an astounding one in 10 households in Singapore have investible assets of $1 million or more. That compares with 4.3% in the U.S., which ranks sixth.

Singapore, of course, is very small–it has about a million households. And its 112,000 millionaires are dwarfed by the 4,884,000 millionaires in the U.S., according to Boston Consulting?s calculations.

Of course, wealth surveys, by nature, are imprecise, given the small sample sizes, the agendas of the surveyors and the difficulty of polling the rich. Still, they can offer insights into broader trends and directional changes with the wealthy.

If you want to know where to go to have the highest chance of bumping into a millionaire, here are the top five:

1 — Singapore — 10.6%

2 — Qatar — 7.9%

3 — Switzerland — 7.3%

4 — United Arab Emirates — 6.6%

5 — Kuwait — 5.3%

Interestingly, the chances of running into a millionaire are almost twice as high in the U.S. than in Saudi Arabia, which has a millionaire density of 2.2%.

As for cities with the largest number of millionaires, the report found that nine of the top 15 are in the U.S., with New York topping the list, followed by London, Tokyo, Los Angeles and Chicago.

The Federal Reserve’s decision today to extend loans to investment banks into 2009 is one more hurdle to an eventual tightening cycle that now appears unlikely to begin before next year.

It’s not an insurmountable one, Fed watchers said, especially if inflation were to worsen further. But like the November elections, it’s the type of symbolic barrier that would put officials in a tight spot if they tried to raise interest rates before the end of the year.

“The presence of these facilities does not absolutely prevent the Fed from tightening, because the Fed has made some separation between its monetary policy tools and its liquidity tools,” former Fed governor Laurence Meyer and former Fed economist Brian Sack, both with Macroeconomic Advisers, wrote in a research note. “However, in our view, it leans the Fed in that direction.”

In a statement, the Fed cited “continued fragile circumstances in financial markets,” adding “these [lending] facilities would be withdrawn should the Board determine that conditions in financial markets are no longer unusual and exigent.”

“There’s some intellectual case to be made [that] they can’t be tightening when they’re declaring that financial conditions are bad,” said Stephen Stanley, economist at RBS Greenwich Capital Markets. He expects the Fed to start raising rates next April.

Brian Bethune, economist at Global Insight, agreed. “It wouldn’t make sense for the Fed to raise rates if they’re trying to expand liquidity,” he said. “That would basically push up all the rates people would pay on these facilities. It would be an exercise in futility.”

The Federal Open Market Committee will meet Aug. 5 and is universally expected to hold the target federal-funds rate for interbank loans unchanged at 2% for a second-straight meeting. Officials cut the fed-funds rate by 3.25 percentage points between September and April to ease the fallout from a housing and credit crunch.

Yet the rest of the year remains in doubt. Some Fed officials, particularly regional bank presidents, have grown more antsy about inflation and want rate hikes sooner rather than later. And while weak, the economy has shown no sign yet of sliding into a severe recession. Indeed, in a policy statement on June 25, officials said growth risks “appear to have diminished somewhat” while inflation risks “have increased.”

“The FOMC might want to see how the markets function without the [liquidity facilities] before deciding whether it is time to [raise rates],” said Macroeconomic Advisers’ Meyer and Sack.

The new Jan. 30, 2009, end-date for the measures “is quite convenient for our policy call,” they noted, since they expect the Fed to start raising rates at its first meeting after that, in March 2009. –Brian Blackstone and Meena Thiruvengadam

The makers of kid’s movies today seem to understand that parents will be watching these movies with their children.  They have mercifully made these kid’s movies with enough humor that even an adult can appreciate.  Unfortunately for parents they will not have to view these movies just one or even two times, but most likely several thousand times each and every day.  Just how do parents muster the same enthusiasm every time their child pulls out the beloved DVD?

Every parent knows that when a kid becomes entranced by a movie they want to view it every chance they get.  They learn the lines by heart, can sing along with every song, and sometimes quote from the movie in real life situations.  I have personally found myself singing Hakuna Matata while washing dishes.

Read more »