Adventures in the Economy

1
Adventures in the Economy

• Cynthia Harter
• Eastern Kentucky University
• Center for Economic Education
• November 22, 2008

2
Agenda

• 830 900 Continental Breakfast
• 900 1000 Welcome and Introductions, Dr.
  Cynthia Harter presents Todays Economy
• 1000 Noon Break out Sessions
• Lisa Saylor presents Adventures in the Stock
  Market for Elementary Teacher
• Will Grant presents Learning, Earning, and
  Investing for Middle- and High-School Teachers
• Noon 1230 Lunch
• 1230 200 Susan Sandage presents Stock Market
  Game, investing with your students
• 200 Wrap-Up and Dismissal

3
Welcome and Introductions

• KCEE Folders Who we are and what we do
• None In A Row Did anyone solve it?
• Prize to Winner
• Email Elizabeth.Tipton_at_eku.edu if you want files.

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Expectations

• Enjoy ourselves and act professional.
• Put cell phones on vibrate or turn them off. If
  you get a call that you need to take, please
  leave quietly and move to an area where there is
  no presentation going on to talk.
• Make any interruptions as brief as possible.
• Please give presenters full attention and keep
  conversations with neighbors brief and quiet.

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Todays Economy
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Financial Crisis 101

• How did we get here?
• CNNs Ali Velshi explains how we got into
  this financial mess in straightforward terms.
• http//www.oprah.com/media/20081003_tows_ali
• Loans were extended when they shouldnt have
  been.
• Too much risk was taken because costs were
  assumed to be paid by someone else.

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Samuelsons Darker Future

• Slower growth seems probable end of economic
  era
• Origins of current crisis are the widespread
  optimism unleashed by disinflation
• Getting ahead feeds peoples optimism
• People are more tolerant of diversity, social
  mobility, and have a greater commitment to
  fairness
• Mistakes were made
• Consumers were convinced that prices only went up
  stocks, homes, etc.
• Firms made bad decisions poor management

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Samuelson (cont.)

• Will not suffer another Great Depression
• Recovery will not return us to previous rates of
  growth
• Aging society retirement benefits, health care
• Energy needs, global warming
• Immediate need to revive confidence rev up
  demand and spending
• How much government intervention is needed?
• Some but not too much

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Increased Uncertainty

• Psychology of Financial Fears
• Go to http//www.cbsnews.com/video/ and type
  title in Search line at the top of the screen
• Fear is a driving force of current financial
  crisis
• Crisis of Confidence
• Go to http//www.cbsnews.com/video/ and type
  title in Search line at the top of the screen
• Restoring consumer confidence
• Fed Survey Shows Consumer Confidence Falling
• http//dallasfed.org/educate/classroom.html
• US Economy Slideshow updated weekly

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What is a Credit Crunch?

• The simple answer is that a credit crunch is a
  general decline in the supply and quantity
  demanded of credit.
• Can lead to higher interest rates so that it
  becomes difficult to fund projects and
  investments, which can slow economic growth,
  which can make lenders even more unwilling to
  lend.
• http//www.minyanville.com/articles/credit-crunch-
  fed-bernanke-hrb-SP-Nasdaq-DJIA/index/a/13935
• An Animated Look at the Credit Crunch
• Go to http//abcnews.go.com/video/ and type title
  in Search line at the top of the screen

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Government Bailout

• Is government help the answer to getting out of
  the credit crunch?
• Kid Reporters Talk Economy with Congress
• http//www2.scholastic.com/browse/article.jsp?id3
  750605
• Why offer a bailout? Paulson on the Bailout
  60 Minutes interview
• Go to http//www.cbsnews.com/video/ and type
  title in Search line at the top of the screen
• Jim Cramer will the bailout work?
• http//www.msnbc.msn.com/id/21134540/vp/269396202
  6939620

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Who Wins and Who Loses with the Bailout?

• Taxpayers will pay for it
• Intended to keep the economy from stagnating
• Pay now or pay later as the economy contracts
• If bailout works, taxpayers should be paid back
  the loans made to companies that turn themselves
  around.
• We are in the middle of this crisis.
• There are no clear answers at this point.
• They are working on it.

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More Online Resources

• Scholastic Games, Glossary, Articles, Lesson
  Plans
• Economy for Kids
• http//www2.scholastic.com/browse/collection.jsp?i
  d455
• Help Kids Understand the Financial Crisis
• http//www2.scholastic.com/browse/collection.jsp?i
  d453
• How to teach students Financial Crisis Lesson
• http//www.pbs.org/newshour/extra/teachers/lessonp
  lans/economics/july-dec08/economic_glossary.html

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Updates on the Economy

• KCEE updates information about what is happening
  in the economy
• http//econ.org/smg/financialcrisisarticles.html
• Resources from the Fed
• http//dallasfed.org/educate/pubs/index.html
• http//dallasfed.org/educate/classroom.html
• Izzit.org
• http//izzit.org/events/index.php
• Provides a different daily news article with a
  series of discussion questions every weekday
  throughout the school year. Questions are
  designed to encourage critical thinking,
  challenge assumptions, and provoke lively
  classroom discussion.

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Where Do We Go Now?

• The Latest Style Self-Denial
• A more critical look at Needs vs. Wants
• Frugal shopping no more 800 shoes
• Is more Government Intervention or more
  Regulation the answer?
• Is more Education the answer?
• How do we build confidence?

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Teaching for the Future

• Importance of education in personal finance
  cannot be overstated
• Combat financial fears with education and smart
  planning for the future
• Start early so that it becomes part of kids
  lives like good nutrition and exercise
• Knowledge instills confidence what you dont
  know CAN hurt!
• More about investing and the stock market in the
  breakout sessions

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Research on Stock Market Game

• Jumptart Coalition for Personal Financial
  Literacy
• Since 2000, students who participated in SMG have
  consistently outperformed all other students who
  participated in all other forms of money
  management education
• National Assessment of Educational Progress in
  Economics
• Students who participated in a stock market game
  simulation performed better in general economics
• Mississippi High School Students
• Participating in a stock market game simulation
  had a positive and significant effect on
  students posttest scores on the general Test of
  Economic Literacy
• Kentucky High School Students
• Participating in a stock market game simulation
  had a positive and significant effect on
  students posttest scores on an assessment of
  financial literacy

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Investor Practice Track

• A Guide for the Road to Wealth
• Entertaining and educational simulation for
  students