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DISINTERMEDIATION: A general deterioration in the profitability of a bank because it pays high interest rates on short-term borrowing, but earns relatively low interest rates on long-term lending. This was a big, BIG problem for savings and loans (S&Ls) during the 1970s and ultimately caused many of them to fail in the 1980s. S&Ls were designed (by law) to make long-term (30-year) home loans to consumers, but to get the funds for these loans using standard savings accounts. When inflation and interest rates shot up in the 1970s, S&Ls found it necessary to pay savers higher rates to get the funds. But, they still had a bunch of home loans--with low interest rates--that were 15, 20, or 25 years from being repaid. For several years, S&Ls received 6 percent on many of their loans, but paid out something like 12 percent. This gradually eroded their profitability until many were forced to close their doors.
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SEVEN ECONOMIC RULES A set of seven fundamental notions that reflect the study of economics and how the economy operates. They are: (1) scarcity, (2) subjectivity, (3) inequality, (4) competition, (5) imperfection, (6) ignorance, and (7) complexity.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time lost in your local discount super center hoping to buy either a lazy Susan for you dining room table or a set of serrated steak knives, with durable plastic handles. Be on the lookout for poorly written technical manuals.
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This isn't me! What am I?
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The average bank teller loses about $250 every year.
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"We may affirm absolutely that nothing great in the world has been accomplished without passion." -- Hegel
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GLS
Generalized Least Squares
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