Tuesday, 7 October 2008

Leverage: One Cause of the Financial Crisis

Teachers who like to deal with topical issues in class won't want to skip over the current meltdown. The problem is that so much of what has been happening in the world of finance is so arcane - impossible for us to understand, let alone explain in simple English to our students. However, there are some very important phenomena that can be grasped, described and discussed.

One of these is leverage, and a fair amount of people seem to agree that leverage is at the root of a lot of what brought the world of finance to the abyss. Know what leverage is? In essence, it is really quite simple.

See http://www.fullspate.net/meltdown.html for an easy-to-understand article about leverage and how it can have such nasty results.

3 comments:

Mohamed Taher said...

How current and how much wanting is this theme in upbringing the future generation of thinkers?

Wish all school teachers read your post, and reflect about an education that has currency, as its most imp bottomline.
Came here reading, your excellent question about why one would like to add a favorite (aka buddy) in blog catalog.
Best wishes.
BC id: Hyderabadiz

Mohamed Taher said...

I posted an extract from this 'http://eflbliss.blogspot.com/2008/10/leverage-one-cause-of-financial-crisis.html' at my mentors blog...

neo-anchorite said...

Thanks Mohamed and please accept my apologies if I caused any offence with my misgivings about a discourse that describes human identity in business terms. I think we should all agree that business is business (and I'm not against it) and life is life (of course that is a bit vague but I think you get my point. Let's drop the business metaphors.