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Archives for: January 2008


Carnegie Mellon Today, 1/1/2008
Rankings achievements pleasing, but not surprising
Carnegie Mellon’s top status in the U.S. News & World Report 2008 rankings came as no surprise to Milton Cofield, Executive Director, B.S. in Business Administration Program and Associate Teaching Professor of Business Management. Even so, Cofield says he was “really happy” about the rankings, which rate undergraduate business seventh.

Pittsburgh Tribune-Review, 1/1/2008
Fed yielding to pressure in cutting interest rates, Meltzer says
The Federal Reserve has yielded to pressure from Congress, the market, and probably the White House to reduce interest rates, according to Allan H. Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer says the Fed is being urged to put the risk of a possible recession above actual inflation.

Foreign Policy, 1/1/2008
Ballooning trade deficit gives ammo to China’s U.S. critics
As the U.S. trade deficit continues to balloon, American politicians are taking aim against China, says Marvin Goodfriend, Professor of Economics; Chairman, The Gailliot Center for Public Policy. Goodfriend says the rising bilateral trade deficit with Beijing provides ammunition for critics who argue that Chinese currency policies are the root of the U.S. trade imbalance.

Exempt, 1/1/2008
Lerrick: Alternative investments must offer some advantages
Alternative investments should offer higher returns and portfolio diversification from returns uncorrelated with other assets, according to Adam Lerrick, The Friends of Allan H. Meltzer Chair in Economics; Director of The Gailliot Center for Public Policy. Lerrick says one question about hedge fund and private equity managers is whether they are simply taking ordinary investments and leveraging them up.

NT Page Magazine, 1/1/2008
Meltzer: Fed needs to respond to big picture, not bail out mistakes
The Federal Reserve’s job is to watch the economy, which is the big picture, according to Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer says the Fed should respond to what will happen with employment and inflation, and not the concerns of people who made mistakes.

Associated Press, 1/3/2008
Energy not as key to economy as in decades past, says Lave
Energy is just not as important to the economy as it once was, according to Lester Lave, Harry B. and James H. Higgins Professor of Economics and University Professor, Director of Green Design; Co-Director, Electricity Industry Center. Analysts do not expect record-high oil prices by themselves to send the economy into recession, because energy does not consume as much of America’s budget as it used to.

U.S. News & World Report, 1/4/2008
Lave: Energy prices not high enough to drive behavior change
Energy prices are not high enough for middle-income American consumers to change their behavior, according to Lester Lave, Harry B. and James H. Higgins Professor of Economics and University Professor, Director of Green Design; Co-Director, Electricity Industry Center. Lave notes that only 7 percent of gross domestic product is spent on energy, compared with 14 to 15 percent in 1981.

KQED Radio, 1/7/2008
MBA students trek to Silicon Valley
About 45 MBA students from the Tepper School spent some time in Silicon Valley during the first week in January to meet with recruiters from companies such as Apple, Google, Cisco, HP, and Intel. Steve Rakas, Associate Director of the Career Opportunities Center, says most students on the trip are looking to work in the tech sector.

Electricnet, 1/9/2008
RTO membership doesn’t necessarily promote renewable energy, study says
Membership in a Regional Transmission Organization does not necessarily promote the development of renewable energy development, according to a study by the Electricity Industry Center. In fact, RTOs had a negative effect on wind energy, according to the study, which was co-authored by Lester Lave, Harry B. and James H. Higgins Professor of Economics and University Professor, Director of Green Design; Co-Director, Electricity Industry Center.

Bloomberg, 1/10/2008
Greenspan ignored warnings about low interest rates, says Meltzer
While Alan Greenspan was a “great Fed chairman,” he was wrong to ignore warnings about the risks of keeping interest rates low, says Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer says he told Greenspan at the time that he was exaggerating the danger of deflation and thus making a mistake in cutting interest rates to 1 percent.

Wall Street Journal Online, 1/10/2008
Consulting firm’s workers are far-flung
More than one-third of the employees working for Raj Sharma (MSIA 2001) at Censeo Consulting are located outside of the Washington D.C. area, where the company is located. To make the business work, people sometimes use the office for client meetings, and employees in other states travel to headquarters a few times a year.

New York Times, 1/10/2008
Tepper School senior campaigns for Ron Paul
Violet Zharov, a senior majoring in Business Administration and Economics, traveled to New Hampshire to campaign for Ron Paul in the Republican presidential primary. Zharov says she found herself explaining to many undecided voters why a vote for Paul would not be wasted.

Pittsburgh Post-Gazette, 1/10/2008
Tepper School alumnus will serve as Mt. Lebanon commissioner
D Raja, who earned his MBA from the Tepper School in 2003, takes his seat as a Mt. Lebanon, Pennsylvania commissioner for the first time this month. Raja’s Mt. Lebanon-based Computer Enterprises Inc. is a global IT services and consulting company that he started with a business partner in 1993.

Pittsburgh Business Times, 1/11/2008
Tepper School alum teaching people how to buy traditional businesses
Chris Cynkar, a 1998 MSIA alumnus of the Tepper School, heads a Pittsburgh private equity group focusing on traditional businesses. Cynkar is also grooming others to buy companies by teaching a course on entrepreneurship at the school.

BusinessWeek, 1/14/2008
Oil prices alone won’t cause recession, but could break camel’s back
Crude oil priced at $100 a barrel won’t cause a recession all by itself, but it could “break the camel’s back,” says Lester Lave, Harry B. and James H. Higgins Professor of Economics and University Professor, Director of Green Design; Co-Director, Electricity Industry Center. That’s because the cost of powering an economy that relies on 22 million barrels of oil per day has risen sharply.

Washington Post, 1/14/2008
People focus on absolute, forget that some things are relative
Even when a decision has been molded by the available options, people tend to see it in absolute terms rather than relative terms, says Don Moore, Carnegie Bosch Faculty Development Chair; Associate Professor of Organizational Behavior & Theory. Moore says this phenomenon explains why people are generally more confident about winning an athletic event in good weather than bad weather, because they focus on their own performance, and forget their competitors will also benefit from the sunshine.

Pittsburgh Post-Gazette , 1/14/2008
Sleep-at-work business evolved from Tepper School project
Arshad Chowdhury says he first began thinking about his sleep-salon business, Metronaps, when he came to the Tepper School to pursue an MBA. Chowdhury’s professor in entrepreneurship, S. Thomas Emerson — Director, Donald H. Jones Center for Entrepreneurship; David T. and Lindsay J. Morgenthaler Professor of Entrepreneurship — admits that he was skeptical of the idea at first, although Chowdhury cited the success of Asian businesses that used the nap-at-work concept.

MSNBC.com, 1/15/2008
Meltzer: Candidates should tread lightly on mortgage issue
Presidential candidates must walk a fine line on the question of how much the government should assist homeowners caught in the mortgage crisis, says Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer says people have sympathy for their neighbors, but many also believe people should be responsible for their own debts.

Los Angeles Times, 1/17/2008
Fed, Congress, Bush in ‘panic mode,’ says Meltzer
The Bush administration, Congress, the Federal Reserve, and Wall Street day traders all seem to be in panic mode, according to Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Although financial markets are in a funk, some analysts believe the danger of real trouble is overstated.

Baltimore Sun, 1/17/2008
Price caps are backfiring in Maryland’s power generation system
Power generators in Maryland love the grid operator because exemptions in price cap laws allow the companies to make large profits, according to Lester Lave, Harry B. and James H. Higgins Professor of Economics and University Professor, Director of Green Design; Co-Director, Electricity Industry Center. State utility regulators say the exemptions cost Maryland consumers at least $87.5 million in overpayments in 2006.

Atlanta Journal Constitution, 1/20/2008
Airline merger will invite competition if merged company overcharges
A merger between Delta Air Lines and either Northwest or United will invite a challenge if the merged company tries to take advantage of reduced competition, says Ilker Baybars, Deputy Dean and Professor of Operations Management and Manufacturing. Baybars says in the event of overcharging, someone likely will enter the market as a competitor.

Washington Post, 1/21/2008
Bernanke is repeating mistakes of the 1970s, says Meltzer
Although Federal Reserve Chairman Ben Bernanke is a very able academic, he is repeating the mistakes of the 1970s, according to Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer says a country that can’t accept the possibility of a modest recession will get inflation, resulting in a worse recession.

Washington Post, 1/23/2008
Compensation linked to subprime mortgage securities
MBA students from top business schools were among those who were buying and selling subprime mortgage securities, says Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer says that’s because they were compensated for doing it, and if they didn’t, they risked losing their jobs.

BusinessWeek, 1/24/2008
Recruiters giving hope to anxious MBA students
Anxious first-year MBA students who are concerned about the job market are getting some encouragement from the large number of recruiters who have been visiting the Tepper School, according to Ken Keeley, Executive Director of the Career Opportunities Center. Keeley says the real measure of the economy’s impact will come in the fall, when firms decide how many job offers they want to give to summer interns.

Chronicle of Higher Education, 1/25/2008
Some MBA students arriving straight from undergrad programs
A growing number of business schools, including the Tepper School, are accepting promising MBA candidates straight from undergraduate programs in hopes of creating a more diverse student body. The Tepper School offers a five-year combined undergraduate and MBA program that accepts around 10 students per year.

CNN, 1/25/2008
Goodfriend: Critics are right to worry about inflation
Critics are right to be concerned about the Federal Reserve overdoing its short-run ease on monetary policy, says Marvin Goodfriend, Professor of Economics; Chairman, The Gailliot Center for Public Policy. Goodfriend says it’s the same mistake the Fed has made over the years: dropping interest rates to the point where they stoke inflation.

Reuters, 1/27/2008
Rate cuts rekindle criticism that Fed is protective of stock market
An emergency U.S. interest rate cut has rekindled perceptions that the Federal Reserve is biased toward protecting the stock market. It is good monetary policy to put some distance between interest rate policy actions and market re-pricing, says Marvin Goodfriend, Professor of Economics and Chairman of The Gailliot Center for Public Policy.

Pittsburgh Post-Gazette , 1/27/2008
Pennsylvania’s monopoly benefits liquor store employees, says Sieg
The main beneficiaries of Pennsylvania’s monopoly on the wine and liquor business are probably liquor store employees, says Holger Sieg, Professor of Economics. The workers enjoy significantly better wages and benefits than their counterparts in unregulated states, he notes.

Ft. Worth Star-Telegram, 1/27/2008
Meltzer: When it comes to interest rate cuts, cure is worse than disease
A small recession that kills inflation immediately is preferable to high inflation and a big recession later, says Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer is among those who believe the “cure” of cutting interest rates is worse than the disease.

The Tartan, 1/28/2008
Corrupt study abroad is nothing new, professor says
Corrupt study abroad arrangements involving alliances with specific third-party programs have always existed, according to John Hooker, T. Jerome Holleran Professor of Business Ethics and Social Responsibility; Professor of Operations Research. Hooker says it’s just now, amid subpoenas issued by New York Attorney General Andrew Cuomo to 15 colleges and universities, that the issue has come to light.

The Financial Times, 1/28/2008
Tepper School earns high marks in Financial Times rankings
The Tepper School earned first-place honors in Industry and IT for the Financial Times’ 2008 rankings. The school was ranked second in statistics, third in e-business, and 23rd among U.S. schools.

Pittsburgh Post-Gazette , 1/28/2008
Lave presents at climate change “teach-in”
Carnegie Mellon was among the schools participating in a three-day program billed as the “largest teach-in in U.S. history.” Among those presenting at the program, which seeks to effect climate change solutions, was Lester Lave, Harry B. and James H. Higgins Professor of Economics and University Professor; Director, Carnegie Mellon Green Design Initiative; Co-Director, Carnegie Mellon Electricity Industry Center.

Bloomberg, 1/29/2008
Goodfriend: Negative real interest rates are a danger zone
Negative real interest rates are “a substantial danger zone,” according to Marvin Goodfriend, Professor of Economics and Chairman of The Gailliot Center for Public Policy. Goodfriend believes the Federal Reserve has created circumstances ripe for either excessive inflation or an excessive boom that goes on too long.

Los Angeles Times, 1/29/2008
Fed is stoking inflation fears, Goodfriend says
The Federal Reserve has stoked inflation fears by going into negative interest rate territory, says Marvin Goodfriend, Professor of Economics; Chairman, The Gailliot Center for Public Policy. Goodfriend says the hardest job for a central bank is to not succumb to temptation to revive the economy prematurely.

Forbes.com, 1/30/2008
Meltzer: Fed should worry less about recession, more about inflation
The Federal Reserve should stop worrying about a possible recession and start paying closer attention to inflation if the U.S. wants to avoid a repeat of the 1970s, says Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. Meltzer says the lesson is that countries unwilling to accept the risk of a small recession will have to endure a much larger one after the inflation.

Rediff News, 1/31/2008
Fed put all its chips in recession basket, says Meltzer
If the United States experiences a bout of inflation, the Federal Reserve may have to increase interest rates, says Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy. That’s because the central bank “put all of its chips on the prospect of a possible recession, and very little on the possibility of inflation,” he says.

Pittsburgh Post-Gazette , 1/31/2008
Borrowing less expensive in interbank market, leading to drops in interest for depositors
Because borrowing has become less expensive in the interbank market, banks cut the interest they’re willing to pay depositors, according to Marvin Goodfriend, Professor of Economics and Chairman of The Gailliot Center for Public Policy. Goodfriend says banks “will not pay more than they have to” to depositors.

Los Angeles Times, 1/31/2008
Meltzer: Fed is “bonkers” for interest rate cuts
Not pulling any punches, Allan Meltzer called the Federal Reserve “bonkers” for excessively lowering interest rates. Meltzer, The Allan H. Meltzer University Professor of Political Economy, commented after the Fed cut its key interest rate to 3 percent, capping an eight-day run in which the central bank slashed the rate more than at any time since 1990 in an effort to stave off recession.

Bloomberg, 1/31/2008
‘Courageous’ former Fed chairman endorses Obama
A former Federal Reserve chairman described as politically courageous by Allan Meltzer, The Allan H. Meltzer University Professor of Political Economy, has endorsed presidential candidate Barack Obama. Meltzer says Paul Volcker is the only Fed chairman, with the possible exception of Alan Greenspan, who took the role of the central bank seriously.

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