The Financial Crisis Film 'Boom Bust Boom' Falls Prey To The Big Problem It Addresses

Can a group of portly, middle-aged puppets explain the financial crisis?

They certainly can try.

In the new Terry Jones documentary, "Boom Bust Boom," which premiered Friday in New York City, the Monty Python comedian uses puppets, cartoons and interviews with real people to turn a difficult and often boring subject into a lively lesson on history and the human biases that drive huge swings in the economy. Think of it as a whimsical version of "The Big Short." 

Set for a national release on March 18, the film shows how markets can boom and bust with regularity. Over the course of centuries, we see this cycle play out over and over, and yet, before each bust, we learn how people convince themselves this time is different. It's frustrating. Why can't humans just get it right? 

Unfortunately, the film falls prey to its own thesis, almost shutting out the voices of anyone who isn't a middle-aged white man, leading to a narrow view of this complex topic. It's not very helpful for thinking critically about how we might change things, and perhaps that's why the film offers few solutions.

"Boom Bust Boom" is at its best when illustrating some of history's worst economic meltdowns. It has informative and fun depictions of the 1637 tulip mania in the Netherlands, the crash of the South Sea Company in early 18th-century Britain, and the 19th-century speculation in (and fantastic crash of) British railroad stock. It also describes how the heights of speculation in the 1920s led to the lows of the Great Depression, and, finally, the hard lessons of the 2008 mortgage crisis. Every time is the same: Euphoria over rising prices leads to speculation, which ends with a crash.

Humans are not rational, the movie tells us. We are hardwired, from the time of our primate ancestors, to have certain biases and blind spots. When it comes to capitalism, those blind spots lead to financial crises. And when someone sees the issue clearly, they are often disregarded until long after it's too late.

The problem is, the film doesn't take the next step and ask why policymakers and economists continue to think the same way and follow the same patterns from one crisis to another.

Here's one reason: The world's top economists (and government officials) more or less all have the same background. They went to a handful of schools, studied under a few dozen of the same professors, have read the same books and mingle in the same circles. Oh, and, to a large extent, they're all white and male. That doesn't encourage diversity of thought. 

Neither does this film. I counted about a dozen puppets woven into the story, and nearly all of them depicted middle-aged (or older) white men. Activist-actor and Huffington Post blogger John Cusack makes several somewhat puzzling appearances in this movie, too. (No disrespect to Mr. Cusack.)  

Nick Rutter

Women and minorities are almost entirely left out of this film -- not unlike the way they've been left out of financial and economics professions. Yet, we know that women are slightly better at managing financial risk than men are. Study after study over the last five years has found that female financial managers consistently outperform their male peers. They think differently.

The two expert women the movie manages to talk to are Lucy Prebble, a playwright who once wrote a play about the collapse of Enron, and Laurie Santos, a Yale psychology professor who studies how monkeys make decisions. Neither have a background in economics, or in the 2008 crisis. 

But there is a long list of people -- who aren't white men -- who would have made great interview subjects for the filmmakers.

Where was Christina Romer, who wrote a paper in 2015 examining the impact of financial crises on advanced economies? Where was Brooksley Born, who warned against the danger of unregulated derivatives -- which ended up creating the 2008 financial crisis -- when she was head of the Commodity Futures Trading Commission in the 1990s? Where was Harvard economist Carmen Reinhart, who literally wrote a book called This Time is Different: Eight Centuries of Financial Folly? Where was Raghuram Rajan, India's top central banker, who warned of a potential financial crash way back in 2005, when he was working at the International Monetary Fund? 

If the world is to develop a framework for thinking differently about economics, it might help to start with more diverse sources.

4 Things You Need To Know About The Latest Jobs Report

The monthly jobs report came out on Friday, and things are pretty good overall.

The big headline numbers were great: The economy added 242,000 jobs in February, much higher than the 195,000 that economists estimated, and the unemployment rate remained at 4.9 percent, which is nice and low. 

But if you drill down into the data, the picture is a little murkier.

Here are four things we know about the economy from the details in this report:

1) Wages aren't growing much, and it's hard to say why.

Average hourly earnings were down by 3 cents in February, to $25.35. Year-over-year, wages are up about 2.2 percent. That's not great -- although, thanks to very low oil prices and low inflation, it's not terrible either. But it's worth asking why wage growth since 2010 hasn't been as robust as growth in previous recoveries. 

Shane Ferro/Huffington Post

2) Nonetheless, people are coming back into the labor force.

As we said earlier, the economy added 242,000 jobs this month. But perhaps more importantly, details in the household survey show that more than 500,000 entered the labor force by starting to look for work again. In order to be officially unemployed, a person must not have a job and must be looking for work. Discouraged workers, who have given up looking for jobs, aren't counted as part of the labor force. It's a sign of a healthy economy when those people start looking for jobs again, even if they don't find work immediately.

3) But the unemployment rate for blacks is twice the unemployment rate for whites.

The unemployment rate for whites in the United States is 4.3 percent. For blacks, it's 8.8 percent. This is an economic dynamic that has been persistent since the Labor Department started tracking unemployment by race back in the 1970s. The chart below is not really America's best look: 

Shane Ferro/Huffington Post

There's a huge racial disparity in the unemployment rate in this country.

4) There is a lot of growth in low-wage industries.

The retail industry added 55,000 jobs last month, and food service added 40,000. These have been some of the strongest growth industries over the last few years, which means the economy is adding a lot of low wage, service sector jobs. That said, the economy also added a lot of health care (38,000) and construction (19,000) jobs in February, which tend to pay quite well. 

How Americans Get Duped Into Buying Endangered Animal Items

You might be contributing to the decimation of endangered animal species without even realizing it. 

When illegal ivory, tiger pelts or rhino tusks make their way to markets and e-commerce sites, traffickers may try to conceal how the products were obtained. They'll use terms like "bone" or "walrus tusk" to describe ivory, duping retailers and customers alike. What's more, uninformed shoppers or tourists might not know that tortoiseshell and certain types of coral or wood are also part of this illicit trade network, which is estimated to be worth between $50 and $150 billion per year. 

Major companies across the e-commerce, retail and travel industries are now banding together to raise awareness and reduce the amount of illegal wildlife products Americans buy. 

Google, eBay, Etsy, JetBlue and Tiffany & Co are among the 16 firms committing to eliminating these products from their supply chains, the U.S. Wildlife Trafficking Alliance and the Obama administration announced Thursday.

“A lot of Americans are just not aware that they could be buying illegal products and adding to this global problem,” David J. Hayes, chair of the alliance and former chief operating officer at the Department of Interior, told The Huffington Post.

Each company will take action within its own sphere of commerce. Some will warn customers about the impacts of illegal wildlife products, while others will flag items on sale that potentially violate wildlife policies or provide educational videos on sustainability for travelers.

ChinaFotoPress via Getty Images

Illegal ivory and ivory products confiscated in China. 

Several online retailers have already taken steps to block harmful items from their sites. eBay and the online bidding platform LiveAuctioneers.com have banned illegal ivory sales. Etsy has banned all ivory and prohibited sellers to list goods made from threatened or endangered animal parts. 

"It's hard for the consumer to know what's legal and what's illegal, and it can be hard for the retailer to know," said Beth Allgood, U.S. campaigns director for the International Fund for Animal Welfare, a conservation nonprofit that has worked with eBay, Etsy and LiveAuctioneers to remove illegal ivory listings. "We can be partners to retailers who don't know all the regulations."

For JetBlue, the awareness campaign will primarily inform passengers traveling to and from the Caribbean and Latin America, said Sophia Mendelsohn, JetBlue’s head of sustainability. In videos to be shown on JetBlue’s flights, residents and small business owners from the region will speak about how sustainable tourism practices can support wildlife diversity.

“We want to stop this issue at its root cause,” Mendelsohn told HuffPost. “We’re going to cut out unwitting demand so there’s less profit in drawing out these natural resources, whether it’s for tech, necklaces or special meals” at local restaurants.

Lam Yik Fei via Getty Images

Leopard skins seized by Hong Kong customs officials.

Other corporate partners that have pledged to work with the alliance include Ralph Lauren and Royal Caribbean Cruises. The Association of Zoos and Aquariums will exhibit seized illegal wildlife products in its parks to highlight the threats posed to various species. Discovery Communications will produce virtual reality content focusing on trafficking and conservation. 

The household brands committed to this new effort will work to establish best practices for smaller names in the travel, e-commerce and retail industries.

“These companies are accepting industry leadership and making sure smaller ones aren’t involved in wildlife trafficking,” Hayes said. “These are true industry-wide efforts.”

Stockbyte via Getty Images

An illegal haul of rhino horn.

Awareness of wildlife conservation has been growing for some time. President Barack Obama issued an executive order to implement a wildlife taskforce in 2013. The corporate alliance announced this week is a result of that effort.

Public interest in the issue spiked last year following the killing of Cecil the Lion. The backlash against the Minnesota dentist who shot down the lion in Zimbabwe heightened scrutiny of trophy killings and spurred action from the travel industry.

American Airlines, United Airlines and Delta Airlines announced last summer that they would ban transport from Africa of the “big five” game animals -- lion, elephant, rhino, leopard and buffalo.

ASSOCIATED PRESS

A lion in an enclosure of the Lion Park, in Johannesburg, South Africa.

Warren Buffett Is Wrong About Climate Change

Warren Buffett doesn't want you to know how his empire is preparing to deal with the disastrous effects of climate change. In fact, he said in a letter released Saturday, he isn't exactly sure this whole "climate change" thing is real, anyway.

In his annual letter to investors in his conglomerate Berkshire Hathaway, the billionaire investor fought back against a proposed shareholder resolution demanding his insurance subsidiaries measure and disclose the risks that climate change poses to their business and how the company is responding to the threat. Buffett compared fears over climate change to the brouhaha around apocalyptic Y2K predictions.

“It seems highly likely to me that climate change poses a major problem for the planet,” the 85-year-old wrote in the letter, released Saturday morning. “I say ‘highly likely’ rather than ‘certain’ because I have no scientific aptitude and remember well the dire predictions of most ‘experts’ about Y2K.”

Insurance companies take on losses after major weather disasters (think droughts, Hurricane Katrina and other big storms), so it makes sense they'd be concerned about climate change. If that's true, why would Buffett say he's not so sure this is real? Because skepticism is better business.

Buffett isn’t denying climate change, but rather using language climate deniers feel comfortable with and will likely cite in future attempts to derail environmental policy. Climate change affects Buffett's business: He owns a Nevada utility that has fought and won against solar development in that state, and his railroad, Burlington Northern, in large part depends on the demand for coal and oil.

Buffett argues in favor of seeing climate change as a likely risk to the world, but against the need for more oversight, transparency or regulation of his companies. It’s a position he’s taken before -- Buffett argued against designating reinsurers, of which he owns the world’s fifth-largest, as too-big-to-fail institutions. Though he said he never spoke directly to regulators about the issue, he made his views public. Regulators, thus far, have agreed.

Why Buffett's Words Matter

Markets, governments and companies aren’t properly pricing the risk of climate change. For instance, are beachfront homes in low-lying areas as valuable as their owners believe? Experts reckon that only once markets and others attach a price to the threat of climate change will the rest of the world finally move to limit the potential consequences. If insurers -- which must grow their assets in order to make good on their guarantees -- measure the potential losses they could incur as a result of climate change, they can then price that risk. Then everyone else could follow.

Buffett's views against disclosure put him in sharp disagreement with Bank of England Governor Mark Carney, who has said that financial markets can help limit the effects of climate change, but only if companies -- such as insurers -- supply the kind of information that Buffett doesn't want to disclose. 

In September remarks to the insurance industry, the chief overseer of the world’s third-largest insurance sector warned about the numerous economic and financial risks posed by climate change. Carney urged companies, particularly insurers, to start taking seriously their responsibility to measure their potential losses. Their own solvency could be at stake, Carney warned.

Insurance companies invest their money in places like the stock market. But “stranded" oil, gas and coal reserves, left in the ground due to the world’s commitment to halt rising temperatures, could render related financial assets worthless. Or the disruption of trade resulting from an extreme weather event could affect related investments.

Cynthia McHale, director of the insurance program for Ceres, a nonprofit group that pushes investors to pay attention to the financial risks of climate change, said in an interview earlier this month that neither insurers nor their government overseers have a good handle on the risks that climate change poses to insurers’ various financial assets.

McHale compared the situation to the one faced by big banks in 2008, when few sufficiently realized the magnitude of potential losses from the U.S. property bust. 

Weathering Heights

Buffett's case against the resolution boils down to this: “Thinking only as a shareholder of a major insurer, climate change should not be on your list of worries.”

First, he said, his company can handle any possible losses thanks to rising premiums. Because insurance policies are typically written for one year and repriced annually, Buffett's company can hike premiums to better account for the heightened risk of climate change-driven losses.

Second, Buffett asserts that climate change has produced neither “more frequent nor more costly hurricanes nor other weather-related events covered by insurance.”

But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute. Nine of the 10 costliest floods in U.S. history, when measured by payouts from the federal government’s National Flood Insurance Program, also have occurred since 2000, according to the insurance group.

NOAA

The U.S. experienced five different types of extreme weather last year. 

Munich Re, the world’s biggest reinsurer, estimated that extreme weather events led to $510 billion in insured losses from 1980 to 2011.

Carney said that according to Lloyd’s of London, the world’s oldest insurance market, the roughly 8-inch rise in sea level at the tip of Manhattan since the 1950s increased the insured losses from Hurricane Sandy by 30 percent in New York alone.

PAUL J. RICHARDS via Getty Images

A house in Staten Island, New York, hit in Hurricane Sandy. Scientists say we should prepare for more weather events like the massive storm.

Insurance companies should care about climate change from a selfish perspective if they want to stay in business. Carney has warned that insurers that jack up premiums or exit markets after realizing the potential losses associated with climate change could unwittingly cause the value of their own assets to shrink.

He also warned about potential losses from claims on policies written by insurers. For example, insurance companies could be forced to make massive payouts if victims of climate change successfully hold accountable companies that contributed to it. He likened the situation to the one faced by U.S. insurers stung by tens of billions of dollars in losses from asbestos claims.

In fact, Carney said that as a result of recent weather trends, some now estimate that insurers are undervaluing their potential losses by as much as 50 percent.

Insurance companies caught unprepared for the effects of climate change could cause problems for government officials and put taxpayers at risk.

For example, governments may have to cover markets that insurers dump as a direct result of climate change, the Bank of England chief said, putting taxpayers on the hook.

Bloomberg via Getty Images

Mark Carney, the U.K.'s top central banker, says insurers may be undervaluing their potential risks by 50 percent. 

What Could Change If Insurers Opened Up About This Risk

Disclosing climate change information would improve policymaking, Carney said. It could make climate policy more like monetary policy, where officials who set interest rates often tinker with their stance based on markets’ reactions.

The Financial Stability Board, a global group of the world’s financial regulators, wants financial companies to disclose their risks, too.

Some state insurance regulators in the U.S. are demanding insurers take the threat posed by climate change into account when investing their customers’ money and underwriting insurance policies. Washington state’s insurance regulator, Mike Kreidler, has criticized some insurers for failing to take climate change risks seriously, arguing their own solvency was at risk.

Buffett sounded more alarmed by the prospect of climate change in 2007, when scientific evidence of the impacts of climate change was less well-understood. In his annual letter that year, Buffett wondered aloud whether the deadly and expensive hurricanes of 2004 and 2005 marked the first warning of a new type of climate.

“It would be a huge mistake to bet that evolving atmospheric changes are benign in their implications for insurers,” Buffett wrote in his letter.

He warned that it was “naïve” to think of Hurricane Katrina -- the costliest hurricane in U.S. history -- “as anything close to a worst-case event.”

“These could rock the insurance industry,” Buffett added.

 

Another Huge Company Is Harnessing The Power Of Mindfulness

Taking some time to look inwards goes a long way.

That’s something Salesforce employees will soon be able to do regularly, as the cloud-based software company begins installing mindfulness rooms on each floor of its buildings.

After Buddhist monks from France's Plum Village gave a mindfulness workshop at Salesforce headquarters last October, founder and CEO Marc Benioff decided to outfit the company's new offices with dedicated areas to promote employees’ well-being.

An original proposal for a single floor of mindfulness space in each building was scrapped, and Benioff decided instead to install individual rooms on each floor.

“They came to me and said, ‘There’s constant activity at Salesforce. You should take one of your entire floors and make it a silent floor,’” Benioff said in an interview with The Huffington Post. “I said, ‘That’d be great, unless you work on that floor.’”

Instead, "as we build facilities around the world, we're now going to have a mindfulness section on each floor," he said. This space will not be for employees to make phone calls or take meetings, but rather to fully step away from the intensity of work. When someone enters one of the rooms, he or she will have to do so without bringing along any gadgets like a cell phone or computer.

A tower set to open at 350 Mission Street in San Francisco will be the first to include these spaces, Benioff said. The rooms are meant to encourage employees to turn their focus inwards, rather than thinking about external responsibilities.

“You spend your life going outwards, and your attention is focused on work, projects or other people,” brother Phap Linh of Plum Village told HuffPost. “This is a place where you can go in. The way out of stress, anxiety and difficulty is not out there.”

Benioff has championed mindfulness at his company, and said last year that he has hosted dozens of monks in his spare home in San Francisco. He has also pushed for business leaders to create a stronger culture around their employees’ well-being.

“It’s an anxious era. The antidote to anxiety is mindfulness,” Benioff told The New York Times last year.

Mindfulness can have significant impact on individuals’ physical and mental health. It’s been shown to make you a kinder person and reduce feelings of anger or depression. Guided meditations can help you sleep better, and even keep you young.

The rooms at Salesforce will be sectioned into two areas, one for reading and another for meditating. They will be centrally located on each floor, in order to encourage employees to take a break from their regular work and slow down.

The company is also entertaining the possibility of creating a meditation app geared toward specific goals, like unwinding from a pressing deadline or calming down after a tense exchange with a coworker, Linh said. (It would be the single digital activity allowed in the mindfulness rooms.)

“There’s a lot of fear, stress, anxiety and jealousy out there,” Linh added. “We want to cultivate joy and compassion.”

The monks of Plum Village also proposed bringing Salesforce employees to one of their monasteries for a weeklong retreat.

“It’s not enough to go to a one-hour workshop,” Linh said. With a retreat, “you really feel it in your flesh and can bring it back into your daily life.”

White House Predicts Robots May Take Over Many Jobs That Pay $20 Per Hour

The White House is worried that robots are coming to take your job.

In a report to Congress this week, White House economists forecast an 83 percent chance that workers earning less than $20 per hour will lose their jobs to robots.

Wage earners who receive up to $40 in hourly pay face a 31 percent chance they'll be replaced by robots, while workers who are paid more than $40 an hour face much lower odds -- about 4 percent -- of losing their jobs to automation.

The estimates underscore the myriad threats facing low-wage workers in America, who in recent years have been buffeted by stagnant wages, decreasing employment prospects and higher education costs if they wish to obtain additional credentials in pursuit of better-paying jobs.

In an economy increasingly defined by the yawning gap between rich and poor, White House economists worry that increased automation could exacerbate inequality as the well-paid enjoy the fruits of robot-fueled gains in productivity while everyone else is left to fight for scraps.

One study cited by the White House found that automation has particularly hurt middle-skilled Americans, such as bookkeepers, clerks and some assembly-line workers. A lack of additional training and education opportunities led these workers to settle for lower-skilled positions, and likely lower wages.

Already, the White House noted in its report, most economists reckon that changes in technology are "partially responsible for rising inequality in recent decades."

Robots and other advances in technology are forecast to displace a significant number of blue- and white-collar workers, according to 48 percent of experts surveyed by the Pew Research Center in 2014. They also said that robots and so-called digital agents will displace more jobs than they create by 2025.

Many experts surveyed by Pew said they are concerned that the rise of robots and other technological advances "will lead to vast increases in income inequality, masses of people who are effectively unemployable, and breakdowns in the social order."

It's not a new worry. The famed economist John Maynard Keynes wrote in 1930 about "technological unemployment," or the theory that workers could be displaced due to society's ability to improve labor efficiency at a faster rate than finding new uses for labor.

But White House economists said they don't have enough information to judge whether increased automation will help or hurt the U.S. economy. For example, new jobs could emerge to develop and maintain robots or other new forms of technology.

"While industrial robots have the potential to drive productivity growth in the United States, it is less clear how this growth will affect workers," the White House said in its report.

There are two important questions, according to White House economists. First, if robots replace existing workers, will workers have enough bargaining power to share in their employers' newfound gains? Second, will the economy create new jobs fast enough to replace the lost ones?

Falling union membership -- some 11 percent of U.S. workers belonged to a union last year, down from about 20 percent in 1983 -- suggests that workers may not have much power to demand higher wages from employers who are automating them out of a job.

The economy could create enough new, good-paying jobs to help those displaced by robots, but the plight of manufacturing workers who have lost their jobs in recent decades as manufacturers moved abroad suggests that this, too, could be a challenge.

Instead, according to the White House, the key is to maintain a "robust training and education agenda to ensure that displaced workers are able to quickly and smoothly move into new jobs." With most Americans now financing higher education through debt -- about 1 in 8 Americans collectively owe $1.3 trillion on their student loans -- amid an era of sluggish wages, it's unclear whether higher debt burdens will lead to a better economic future.

White House Predicts Robots May Take Over Many Jobs That Pay $20 Per Hour

The White House is worried that robots are coming to take your job.

In a report to Congress this week, White House economists forecast an 83 percent chance that workers earning less than $20 per hour will lose their jobs to robots.

Wage earners who receive up to $40 in hourly pay face a 31 percent chance they'll be replaced by robots, while workers who are paid more than $40 an hour face much lower odds -- about 4 percent -- of losing their jobs to automation.

The estimates underscore the myriad threats facing low-wage workers in America, who in recent years have been buffeted by stagnant wages, decreasing employment prospects and higher education costs if they wish to obtain additional credentials in pursuit of better-paying jobs.

In an economy increasingly defined by the yawning gap between rich and poor, White House economists worry that increased automation could exacerbate inequality as the well-paid enjoy the fruits of robot-fueled gains in productivity while everyone else is left to fight for scraps.

One study cited by the White House found that automation has particularly hurt middle-skilled Americans, such as bookkeepers, clerks and some assembly-line workers. A lack of additional training and education opportunities led these workers to settle for lower-skilled positions, and likely lower wages.

Already, the White House noted in its report, most economists reckon that changes in technology are "partially responsible for rising inequality in recent decades."

Robots and other advances in technology are forecast to displace a significant number of blue- and white-collar workers, according to 48 percent of experts surveyed by the Pew Research Center in 2014. They also said that robots and so-called digital agents will displace more jobs than they create by 2025.

Many experts surveyed by Pew said they are concerned that the rise of robots and other technological advances "will lead to vast increases in income inequality, masses of people who are effectively unemployable, and breakdowns in the social order."

It's not a new worry. The famed economist John Maynard Keynes wrote in 1930 about "technological unemployment," or the theory that workers could be displaced due to society's ability to improve labor efficiency at a faster rate than finding new uses for labor.

But White House economists said they don't have enough information to judge whether increased automation will help or hurt the U.S. economy. For example, new jobs could emerge to develop and maintain robots or other new forms of technology.

"While industrial robots have the potential to drive productivity growth in the United States, it is less clear how this growth will affect workers," the White House said in its report.

There are two important questions, according to White House economists. First, if robots replace existing workers, will workers have enough bargaining power to share in their employers' newfound gains? Second, will the economy create new jobs fast enough to replace the lost ones?

Falling union membership -- some 11 percent of U.S. workers belonged to a union last year, down from about 20 percent in 1983 -- suggests that workers may not have much power to demand higher wages from employers who are automating them out of a job.

The economy could create enough new, good-paying jobs to help those displaced by robots, but the plight of manufacturing workers who have lost their jobs in recent decades as manufacturers moved abroad suggests that this, too, could be a challenge.

Instead, according to the White House, the key is to maintain a "robust training and education agenda to ensure that displaced workers are able to quickly and smoothly move into new jobs." With most Americans now financing higher education through debt -- about 1 in 8 Americans collectively owe $1.3 trillion on their student loans -- amid an era of sluggish wages, it's unclear whether higher debt burdens will lead to a better economic future.