Regulators Were Appointed to Be Asleep at the Wheel
Robert Engle is a Nobel Prize-winning economist. After completing his Ph.D., Engle was a professor of economics at the Massachusetts Institute of Technology from 1969 to 1977. He joined the faculty of the University of California, San Diego (UCSD) in 1975, where he retired from in 2003. He now is a Professor Emeritus and Research Professor at UCSD. He currently teaches at New York University, Stern School of Business where he is the Michael Armellino professor in Management of Financial Services. Engle is also the co-founder of the Society for Financial Econometrics (SoFiE). He won the Nobel Memorial Prize in Economic Sciences in 2003.
Question: What can we learn from the recent financial crisis?
Robert Engle: Right. So, I think we’ve learned a lot from this crisis. And I think one of the things is kind of what we’ve been talking about. That when firms take a lot of risk, to some extent, they’re taking risk beyond what they feel themselves. In other words, when large companies take on risk, then they impose risks on the rest of the system. And these are systemic risks and these systemic risks we never used to think were really that important, but as soon as we recognize how the financial sector – the risks the financial sector takes on can impact the entire global economy, we realize that those risks needed to be controlled for the social good. And reduced the systemic risks.
So we have a new push to understand systemic risk, where it comes from, how do you measure it, how do you regulate it. And the financial regulation that has been discussed for a year in the U.S. and which is about to be put into place, I think, and which is being discussed in Europe and everywhere, the focus is very much on systemic risk that those are the risks that you want to spend most of your regulatory time worrying about. So that leads us to regulating more carefully the largest or the most systemic risky companies and institutions.
Question: Is deregulation effective for financial markets?
Robert Engle: I think we’re fooling ourselves if we think that regulators are going to be able to outsmart the bankers. So, the task of designing regulatory reform is trying to make more or less foolproof regulation and that’s one of the advantages of the systemic category where, if you can **** that some smaller number of banks or financial institutions are the ones to worry about, then you can give them more scrutiny and more attention, you don’t have to have rules that apply to everybody. And I think that you can do sort of what the Fed has often done, which is said – called “leaning against the wind.” In other words, if you think that there’s too much risk being taken and that the financial sector is being super heated, you can actually increase the capital requirements at that point.
When Greenspan, who’d had no appetite for regulating risk thought that things were getting out of hand, he coined the phrase “irrational exuberance” to cover it. But all he had was talking points. And with this new regulatory environment there would be more than talking points, there would be things that could be done. I do think that the reason the regulators were asleep at the switch in part was because we have had so much success in the U.S. history with deregulation, it’s done valuable things for the trucking industry, for airlines, for telecommunications. We’ve expanded deregulation, gotten government out of one sector after another and I think that the Greenspan approach and the Cox SEC were in that tradition of let’s deregulate and see what these markets do. And one of the things they immediately observed is that these markets took off. But they took off by taking more and more risk, which it turned out to be risks that the taxpayers were really taking.
So I think what we’ve learned is that deregulation is not as effective in the financial sectors where at least it can’t go as far in the financial sectors as it has I some of these other sectors, and so I think while they were asleep at the switch, I don’t think it was really just the regulators that were asleep at the switch, I think that they were appointed to be asleep at the switch. And that Congress, Congressional Oversight wanted them to be asleep. And so that it was really across the board. It was just not that the regulators missed it. They were appointed to not do anything.
Question: Will Americans post-financial crisis be smarter investors?
Robert Engle: I think they’re more cautious. On the other hand, that was true in 2003 also, when they had run up the internet bubble in 2000 and 1999, and then all of a sudden it blew apart. So, people were cautious for a while, but then they jumped on some other bubbles. We had an energy bubble, and then we had the banking bubble, and those – and I guess the housing bubble. So I’m not really sure whether Americans are going to be better investors.
Recorded May 25, 2010
Interviewed by Andrew Dermont
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Beards and perceptions of masculinity<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjU5OTg0MC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0NzkxMjM3N30.cH-GqNwP5GVqvstgJWAhBPn1B_lYpVEAI0I7iax7EQw/img.jpg?width=1245&coordinates=0%2C1900%2C0%2C849&height=700" id="caae6" class="rm-shortcode" data-rm-shortcode-id="cb0a355a4e8e1899789bc45f3f7aef56" data-rm-shortcode-name="rebelmouse-image" />
Photo Credit: Wikimedia<p>The study used 919 American (mostly white) women ages 18-70 who rated 30 pictures of men they were shown with various stages of facial hair growth. The photographs depicted men with faces that had been digitally altered to look more feminine or more masculine, with a beard and without a beard. The women rated the men according to perceived attractiveness for long-term and short-term relationships. The study found that the more facial hair the men had, the higher the men were rated on their attractiveness, particularly for their suitability for a long-term relationship.</p><p>Part of this might be attributed to facial masculinity — i.e. protruding brow ridge, wide cheekbones, thick jawline, and deeply set narrow eyes — which conveys information to a woman about a man's underlying health and formidability. Women tend to associate more masculine faces with physical strength and social assertiveness. It can also indicate a man with a superior immune response. The researchers suggested that their findings favoring bearded men could be due to the fact that facial hair enhances the masculine facial features on a man's face, like creating the illusion of a thicker jaw line. This could communicate direct benefits to women like resources and protection that would enhance survival among mothers and their infants. In other words, while a beard doesn't mean superior genetics in and of itself, it might be a primitive, ornamental way of saying, "Hey girl, I'm a testosterone-fueled lean, mean, pathogen fighting machine." <br></p><p>It could also be that a beard becomes its own destiny. The researchers in this study cite prior research that found that by growing a beard, men felt more masculine and had higher levels of serum testosterone, which was linked to a higher level of social dominance. They also tended to subscribe to more old-school beliefs about gender roles in their relationships with women as compared to men with clean-shaven faces.<span></span><br></p>
What does disgust have to do with beard preference?<p>Obviously, not all women dig beards. The researchers were particularly interested in what traits make a women prefer bearded men over clean-shaven faces. They looked into several factors including a woman's disgust levels on various concepts, her desire to become pregnant, and her exposure to facial hair in her personal life. </p><p>According to the study, women who were not into facial hair were turned-off by potential parasites or other critters they imagined could be in the hair or skin. Women ranking high on this "ectoparasite disgust" scale might have viewed beards as a sign of poor grooming habits. However, women who ranked higher in levels of "pathogen" did find the bearded men to be desirable, possibly because they perceived beards as a signal of good health and immune function. An intriguing discovery in the study was links to morality. Women who displayed higher levels of "moral disgust," or feelings of repugnance toward taboo behaviors, were more likely to prefer hairy faces. The authors opined that this could reflect a link between beardedness, politically conservative outlooks, and traditional views regarding performances of masculinity in heterosexual relationships.</p>
Additional findings<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjU5OTg1My9vcmlnaW4uZ2lmIiwiZXhwaXJlc19hdCI6MTYyNDI1NjUyOX0.P9B8WbmJR0q4nfzYZKbuNSA-2SAigVWJgrQE-_Gxlds/img.gif?width=980" id="49143" class="rm-shortcode" data-rm-shortcode-id="2ed3b1d6f20fc170bf2974646e565e8d" data-rm-shortcode-name="rebelmouse-image" />Giphy<p>The correlations that existed between married and single women's rating on the attractiveness of beards were not particularly clear, although the researchers noted that single and married women who wanted children tended to find beards more attractive than the women who didn't want children. They also found that women with bearded husbands found beards to be more attractive, which might indicate that social exposure to beards influences how desirable they are perceived of as being. Or it could be that men with wives who like beards grow beards.</p><p>It's important to note that culture plays a huge role in how attractive women perceive certain male characteristics as being. This study looked at a small, culturally specific group of American women, so no big, universal claims should be made about masculinity, facial hair, and male desirability to women. However, research like this is important in highlighting how human grooming decisions are driven by much more than fashion trends. Sociobiological, economic, and ecological factors all play a part in the way we choose to present ourselves.</p>
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Credit: logika600 / Shutterstock<p>Remaining healthy requires regular screenings. Here again we see a disassociation between risk reduction and proactivity. Seventy-seven percent of respondents don't talk to their doctors about lifestyle habits that support brain health; 51 percent have never been screened for depression; 44 percent have never had a neurological exam; and 32 percent have never been screened for hearing problems. </p><p>Common early warning signs of dementia, <a href="https://news.yahoo.com/americans-worry-alzheimers-disease-survey-140644803.html" target="_blank" rel="noopener noreferrer">according to</a> Dr. Jason Karlawish, co-director of the Penn Memory Center, include repetitive questions and stories, difficulties with complex daily tasks, and trouble with orientation. </p><p>In terms of intervention, <a href="https://bigthink.com/21st-century-spirituality/does-lack-of-exercise-lead-to-dementia" target="_self">exercise</a>, <a href="https://bigthink.com/surprising-science/obesity-dementia" target="_self">diet</a>, building a <a href="https://bigthink.com/mind-brain/brain-reserve" target="_self">brain reserve</a>, and challenging your brain (such as learning a new language or musical instrument) are all proven methods for staving off the ravages of Alzheimer's. Oxytocin has also <a href="https://bigthink.com/mind-brain/alzheimers-oxytocin" target="_self">showed promise</a> in brain-addled mice, while researchers found positive results for a <a href="https://bigthink.com/mind-brain/intermittent-fasting" target="_self">group of intermittent fasters</a> in promoting neurogenesis. </p><p>Epidemiologist Bryan James says that dementia is <a href="https://www.npr.org/sections/health-shots/2013/04/15/176920391/how-exercise-and-other-activities-beat-back-dementia" target="_blank">not an inevitable result</a> of aging. </p><p style="margin-left: 20px;">"It's simply not pre-destined for all human beings. Lots of people live into their 90s and even 100s with no symptoms of dementia." </p><p>Professor of neurology at Boston University School of Medicine, Andrew Budson, <a href="https://news.yahoo.com/americans-worry-alzheimers-disease-survey-140644803.html" target="_blank" rel="noopener noreferrer">recommends</a> aerobic exercise and the Mediterranean diet. As has long been known, whole grains, fruits and vegetables, fish and shellfish, and healthy fasts like nuts and olive oil seem to have brain-boosting properties. </p><p>To learn more, take the <a href="https://www.mdvip.com/brain-health-iq-quiz" target="_blank">Brain Health IQ quiz</a>.</p><p><span></span>--</p><p><em>Stay in touch with Derek on <a href="http://www.twitter.com/derekberes" target="_blank">Twitter</a>, <a href="https://www.facebook.com/DerekBeresdotcom" target="_blank">Facebook</a> and <a href="https://derekberes.substack.com/" target="_blank" rel="noopener noreferrer">Substack</a>. His next book is</em> "<em>Hero's Dose: The Case For Psychedelics in Ritual and Therapy."</em></p>