Income Inequality Institute Will Pay Paul Krugman $25,000 Per Month
In late February, the City University of New York announced that it had tapped Princeton economist and New York Times blogger Paul Krugman for a distinguished professorship at CUNY’s Graduate Center and its Luxembourg Income Study Center, a research arm devoted to studying income patterns and their effect on inequality.
About that. According to a formal offer letter obtained under New York’s Freedom of Information Law, CUNY intends to pay Krugman $225,000, or $25,000 per month (over two semesters), to “play a modest role in our public events” and “contribute to the build-up” of a new “inequality initiative.” It is not clear, and neither CUNY nor Krugman was able to explain, what “contribute to the build-up” entails.
It’s certainly not teaching. “You will not be expected to teach or supervise students,” the letter informs Professor Krugman, who replies: “I admit that I had to read it several times to be clear … it’s remarkably generous.” (After his first year, Krugman will be required to host a single seminar.)
CUNY, which is publicly funded, pays adjunct professors approximately $3,000 per course. The annual salaries of tenured (but undistinguished) professors, meanwhile, top out at $116,364, according to the most recent salary schedule negotiated by the university system’s faculty union. And those professors are expected to teach and publish. Even David Petraeus, whom CUNY initially offered $150,000, conducted a weekly 3-hour seminar.
Along with the offer letter, CUNY released dozens of emails between Krugman and university officials. “Perhaps I’m being premature or forward,” the Graduate Center’s President, Chase Robinson, tells Krugman in one of them, “but I wanted you to have no doubt that we can provide not just a platform for public interventions and a stimulating academic community—especially, as you will know, because of our investments in the study of inequality—but also a relatively comfortable perch.”
Which is undeniably true: $225,000 is more than quadruple New York City’s median household income.
Krugman did not respond to requests for comment. When contacted, a CUNY spokesperson told Gawker, “We’ll get back to you by early next week.”
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Another timely article by the Head Trouble Maker over at Zerohedge. Although US banks are supposedly carrying insurance from the FDIC, there is never nor has their ever been enough in the FDIC to cover more than a small bank failure. The ratios regulated in the US are a joke, thus US banks are highly insolvent:
A depository institution’s reserve requirements vary by the dollar amount of net transaction accounts held at that institution. Effective December 29, 2011, institutions with net transactions accounts:
- Of less than $12.4 million have no minimum reserve requirement;
- Between $12.4 million and $79.5 million must have a liquidity ratio of 3%;
- Exceeding $79.5 million must have a liquidity ratio of 10%.
What A Bank Run In China Looks Like: Hundreds Rush To Banks Following Solvency Rumors
Submitted by Tyler Durden on 03/25/2014 12:22 -0400
Curious what the real, and not pre-spun for public consumption, sentiment on the ground is in a China (where the housing bubble has already popped and the severe contraction in credit is forcing the ultra wealthy to luxury real estate in places like Hong Kong) from the perspective of the common man? The photo below, which shows hundreds of people rushing today to withdraw money from branches of two small Chinese banks after rumors spread about solvency at one of them, are sufficiently informative about just how jittery ordinary Chinese have become in recent days, and reflect the growing anxiety among investors as regulators signal greater tolerance for credit defaults.
Domestic media reported, and a local official confirmed, that ordinary depositors swarmed a branch of Jiangsu Sheyang Rural Commercial Bank in Yancheng in economically troubled Jiangsu province on Monday. The semi-official China News Service quoted the bank’s chairman, Zang Zhengzhi, as saying it would ensure payments to all the depositors. The report did not say how the rumour originated.
Chen Dequn, a resident in Yandong, just outside Yancheng, said she saw a crowd of about 70 to 80 people gathering in a branch of Sheyang Rural Commercial Bank in her town on Tuesday.
“At the moment there are about 70 or 80 people in there. Normally there’d only be about 10,” she told Reuters by telephone.
Officials at another small bank, Rural Commercial Bank of Huanghai, said they had faced similar rushes by depositors, triggered by rumours of insolvency at Sheyang. “We will be holding an emergency meeting tonight,” an official at the bank’s administration office told Reuters, but declined to comment further.
Why Yancheng investors suddenly lost confidence in the security of their bank deposits is not clear, given that the Sheyang bank is subject to formal reserve requirements, loan-to-deposit ratios and other rules to ensure it keeps sufficient cash on hand to meet demand.
Why the jitteriness? Because until now, bank failures in China have been unknown, as Chinese banks are considered to operate under an implicit guarantee from the government. That is changing. Which is why the rumor mill is on overdrive:
“It’s true that these rumours exist, but actually (the bank going bankrupt) is impossible. It’s a completely different situation from the problem with the cooperatives,” said Zhang Chaoyang, an official at the propaganda department of the Communist Party committee in Tinghu district, where the bank branch is located.
And Bear Stearns is fine…
Zhang was referring to an incident that rattled depositors in Yancheng in January, when some rural cooperatives — which are not subject to the supervision of the bank regulator — ran out of cash and locked their doors. Local officials say several co-op bosses fled after committing fraud.
China’s central bank governor said this month that deposit rates are likely to liberalised in one to two years – the most explicit timeframe to date for what would be the final step in freeing up banks to set their own interest rates.
It is widely expected to introduce a deposit insurance scheme before freeing up deposit rates, to protect savers in case a liberalised market puts major strains on smaller banks and alarms the public. Analysts also expect the controls on deposit rates to be lifted gradually. Is China’s debt nightmare a province called Jiangsu?
Why are bank runs like these only set to accelerate? Simple – unlike the US China has zero deposit insurance. Reuters expplains:
The case highlights the urgency of plans to put in place a deposit insurance system to protect investors against bank insolvency, as Chinese grow increasingly nervous about the impact of slowing economic growth on financial institutions.
Regulators have said they will roll out deposit insurance as soon as possible, without giving a firm deadline.
In the meantime, there are always helpful investor relations people willing to explain calmly just what is going on:
When contacted by Reuters by phone on Tuesday, an official at the Jiangsu Sheyang Rural Commercial Bank branch hung up, saying she was busy.
Others were even more helpful:
An official at the administrative office at Jiangsu Sheyang Rural Commercial Bank said the bank would publish a statement shortly. On its website, the bank says it is capitalised at 525 million yuan and had total deposits of 12 billion yuan as of end-February,
Officials at the Jiangsu branch offices of the China Banking Regulatory Commission (CBRC) declined to comment. The Yancheng branch of CBRC and the propaganda offices in Yancheng city and Sheyang county did not answer calls seeking comment.
Busy or not, for now, the banks may have survived following yet more capital infusions from the local government, but what happens when the default wave that has claimed solar, coal, and real estate developers finally impacts a deposit-holding institution? How will China – which has far more total deposits within its banking system than in the US (since the US banks fund themselves mostly using ultra-short term, overnight shadow funding) – survive a nationwide bank run we wonder?