A crisis indeed, Princeton economists say

A few months ago, it might have taken a celebrity to fill the 400 seats of McCosh 50 and the three auditoriums set up to simulcast the speech. But in a display of how the failing U.S. economy has shaken the Princeton campus, students and community members packed in to hear five Princeton economists speak on the “Crisis on Wall Street” Sept. 24.

Economics professors Hyun Shin, Markus Brunnermeier and Harrison Hong addressed the economic crisis and the factors that had triggered it, while Paul Krugman and Alan Blinder ’67 tackled Henry Paulson’s economic bailout plan and the federal government’s next steps.

“Toto, we are not in Kansas anymore,” Hong remarked, as he outlined the danger of the “speculative bubbles and excesses” that are inherent in the markets. Marked by poor governance and regulation, Wall Street gained by hyping and selling poorly valued mortgage-backed securities, he said. The housing burst, Hong explained, has taught us that “our society really doesn’t like short-selling. Shorting America - not a good idea.”

Krugman pointed out that housing prices will continue to fall, which will reveal more underlying losses. “It drives me crazy when people say, ‘We need to take troubled assets off the balance sheet.’ That’s an extremely evasive phrase.” Krugman argued that wiping off troubled assets is not the real issue; instead, “the question is, at what price?” The Treasury Department will have to pay well above current market prices for troubled assets to actually help the situation, Krugman said.

Blinder expressed concern with Paulson’s preliminary bailout plan, agreeing with Krugman’s critique of the plan’s lack of oversight implementation. The Treasury Department’s final bailout plan will need to highlight “substantial transparency,” Blinder contended. He also suggested the creation of a new agency to oversee the bailout. “I would not [regulate the plan] in an agency that lives and breathes one degree away from the White House.”

Blinder urged Congress to build a plan that would attract “bottom feeders” to invest private capital alongside the government. In any case, the current economic situation necessitates quick action. “Markets are forward-looking,” Blinder said, “they need to know that help is on the way.” By Sarah Harrison ’09

University Garden Project grows

Tucked away between Alexander Road and the Springdale golf course sits a small organic garden cultivated by Ruthie Schwab ’09 and Stephanie Hill ’10, coordinators of the Garden Project. Started last year on a 12-by-55 foot plot of land south of Forbes College, the project has blossomed after moving to its current location, a 1.5-acre lot near the Forbes master’s house.

Students celebrated the first harvest at the new location Sept. 20, gathering to pick, cook, and eat the summer’s bounty of corn, squash, lettuce, tomatoes, carrots, Swiss chard, and more.

Meant to be a demonstration garden, the organic garden experiment has shown students the variety of healthy vegetables that can be grown locally. For instance, Schwab said, the project is growing 20 different types of lettuce.

The garden provides some produce to the Forbes and Graduate College dining halls, and organizers hope to expand. “We eventually hope to have high-producing crops like parsley and basil [for the dining halls],” Schwab said. “They’re herbs that make a difference if you have them fresh.”

The garden also donates produce to Nomad Pizza Co., the local organic pizza producer, and The Bent Spoon, an ice cream shop in Palmer Square.

On Sept 24, Sherry Dudas, the farm planner at Honey Brook Organic Farm in Pennington, N.J., one of the largest community-supported agriculture farms in the nation, visited the Garden Project to speak about the importance of consuming organic and locally grown products. Organic foods can be affordable, even in a time of economic crisis, according to Dudas. Buying the equivalent amount of organic food at retail stores like Whole Foods can cost up to three times more than a family-share membership at an organic farm, she said. By Julia Osellame ’09

Above, a student enjoys wood-fired pizza from Nomad Pizza Co’s traveling brick oven Sept. 24. The Garden Project donated the basil used on the pizzas. Photo by Julia Osellame ’09

Hitz ’61 calls for intelligence changes

Promoting his new book Why Spy? Espionage in the Age of Uncertainty in a speech for Princeton students and community members in Dodds Auditorium Sept. 25, Fred Hitz ’61 drew from his experiences as the former CIA inspector general and a Woodrow Wilson School lecturer, outlining the need for a new approach to U.S. intelligence in the era of Islamist terrorism while urging Princeton students to pursue careers in public service.

Since Sept. 11, 2001, “the U.S. government…has been charged to prevent or pre-empt any attack of 9/11 capacity,” Hitz said. But, he added, “the best way to deal with Islamist terrorism is probably not through the military.”

Pointing to the need for intelligence sources within key terrorist movements, Hitz argued that the methods used to recruit informants during the Cold War (like the “James Bond trilogy” of sex, blackmail, and intimidation) may not be as effective in a post-9/11 world. “We’re not going to meet friends of terrorists at an embassy cocktail party,” he said.

Hitz, who retired from the CIA in 1998, considers the 9/11 attack and the U.S. government’s failure to find weapons of mass destruction clear “failures of intelligence.” U.S. intelligence agencies were not “penetrating [the Al Qaeda] entourage,” and the U.S. government “didn’t have any reliable information coming from Iraq” between 1991 and 2002 to confirm Saddam Hussein’s involvement with weapons of mass destruction. Hitz pushed for increased collaboration and cooperation between U.S. intelligence and law-enforcement agencies to eliminate redundancies and expand the information network.

Hitz attributed some intelligence weakness to a personnel “brain drain,” as he called it, acknowledging that government salaries cannot match those in the private sector. “If only we could find a way to stuff [graduating seniors’] envelopes,” he joked. But on a more serious note, he added that by passing up opportunities in public service, “a lot of students are missing out on learning more about their country.” By Sarah Harrison ’09

Keeping the beat

Percussionist Jordan Bubin ’09 of the Princeton University Band plays his instrument of choice at halftime of the Tigers’ Sept. 27 football game against Lehigh. A rainy evening didn’t deter the band, or the football team, which won, 10-7, on a Connor Louden ’09 field goal in the game’s final seconds. Princeton football travels to Columbia Oct. 4 for its Ivy League opener.

Photo by Frank Wojciechowski