Harvard University is reeling from a uniquely bad business gamble. The school lost at least $500 million when it bet that interest rates would rise. The money went to investment banks this year due to $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects. The loss will likely grow considerably. It also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.
Harvard sold $2.5 billion in bonds to pay for the “swap exit.” This comes with the school’s largest record loss of endowment in 40 years.
This ruinous economic planning is being blamed in part on former Harvard President Lawrence Summers. But rest assured, he is no longer Harvard President. President Obama made him the director of the National Economic Council.
For the full story, click here.
Patrick Oden 1, October 20, 2009 at 5:20 am ,
Now how long did it take for you to read that in the article. I am amazed as some comments when that was at near the end.
O, my, “But rest assured, he is no longer Harvard President. President Obama made him the director of the National Economic Council.” That’s funny and sad all at the same time.
Interesting excerpt, Jill. I’ll check out the book.
On this point: “The elite skimmed off hundreds of millions in bonuses, commissions and salaries from this fictitious wealth.”
I just read an interesting piece on corporate bonuses and the practice of “grossing-up,” whereby the corporations pay the taxes on the bonuses and other “perks” their top executives receive (private jet, driver, security, etc…) so that they can keep all of the money and receive all of the services without paying taxes on it. Nice, huh? Especially when many of them receive the bulk of their compensation in bonuses. We have to pay taxes, they don’t. And it continues!
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/19/AR2009101903546.html
Them smart Hahvahd folk shore is stupid.
The only real asset with which Lawrence Summers is endowed is a financially criminal mind.
Could the person at the Harvard Foundation who is responsible for making these chancy investment decisions be held accountable for this less than prudent investment scheme? If a Trustee had made this kind of risky move, they could be held liable for the loss.
“But rest assured, he is no longer Harvard President. President Obama made him the director of the National Economic Council. ”
I lol’d
The fact that George Bush has a Harvard MBA should have been the first clue as to why you should never send your kid there.
This is from Chris Hedges. I highly recommend his book, “Empire of Illusion”. Starting around page 102 he properly excoriates our elite institutions and the type of people they are MOST likely to graduate and send out to prey on the world. (There are many exceptions to this, including several very fine people who write on this blog.)
“The corporate state, and the political and intellectual class that served the corporate state, constructed a financial and political system based on illusions. Corporations engaged in pyramid lending that created fictitious assets. These fictitious assets became collateral for more bank lending. The elite skimmed off hundreds of millions in bonuses, commissions and salaries from this fictitious wealth. Politicians, who dutifully served corporate interests rather than those of citizens, were
showered with campaign contributions and given lucrative jobs when they left office. Universities, knowing it was not good business to challenge corporatism, muted any voices of conscience while they went begging for corporate donations and grants.”
http://www.truthdig.com/report/item/20090406_resist_or_become_serfs/
Brotha, can you spare a dime?