Planet Money

A few years back, when the housing market was going nuts, people didn't know we were in the middle of a gigantic bubble. That, of course, is how we wound up with Toxie, Planet Money's pet toxic asset. On today's podcast, we travel back to 2005, the year Toxie was created from thousands of home mortgages. And we talk to Lisa Liberator-Kinney, who bought a home in Bradenton, Florida during the bubble -- and whose mortgage wound up in our toxic asset.

We got all excited about school starting up again. So on today's podcast, we reached out to a bunch of econ profs and asked them to give us their best stuff -- the stories they tell to try to hook their students on economics. Music: Magic Bullets' "Lying Around."

Today, we hear from Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives. Das' book was written before the financial crisis, but if you read it when it came out, not much of what happened during the crisis would have surprised you. It's a very detailed, very cynical account of what actually goes on inside Wall Street banks.

On today's Planet Money, listeners suggest ways to cut the federal budget -- and experts evaluate their suggestions. Among the ideas: Get rid of manned space flight, cut "welfare and warfare," and stop paying Social Security benefits to high earners. This is the first of several stories we'll be doing in the coming months on government spending, and the way things like earmarks, subsidies and entitlements affect our lives. Music: Gomez's "How We Operate"

Over the past few years, the Fed bought $1.25 trillion* of mortgage bonds. It was a big move for the central bank, intended to prop up the housing market. But in all the discussion about the program, we never heard anybody explain how you actually buy all those bonds. On today's Planet Money, we go inside the Fed to find out. The answer involves a plain room with four small cubicles, a Nerf hoops net and a table-tennis trophy.

Financial trickery! Self-dealing! CDOs! On today's podcast, we return to the last days of the housing bubble. Our story: A group of bankers knew there were serious problems in the market for subprime mortgage investments. But rather than wind the business down, they sped it up -- prolonging the bubble, and ultimately making the crisis worse. Music from The Delays' "Long Time Coming."

On today's Planet Money, we talk to people who've been inside those rooms. And we unpack the latest Basel rules -- regulations that are supposed to apply to banks around the world, and that are due later this year. (Spoiler alert: They'll probably make the system safer. But they won't end financial crises.)

It's really, really hard to create the right kind of economic incentives -- even if you're a professional economist, and all you're trying to do is teach your kids to use the toilet. On today's Planet Money, we talk to Joshua Gans, an economist at the University of Melbourne -- and his 11-year-old daughter. He explains the system he constructed and rules he enforced. But like tiny Wall-Street bankers, the kids figured out how to work the system for maximum advantage.

Today, we hear from Nassim Taleb, the former Wall Street trader who published a book called the Black Swan back in 2007. The book argues that most economic models fail because they don't take into account rare, high-impact events that wind up driving history. (Taleb calls these events Black Swans.) The argument came out looking pretty good after the 2008 financial crisis. Earlier this year, a new edition of the book came out, with a new section called "On Robustness & Fragility." Among other things, the new section includes a prescription for withstanding a Black Swan. The short version: Get rid of debt.

On today's Planet Money, we leap 30 years into the future, a time, if current trends persist, when China's economy is bigger than America's. What does it look like? We're watching Chinese reality shows dubbed into English, and taking life-saving drugs invented by Chinese scientists. We're exporting more goods to China's growing middle class. The yuan probably has not supplanted the dollar as the world's reserve currency (and even if it has, it's not the end of the world). And Chinese people are still much poorer, on average, than people in the U.S.

The network neutrality debate, which has been burning up the comments section of many a tech blog for several years now, hit mainstream media this week when Verizon and Google released a joint proposal for new legislation regulating the internet. The debate really boils down to the economics of the internet. How it operates, and who pays. On today's podcast, we put on flame-resistant suits and dive in. We talk to two economists to find out what net neutrality will mean for the future of the internet.

Right at this very moment, you and I, and the rest of the country are participating in one of the great economics experiments of all time. An experiment to test whether John Maynard Keynes' prescription for how to get out of a global depression actually works. The Obama administration calls it the American Recovery and Reinvestment Act, you probably know it as the $787 billion stimulus package. Keynes wrote about the idea of stimulus in his 1936 book, The General Theory of Employment, Interest and Money. His theory simply put, was this -- sometimes economies go into a recession and they can't get out, they get stuck in a kind of recession whirlpool and the best way to get them out is a swift kick by the government in the form of spending. The idea being that if the people aren't spending money, the government needs to borrow it from them and then spend it for them. Today on the podcast, we try to answer the question was Keynes right? Did the $787 billion stimulus package worked?

Playing Monopoly is one of a child's earliest opportunities to manage their own "money" and learn basic economic concepts. As such, it is frequently cited as an effective teaching tool. Daniel Hamermesh, professor of economics at the University of Texas at Austin , and a self-described "monopoly veteran," uses it at the college level, to teach his intro economics classes about marginal benefit. He explains it this way, when you put the first 2 or 3 houses on a property in Monopoly, you get big increases in rent, but adding house number 4 and a hotel only bring dwindling returns. He's also got his own strategy for playing at home with his grandkids "the green properties are losers" and "never buy the utilities." If Daniel Hamermesh is Monopoly's economist champion, Russ Roberts of George Mason University, is its economist defector. While Russ admits to playing as a child, these days he says the only time it's played in his house, is when he wants to teach his kids "how bad" its lessons are. In a 2006 Morning Edition commentary, Roberts said about the game "...only Marxists look at the world of capitalism the way the game of Monopoly does, as an unrelentingly gloomy system of exploitation where the rich eventually wear everyone else down." On today's podcast, we pit Daniel Hamermesh and Russ Roberts against Alex Blumberg and Robert Smith in a heavily edited game of Monopoly to find out what lessons the game has to offer and who has the best strategy for winning.

Historians say it was the spring waters that brought President Franklin Delano Roosevelt to Warm Springs, Georgia, in the 1920's. FDR, who suffered from polio, was said to have used the springs for physical therapy. Around town however, another story circulates, FDR was fond of the region's moonshine. On today's Planet Money, we travel to Warm Springs to find out if the rumors are true. Did FDR really buy moonshine during Prohibition? Did he really violate the Constitution he had sworn to protect? In our quest for truth, we meet the daughter of FDR's favorite fiddle player and an economist, who explains how Prohibition, a divisive moral issue, became a celebrated business stimulus plan.

What's the price of a pelican? The total for a turtle? The dollars for a dolphin? Its not a philosophical question anymore. The BP oil spill killed hundreds of these animals, and the Feds want to make darn sure that BP pays the total bill. But coming up with a precise economic value for wildlife has stymied economists and scientists for decades. There's no market for most of these animals. No catalog for endangered species. No eBay or Craigslist for migratory birds. That's not going to stop us from trying, though. Today on the podcast, we come up with 5 different ways to put a pricetag on a pelican.