Planet Money

Spain's financial system is in trouble. Too many banks made too many bad loans. Part of the solution, the government has decided, is to consolidate -- to have relatively healthy banks buy relatively sick ones. On today's Planet Money, we meet Angel Borges. He's a banking consultant in Spain, and he's played the role of merger matchmaker for many of the regional banks known as cajas. But the mergers haven't been particularly smooth or efficient. For more on Spain's cajas, listen to our podcast from last week (#239).

The fate of Spain's economy may lie in a couple dozen savings banks called cajas de ahorros. These banks hold more than 50 percent of Spanish bank deposits and many are in danger of failing. On today's Planet Money, we explain why these tiny Spanish banks pose a threat to the European and global economies.

Gift-giving makes economists crazy. It's so inefficient! So we wondered: Is there a way to make the holiday season both more efficient and more joyful? On today's Planet Money, we try to answer that question by conducting a wildly unscientific experiment. We go into a seventh-grade classroom and give a bunch of kids some small gifts -- candy, raisins, fig newtons. Then we ask them how much they value what they got, and if they can think of a way to make everyone better off, without buying any more gifts. They quickly arrive at a solution: trade. Behold, the power of economics!

Economists love to point out that the simplest products -- a pencil, say -- are the results of an incredibly complex system. On today's podcast, we talk to the economist Tim Harford, who once marveled at the beauty and complexity hidden in a cup of cappuccino. But now, he questions if that complexity is always good.

Today on the podcast, why a horrible economy can be really good for pursuing your dreams. We talk to listener, Becky Mumaw, who wrote to us when we asked people to share how they think they'll fair in the post-crisis economy. Becky and her boyfriend Nick Westervelt had dreamed of being farmers one day, and recently, they made that dream come true by purchasing a farm in upstate New York. The farm's former owners had a food concession business that failed during the recession, so Becky and Nick were able to buy the land fairly cheaply. The downturn in the job market also made it easier for Becky and Nick to pursue the farm. Without many good job prospects, they felt comfortable walking away from the career paths they would have pursued in good economic times. But that's not the case for everyone. For some of Becky and Nick's friends -- a dancer and a painter -- the recession has made life very hard.

A few months back, we bought a tiny gold coin. The idea was to understand gold and its role in the history of money. That coin got us thinking about this really basic question: What is money? The question led us to Yap -- a tiny island in the middle of the Pacific Ocean, where for hundreds of years people used giant stone discs as a form of money. As it turns out, those stone discs say a lot about the meaning of money. If you don't believe us, just ask Milton Friedman.

The world's biggest economies spend a summer plotting in secret, over French wine, to make the dollar worth much, much less. You guessed it: The Plaza Accord! On today's Planet Money, we tell the story of the 1985 deal -- and reflect on what it says about today's currency wars, and about government efforts to set the value of money.

Europe is borrowing money to bail out countries that got in trouble by borrowing too much money. On today's Planet Money, Satyajit Das explains that European countries aren't actually putting their own money into that trillion-dollar bailout fund. Instead, the fund will borrow from investors around the world -- the same investors who are growing wary of lending to a bunch of countries in Europe.

Earlier this year, we reported on l'Artibonite, a rice-growing region in Haiti. The people there were suffering because an influx of free rice from foreign aid groups destroyed the market for their crop. Listeners responded, donating some $3,000 to support a school that figured prominently in the story. That's about 10 years of wages for the average Haitian. The principal, Enselm Simpliste, thought he could use the $3,000 to build a schoolhouse. We recently visited the school to see how things were coming along. The news is bad: All the money has been spent, and all there is to show for it is a foundation, some concrete blocks and some rock and sand.

In the teeth of the financial crisis, the government of Ireland decided to issue a blanket guarantee, promising to make good on all the debts of all its banks. That guarantee, we know now, has worked out very badly for Ireland. On today's Planet Money, we hear the story of how Ireland's decision also had huge consequences for Europe and the U.S.

Okay we admit it, we stole our idea to make a t-shirt and report every part of the process from Pietra Rivoli, who wrote the book, The Travels of a T-shirt in a Global Economy. Pietra followed the story of her t-shirt across three continents and along the way she learned about the many factors outside the market that impacted its production.

Out of all the elements on earth, why does gold hold such a privileged place in human history? Is it just a fluke, or is there something more fundamental going on? On today's Planet Money, we try to find out.

According to a recent report from the Social Security Board of Trustees, the program's trust funds have $2.5 trillion in them. But there's an argument about whether or not that $2.5 trillion actually exists. So in today's podcast, we take a look at just what are the Social Security "trust funds."

What should the government pay for? On today's Planet Money, we pose that question to Charlie Wheelan, author of the book Naked Economics, and recent Congressional candidate (he lost; here's his underwater ad). He gives us the econ 101 answer: The government should definitely pay for something if it's a public good.

For two years, we've waited for someone from the financial world to apologize for their role the financial crisis. On today's Planet Money, Jacob Kosoff steps up. Kosoff used to work as an economist for Freddie Mac, and his job was to promote homeownership. He managed an online calculator designed to help people determine whether to rent or buy a house. But Kosoff says there's a big problem with the calculator -- and he's sorry he didn't work harder to fix it.