Question: Who regulates the student loan industry to stop the practice of gouging young people with excessive interest charges added to their principal when they "defer" payment ...the govt doesn't pay the interest and the loans mushroom.

Paul Solman: As best I can tell, it's the Department of Education. The main initiative to stop the "gouging" is a bill proposed by President Obama in the spring, passed by the House in September, and now making its way through the Senate. It would make all student lending a direct responsibility of the Dept. of Education, rather than what we currently have: a private student loan industry that's federally guaranteed.

Question: The Bush tax cuts put billions in the hands of corporations and other businesses with the hope that they would create U.S. jobs, especially manufacturing jobs in the United States. Did this actually happen or did much of that money get used to create jobs overseas for cheaper labor rather than pay for expensive American jobs? And approximately what proportion of the tax cuts were used to create overseas jobs?

Paul Solman: Impossible to say. Just last week came this report from reporter Frannie Carr at Boston's main NPR affiliate, WBUR:

"A solar panel company that received $58 million in state aid to build its factory in Massachusetts is now moving jobs overseas.

Evergreen Solar is shifting some of its production, currently done at a plant in Devens, to China next year, after posting an $82 million loss in the third quarter.

Gov. Deval Patrick calls the move unfortunate, but says some of Evergreen's operations will remain here.

"I'm disappointed about the manufacturing," Patrick said, "but I'm delighted that they will continue to grow jobs in Massachusetts and they will be a part of our emerging clean tech sector."

Ian Bowles, secretary of the state Executive Office of Energy and Environmental Affairs, called Evergreen's decision disappointing.

State Sen. Mark Montigny is one of the lawmakers who said this proves what he's been saying all along, that the state should not be spending taxpayer money to woo private business.

"No one should be surprised," Montigny said. "Many of us have spoken very aggressively on the floor of the Senate against these boondoggles and they continue to happen. The biggest and most egregious right now are the billion dollars going to waste on the bio-tech industry."

About half of the 577 full-time and 230 contract employees at the Devens factory are involved in putting the panels together, but the company did not say how many jobs the state would lose."

So I hear (or read) a story like this and wonder: Would the company have closed down entirely without government investment? Been bought by a Chinese firm maybe? Shipped MORE jobs abroad?

Along these lines, an interesting proposal has been floating around for a few years from Ralph Gomory, a famous mathematician, longtime senior executive at IBM, president of the Sloan Foundation for many years (which gave the NewsHour a grant in his last year), and author of a book with the distinguished economist, William Baumol, Global Trade and Conflicting National Interests.

The idea; a tax break for U.S. corporations that create jobs here at home. Here's his most recent articulation of the proposal.

Question: Hi Paul. If it's going to take a "new thing," a la the Internet, to pull us out of the unemployment funk, what do you think it is ?

Paul Solman: When I receive a query like this, Hunter, I think to myself: Why don't I become an entrepreneur, push some alluring version of the "new thing," and cash in on my sem-quasi-celebrity? Then I remember that: 1) It would be wrong; 2) It probably wouldn't work; and, in answer to your question, 3) I have no idea what the Next New Thing will be and wouldn't be good at either developing or bringing it to market if I did.

Happily, there are uncountable numbers of people out there trying to invent the NNT even as I write. Many are in the alternative energy business, like a Frenchman I met a few weeks back at the B&B we frequented in Lisbon. Wood pellets (made of sawdust) for home heating is his game. Says it works wonders at his stove in Paris, and from what I saw of his family, they certainly seemed to have been well heated. You can even control the temperature by remote control, he alleges.

For all I know, there may have been an alternative energy entrepreneur checking into every hostelry in Europe that day. Or a biotech pioneer. Perhaps even a space travel visionary like Howard Bloom, author of the intriguing new book, Genius of the Beast. (Okay, there can't be that many astro-preneurs out there, but you get the point.)

In short, who knows the nature of the NNT? But you can be sure there are plenty of folks working on it. Will it usher in a new wave of prosperity? They forbid the following sentence on TV news, because it was already a cliche decades ago, but that's because it was always so apt: Time will tell.

Question: I have never understood why it would not have been more effective to have "bailed out" people directly, and banks indirectly, by giving money to people instead of banks.

The money would have necessarily have had to move through the banks, thus increasing cash flow, but would not have become bank property as it did, with which the banks could do anything they liked, as indeed they did, which did not actually "help the economy" in any way that I can see.

Meanwhile, they've done as little as possible to help people facing foreclosure. What have I missed here? How did simply improving the banks' balance sheets help any of the rest of United States, the Joe Blows?

Paul Solman: Remember, Tommie, how desperate the situation seemed a year or so ago. As I often wrote at the time, credence in the financial system was dissolving. The credibility of banks to pay back depositors (especially those with accounts beyond the insurance limits -- by far most of the money deposited by companies and the like) was on the line. And what about the credibility of credit itself? If those same banks couldn't come up with enough money to honor their debts, our credit cards might suddenly cease to work. Credence; credibility; credit: The entire system was perceived to be on the brink.

At that moment, how exactly would the government have bailed out the system by giving money to you, me, and the rest of us? How quickly? In what form? A lump sum to each family? How much for each? Suppose many of us DIDN'T put the money in the banks and just held onto it. Frankly, in the environment of the time -- and with banks teetering left and right -- that's what I might have done. Not you?

The solution to bail out the banks was one of desperation. That their creditors were thus rescued, and their executives and now even shareholders, to the extent their stock prices have come back, may be grossly unfair and perhaps unwarranted. But the phrases "too big to fail" and "too interconnected to fail" aren't used lightly. They reflect a consensus.

Paul sat down with Bair this morning at FDIC headquarters in Washington, and his interview appears on Friday's NewsHour.

Bair also answered seven questions from NewsHour viewers -- on topics ranging from the power of the banking lobby and what to look for to judge a bank's health to lessons learned from other countries' banking rules and the changing role of the FDIC.

We were particularly interested to hear Bair's response to a reader question on what she'd do differently in hindsight. Her response: She wished she'd dissuaded Treasury from using federal bailout dollars to prop up big financial institutions with capital infusions last fall, not least because of the thorny issues raised by government ownership of these banks and the public outcry that ensued.

Watch Bair's exclusive interview answering NewsHour viewers' questions below.

Paul Solman: We're interviewing Sheila Bair, head of the Federal Deposit Insurance Corporation, this Friday. And she's agreed to answer your questions as well as mine. Her answers will be posted here on the Business Desk in a special video.

So here's a rare opportunity: to ask the person who guarantees your bank deposits anything you wish. I'd make suggestions, but they would probably be questions I'll wind up actually asking myself. I therefore encourage you to come up with your own: on banking reforms, bailouts, you name it. It's your money (as deposits) that she's insuring, money that comes from insurance premiums the banks themselves pay. But since the government's guarantee is iron-clad, if the FDIC runs out of money, it will be replenished. And that too will be your money, as a U.S. taxpayer. Be bold. Be creative. And remember, there are no stupid questions.

Leave your questions in the COMMENTS section below, and be sure to include your name, city, and state.

Editor's note: This week, the Business Desk will feature questions from students in three high schools around the country.

Question: How is the economy measured? -- Alex, senior, Judge Memorial Catholic High School, Salt Lake City, Utah (pictured right, on the left)

Paul Solman: By the Gross Domestic Product: the amount of goods and services it produces, as measured by their sales. Anything that gets bought counts as part of the final number, but what we buy from abroad is subtracted from what we sell abroad.

There are two famous problems with GDP as a measure of the economy. One is that it includes things that don't necessarily make us better off, like cigarette sales. The other: that it excludes goods that simply aren't traded in the marketplace. So a parent who hires a nanny and then goes to work himself adds to GDP two ways, but if he does the same job himself by staying home to care for his children adds nothing to the GDP.

Question: Is the stimulus plan a success or a failure? How can we tell? Are there other solutions to the economic downturn other than bailouts and stimulus packages? -- Riley, senior, Judge Memorial Catholic High School, Salt Lake City, Utah (pictured above, on the right)

Paul Solman: We can't tell for sure about success or failure, Riley, because, as with everything in human history, we can't run an experiment that repeats the conditions we had when the stimulus plan was launched. It seems pretty safe to say that without the stimulus, unemployment would be worse and thus it's a "success" compared to the alternative. The federal government has been spending money that consumers haven't been spending, and that's true the world over. In the short run, that would seem to helping rather than hurting economies like ours.

But will the stimulus be a success in the long run, you might ask. Well, in the long run, we'll really never know. That's because so many other things will happen to influence the economy. Experts still argue over why the American economy was so successful after World War II. They will be arguing over the impact of the stimulus when you're my age.

Your third question concerns alternatives. One would have been for government to do nothing. Let labor, houses, commercial real estate and everything else in the economy drop in price until the point that people with money were willing to buy at the new low prices. It's not easy to imagine that alternative being tried in a democracy like ours. Moreover, it's far from certain that it would work.

Question: Will the downturn in the economy have a lasting effect on the Las Vegas gambling economy? I am a "low roller" and even I am receiving many free offers for rooms in Las Vegas.

Paul Solman: Let's hope so. Having just finished, while on holiday in Lisbon, two superb and wise books that argue for the importance of a moral point of view in their respective disciplines, I feel moved (and justified) to get on my high horse for this answer. (The books are Harvard psychologist Jerome Kagan's An Argument for Mind on the history of psychology over the past 50 years (and his role in it) and Cold War historian John Gaddis' The Landscape of History.)

In recent times, economists have generally skirted the issue of the Good. The assumption is that something called "utility" (satisfaction) sums up what humans do and therefore SHOULD shoot for, maximizing it as rationally as possible. How do we know what "utility" IS? By what people demonstrate they desire -- their "preferences." How do they demonstrate? By buying, paying, consuming. Thus "consumer preference" is the be-all and end-all of a market system. The implicit (if not, as often, explicit) goal of an economy is the greatest Good for the greatest number ("utilitarianism"), which is the summing of utility as revealed by consumer preference.

Of the several objections to this reasoning, the "utility" of gambling is one. Literature, common experience and now neuroscience all provide ample documentation that gambling can become an addiction not unlike drug or alcohol use. Many, if not most, of us can indulge without harm. Some very notably cannot. I have recently mentioned here my allegiance to the work of George Ainslie and his book, Breakdown of Will. I urge you to read it if you're interested in a formal explanation of the neuro-mechanics (what Ainslie calls "pico-economics").

The casual point is that some of us are born marks. Our brains are overmatched by gambling. We cannot resist and are beguiled into showing a "consumer preference" for an activity -- gambling -- that is detrimental to the long-term interests of ourselves, of those near and dear to us, and even -- to the extent that we live in a welfare-state with something of a safety net -- to the rest of society, with taxpayers picking up the tab for our hapless gambling-related transgressions.

There is also evidence that those most vulnerable to their gambling neuro-circuitry are those least able to afford it. Thus, the same vicious circle occurs as with health. The sicker you are, the poorer you are...the sicker you become, etc., downward and downward. That's one of the key arguments for universal health insurance. By the same logic, the more you gamble, the poorer you become...the more desperate you become to make the big score and get even. See the insights of evolutionary psychology and now behavioral economics for further confirmation.

So John of Scottsdale (sounds like an ancient English lord), I hope that recession and its devastating unemployment will mean that what happens in Vegas will not happen to as many overmatched Americans as before the fall. If that means a low-roller such as yourself can get a better deal, congratulations. By definition, low-rollers (relative to their resources) are not overmatched. Just take care to stay that way.

Meanwhile, I DO worry about what the Great Recession might do to lottery players and other candidates for Gamblers Anonymous. Will they become more desperate and thus gamble more, descending into the maelstrom? If anyone has data on this, please comment below.

Editor's note: This week, the Business Desk will feature questions from students in three high schools around the country.

Question: Because of the current economic conditions are we going to experience deflation or inflation in the future? -- Kavion, senior, Central High School, Phoenix, Ariz.

Paul Solman: Beats me. "Deflation" is a drop in prices; "inflation," a rise in them. Have you looked at the price of oil or gold lately? Rising. But what about wages? Housing? Clothing? All falling. The forces of deflation are consumers not spending, banks not lending. The forces of inflation are governments like ours creating more and more money. Right now, there's a tug-of-war between the two forces.

Question: Some people are saying that the worst is over, that the recession is coming to an end. Based on what you see in the economy right now and on your knowledge of previous recessions, is such a prediction on track? Are there specific indicators that you can point to that show that the economy will improve in the fall of 2009? -- Jacob, senior, Judge Memorial Catholic High School, Salt Lake City, Utah (pictured above, in center back)

Paul Solman: In the late 1980s, I think it was, I heard Harvard economist John Kenneth Galbraith say what has been my answer to questions like yours, Jacob, ever since: "There are two kinds of economists," Galbraith said; "those who don't know the future, and those who don't know they don't know." Like Galbraith, I count myself firmly among those who know they don't know. And that's because, with regard to human events, the future is unknowable.

But this sounds like a cop-out, right? Even if the future is just a matter of probabilities, a guy like me who's covered economics for 32 years should be able to guess the odds better than a high school student, shouldn't I?

OK, so here's my best guess, though please don't bet any money on it: We're in for years of very slow economic growth. Unemployment will remain high by historical standards. The beneficiaries of what economic growth there will be? The top few percent of the economy, as has been the case for decades.

Why am I so gloomy? Because so much of our recent growth was built on borrowing and spending. Not only do I think many Americans have realized that's not a safe way to provide for their future, but investors worldwide are less willing to lend to us.

Even you high school students must have heard the phrase about Americans: "We're living beyond our means." Well, what happens to an economy when the high living stops? Less spending; fewer jobs.

But even as the flexibility of freelancing is becoming more attractive to many employers and employees alike, little security exists for such workers.

Sara Horowitz, a former labor attorney in New York, founded the Freelancers Union more than a decade ago to provide freelancers with a social safety: offering health, dental, life, and disability insurance and a 401 retirement plan, as well as networking and advocacy to make the law more freelancer-friendly.

The union has grown to 125,000 members nationwide, with 75,000 in New York alone.

In a special Business Desk video exclusive, Horowitz explains why more employers and employees are going the freelancer route, and how the law has lagged in its protections for this growing class of workers.

Editor's note: Paul recently sat down with economists Kenneth Rogoff and Carmen Reinhart, authors of a new book chronicling an incredible eight centuries of financial crises around the world, This Time Is Different: Eight Centuries of Financial Folly.

The authors dug through mountains of data on every financial crisis they could uncover back to the 1300s, hoping to uncover common elements. Two major recurring themes they found: Arrogance and ignorance.

Kenneth Rogoff: Ignorance that this has happened before in other places, in other countries and arrogance thinking we're special, this time is different, we have financial globalization, we're running our economy better.

They took questions from NewsHour viewers in this special forum.

Question: Many years ago, I read a book about the Great Wave theory in economics, which argued along the lines that every 60 years or so economies go through crashes like this one. I am not an economist, but am curious if professional economists give any credence to these wave ideas, or are they discredited? -- Edward Allen

Kenneth Rogoff: We applaud looking at long periods of data. A key theme of our book is that you don't want to assess the risk of 100 year floods using 25 years of data, and you certainly want to look at multiple countries and not just one or two. But we also believe that economic theory has a role to play, and the variables we emphasize, such as debt, housing prices, and growth, are quite consistent with the models we know of how financial crises occur.

We put less store in those "wave" theories which are completely non-structural, when it becomes more likely that "regularities" are simply statistical flukes. And again, we don't think it makes sense to take advantage of the striking similarities in financial crises across countries and time, rather than just focus on a very small sample as most previous efforts have done.

Carmen Reinhart: I too read that literature with great interest during my time at Bear Stearns! But as Ken and I document, the cycles are not evenly timed across time or countries as this literature suggests (which is the advantage of tracking 66 countries in our sample for such a long period). In a nutshell (and it is a nutshell), the debt buildup-crises cycles are much more closely timed than 60 years for emerging markets AND they were also more closely timed for the advanced economies of today prior to WWII. (The chapter on banking highlights this point).

Question: Based upon your comparative study, (a) how long do you estimate this recession will last and solid growth will finally return? And (b) Is there a possibility that an even worse crisis can happen, as Nouriel Roubini recently predicted in the Financial Times? -- Frank S.

Kenneth Rogoff: Thanks for your question. In the usual postwar recession, it takes about two years for solid growth to return, as appears to have happened here as well.

Will there be something worse down the road? We probably won't have a relapse into the same kind of panic we saw that the end of 2008. After all, the governments of the world have basically guaranteed a huge patch of the financial sector. Even after they "withdraw" their guarantees, everyone will expect them to rush back as needed.

So the immediate panic is over. The bad news is government debts are soaring. In Chapter 14 of the book (see also Chapter 10 on banking crises), we show that on average, government debt nearly doubles in the aftermath of a severe financial crisis, within a few years. We are looking at trajectories for government debt (relative to income) that are seldom seen outside of a war period.

Will rich country government, already facing severe long-term budget problems due to aging populations, be able to tighten their belts enough to stave off a major problem? Maybe, but we are not so sure. Check out the figure below, from page 74 of our book. (The figure aggregates the world, but the same features come out from a more granular look at the data.) Waves of international banking crises are often followed, a few years later, by waves of government defaults (on external debt).

We do not expect a country such as the United States to necessarily default. But five to ten years down the road, if we have not fixed our severe budget imbalances (we are running double digit deficits), we might well see a period of significantly elevated inflation, which is the rich country way of reneging on debt commitments.

Carmen Reinhart: Ditto to Ken's comments above. You cannot rule out another big bang (an emerging market default could trigger that). But a scenario that worries me is one where the (global) "solid growth," as you put it, does not materialize for awhile. That is, the tentative recovery will end, not with a bang, but a whimper. We have yet to establish a durable foundation for growth.

Editor's note: This week and next, the Business Desk will feature questions from students in three high schools around the country.

Question: Unemployment seems to be far worse than the government's statistics show (currently just below 10 percent). Why is this so? -- Liz, senior, Central High School, Phoenix, Ariz.

Paul Solman: Because lots of people who you (and I) might consider "unemployed" aren't in the most commonly reported number, which only includes people who haven't worked at all, or looked for work, in the past week. And even that number is from a sample that might misrepresent reality, if unemployed people are harder to find and survey than other Americans.

But assume the methods are sound. The government actually reports an official statistic called "Unemployment-6" that includes everyone who has looked for work in the past year (but not past week) and who is looking for full-time work, but can't find, and thus worked part-time in the past week. "U-6" was 17 percent last month. And even that number didn't include anyone who hadn't looked for work in the past YEAR, because they were simply discouraged. Add in those people, and the unemployment number could be double the 10 percent you mention.

Question: Is unemployment going to get worse or better? -- Miguel, senior, Central High School, Phoenix, Ariz.

Paul Solman: If you believe most economic forecasts, it'll get worse right through the middle of next year. I can't see any reason to argue strongly the other way. Since economies like ours tend to move up and down in cycles, I assume unemployment will get better some day.

Editor's note: This week and next, the Business Desk will feature questions from students in three high schools around the country.

Question: If every other major economy in the world has universal health care why doesn't the United States? -- Kavion, senior, Central High School, Phoenix, Ariz.

Paul Solman: The excellent health economist Victor Fuchs gives four reasons:

1. Many organizations prefer the status quo. (Insurance companies, drug companies)

2. Machiavelli's "Law of Reform" suggests that a determined and concentrated minority fighting to preserve the status quo has a considerable advantage over a more diffuse majority who favor reform.

3. Our country's political system renders Machiavelli's Law of Reform particularly relevant in the United States, where many potential "choke points" offer opportunities to stifle change.

4. Reformers have failed to unite behind a single approach.

I can't do any better than that, except to add that health care's opponents have spent a lot of money scaring Americans about "socialized" medicine, suggesting that government health care is simply not "American" because it doesn't rely on the "free market."

The vulnerability of Americans to such appeals was apparent when protesters at a Congressional town hall meeting on health care said: "Keep your government hands off my Medicare!" But Medicare is a government program for all Americans over 65. It does not rely on the free market at all.

Question: If education helps to increase economic growth, why don't politicians pay more attention to and spend more money on K-12 schools? -- April, senior, Central High School, Phoenix, Ariz.

Paul Solman: Because economic growth is a long-term and iffy thing. Human beings don't love giving up something today (money) on iffy outcomes years down the road. I'm not sure how appealing the politics of education spending would be even if it could be shown persuasively to increase economic growth. Since the results aren't blindingly clear, the appeal is even less than it might otherwise be.

Editor's note: This week and next, the Business Desk will feature questions from students in three high schools around the country. To kick off the special series, two questions from high school seniors at Central High School in Phoenix, Arizona.

Question: How does it happen that the whole world is in a recession? -- Kavion, senior, Central High School, Phoenix, Ariz.

Paul Solman: The whole world isn't in a recession. China is growing; so is India; so is Brazil. Among them, those three countries alone have something like two-thirds our GDP and maybe nine times as many people as we do.

As to the parts of the world that are in recession -- largely in Europe -- it looks like the reason is because their citizens borrowed and spent "beyond their means."

Question: When, why and how did the economy begin to fall? -- Chanessa, senior, Central High School, Phoenix, Ariz.

Paul Solman: When: late 2007.

Why: easy credit, easier regulation, a national mindset that we could have it all.

How: Scam artists got into the act and pushed the economy beyond the breaking point. You know Ben Stein, the guy chained to Shaquille O'Neal in those TV ads? His father, a famous economist, is known for Herb Stein's Law: "If something cannot go on forever, it will stop."