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“Harvard sucks at finance”

Sad Harvard :(

Sad Harvard :(

Poor Harvard. It can’t seem to catch a break.

After seeing its endowment plummet 27.3 percent last fiscal year (compared with 22.7 percent at Princeton), Harvard revealed over the weekend that it lost a lot more money than just the decline in endowment (which amounts to an $11 billion loss).

The Cambridge school lost an additional $1.8 billion by investing with the endowment the money they use to pay the bills.

Harvard then lost  $500 million more to get out of interest-rate swaps, which the university planned to use to secure better rates to finance their Allston expansion. Instead of seeing higher interest rates, as Harvard had originally bet on, the economic recession pushed central banks to slash lending rates further.

This comes on the heels of Harvard’s decision last winter to issue $2.5 billion in bonds to pay its debts. A month later, Princeton followed suit and raised $1 billion by issuing bonds–but at a cheaper rate–to use as working capital so it could avoid drawing down its endowment further. The difference in interest rates between Princeton and Harvard for their bonds amounts to $6.75 million in savings per year for Princeton.

Now it all makes sense why Harvard has had to lay off 275 staff members, stop serving hot breakfast in the dining halls, close one of its libraries, and halt construction on its Allston expansion (there is literally a giant hole in the ground where the new science building is supposed to be).

At least Harvard’s faculty members will still have cookies at their meetings. Oh wait, nevermind.

(image source: flickr.com)

Since summer’s in full swing and you’ve got better things to do than catch up on Princeton news, we round it up here for you on The Ink. In this week’s edition: Some people talk about Sonia Sotomayor ’76, and some Princeton climate researchers serve up some obvious. Our financial troubles aren’t as bad as we tho — oh wait they might be. But at least they’re not as bad as Harvard’s. Campus gets some Dubya flavor, and holy crap a Princeton professor is actually dubbed “the infomercial king.”

First of all OMG SONIA SOTOMAYOR HEARINGS THIS WEEK. Now that that’s out of the way,

  • In the Post, Peter Winn, who taught Sotomayor five courses and advised her senior thesis and calls himself her mentor, wished he could “have taken detailed notes on [their] conversations and filed them away in anticipation.” In anticipation of what? Probably turning it into a screenplay, by the way the rest of the op-ed reads.
Dont cha wish your student was wise like me?

Don't cha wish your student was wise like me?

  • More Post-Princeton antics: University Provost Christopher Eisgruber says that Sonia Sotomayor is boring because she “will be the ninth federal appellate judge on the nine-member Supreme Court” making the body pretty homogeneous in terms of prior experience. Or maybe he’s just jealous.
  • A recent study by some Princeton-led researchers finds that wealthy individuals pollute more. Apparently this was gathered by looking at “lifestyles including frequent airplane flights, automobile use, and heating and cooling of large homes.” File this one under “things we could’ve guessed.” Also under “things I’d look stupid for saying in precept but which professionals get paid to say.”
  • Hey guys, good news! We only lost 25%, not the full 30% we expected! The endowment situation isn’t as disastrous as we thought it was! But… oh, great, Annual Giving’s in the crapper, $11.4 million below expectations. Really doin’ your share, alums.

The rest of the rundown after the jump…

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