depending on the particular impediment to the transmission of changes in the standard policy rate to the economy. two months ago i argued that financial contagion – both between debt markets of different sovereigns and between sovereigns and banks – is one major force at work that impairs the functioning of the monetary policy transmission mechanism. 10 this is still the case today ; if anything contagion dynamics have worsened rather than eased. contagion already played an important role at the beginning of the financial crisis, then in terms of the propagation of illiquidity in interbank markets. the measures implemented starting in september 2008 had the specific objective of addressing the evaporation of liquidity in the money market, which seriously impaired a key source of funding for banks and thus their ability to continue lending to households and businesses. the money market “ freeze ” and liquidity contagion was, at least in large part, due to asymmetric information on other banks ’ creditworthiness – in turn related to their exposure to toxic asset backed securities. as such, it could not have been cured by a reduction in key ecb rates. the latter could have dealt with a possible increase in interbank rates due to larger counterparty risk premia, but not to a situation of liquidity hoarding and market breakdown. 11 moreover, a sharp reduction in key ecb rates aimed at reducing banks ’ cost of funding would also have had unwarranted repercussions on the overall monetary policy stance. see friedman, m., and a. j. schwartz ( 1963 ), a monetary history of the united states, 1867 – 1960, princeton university press or, more recently, christiano, l., r. motto and m. rostagno ( 2003 ), “ the great depression and the friedman - schwartz hypothesis ”, journal of money, credit and banking 35, pp. 1119 – 1197. keynote lecture on “ contagion and the european debt crisis ” at the bocconi university / intesa sanpaolo conference on “ bank competitiveness in the post - crisis world ”, milan, 10 october 2011. for a formal analysis of the possible breakdown of the interbank market in the presence of counterparty risk, see heider, hoerova and holthausen, “ liquidity hoarding and interbank market spreads : the role of counterparty risk ”, ecb working paper no. 1126. see also allen, f.,

; population growth within texas has compounded over the past two decades by 2 percent per annum, versus 1. 1 percent for the rest of the nation. we now have the second - largest congressional delegation in the country behind california. but the growth dynamic here is vibrant, whereas that of california is stagnant. this is why we are picking up population and congressional seats, while the recent u. s. census apportioned no additional seats to california. in sum, we are a vibrant and strong economy. the economic tenor in california and the rest of america is weary, if not downright weak : somos fuerte ; los otros son flojos. since the recent economic recession ended, texas has been responsible for 48 percent of all the jobs created in america. and yet, the hispanic population is not participating in our economic prosperity in proportion to its weight in the texas census. bis central bankers ’ speeches the unemployment rate among latinos here is substantially higher than it is for non - hispanic texans. hispanics earn 36 percent less in hourly wages than non - hispanic whites ; median household income of latino - headed households in texas is about 60 percent of median household income of non - hispanic households. for the u. s. as a whole, latino - headed households earn about 73 percent of non - hispanic white household income. pia orrenius and our other economists are hard at work in deciphering what accounts for the differences between the economic status of texas hispanics and latinos elsewhere in the u. s. already, one factor is clear : hispanic educational achievement in texas is abysmal. in texas, as anywhere else in the united states and in all capitalist societies, “ you earn what you learn. ” every study known to man, and plain common sense, tell you that income is directly correlated to educational attainment. high school graduates earn significantly more than high school dropouts ; a college degree results in greater lifetime earnings than a high school degree ; the highest income groups are those with graduate degrees. nearly 50 percent of texas public schoolchildren are hispanic, but only 38 percent of high school graduates are hispanic. some 54 percent of non - hispanic whites and 48 percent of non - hispanic blacks age 18 to 24 with a high school degree were in college in 2008. the percentage of hispanics was only 43 percent. within the age cohort between 25 and 64, only 14 percent of native - born texas latinos have college degrees ; 23 percent of