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The world's central banks join together to combat tough economy

Flags of the European Union countries are hoisted in front of the European Parliament in the French eastern city of Strasbourg.

Jeremy Hobson: The world's major central banks -- including the Federal Reserve -- have just agreed to make dollar-based loans available to Europe in a coordinated way.

To help explain what that means, we've got our regular Thursday guest Diane Swonk who is chief economist with Mesirow Financial, and she's with us live from Washington. Good morning.

Diane Swonk: Good morning.

Hobson: So Diane, explain what is going on with this coordinated move by the world's central banks.

Swonk: I think there's two issues that are really important. The first issue is that there making sure that European banks continue to get funded -- liquidity will not be an issue through the end of the year for European banks -- and so it takes one of many risk issues regarding Europe off the table. And I think that's very important.

The second issue: coordinated. This is what we had to do in 2008 -- the realization that we are in a global economic boat together, and we all need our oars in the water at the same time, rowing together to get out of it. And I think that's a very important thing. Financial markets may fight one central bank in the world, they're not going to fight central banks of the entire world. And that's what we're starting to see now -- is coordinated efforts are meant to shore up confidence.

Hobson: OK Diane, well that's the news out of Europe this morning. Before we get too wrapped up in this Europe story -- which I'm sure will be with us for a while. I want to get your thoughts on another story here in the U.S. -- that SAT scores in reading and writing for the class of 2011 have fallen to the lowest level ever recorded. And apparently, only 43 percent of students scored high enough to be considered ready for college. As an economist, what do you think of that?

Swonk: This is one of our great tragedies, is for some time now, we have not trained people and educated people to fill the kind of jobs we're generating in an information and knowledge age. And this underscores how critical the crisis is, and it's at the same time that we're laying off teachers en masse and further undermining our educational system. As I speak, I just saw a headline go up where an employer said we need a complete revamping of our educational system in the United States. And I think that's something -- we don't want to lose another generation.

Hobson: Diane Swonk, chief economist with Mesirow Financial, thanks as always.

Swonk: Thank you.

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