Panel, students discuss economy

By Scott Kanowsky

Published Oct. 8, 2008

The Trulaske College of Business held a forum on Tuesday to address the financial crisis gripping the nation.

A panel of prominent MU professors and businesspeople talked about the causes, the repercussions and the remedies to the current state of the economy

Bruce Walker, the dean of the business school, discussed the impact of the situation to a cramped Bush Auditorium in Cornell Hall.

“This is a historic period in our economy,” he said.  “We are trying to survive this history.”

For some MU students in attendance, the forum was time to learn more about a situation that affected their lives directly.

Freshman Brianne Cummings, a marketing major whose father is an investment banker that recently lost his job, said she was optimistic despite the current gloomy outlook.

“I think our generation will be the one to pick everything up,” she said.  “Everything we want to have gives us more opportunity.”

Sophomore Zach Mutter, a business major, was less optimistic than Cummings. Mutter has paid particular attention to the recent collapse of the mortgage firm Lehman Brothers because his cousin was a vice president at the company’s Chicago branch.

Mutter said he hoped a job at the company was in his future.

“The industry I work in no longer exists,” he said.

Banking professor John Howe said students' fears of unemployment and economic hardship are somewhat exaggerated.

“For a year or two there will not be as many employment opportunities,” he said, and said students could find their work hours decreased.

But to Howe, students are lucky. He said they have only seen solid economic times, so the current conditions are frightening.

“I think it is an important lesson in your life,” Howe said.  “You learn at a much more visceral level that stocks don’t always go up. You understand at a deep and somewhat personal level.”

W. D. Allen, a finance professor, said that there are three main reasons for the crisis.

He the lack of confidence in lending money, leverage used by borrowers that left little capital standing and an irresponsible handling of mortgages led to the current problems.

Management professor Karen Schnatterly said that nobody really knew how the decisions they were making would cause the crisis to explode. CEOs and consumers, she said, did not know what they were selling or buying.

As for remedies, nearly all the panelists felt the bailout plan passed by Congress last week, in which  $700 billion would be given to the U.S. Department of Treasury to buy defaulted loans, is mostly ineffective.

 “There are no easy fixes to this and that was what (Treasury Secretary Henry) Paulson was trying to do, have an easy fix,” Allen said.