MU professors and businessmen discuss economy, bailout
Panelists had a mix of optimism, concern about the future of the economy.
Oct. 10, 2008
The Trulaske College of Business held a forum Tuesday to address the financial crisis gripping the nation.
A panel of MU professors and businesspeople discussed the causes, repercussions and remedies for the current state of the economy.
Bruce Walker, the dean of the business school, discussed the impact of the situation in a packed 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, whose father is an investment banker who 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 paid particular attention to the collapse of the mortgage firm Lehman Brothers because his cousin was a vice president at the company's Chicago branch.
Mutter had 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, adding that students could find their work hours decreased as well.
But Howe said students are lucky because 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."
Finance professor W.D. Allen said there are three main reasons for the crisis: the lack of confidence in lending money, banks borrowing much more than they hold as assets and irresponsible mortgage practices.
Management professor Karen Schnatterly said nobody really knew how the decisions they were making would cause the crisis. 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 signed into law last week is mostly ineffective. The plan allows Treasury Secretary Henry Paulson to buy roughly $700 billion in "toxic" loans in an effort to allow banks to more freely loan money to other banks and businesses.
"There are no easy fixes to this and that was what Paulson was trying to do, have an easy fix," Allen said.