Over 250 people attended a faculty panel discussion on the global financial crisis Wednesday night. College of William and Mary professors spoke about the causes of the crisis, detailed its probable course and suggested solutions.
Business professor Richard Ash began the discussion by explaining that the public should not panic and the market will fix itself in time.
“We may have some breaks in the system, but it is not doomed,” he said.
Business professor John Boschen argued that the sub-prime mortgage housing crisis is the origin of the country’s current financial struggles.
“Where this crisis started and where it’s going to end, you still have to look at the housing market,” Boschen said. “If you look at the household income from 2000 to 2006, it grew at a steady and respectable rate of about 4 percent a year. At the same time, housing prices were running up at about four times that rate. That is not sustainable.”
Economics professor Till Schreiber said that the country’s economic situation would probably get worse before it gets better, but that the current recession will not be as serious as the Great Depression.
Business professor John Merrick shared Schreiber’s view that the financial crisis will worsen. Merrick claimed that most banks probably do not know the full extent of their bad assets.
Marshall-Wythe School of Law Vice Dean Eric Kades proposed the establishment of a new bankruptcy department to deal with financial entities in distress that would only partially bail out some institutions.
He said the section would provide incentive for the creditors to behave rationally, but the law will probably not change.
“My prediction in the end, five years from now, the law will not have changed,” Kades said. “So, in 10 years from now [the panel] may be meeting in this room again.”
After the discussion, the panel answered questions from the audience that included topics such as Social Security and inflation. The panel suggested that staying informed is one way the public can deal with the crisis.
“Do yourself a favor, stop listening to all the talking heads,” Ash said. “Everybody has an opinion. … Make your own decisions.”