27th
Money matters
Courtesy of my brilliant and perceptive classmate Mike, one of the most succinct summaries I’ve seen of why the financial crisis matters to us and why the mood on b-school campuses is so scary right now. I hope he will forgive me from borrowing this from his (non-Tumblr) blog!
“But the mood is a bit changed from last year. The struggles of the financial system has begun to weigh on recruiting of finance and banking-minded students. We are in a period of great uncertainty, a period that is almost scary to truly consider. The failure of Lehman Brothers and Bank of America’s purchase of Merrill Lynch will probably cost some of our most talented second-year students their full-time job offers. The massive downsizing on Wall Street and at financial institutions across the country is flushing the market with talented young men and women, and they will actively pursue the very same opportunities that the Class of 2009 will seek.
Although I would love to see the $2,000+ per American citizen that a total of $700 billion represents not get spent buying loads of bad securities at inflated prices in order to inject liquidity into our financial system, I know that it is the only possible way to avoid an economic disaster rivaling that of the Great Depression. I know it because, finally, after many classes and a special faculty panel convened before a capacity crowd at Darden’s Abbott Auditorium on the subject, I understand how we arrived here. And I understand why we’re teetering at the edge. If capital markets freeze, it’s not just the banks, bankers, and consultants who will suffer. Everyday, otherwise healthy businesses will be unable to access credit. Not just credit they need to fund expansion plans and new hiring… they will be unable to secure funding to make payroll. They will be unable to pay their bills. They will go bankrupt. And our government and the Fed will be paralyzed to do anything at that point. Our very national security, so rooted in our economic health, will be imperiled. So, I guess we have no choice.
“Do we really want to play chicken with the Great Depression?” – Professor Peter Rodriguez
No.”
