CORNWELL

Terry professors ponder financial crisis

U.S. 'in first inning' of recession

By: CAREY O'NEIL

Posted: 10/9/08

The current economic crisis drew hundreds to the Miller Learning Center Wednesday.

"I guess this is a sign we're going to talk about some pretty important events," said Christopher Cornwell, department head of economics, as he addressed more than 300 people during Terry College's "What Just Happened?" panel discussion.

"We're only in the first inning," he said about the economy, but people should start planning for the future.

William D. Lastrapes, a professor of economics, compared past economic woes in the U.S. to the present situation.

"The '90s had a lot of money floating around," he said. "Lending standards fell. In the summer of 2006, house prices declined. In 2007, people began realizing there were problems and pulled out of the market, increasing the cost of finance."

"We are currently in a recession," he said, pointing to job loss and housing declines. "No one's predicting unemployment rates of 25 percent for four years like in the Great Depression, but figures are similar to the recession of the early '80s."

James B. Kau, a legal studies and real estate professor, said he thinks government regulation is to blame.

"The last thing we should have is more regulation. What the credit market is doing ... is perfectly rational. What the government is doing is very strange."

People on Wall Street would get around any government regulations, and by piling on more regulation "we're just drawing on the poison," he said.

Kau, who worked for Freddie Mac and Fannie Mae, said he foresaw short term problems.

"Everyone is going to suffer, including a lot of innocent people," he said, because of rising inflation.

But some students said they were still optimistic about the job market.

"I can't do anything about it, so there's no sense in worrying," said Timothy Orkins, a senior from Clarkesville.

Lastrapes agreed.

"You guys who are 18 to 20 years old will have no problem in the long term. Things will get better. I would be optimistic."