Despite the current economic crisis, Steve Wyatt, chair of the finance department at Miami University, is optimistic about Treasury Secretary Paulson's $700 billion bailout plan and the United States' financial future.
This was the message he and finance professor Mark Griffiths sent during a talk, "Hurricane on Wall Street," Tuesday afternoon in Laws Hall.
However, Wyatt said he recognized criticisms of the plan, including the amount of federal debt it will create, the lack of consequences for financial firms who over-leveraged and the lack of relief for the American public.
"(The bailout plan) could push the debt of the U.S. government to some of the highest levels in the world ... and raises concerns about our national credit worthiness," Wyatt said.
Wyatt said the long-term fallout would greatly impact younger generations.
"It falls on people who are young because they have a longer lifespan ... and a longer income period," Wyatt said.
He said it would likely be that this generation learns from the current crisis, saves money and works to prevent a repeat, although future generations may not be as aware of fiscally responsible.
Griffiths said the bailout would cost each U.S. taxpayer $7,246. He said the short-term estimates for the market are 18 to 20 months of continued financial panic, with a 15 to 20 percent further decline in the market.
Both Wyatt and Griffiths said the current situation resembles other bubbles economies have faced in the past.
"Bubbles are not a new thing-they have taken place throughout our history and we're still here," Griffiths said.
However, Griffiths said the global nature of the market intensifies the crisis.
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"It's different now," he said. "It's not six banks trading with each other, it's 100."
In response to a finance student who asked about job prospects, Wyatt said not to worry.
"The business didn't go away, the players did," he said. "There are immense opportunities. If you're not doing mergers and acquisitions, you're doing restructuring."
First-year business economics major Jacob Shannon said the presentation was easily understood but complex enough to cover the scope of the market's troubles.
"(This economic situation) provides our generation with a lot of opportunities but a lot of hardships because we have to foot the bill," Shannon said.
Jonathan Tudor, first-year finance major, said the situation validates his belief that students shouldn't rack up debt on a credit card.
"This situation leaves us with a lot of responsibility," Tudor said. "We'll need ingenuity and to pay attention (to fix the situation)."
Wyatt said one thing was for sure-America's economic future isunpredictable.
"The question I will not be able to answer-and I don't think anyone will-is what will happen to the market tomorrow," Wyatt said.
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