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News media consult KU Business faculty for expert opinions on nation's economic bailout

Friday, October 3, 2008

As the economy dominates the news, media outlets have turned to KU School of Business faculty for expert analysis. Recent coverage of the economic bailout plan in Congress and the housing crisis has included the research and opinions of a number of KU business faculty.

Business professors Paul Koch, George Bittlingmayer and Keith Chauvin joined 230 other professors from leading business schools across the nation this week in signing a letter urging members of Congress to avoid a reckless bailout of the nation's economy.

"There are a lot of good ideas out there, above and beyond simply buying up these troubled assets," said Bittlingmayer, who spoke to the Lawrence Journal-World. "You want to do something that saves the financial system but doesn't save people who made mistakes."

Despite these words of caution from top business professors, President Bush signed into law a bill passed by Congress to allow the U.S. Treasury to buy as much as $700 billion in bad mortgage-related securities. KU Business Professor Bob DeYoung said it was the right thing to do in the end.
"Whether that $700 billion will be able to pay off, nobody knows the answer," DeYoung told the Lawrence Journal-World. "The final bill to the taxpayers will be far less than the $700 billion, and there's a small chance they will profit from it."

To read more about the final bailout bill, visit the Lawrence Journal world article: Area economists say bailout right thing to do.

For more information on the business professors' letter to Congress, visit the Lawrence Journal-World article: KU professors oppose economic bailout.

The recent housing crisis certainly contributes to our nation's economic woes. Research conducted by KU finance professor Mark Hirschey and Eli Beracha of East Carolina University, found that the drop in housing prices, while serious, had limited or no effect on homeowners in 34 states, including Kansas. The research noted that homeowners in these states have suffered little to no collateral damage from the burst of the housing bubble. An article in the Topeka Capitol-Journal cites the professors' finding that home prices actually increased 2.2 percent in Kansas during the past two years.

According to Hirschey and Beracha, the recent 8 percent decline in housing prices nationwide is due largely to massive drops in the heavy population centers of California, Nevada, Arizona, Florida and Virginia. The California price decline was 27 percent from the second quarter of 2006 to the second quarter of this year.

For more of Hirschey's analysis, visit the Topeka Capitol-Journal article: Daily Dose: Dodged a bullet?

While our nation struggles with an economic crisis, KU business professors are sharing their research and opinions on how individuals can manage their investments during these tough economic times.

In a recent Lawrence Journal-World article, finance professors Bob DeYoung and Mark Hirschey offer answers to questions regarding the safety of consumer banks and moving money out of the current market.

For the complete article, visit: Should you be worrying about the economy?