Penn State Abington examines the recession: How deep? How long?

April 24, 2009

“Deep and long,” predicted Salar Ghahramani, lecturer of business, law and political science at Penn State Abington. The panel discussion event was held on a night as gloomy as Ghahramani’s economic outlook. On the stormy evening of April 14 at the Abington campus, three leading financial experts discussed and debated the world economy.

Ghahramani explained in layman’s terms why the economy is in such bad shape today. He split the blame/responsibility for the poor economy three ways: consumers, government and banks. Consumers let greed get in the way of sound financial decisions -- limited or no savings, and buying more house than they could afford; government for lack of regulations/underwriting guidelines for mortgages, and banks for writing so many bad loans.

Another panelist, William Dunkelberg, professor of economics at Temple University and nationally known authority on small business, entrepreneurship, consumer behavior, consumer credit and government policy, agreed. “You can’t borrow your way into prosperity. Credit can be a good thing but we certainly learned how it can be bad. Greed is the root problem of all of this. We can’t sustain this greed. We have to work our way out of this problem; change our attitudes.”

Dunkelberg also puts part of the blame on the government. “Government is not the solution; it’s the problem. Small business isn’t getting any of the money from the stimulus package. What small business needs is less government, more customers. Weak retail sales is the number one business problem.”

The third panelist brought an international perspective to the evening event. Ian Kitchiner, principle lecturer at the Business School of the University of Gloucestershire, England, was visiting the Abington campus with a group of his students on a study abroad program. “My view of the future is mixed; we’re all sharing the same problems. It’s not a time for politics, it’s a time to work together -- find creative solutions. The banks are still constipated; not releasing the funds. Once we find the will, the way will follow. We’ve got to return to the basics and work through the problems we’ve created for ourselves.”

Paradoxically, according to the panelists, even though greed, borrowing and overspending were the root of the global economic troubles, consumer non-spending is now causing the recession to continue. According to Dunkelberg, “Once we start to do stuff again, the economy will go up. There’s plenty of pent-up demand -- a car that’s needed, a roof that needs fixing. We’ve been here before. It will get better.”

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Last Updated April 27, 2009