A healthy-sized crowd welcomed Vice President and Senior Economist for the Federal Reserve Bank of Dallas Dr. Mark Wynne to Manning Chapel Feb. 22.
As a part of the university Honors Program, his lecture on globalization and the financial crisis of 2008 concerned a topic all too familiar to anyone living above ground since the recession began in 2007.
Assistant Professor and department chair of psychology Dr. Trent Terrell found the topic of particular interest given the world’s current economic climate. He admits he didn’t know more than many others about the economic crisis but was interested in hearing from someone who truly understands the issues on a global level.
“I thought he was incredibly knowledgeable,” Terrell said. “He managed to convey a massive amount of information in a way that a mixed audience could follow and understand. I specifically appreciated how apolitical his talk was. So often discussion of economic issues is laced with political blame and agendas. He described the data without editorializing, which was quite refreshing.”
Wynne’s focus was explaining the concept of globalization and its driving factors, free trade and immigration and how they work together to intertwine the world’s different economies.
Unity may sound like a pleasant idea, but when financial irresponsibility, excessive borrowing and consumption binges come into play, the term takes on a more ominous connotation.
He began by saying that globalization has been around since the largest period of integration in 1913 during WWI and has played a major role in the most dramatic economic downturn since the Great Depression.
The concept can be a mouth full for anyone without a mind for economic jargon, and sensing this may be the case, Wynne defined the term as “the increased interdependence of national economies as the result of the freer flow of goods, services, capital and labor.”
“Nowhere in this definition,” he assured the audience, “does it mention someone in China taking your job.”
The collective sigh of relief was hard to miss.
During World War I, the U.S. economy sky-rocketed above the competition so much so that the rest of the world thought they’d never catch up. According to current trends, however, by 2015 China will surpass the U.S. to become the biggest economy in the world, ushering in one of the most significant fundamental changes in economic activity since 1913.
Wynne explained that the more countries share with each other, the more intertwined their economies become, making each economy more vulnerable to negative impacts from misfortune and irresponsibility around the globe.
Take for example Greece. The sovereign nation doesn’t have the best financial track record and has spent the majority of its independence in a state of economic default.
The Treaty of Maastricht was signed in 1992, creating the European Central Bank.
Excessive deficits were given a zero-tolerance policy and bail-outs were strictly written out of the rules.
Simply put, if a country messes up or borrows too much money and can’t pay it back, they’re on their own. Greece knew this, but fabricated the numbers they needed in order to join the ECB.
Inevitably, it came out in 2004 that their economy was well over three times the allowed deficit limit.
The second Greek bailout was finalized Feb. 21, 2012 and their fiscal irresponsibility inevitably trickled from nation to nation until it reached America, intensified only by the compensatory behavior of the United States.
“The crisis was a crisis of globalization,” Wynne said. “The excesses that led to this crisis were facilitated by financial globalization. Had we not become so involved with the rest of the world and borrowed so much from them, it wouldn’t have been nearly as bad and nearly as long.”
The big issues of moving forward, he explained, are going to be focusing more on global stability instead of domestic mandates and for banks to consider global problems and how their budgets and spending habits will affect the rest of the world.
This is the only way to breach the deficits soaring around the world.
“I knew it had a lot to do with upside-down mortgages, but there is so much involved,.You can’t really say it’s one thing,” said junior economics major and vice president of Omicron Delta Epsilon Frank James. “So often we’re only concerned with what’s going on in our own country. We should all try to learn more about how we function as a part of the global community.”
Senior business management major Elise Butler attended the lecture to earn extra credit for class, but found herself surprised at how enlightened and relieved she felt after Wynne’s presentation.
“I knew we were having a problem, but I didn’t know specifically what it was. I just knew it was bad,” she said. “But I feel better after listening to him. I’m not sure how I feel about some of it, but he did a good job explaining everything in a way that didn’t make it sound so terrible.”