Those interested in the reasons behind the current recession would have undoubtedly had their questions answered if they had attended the lecture on the current economic state put on by economics professor Richard Le.
It would have, however, been nearly impossible for any more students to squeeze into the small BS 120 classroom that the lecture was held in. Since every last desk was occupied, students were scattered across the floor, cross-legged, creating the ambience of a kindergarten classroom.
The lecture was held Friday, May 1 at 9 a.m. Le began the lecture in the cramped corridors by explaining how the recession began and developed.
Le explained his motivation for putting on the lecture. "I think of this as a public service," said Le. "Many people know about the recession but do not know why the economy has fallen."
Le said that the biggest cause for the recession was the housing market bust that occurred in 2007, due mostly to the amount of risky loans that were given out to homebuyers from 2001-2006.
Le said that because interest and mortgage rates were down from 2001-2006, that the demand for homes increased and a housing "boom" occurred.
The high demand for homes caused the price of homes to also rise, which created inflation. In order to remedy this, the Fed nationally raised interest rates. Unfortunately- the unintended consequences of this was the housing bust that followed.
Those who had purchased homes felt the pain of higher interest rates as their payments skyrocketed. Foreclosures followed, and the demand for homes drastically fell, along with prices.
Le attributed this as the single event that pushed America into the recession. As home sales dropped, companies stopped building home and construction workers were laid off.
As the home industry fell, along with it fell the rest of the economy. People spent less and unemployment rose.
Le simply defined a recession as a decline in consumer spending. He asked the class to "think of the economy as a car. Instead of moving forward we are moving backward right now," said Le.
"The lecture put the complexities of the economic crisis into terms that were very understandable for students," said Matt Rawlings, a 19-year-old biology major, who said his initial motivation for attending the lecture was the extra credit that his instructor offered.
"We decided to put on this lecture in order to help students understand the economic fluctuations," said Le. From the turnout and the words of Rawlings, it looks as if Le has accomplished his goal.
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