Crisis a tool for teachers

Economy offers students real-world lessons

For college students soon to emerge into a job market that's worsening by the day, the current financial crisis is more than an abstract development confined to the financial services sector.

It's a harsh reality that could have a direct impact on their lives.

Already, it's seeped into the classroom. Professors are using the crisis as a teaching tool, and students are paying attention to difficult concepts they once might have shrugged off.

"It's given me material to excite the students," said Clarence Condon, economics professor at the College of Charleston.

Condon said he is seizing on shocking daily headlines to spark discussion and explain the principals of macroeconomics, which is the study of aggregated economic indicators, such as gross national product, unemployment, investment capital, inflation, savings and international trade.

Thanks to the current crisis, he can root his lessons in reality and motivate students to apply what they learn to daily life, Condon said.

Brian McGee, chairman of the Department of Communication at the college, teaches courses in advertising and speech-writing this semester. He said the crisis has insinuated itself thoroughly into his classrooms.

To teach advertising and marketing concepts, McGee had laid out several examples for students, but set most aside when the financial meltdown began to affect the way ads are perceived.

Banks, for example, capitalize on perceptions of trust, permanence and stability, he said. Then Washington Mutual failed.

In his graduate-level, speech-writing class, he used a hypothetical scenario — a run on the bank — as a subject for students to consider.

"As faculty, we understand what's going on with current events and how they will provide exceptional opportunities to illustrate course concepts," McGee said.

Steve Werdann, a 20-year-old College of Charleston junior studying international business and German, said the election is a topic for conversation in his marketing concepts course. They consider how the candidates sell themselves by explaining what they'll do to fix the economy, he said.

They are talking about unemployment rates and where in the U.S. the best job prospects are. They are talking about how the U.S. economy is dependent on the service sector and consumerism, and how the worse the economy gets, the less people buy, which worsens the economy more, making it harder still for consumers to spend.

At The Citadel, Mike Barth teaches his finance and risk-management students about the Dow Jonesindustrial average, the effects of a precipitous drop — or, rather, eight consecutive precipitous drops — and how this affects retirement plans, investments and the availability of credit.

"We do try to get them to understand what's causing these gyrations," he said.

Barth's colleague, Wes Jones, met with his graduate finance students the night the big bailout bill passed Congress, and that became the subject of conversation.

"Once the dust settles, there will be a whole lot to look back on and see how this whole thing has unwound," Jones said.

Sam Berry, another Citadel professor, said he's citing real-life examples of victims of the crisis: the local car dealer who can't get any subprime loans approved, who can only get about half of his prime loans approved and who can't secure any short-term business financing to help him keep his doors open. Or there's the private college in need of a bridge loan it can't get.

Telly Davakos, a 21-year-old from West Ashley and an international business and finance student at the University of South Carolina, said the first 30 minutes of his investment and portfolio analysis class is spent discussing the crisis and its impact on career prospects.

Not long ago, he was learning about short-selling securities, the process of selling borrowed stocks whose value is in decline hoping that when the stock is "covered" (i.e., purchased at a later date to be returned to the lender), it will cost even less than before.

A little after this lesson in risky investment maneuvers, short selling was temporarily banned.

"Things are changing so rapidly," Davakos said. "As you learn it, it's changing."

He was studying the 1980s and 1990s financial crises in Latin America, how price controls exacerbated the problem, how governments relied on petro-dollars, how they had huge debts and struggled to globalize their markets. When the Clinton administration had discussed a bailout package for Mexico, officials used terminology familiar to anyone paying attention to news reports today, Davakos said.

A month ago, he assumed the crisis was a short-term problem that would be resolved after the presidential election.

"But now I'm not so sure," he said. "I think we're going to be in it a little while longer."

Reach Adam Parker at 937-5902 or aparker@postandcourier.com.