Wall Street will face hard times, but they will be nowhere near as devastating as during the Great Depression, the United States under secretary for economic affairs told Fordham business students on Oct. 1.
“There are serious issues and the markets will unwind,” said Cynthia A. Glassman, Ph.D. “But will we get to the levels of a depression? I think not.
“The job market is tight,” she continued. “Historically, unemployment is not that high but it is probably higher than you’ve seen in your lifetimes. Things don’t always go up—there are business cycles, and we are in the middle of a down cycle. But things will go up, and there will be jobs. Remember that.”
In the meantime, Glassman said students should keep an open mind about their careers. “You may end up taking a job you didn’t envision,” she said.
The collapse of the housing market that led to problems in financial houses happened, according to Glassman, because “the incentives were wrong.”
“Money was cheap, interest rates were low. Borrowers who couldn’t afford mortgages took them,” she said. “Lenders made loans they shouldn’t have made and then resold them as a package and passed on the risk.”
Letting the government assume a portion of the bad debts, Glassman said, would help shore up key lending institutions so they can start the flow of credit again. It would also provide time to sort out where the bad debts are. Currently, Glassman said, it’s “hard to figure out” the depth and breadth of the bad assets.
“The worst thing [the nation]can do is to have a knee-jerk reaction to this problem,” added Glassman, noting that the current plan means most of the crisis management will be done by the next administration.
Glassman, a native of Brooklyn, was nominated for her position by President George W. Bush and sworn in on Oct. 5, 2006. As under secretary, she oversees the Census Bureau and the Bureau of Economic Analysis, which gathers economic data to calculate the nation’s gross national product. She is the principal economic advisor to United States Department of Commerce Secretary Carlos M. Gutierrez.
Glassman spoke as part of the College of Business Administration’s (CBA) Access Your Future Week, a series of events to expose students to post-college business opportunities by bringing in corporate representatives, business alumni and experts in the field to Fordham.