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mojorising800
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Defaulting western economy-Impact on B-schools. 30 Jul 2011, 13:10
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I am not much of an economist but all this saga about the US Fed Reserve running out of funds and AAA accreditation being revoked is certainly taken US by storm.
Even worse situation in Europe when countries are just lining up in the defaulters list. Greece is already there.Ireland and Poland might join in soon.
With the Western economy facing one of its toughest times , what is the impact going to be on the B-schools in those regions.US and Europe have the best B-schools in the world and surely there must be some impact.
Can the experts please shed some light on this issue. :shock:
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mbasile
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Defaulting western economy-Impact on B-schools. 30 Jul 2011, 16:58
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Since the government doesn't offer grants and scholarships to graduate students like it does for undergraduates, I don't think there will be much of an impact. For undergrads, cuts in government spending will result in higher tuition and there will be fewer spots---increased competition.

If you're asking how the debt crisis and an almost certain downgrade of US treasury bonds will affect the schools themselves--nobody can say because the US has never been downgraded. As Mohamed El-Erian put it, we would be in the land of uncertainty. However, I would venture to guess that a downgrade from AAA to AA would cause a spike in interest rates (~50-100 basis points) and people, corporations, organizations, and institutions like universities can lose a lot of paper wealth. Hence, I can see a downgrade indirectly affecting university research, rankings, and admissions by diminishing the value of university endowments.
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Defaulting western economy-Impact on B-schools. 31 Jul 2011, 11:37
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mbasile
Since the government doesn't offer grants and scholarships to graduate students like it does for undergraduates, I don't think there will be much of an impact. For undergrads, cuts in government spending will result in higher tuition and there will be fewer spots---increased competition.

If you're asking how the debt crisis and an almost certain downgrade of US treasury bonds will affect the schools themselves--nobody can say because the US has never been downgraded. As Mohamed El-Erian put it, we would be in the land of uncertainty. However, I would venture to guess that a downgrade from AAA to AA would cause a spike in interest rates (~50-100 basis points) and people, corporations, organizations, and institutions like universities can lose a lot of paper wealth. Hence, I can see a downgrade indirectly affecting university research, rankings, and admissions by diminishing the value of university endowments.
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Will the default not affect the economy in a similar way the 2008 recession did? Will it not affect the companies recruiting patterns considering their business in the US might be affected?
I mean since the 2008 recession did not affect the Univ grants etc (At least i think it did not,please correct me if i am wrong) , the downturn still affected companies' recruiting patterns around the world.So many views for this post and ust one reply.Am i just being paranoid or people do not know how will it affect everyone?
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mbasile
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Defaulting western economy-Impact on B-schools. 31 Jul 2011, 15:02
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mojorising800
mbasile
Since the government doesn't offer grants and scholarships to graduate students like it does for undergraduates, I don't think there will be much of an impact. For undergrads, cuts in government spending will result in higher tuition and there will be fewer spots---increased competition.

If you're asking how the debt crisis and an almost certain downgrade of US treasury bonds will affect the schools themselves--nobody can say because the US has never been downgraded. As Mohamed El-Erian put it, we would be in the land of uncertainty. However, I would venture to guess that a downgrade from AAA to AA would cause a spike in interest rates (~50-100 basis points) and people, corporations, organizations, and institutions like universities can lose a lot of paper wealth. Hence, I can see a downgrade indirectly affecting university research, rankings, and admissions by diminishing the value of university endowments.
Will the default not affect the economy in a similar way the 2008 recession did? Will it not affect the companies recruiting patterns considering their business in the US might be affected?
I mean since the 2008 recession did not affect the Univ grants etc (At least i think it did not,please correct me if i am wrong) , the downturn still affected companies' recruiting patterns around the world.So many views for this post and ust one reply.Am i just being paranoid or people do not know how will it affect everyone?
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If you want just one reply, this is what will happen:

The US will not default. Republicans and Democrats will strike a deal in the next 30 hours and we will avoid default. There will be no recession comparable to the financial crisis of 2008. However, US debentures will be downgraded from AAA to AA. The rise in interest rates will be minor but, would slow down the economic recovery. I don't think we would see huge changes in hiring trends.
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Defaulting western economy-Impact on B-schools. 01 Aug 2011, 00:40
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mojorising800

With the Western economy facing one of its toughest times , what is the impact going to be on the B-schools in those regions.US and Europe have the best B-schools in the world and surely there must be some impact.
Can the experts please shed some light on this issue. :shock:
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I am not an expert on impacts of crises on b-schools. However, I have witnessed first hand how the most profound crisis in modern financial history influenced my school. From the admissions point of view, the number of applicants to Wharton in exploded, and competition intensified a whole lot. From the academic point of view, the school was quick to react and introduced new courses focused on the crisis, then it went on to overhaul the curriculum. Result: it is still a very cool school, and it is still hard to get in. :wink:
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Defaulting western economy-Impact on B-schools. 01 Aug 2011, 09:45
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All said and done. US should be in a good place by 2014 right? Right?