The mess behind the mess

1
DAILY KENT STATER watch. read. listen. react. www.KentNewsNet.com Monday, October 6, 2008 The independent student newspaper of Kent State University WEATHER Searching for KSU’s next top model Kent Interhall Council held a competition as part of Sextoberfest to determine who graces the cover of “Sex Stories” magazine. PAGE A3 Mostly cloudy with a slight chance of a shower. HI 64, LO 43 Extended forecast, PAGE A2 NEWS INSIDE Well, have you registered to vote? The deadline to register is 9 p.m. tonight. You may think we’re drilling this into the ground, but this is your chance to be heard. PAGE A4 OUR VIEW Suede’s out, but looking forward Now that he’s off “Project Runway,” Suede is looking to the future and teaching 11 Kent State students the tricks of the trade. PAGE A6 NEWS Remembering Robby Stamps Thirty people gathered in the Student Center to remember one of the nine students wounded on May 4 who died this summer. PAGE A3 NEWS DAILY POLL Do you plan on voting for homecoming king and queen? Log on and vote at KentNewsNet.com. >>On Friday we asked you if you went to see Jack Han- na’s animals in the Kiva. Out of the 21 who voted, 38 percent said they forgot to go, 24 percent said snakes scare them, 19 percent said yes, and 19 percent said no, they don’t like animals. SCHEDULE 5:30 P.M. NEWS 6:30 P.M. NEWS CONTENTS For Your Information PAGE A2 Police blotter PAGE A3 Forum PAGE A4 Classifieds PAGE B3 Sports SECTION B KSU keeps above problems on Wall Street Officials watch market closely Ben Wolford Daily Kent Stater As Wall Street trembles, shud- ders and otherwise quavers, Kent State remains unshaken but poised, university financial officials said. Stock market values dipped sharply amid bank failures last week and since then, Kent State’s finance team has been watching the univer- sity’s roughly $150 million worth of shares with increased vigor. “Yes, our investments are hurt- ing, of course,” President Lester Lefton said. “But we’re still doing better than the S&P because we have some alternative investments that don’t track the stock market.” Those alternative investments have kept the university relatively safe, said Gregg Floyd, vice president for finance and administration. He said tuition won’t rise any more than it would have. And even budget cuts — what Floyd said would be the first line of defense if things turned too sour — aren’t on the horizon. Even so, university officials are keeping close watch on Kent State’s stocks. Associate treasurer David Young said he checks share values if not by the hour, then daily. Fifteen minutes after the House of Representatives passed the $700 billion bailout of the financial sys- tem Friday, Young already knew about it and knew the Dow Jones industrial average had already lost almost 200 points. THE MESS BEHIND THE MESS EVERY DAY, ITS IN THE NEWS: STOCKS PLUMMETING, WALL STREET FAILING, PEOPLE LOSING JOBS AND HOUSES, Congress passing a bailout plan that’s supposed to give the economy a boost. This mess didn’t just begin in the past month. It’s been in the works for more than a decade. Here’s a look at some events that contributed to the economic failout of 2008. VOTE REGISTERED TO ? If you think you’ve registered but haven’t received a confirmation from the Board of Elections, go to the University Library reference desk and register again. The deadline to register is 9 p.m. tonight. If you plan to vote in Ohio, check your registration status at www.sos.state.oh.us. Economic crisis moves from the TV to the classroom Many professors are talking about Wall Street’s woes during their classes Bo Gemmell Daily Kent Stater The current financial crisis and bailout plans are making their way from news headlines to Kent State classrooms. Some professors are expanding their curriculum to include discussions of current events, especially those concerning the subprime mortgage crisis. Because of its connection to his class, economics assistant professor David Vera said he devotes an average of 10 min- utes per class to discussing the financial news or showing students other media. “It allows me to intro- duce a topic,” he said. “Some things going on in the economy are directly linked to a model I’m going to talk about in class.” Vera uses current events most in his Intermediate Macroeconomic Theory and Policy class, but he also mentions them in Principles of Macroeconomics. Sophomore exploratory major Kyle Sholtis said he learns about issues facing the nation’s economy in a microeconomics course. He said assistant professor Curtis Reynolds discussed the weak economy in addition to his lec- ture. “He explained it well,” Sholtis said. “I just couldn’t com- prehend all of it.” While today’s economy has a direct connection to classes in the economics department, it’s also being incorporated in other fields. Aerospace studies professor Lowell Bailey said he usually talks about a current event each time his Defense Studies I class meets. Bailey last discussed the economy with his ROTC cadets when the Dow Jones industrial average dropped more than 700 points on Sept. 29. Bailey said he averages about five minutes discussing cur- rent events during the senior-level class because he wants the students to “start thinking outside of college life.” It allows me to introduce a topic. Some things going on in the economy are directly linked to a model I’m going to talk about in class. DAVID VERA ECONOMICS PROFESSOR See CLASSROOM | Page A7 CountMore.org identifies the nation’s swing states Nicole Stempak Daily Kent Stater Out-of-state students may have more of a say in the upcoming presidential election than in-state students. A new Web site, CountMore.org, shows college students where their vote will count more. According to the Supreme Court’s ruling in Symm v. U.S., students have the right to vote in either their home state or school state. “College students are in the unique position of being able to vote in their school state or their home state, and CountMore. org helps them figure out where their vote Making out-of-state student votes count Candidates compete for the crown >> One tough weekend for Kent State sports. On Saturday the Flashes lost the Wagon Wheel for the second year in a row. SPORTS | SECTION B College students are in a unique position of being able to vote in their school state or their home state ... MATT LERNER CHIEF TECHNOLOGY OFFICER FOR FRONT SEAT makes more impact” said Matt Lerner, chief technology officer for Front Seat, a civic soft- ware company and incubator. Front Seat launched CountMore.org in September. CountMore.org factored in the 2004 election results and the number of electoral votes to determine where students should vote and the most important swing states. See VOTE | Page A7 During the Clinton administration in the 1990s, the banking industry was deregulated. This means banks took more risks with their money into the new millennium. In 2001, central banks around the world were forced to put additional liquidity (assets that can be turned into cash quickly) into the financial systems. This forced interest rates to plummet to historic lows during 2003-2004. Because of this, investors trying to get some sort of return took greater risks than usual. People who weren’t credit-worthy were tempted by low interest rates to get mortgages. Banks wanted to keep lending because they made money from the interest rates. The people who weren’t credit-worthy were then not able to pay their mortgages, and banks weren’t making money from the loans they gave out. The banks that gave out the mortgages split up the money, packaged it and sold it off to investment firms. These are called mortgage-backed securities. Wall Street institutions then couldn’t pay off these mortgage-backed securities they used as collateral for increased debt. Companies such as American International Group (AIG) that issued insurance policies on debt were over- whelmed. Soon, banks had more debt and fewer assets, so they froze credit. Investors were fearful of the market and unwilling to trade. They got rid of stocks, and banks became trapped in a cycle of declining value. NOW: The Treasury wants to buy bad assets from banks to break the cycle. The government passed the bill Friday to lend $700 billion to banks. This proposal would buy the bad debt and hold it until the system stabilizes. The money will help banks to begin lending to each other again, but it may take some time to jump-start the economy. THE BOTTOM LINE: No one truly knows or understands what would be sufficient to stop this mess. Sources: Ron Stolle, assistant professor of finance; John Thornton, associate professor of finance; Lauren Fine, practitioner in residence. Information compiled by Kristina Deckert. KENT STATE INVESTMENTS AT A GLANCE: $330 MILLION IN TOTAL INVESTMENTS. $150 million in equities. $60 million in short-term investments. $120 million in other alternate investments. LYNDSAY ELLIOTT Nickname: Lynds Hometown: St. Clairsville Sponsoring organization: Phi Sigma Pi National Co-ed Honors Fraternity Major: Public Relations with a minor in Applied Conflict Management Honors and activities : Kappa Tau Alpha National Honor Society, Phi Sigma Pi National Co-ed Honors Fraternity, National Society of Collegiate Scholars, Dean’s List, Trustee Schol- arship, Kent State Relay for Life Publicity Chair, Public Relations Student Society of America, Fashion and College of Education, Summer Kent Stater reporter, Donate Life Ohio “Do It Now” College Competition See INVESTMENT | Page A6 ILYA POKLAD Nickname: none Hometown: Gaithersburg, Maryland Sponsoring organization: Allyn and Clark Halls Major: Finance Honors and activities: two-year resident assistant at Allyn Hall, American Association of Airport Executives, University Orientation instructor, Habitat for Humanity My dream job: to be an airport manager at an international airport My best stress reliever is: going to the Rec center Best memory at Kent: getting my private pilot’s license at Kent State’s airport during my freshman year ANASTASA WILLIAMS Nickname: Stas Hometown: Cranberry Township, Pennsylvania Sponsoring organization: Kent Student Ambassadors Major: English Honors and activities: Honors College, Kent Student Ambassadors, Undergraduate Student Government Allocations Committee, First Year Experience Student Instructor, campus tour guide, Washington Program in National Issues 2008, Leadership Excellence Award Recipient My dream job is: to be a sports attorney My best stress reliever is: listening to music, working out See COURT | Page A7

description

This was another A1 where I had the opportunity to write the story and create the page. I wanted students to understand why the economy fell apart, so I wrote an alternative story form to (hopefully) help them better understand it in "college kids'" terms. Although it didn't have a lot of art, I think the page turned out fairly well.

Transcript of The mess behind the mess

Page 1: The mess behind the mess

DAILY KENT STATERwatch. read. listen. react. www.KentNewsNet.com

Monday, October 6, 2008 • The independent student newspaper of Kent State University

WEATHER

Searching for KSU’s next top modelKent Interhall Council held a competition as part of Sextoberfest to determine who graces the cover of “Sex Stories” magazine. PAGE A3

Mostly cloudy with a slight chance of a shower.HI 64, LO 43Extended forecast, PAGE A2

NEWS

INSIDE

Well, have you registered to vote?The deadline to register is 9 p.m. tonight. You may think we’re drilling this into the ground, but this is your chance to be heard. PAGE A4

OUR VIEW

Suede’s out, but looking forwardNow that he’s off “Project Runway,” Suede is looking to the future and teaching 11 Kent State students the tricks of the trade. PAGE A6

NEWS

Remembering Robby StampsThirty people gathered in the Student Center to remember one of the nine students wounded on May 4 who died this summer. PAGE A3

NEWS

DAILY POLLDo you plan on voting for homecoming king and queen?Log on and vote at KentNewsNet.com.

>>On Friday we asked you if you went to see Jack Han-na’s animals in the Kiva. Out of the 21 who voted, 38 percent said they forgot to go, 24 percent said snakes scare them, 19 percent said yes, and 19 percent said no, they don’t like animals.

SCHEDULE5:30 P.M. NEWS6:30 P.M. NEWS

CONTENTSFor Your Information PAGE A2Police blotter PAGE A3Forum PAGE A4Classifieds PAGE B3Sports SECTION B

KSU keeps above problems on Wall StreetOfficials watchmarket closelyBen WolfordDaily Kent Stater

As Wall Street trembles, shud-ders and otherwise quavers, Kent State remains unshaken but poised,

university financial officials said.Stock market values dipped

sharply amid bank failures last week and since then, Kent State’s finance team has been watching the univer-sity’s roughly $150 million worth of shares with increased vigor.

“Yes, our investments are hurt-ing, of course,” President Lester Lefton said. “But we’re still doing better than the S&P because we have some alternative investments

that don’t track the stock market.”Those alternative investments

have kept the university relatively safe, said Gregg Floyd, vice president for finance and administration.

He said tuition won’t rise any more than it would have. And even budget cuts — what Floyd said would be the first line of defense if things turned too sour — aren’t on the horizon.

Even so, university officials are keeping close watch on Kent

State’s stocks.Associate treasurer David Young

said he checks share values if not by the hour, then daily.

Fifteen minutes after the House of Representatives passed the $700 billion bailout of the financial sys-tem Friday, Young already knew about it and knew the Dow Jones industrial average had already lost almost 200 points.

THE MESS BEHIND

THE MESSEvEry day, it’s in thE nEws: stocks plummEting, wall strEEt failing, pEoplE losing jobs and housEs, Congress passing a bailout plan that’s supposed to give the economy a boost. This mess didn’t just begin in the past month. It’s been in the works for more than a decade. Here’s a look at some events that contributed to the economic failout of 2008.

VOTEREGISTERED TO? If you think you’ve registered but haven’t

received a confirmation from the Board of Elections, go to the University Library reference desk and register again. The

deadline to register is 9 p.m. tonight. If you plan to vote in Ohio, check your registration

status at www.sos.state.oh.us.

Economic crisis moves from the TV to the classroomMany professors are talking aboutWall Street’s woes during their classes Bo GemmellDaily Kent Stater

The current financial crisis and bailout plans are making their way from news headlines to Kent State classrooms.

Some professors are expanding their curriculum to include discussions of current events, especially those concerning the subprime mortgage crisis.

Because of its connection to his class, economics assistant professor David Vera said he devotes an average of 10 min-utes per class to discussing the financial news or showing students other media.

“It allows me to intro-duce a topic,” he said. “Some things going on in the economy are directly linked to a model I’m going to talk about in class.”

Vera uses current events most in his Intermediate Macroeconomic Theory and Policy class, but he also mentions them in Principles of Macroeconomics.

Sophomore exploratory major Kyle Sholtis said he learns about issues facing the nation’s economy in a microeconomics course. He said assistant professor Curtis Reynolds discussed the weak economy in addition to his lec-ture.

“He explained it well,” Sholtis said. “I just couldn’t com-prehend all of it.”

While today’s economy has a direct connection to classes in the economics department, it’s also being incorporated in other fields.

Aerospace studies professor Lowell Bailey said he usually talks about a current event each time his Defense Studies I class meets. Bailey last discussed the economy with his ROTC cadets when the Dow Jones industrial average dropped more than 700 points on Sept. 29.

Bailey said he averages about five minutes discussing cur-rent events during the senior-level class because he wants the students to “start thinking outside of college life.”

“It allows me to introduce a topic. Some things going on in the economy are directly linked to a model I’m going to talk about in class.DavID vERaeconomics professor

See CLASSROOM | Page a7

CountMore.org identifiesthe nation’s swing states

Nicole StempakDaily Kent Stater

Out-of-state students may have more of a say in the upcoming presidential election than in-state students.

A new Web site, CountMore.org, shows college students where their vote will count more. According to the Supreme Court’s ruling in Symm v. U.S., students have the right to vote in either their home state or school state.

“College students are in the unique position of being able to vote in their school state or their home state, and CountMore.org helps them figure out where their vote

Making out-of-state student votes count

Candidates compete for the crown

>>One tough weekend for Kent State sports. On Saturday the Flashes lost the Wagon Wheel for the second year in a row.

SPORTS | SECTION B

“College students are in a unique position of being able to vote in their school state or their home state ...

MaTT LERNER chief technology officer for front seat

makes more impact” said Matt Lerner, chief technology officer for Front Seat, a civic soft-ware company and incubator. Front Seat launched CountMore.org in September.

CountMore.org factored in the 2004 election results and the number of electoral votes to determine where students should vote and the most important swing states.

See VOTE | Page a7

During the Clinton administration in the 1990s, the banking industry was deregulated. This means banks took more risks with their money into the new millennium.

In 2001, central banks around the world were forced to put additional liquidity (assets that can be turned into cash quickly) into the financial systems. This forced interest rates to plummet to historic lows during 2003-2004. Because of this, investors trying to get some sort of return took greater risks than usual.

People who weren’t credit-worthy were tempted by low interest rates to get mortgages. Banks wanted to keep lending because they made money from the interest rates. The people who weren’t credit-worthy were then not able to pay their mortgages, and banks weren’t making money from the loans they gave out.

The banks that gave out the mortgages split up the money, packaged it and sold it off to investment firms. These are called mortgage-backed securities. Wall Street institutions then couldn’t pay off these mortgage-backed securities they used as collateral for increased debt.

Companies such as American International Group (AIG) that issued insurance policies on debt were over-whelmed. Soon, banks had more debt and fewer assets, so they froze credit.

Investors were fearful of the market and unwilling to trade. They got rid of stocks, and banks became trapped in a cycle of declining value.

NOW: The Treasury wants to buy bad assets from banks to break the cycle. The government passed the bill Friday to lend $700 billion to banks. This proposal would buy the bad debt and hold it until the system stabilizes. The money will help banks to begin lending to each other again, but it may take some time to jump-start the economy.

THE BOTTOM LINE: No one truly knows or understands what would be sufficient to stop this mess.

Sources: Ron Stolle, assistant professor of finance; John Thornton, associate professor of finance; Lauren Fine, practitioner in residence. Information compiled by Kristina Deckert.

Kent State inveStmentS at a glance:

$330 million in total inveStmentS.

$150 million in equities.

$60 million in short-term investments.

$120 million in other alternate investments.

LYNDSaY ELLIOTT

Nickname: Lynds Hometown: St. ClairsvilleSponsoring organization: Phi Sigma Pi National Co-ed Honors FraternityMajor: Public Relations with a minor in Applied Conflict ManagementHonors and activities: Kappa Tau Alpha National Honor Society, Phi Sigma Pi National Co-ed Honors Fraternity, National Society of Collegiate Scholars, Dean’s List, Trustee Schol-arship, Kent State Relay for Life Publicity Chair, Public Relations Student Society of America, Fashion and College of Education, Summer Kent Stater reporter, Donate Life Ohio “Do It Now” College Competition

See INVESTMENT | Page a6

ILYa POKLaD

Nickname: noneHometown: Gaithersburg, MarylandSponsoring organization: Allyn and Clark HallsMajor: Finance Honors and activities: two-year resident assistant at Allyn Hall, American Association of Airport Executives, University Orientation instructor, Habitat for HumanityMy dream job: to be an airport manager at an international airportMy best stress reliever is: going to the Rec centerBest memory at Kent: getting my private pilot’s license at Kent State’s airport during my freshman year

aNaSTaSa WILLIaMS

Nickname: Stas Hometown: Cranberry Township, PennsylvaniaSponsoring organization: Kent Student AmbassadorsMajor: EnglishHonors and activities: Honors College, Kent Student Ambassadors, Undergraduate Student Government Allocations Committee, First Year Experience Student Instructor, campus tour guide, Washington Program in National Issues 2008, Leadership Excellence Award RecipientMy dream job is: to be a sports attorneyMy best stress reliever is: listening to music, working out

See COURT | Page a7