As the world faces uncertain economic times due to COVID-19, the University of Pittsburgh at Bradford is offering an online summer course that covers financial scandals and crises.
Assistant professor of finance John Crawford will be teaching the course, which is making its online debut at UPB.
“This is a very special topic that’s important to me,” said Crawford, who just completed his seventh year at the university and also serves as a city alderman for Olean, N.Y.
The class begins June 22 and runs through Aug. 1, and will look at previous financial crises such as the dot-com bubble and 2008 housing bubble, and also use those prior instances to look more closely at the current economic uncertainty in the world.
Crawford has taught the course in-person overseas in Germany through an exchange program in previous years.
“The concept behind (the course) is looking at the history of corporate scandals, as well as economic patterns of panics, manias and crashes, and trying to provide a real keen understanding of these events,” Crawford said. “What failures, be it in corporate governance at the business level or at the governmental level, has led to or exacerbated these situations? Obviously, it’s not only to study these situations, but ideally to learn from them.”
Now, as the novel coronavirus pandemic grinds economies to a halt and puts life on pause, Crawford feels there could be another crisis coming, and in fact, felt there was one potentially on the way even before the pandemic.
“My major concern, where I truly felt the next collapse would come from, would be from massive amounts of debt,” he said. “Not just the national debt we carry… but when you look at individuals, we are sitting on a situation where we have more credit card and consumer debt — such as mortgages or student loan debt — than ever before. I truly believed that the next major collapse or crisis would come from people’s inability to keep making payments.”
And while that certainly still looms as a concern, the coronavirus has taken its toll on economies.
“I thought the next crisis was coming. Maybe, to a certain extent, the health crisis triggered a correction,” Crawford said. “It probably triggered some pullback as we were nearing 30,000 with the DOW. It’ll be interesting, and certainly we don’t know where we’re going next.”
To that end, Crawford has considered three scenarios for the nation and world moving forward: a best case, worst case and most likely.
In Crawford’s best case scenario, the summer months and warmer weather cause the virus to dissipate, and restrictions are lifted and there’s no resurgence in the fall. In that scenario, things return to “normal” by 2021 and the world rebounds relatively quickly.
In the most likely scenario, according to Crawford, the virus continues to a degree, but markets manage to remain stable at where they are now, and a rebound takes about three years.
And then there’s Crawford’s worst case scenario, in which the virus resurges in the fall and a vaccine takes until sometime in 2021 to develop. In that case, markets continue to shrink to the tune of 3-5%, and it snowballs.
“If we go 10-12 months of such uncertainty, you’ll see a lot of businesses shutter, and as more shutter, more people are out of work, and there’s less income into the economy, and it’s a deflationary cycle,” Crawford noted. “Layoffs and unemployment lead to lower consumer spending, and less spending means less demand for products, which means lower sales, which means firms and businesses lose more money, and then they lay off more people. That’s the worst-case scenario.”
But, Crawford pointed out, “It’s all predicated on how the virus spreads and how it acts.”
And all of it ties into what Crawford will be teaching this summer.
“Some of these (students) will go on to manage money for people, so it would be helpful if they could recognize these various patterns,” Crawford concluded.
