Issue link: https://www.e-digitaleditions.com/i/56540
Crisis and Consequence bailout plan for the banking industry. Many financial neophytes learn for the first time about the London Interbank Offered Rate and how LIBOR affects everything from their mortgages to their business loans. The Dow Jones plummets, soars, and plunges again. Around the world, the Nikkei, the FTSE 100, and the DAX tumble and recover and slump again. These are perilous times for T he subprime mortgage market has a meltdown. Bear Stearns collapses. Lehman Brothers fails. The U.S. government loans billions of dollars to AIG—and then makes that sum look paltry by crafting a $700 billion everyone, from the C-suite banking executive to the teller at the local branch, from major stockholders with millions invested to ordinary citizens with a few thousand dollars in a 401(k), from small-town politicians to presidents and prime ministers. Colleges and universities are not immune from the ill effects of a troubled economy, but business schools can perceive one bright spot in the cloudy forecast. The economic crisis offers a fascinating real-life, real-time case study that teaches students how the market is supposed to work—and what happens when it doesn't. As the global financial markets go on a wild ride, politicians and economists scramble to put together rescue plans. Will they work? And what can b-school students learn by dissecting the crisis as it unfolds? 24 BizEd JANUARY/FEBRUARY 2009