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University of Iowa News Release

 

Jan. 5, 2009

UI law center presents 'Global Financial Crisis for Dummies'

For visual evidence of just how bad the global financial crisis has become, visit the Web site of the University of Iowa Center for International Finance and Development. If you dare.

The page - in PDF form at  http://www.uiowa.edu/ifdebook/timeline/Credit_Crisis_Timeline.pdf -- has a meticulously detailed timeline of events leading up to the economic collapse, and it highlights news reports of every struggling investment bank, failed mortgage company, missed-earnings warning, lousy housing report, cut dividend, and various other portents of impending financial doom.

And that's just up to December 2007, before things really got bad.

"The timeline is pretty gripping reading for those who have an interest in the worst financial and economic crisis since the Great Depression," said Enrique Carrasco, a UI law professor and director of the center. So gripping and well kept, in fact, that it's now one of Google's top entries for the credit crisis timeline, surpassing even Wikipedia.

The timeline starts innocently enough: an item from June 2003 notes the Federal Reserve lowered the prime rate to 1 percent, its lowest point in 45 years.

Following that comes a 2006 notation that lenders made $640 billion in subprime loans that year, and that 20 percent of all mortgage lending was to subprime borrowers.

Then on May 5, 2006 comes what might be the first casualty of the crisis, when Merit Financial Inc. of Kirkland, Wash., files for bankruptcy. Sales had declined 40 percent, the owner said, and revenue was not enough to support the overhead.

After that comes 87 pages of financial news that's various shades of ugly.

"It's a great way for readers to get the bullet points of what's happened so far," said HeeJin Lee, a third year law student, one of the UICIFD's researchers and its managing editor. "It's easier to understand than most people think, and this is a way we can present the core of it for people who aren't financial experts to comprehend."

In fact, Carrasco started the UICIFD in 1998 for just that reason, to objectively analyze complex global financial and development issues with an eye toward readers who are not experts in finance. In the past, much of its focus has been on such topics as reforming the World Bank and International Monetary Fund, the economic future of Cuba, the impact of NAFTA and China's relationship with the World Trade Organization.

"Our research is specifically designed for people who aren't experts in these issues," said Lee. "This is a way for law students, many of them with backgrounds in economics and finance, to help make sense of international finance for people who become wary when others start talking in financial terms."

The students' research is compiled in an electronic book on the center's Web site that has grown to more than 300 pages in the past 10 years. In normal years, the center's student researchers spend the bulk of the year working, and then most of that work is placed on the Web site once it is complete.

With the latest edition, though, the researchers have had their work cut out for them to keep up with the headlines, and updates are frequent.

"This year's theme started as the global credit crisis, but now it's the global economic crisis, and it might change again," said Lee, the e-book's managing editor.

The timeline, which is compiled by law student Jason Cox, follows the economic waves around the globe by linking to news stories that report not just on events in the United States, but in other countries, too. It includes stories about how other governments have responded, and how organizations like the EU, IMF and World Bank have tried to slow the collapse.

The timeline includes links to the big stories, but also the small stories that got lost in the flood of bad economic news. One of those is a story about Bangladesh's micro-lending Grameen Bank has started loaning money to the poor in the U.S. to start their own businesses. Another reports about an attempt by the Bank of England to inject liquidity into the banking system by selling emergency bonds that failed because no one bought the bonds.

In addition to the timeline, the UICIFD tracks the economic crisis on a blog with weekly updates and commentary (http://uicifd.blogspot.com/). The center will also co-host a symposium with the law school's International Law Journal about the global credit crunch and economic crises on Feb. 20 in the Boyd Law Building.

The UI Center for International Finance and Development's general Web site can be found at http://ebook.law.uiowa.edu/ebook/.

STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Iowa City, Iowa 52242-2500

MEDIA CONTACTS: Enrique Carrasco, UI Center for International Finance and Development, 319-335-9059, Enrique-carrasco@uiowa.edu; Tom Snee, 319-384-0010 (office), 319-541-8434 (cell), tom-snee@uiowa.edu