Monday, October 06, 2008

The financial meltdown comes home

She may get some respect, but she is not likely to get a raise. Members of the USF faculty union held an informational picket recently.

Folks know their 401k plans are getting hammered as they watch the stock market tumble, but it is a little hard to envision what the "credit crunch" the media are yammering about might mean. The President of the University of San Francisco, a small Jesuit college, tried to explain it in a letter to his community today [emphasis is mine]:

This communication will come as no surprise! I write to you about the University's response to the widening economic crisis.

Vice President Charlie Cross wrote to you last week regarding the University's cash flow needs and our careful monitoring of that situation, including students' ability to pay their bills. This later consideration is critical, given that 95% of our operating budget comes from tuition, fees and room and board and that economic instability makes it increasingly difficult for families to afford college. Mr. Cross also pointed out the negative impact of the stock market decline on the University's relatively modest endowment [approximately $200 million before market]. ... we cannot completely insulate ourselves from the market's downward spiral.

Like virtually every household in the nation, the University suffers the effects of rising prices, tightening credit and wildly fluctuating variable-rate debt. There is an emerging consensus that we are at the beginning of a long story and must plan carefully for turns and twists in the plot as we work our way through an increasingly challenging situation. We must engage in the same belt-tightening that families are doing all across the country... The University will develop a graduated set of action steps that prepare it to respond to escalating financial challenges of increasing severity. While we remain hopeful about the future, we cannot allow ourselves the luxury of not preparing for the negative effects of a prolonged economic downturn.

Stephen A. Privett, S.J.

I'm not going to pretend I know what action steps they are imagining that will make up for a significant decline in student tuition payments as colleges loans dry up and families loose their savings when their investments plummet. I suspect the good President doesn't have much idea either.

That's the bind we're all in. We don't know and can't imagine what might protect us in a financial meltdown, either individually or collectively.

It would be nice if we had confidence that we have a government working for our interests. But we don't. We've had nearly 30 years of government pretending it worked for our interests by either ignoring the needs of most people or giving super-assistance to rich people. Can we claw our way to envisioning a democratic (small "d") government that weighs the needs of the people, and a frying globe, as of more importance than the needs of the lucky few?

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