Local perspective on economic crisis

By Josh Holderbaum
Western Herald

(Brooke Klenow / Western Herald) Bill Johnston, president, director and chairman of the Greenleaf Companies, discusses “The Financial Crisis from the World to Kalamazoo” on Wednesday evening in the Schneider Lecture Hall.

What the world financial crisis means for Kalamazoo and why the crisis began was the topic of discussion in a lecture Wednesday.

The Haworth College 13th Annual Distinguished Speaker Series continued Nov. 19 with “The Financial Crisis from the World to Kalamazoo,” in Schneider Hall.

Western Michigan University alumnus and president, director and chairman of Greenleaf Companies, Bill
Johnston,  delivered the lecture. Johnston also owns the Radisson Hotel, employing around 1,000 people in the area and is a trustee of the Gilmore Car Museum, among other things.

Faculty and community members were allowed in the main lecture hall while around 85 students sat ready to watch the speech via live feed in a downstairs classroom.

“It’s great everyone is so good-natured about the overflow problem,” David Shields, Haworth College of Business Dean, said before introducing Johnston.

Before the lecture began, Johnston spoke to students for a few minutes.

“I’m sure you must be getting extra credit to be here, not for my wisdom,” Johnston said.

However, technical problems forced the students to fill in the remaining seats in the lecture hall, upping the audience to more than 300 people.

Christopher Korth, professor of finance and series director, introduced Johnston.

“The American economy is in a very traumatic situation,” Korth said. “The markets today plunged another five to six percent. The chairmen of the Big Three automakers are pleading their case in Washington. We’re all in need of understanding what kind of environment we’re now in.”

Johnston began by making light of the fall in stocks.

“Speaking to you now makes me feel like Hank Paulson or George W. Bush,” Johnston said. “The markets go down whenever I speak.”

Placing blame was set early in Johnston’s talking points.

“Depending on how you want to slice it there is a lot of blame to go around,” Johnston said. “What we should do is look at the contributors to those problems so we can learn from those mistakes and not repeat them.”
This is the perfect time for students to learn, however, Johnston said.

“Students have a wonderful opportunity because there are wise lessons to be learned,” Johnston said. “If we don’t learn those lessons, there are forces that will convince us to do so.”

Syndicator greed and investor greed caused the crisis to begin, Johnston said. Instead of building the market on funds and demand, masses of capital were used to build the market. The amount of money led consumers to question the worth of the market.

That greed lead to a capital and liquidity crisis that had been present but invisible to people following the markets.

“I always compare the crisis to a power outage,” Johnston said. “There is ambient noise all around us from the light. We don’t know how loud it is until the lights go off. Then we say, ‘Wow, that’s loud.’ That’s what happened in October.”

Johnston also touched on the possibility of letting companies fail.

“If you’re on the [Herbert] Hoover side of politics, you say, ‘Just let it fail, it was from the private market, the private market will fix it,’” Johnston said. “If you own a home, you probably don’t like Hoover anymore.”
Despite his expertise, Johnston also worries about when the economy will right itself.

“Structural issues like we have, such as excess debt, will take a long time to get through,” Johnston said. “The dichotomy in my business is ‘ know things aren’t going to get better in a hurry, but please let them get better in a hurry.’ And, of course, things don’t get better in a hurry. That makes the day go by very slowly.”

Johnston received a pair of WMU bookends from Korth after the event. A reception for Johnston was held in the Fetzer Center afterwards.

The next lecture in the series will be Jan. 21 featuring Brad Black, a company-reorganization specialist.

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Posted by HeraldAdmin on Nov 20 2008. Filed under Campus, News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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