Dr. Orlowski Speaks About Global Financial Instability

News Story:

By Meg Barone,
SHU Correspondent

FAIRFIELD, Conn. - In a week that sent the stock market on a wild ride, the National Association of Realtors announced that fourth quarter existing home sales fell in most of the nation and economists predicted the loss of thousands of state jobs this year, a Sacred Heart University professor offered words of advice and encouragement.

Lucjan Orlowski, Ph.D., a professor of Economics and Finance, delivered a presentation, titled "Global Financial Instability: Sources and Systematic Solutions,” at the 18th Welch College of Business Research Forum on Feb. 13 at Roncalli Hall. The forums address contemporary managerial and economic issues and Orlowski touched on the timely topic of the sub-prime mortgage crisis. He identified the crisis as one of the main reasons or the sources for the current financial market turmoil.

Dr. Orlowski, who is also an advisor to the Polish finance minister and the National Bank of Poland, said former Federal Reserve Chairman Alan Greenspan contributed to the problem by keeping interest rates very low, “therefore dragging down the value of the dollar in foreign currencies.” He added that recent rate cuts are counter-intuitive.

“All the financial market vicissitudes are not over yet,” Dr. Orlowski said, referring to the impending problems related to credit card debt, among other issues. He said he is optimistic though because people are recognizing the scope of the problem.

“Tighter regulation and supervision of financial institutions will not resolve the financial instability problems,” Orlowski added, “but their internal discipline and search for prudent strategies and policies will. Financial institutions should take a collective and collegial approach to risk management.”

“What he’s talking about affects our whole way of life, our whole future. What he’s addressing are things that are on everyone’s mind,” Prof. Dennis Sokol, executive in residence and clinical assistant professor of management, said.

Prof. Eunsup (Daniel) Shim, director of research for the Welch College of Business, said Dr. Orlowski provided wonderful insight and perspective on the root causes of the sub-prime crisis and how it contributed to global financial instability.

Lauren Rodriguez, a sophomore from Pound Ridge, NY, majoring in finance, said Dr. Orlowski’s presentation helped her better understand what is happening in the housing market.

“Whether you’re a business major or not, it would benefit you to learn a little bit about the housing market and mortgages, and how they have changed over the years,” Rodriguez said.