The largest economic descent since the Great Depression alarmed Washington D.C. and Wall Street yesterday, but experts say it won't affect Ball State University students - yet.
Ball State economics professor Cecil Bohanon said the ripples of the current economic downturn will not affect students unless they continue for multiple months.
"Students should take notice if this lasts three, six or 12 months," Bohanon said. "That's when we may see increased interest rates that will affect student loans. Job prospects many not be as rosy as they would have been, but it may be better to get it out of the way rather than delay it longer."
Monday afternoon the House failed to pass a bipartisan bill regarding a $700 billion bailout of the nation's financial system.
The market reacted with a 778-point drop in the Dow Jones industrial average. Monday's decline threw out about $1.2 trillion in market value, the first day of more than $1 trillion in history, according to the Dow Jones Wilshire 5000.
The result was a plunge of about 7 percent. On Oct. 28, 1929, - Black Monday - the Dow plummeted 12.82 percent, the largest economic fall that acted as a preview to the Great Depression. The stock market crash of 1987 saw a 23 percent drop. More recently, Sept. 17, 2001, recorded an 685-point fallout following the aftermath of 9/11.
Congress' failure to reach an agreement scared the market, Bohanon said.
"The market just doesn't like surprises," he said.
Monday morning many felt the bill was going to be passed by the Democratically controlled House. But, when the votes were cast, it resulted in an 228-205 vote against the pending legislation.
Republicans blame the vote's unpredictable turnout on a speech given by Speaker Nancy Pelosi prior to the vote. In the speech, Pelosi denounced President Bush's economic policies, an act that might have swayed multiple Republicans to vote against the bill.
Michael Hicks, director of the Bureau of Business Research at Ball State, said the current version of legislation has been rushed.
"It carries all the marks of a hurried piece," Hicks said. "As a consequence a lot of people thought it should take another day to think it over."
Republican Rep. Mike Pence voted against the bill. Multiple calls to his office were not completed because of a continuously busy phone.
Barry Welsh, Democratic challenger to Pence in Indiana's sixth district, said he would also vote against the bailout bill.
"I oppose the bill for different reasons than Mike Pence," Welsh said. "I don't think his 'no' vote will fool voters. They know I favor less restrictions instead of more. They know it's because I am more for the people, instead of his being more for corporations."
Senior economics and finance major Seth Hickle said the market has always recovered from tough times.
"Hang in there," Hickle said. "Wait for the right opportunity until you feel comfortable increasing position in any given stock."
With Congress adjourned until Thursday and 35 days until Election Day, Hicks said a newer version of the bailout bill might pass.
"Part of the reason the market didn't do well was due to uncertainty," Hicks said. "If a bill is passed, we might see a recovery. Right now we are just in a period of uncertainty."
Amanda Getchel contributed to this story.
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