Professor Giovanni Zanalda didn't know quite how timely his course on the history of financial crises would be when he proposed it last August. But, when the financial giant Lehman Brothers fell in September, Zanalda said he sensed history was in the making, so he revised the course to make room for current events.
"I changed the syllabus because I thought it was more interesting to focus on the current situation without losing -- what I think is a very important aspect of the class -- the historical perspective," said Zanalda, a visiting assistant professor of public policy and history.
The 18 slots for this semester's "History of International Financial and Monetary Crises" filled quickly. The Economics Department seminar consists primarily of seniors because they have priority over underclassmen in choosing courses.
In a recent class, senior Alex Berghorst gave a report on his paper about the stock market crash of 1929, which sought to amend the common view that the crash was only a case of irrational exuberance.
Citing economist Eugene White, Berghorst said that innovations in technology and management in the '20s provided a solid basis for investment optimism. He also said there were government policies prior to the crash aimed at reigning in investment borrowing, a practice that was driving up prices.
After class, Berghorst, a mechanical engineering major, said he doesn't plan to follow his father into the finance industry but still can apply what he's learning.
"When you see CNBC, Fox News and everybody talking about these different policy decisions and making these comparisons to the Great Depression -- I'm trying to gain a better understanding of what of those comparisons is really relevant and accurate," he said.
Through lectures, student presentations and class discussions, the course is making its way forward in time from the Dutch tulip bubble in the 17th century to the Great Depression and on to the current crisis. It brings to bear methods from history, economics and public policy to understand the particular set of circumstances leading to each crisis.
Zanalda incorporates current newspaper articles and multimedia tools, including Treasury, White House and Federal Reserve websites that track economic metrics discussed in class. One time, the class watched a live broadcast of Federal Reserve Chairman Ben Bernanke's testimony before the U.S. Senate Committee on Banking, which was replete with allusions to financial crises including the Great Depression and Japan in the 1990s.
"When we talk about the current crisis, it's interesting because we touch upon all the problems we'd been facing in the crises in the past," Zanalda said. "So, it's really like a huge experiment for the class."
As the seniors in the course finish their final semester, they are taking different lessons from the course.
Duke students listen to a discussion of financial crises. Photo by Megan Morr.
With a job lined up as a business analyst at Capital One Financial Corp., senior Zed Lamba said he's seeing how booms and busts are a longstanding pattern in business.
"Having looked at so many crises and crashes -- they're all so similar," said Lamba, an economics and computer science double major. "Basically a bubble or something of the sort develops through completely irrational behavior and the crash that follows is essentially just a correction."
Yisel Valdes, a senior sociology major, said taking the course has made her weary of placing blame for an economic situation that is so complicated.
"I think the most relevant question is who is stepping up to leadership because what we have seen in the crises that we have studied, there's usually one individual, or individuals, who are the architect of the solutions," she said. "So as I look at that, I am wondering about now -- who are the architects of our solutions?"