Lawrence and Kansas will likely weather the current national financial crises better than other areas of the country, according to a panel of economists and banking experts.
Just how bad it will be locally isn't yet clear, the panelists said during a town hall forum Monday night at the Lawrence Public Library, 707 Vt.
"We're insulated to some extent," said Don Johnston, executive vice president of the northeast Kansas region for Intrust Bank, who was one of three panelists. He was referring to the financial problems on Wall Street, the $700 billion federal bailout and the declines in the stock market in recent weeks, all connected to housing market problems.
But a strike by Boeing Co. employees could have serious effects on the Wichita area, Johnston said.
The Kansas economy generally stays a steady course no matter what is going on nationally, said Mohamed El-Hodiri, a Kansas University professor of economics, also a panelist. Much of the state's economy is based on federal institutions such as the Leavenworth penitentiary and military bases. The state's agriculture industry also is strong right now, he said.
Local banks are in good shape and have money to loan, Johnston said.
Johnston, El-Hodiri, and Robert DeYoung, a Kansas University School of Business professor who is an expert on banks, said the nation could be in a major recession for some time before it starts to recover.
The three spoke to about 25 people at the library in a forum moderated by Sheyda Jahanbani, assistant professor of history at KU.
A recession is not the time to raise taxes, the past history of national financial crises have shown, DeYoung said.
"There's a time for tax increases but it's not when the economy is growing slowly," he said.
In the long run the national economy will improve, the panelists said.
"We've got to tighten our belts for a few years but in the long run we'll have growth," DeYoung said.
It is not known how Lawrence's manufacturing businesses will fare, Johnston said, but the community needs to build its industrial base to help it get through future economic blips without having to rely on sales tax issues, Johnston said, referring to the city's upcoming sales tax election. Neglected infrastructure problems are compounded by economic downturns, he said.
The financial system will eventually get corrected but panelists think more federal regulations will be needed to prevent a future crisis.
In the meantime, local residents shouldn't panic and instead stay patient. Don't withdraw money and hide it in a coffee can, Johnston said.
Other advice from the panelists included spending when you can afford to, borrowing money at low rates and staying away from adjustable rate mortgages.
"If you are working and have the opportunity to put money in a 401(k) (retirement plan) that is wonderful," Johnston said.
Public officials also should be held accountable for the policies that led to the current crisis, DeYoung said.
"That's something we can all do something about," he said.