The certainty of uncertainty

September 26, 2008

Last year, in the heat of my first year of business school, I recall being told that the second year of Darden would be relaxed by comparison.

This is not entirely the case. If you were wondering why it took so long to update (over a month, a new record that I’m not proud of), this is it. Life has been very, very busy.

First year at Darden is intense, but it is predictable. Each day, I spent four and a half hours in class, an hour or two in company briefings, a few hours working on my cases, and another two or three hours in learning team.

Second year is different. At the end of the first year, I volunteered to be a second year career coach, the Vice President for Fundraising in the Consulting Club, and the University Judiciary Committee representative for Darden. I also scheduled four classes, including some notoriously complex courses. In short, being busy in the first year is part of the design. Being busier in the second year is different; it’s a choice. A masochistic yet rewarding choice to become involved in the school and its going concerns.

And, of course, there is recruiting, which starts very early in the second year. This year, the Career Development Center replaced second year company briefings with networking nights, where students can meet with several companies at once and discuss career opportunities in a relaxed atmosphere (with drinks!). It’s still a very professional event, but it’s superior to briefings if the company doesn’t have a lot of new information to present. A few companies have elected to hold off-grounds events, or to invite second year students to first-year events. This has also been an excellent opportunity to meet with these firms in a more standard setting and learn more about what has happened in their company over the course of the last year. In many of these companies, a year is a lifetime, and their message for potential future leaders may have changed quite a bit.

But the mood is a bit changed from last year. The struggles of the financial system has begun to weigh on recruiting of finance and banking-minded students. We are in a period of great uncertainty, a period that is almost scary to truly consider. The failure of Lehman Brothers and Bank of America’s purchase of Merrill Lynch will probably cost some of our most talented second-year students their full-time job offers.  The massive downsizing on Wall Street and at financial institutions across the country is flushing the market with talented young men and women, and they will actively pursue the very same opportunities that the Class of 2009 will seek.

How will this effect the rest of the economy? Will my classmates pursuing careers in consulting, general management, and marketing also be affected? Uncertain. But probably. For one thing, many of my banking friends are taking a second, longer look at consulting, and many are starting to make the move. This new crop of bankultants are talented, experienced, and will be very attractive to any consulting firm. And now, some consulting firms are reluctantly reporting a slowly emerging softness in key parts of their business.

And then there’s the bad news. Although I would love to see the $2,000+ per American citizen that a total of $700 billion represents not get spent buying loads of bad securities at inflated prices in order to inject liquidity into our financial system, I know that it is the only possible way to avoid an economic disaster rivaling that of the Great Depression. I know it because, finally, after many classes and a special faculty panel convened before a capacity crowd at Darden’s Abbott Auditorium on the subject, I understand how we arrived here. And I understand why we’re teetering at the edge. If capital markets freeze, it’s not just the banks, bankers, and consultants who will suffer. Everyday, otherwise healthy businesses will be unable to access credit. Not just credit they need to fund expansion plans and new hiring… they will be unable to secure funding to make payroll. They will be unable to pay their bills. They will go bankrupt. And our government and the Fed will be paralyzed to do anything at that point. Our very national security, so rooted in our economic health, will be imperiled. So, I guess we have no choice.

“Do we really want to play chicken with the Great Depression?” — Professor Peter Rodriguez