David Backus '75 Hosts NYU Lecture for NYC Program

Program in NYC students with David Backus '75 and Professor Erol Balkan at NYU's Stern School of Business.
Program in NYC students with David Backus '75 and Professor Erol Balkan at NYU's Stern School of Business.

The students on Hamilton’s NYC program attended a lecture at NYU’s Stern School of Business, hosted by David Backus ’75, a professor of economics at Stern. The lecture covered topics from foreign exchange to the European crisis to the current fiscal problems facing the United States.


The lecture began with a brief overview of the Stern school and its graduate programs. At the direction of Professor Erol Balkan, the conversation quickly drifted toward current affairs, specifically the crisis confronting the Eurozone. Having discussed the topic in a group seminar the previous evening, the Hamilton students eagerly sparked a debate regarding the reparation of the crisis, and how to contain the Greek contagion.


Professor Backus then posed the question, “Does anyone understand the fundamentals of capital flows?” He proceeded to lecture the Hamilton students on the fundamentals of capital exchange in a global market, excitedly pulling out a dry-erase marker, quickly filling the board with graphs (a familiar sight to anyone who’s taken an economics course at Hamilton). Backus asserted that the trends in capital flows into and out of Greece closely mirrored that of Mexico prior to the Peso crisis of 1994.

Due to artificial market support from the European “troika,” Greece has not yet witnessed the severe dip in capital flows which afflicted Mexico in the 1990s, prolonging the inevitable downturn, Backus stated. He followed this statement by emphasizing that he does not have the answer to solving a Eurozone-wide monetary crisis. The bigger problem, according to Backus, would be stemming any sort of contagion from a Greek default in order to preserve the Italian and Spanish banks on the brink of disaster. Unfortunately, a one-size-fits-all solution seems beyond the grasp of Europe’s leaders, as the drivers necessary to heat up an Italian economy would have undesirably inflationary effects in Germany, and vice-versa.


Backus concluded the lecture on a comic note by stating that while the rest of the world watches the markets on the edge of their seats, praying for a financial reprieve, those in academia cannot help but find ourselves absorbed in the academic fascination of it all, a welcome silver lining for those willing to look for it perhaps.

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