Recession Watch ‘08: It’s On.
Now that we're officially in a recession and everyone's throwing around words like "death of the middle class," "what job market?" and "SPAM for every meal", perhaps you're having trouble keeping track of all the bad news. We're here to give you the rundown, Ivy-style. In this afternoon's installment of Recession Watch '08: Harvard is out $8 billion! Brown makes like Dartmouth and Cornell and imposes a hiring freeze! And Columbia looks to sell its private equity holdings (maybe)!
This morning, the New York Times reported that Harvard's endowment has lost $8 billion, or 22 percent of its value, in the last four months. In a letter to the deans, University President Drew Faust and Executive Vice President Edward C. Forst '82 said that the total loss in value will likely be closer to 30 percent by June, the end of the current fiscal year. Harvard's endowment is the largest in the country, and the $8 billion loss alone is larger than the endowment value of all but four other American universities (Yale, Princeton, Stanford, and MIT).
The Crimson says, "Yesterday's figure dwarfs Harvard's worst single-year endowment loss of 12.2 percent in 1974. The endowment has clocked only three years of negative returns, all under three percent, in the subsequent three decades." The Faculty of Arts and Sciences has already instated a hiring freeze, and expansion and construction projects, employee salaries and benefits, and "staffing levels" might be further affected. Faust and Forst declined to comment on reports that the University is looking to sell $1.5 billion of its private equity holdings.
Brown has joined Cornell and Dartmouth in delaying construction and imposing a staff hiring freeze, but, in a rare bit of nice news, also told students that the University would be flexible about outstanding balances and late payments. Princeton is cutting its 10-year construction budget by $300 million and delaying renovation and construction of new buildings, several indefinitely beyond the capital plan's 2016 end date. Other universities are following in Penn President Amy Gutmann's footsteps and donating part of their salaries to the schools. Columbia's PrezBo admits that the endowment has been hit but says that the school would "go out of business" before cutting back on need-blind financial aid. Like Harvard, Columbia might also sell some of its private equity assets.
In probably unrelated but interesting financial news, Princeton invested in Zimbabwe in 2006-2007 even as the United States and European Union were considering imposing harsher sanctions on President Robert Mugabe and his human rights-violating, food-shortaging ways.
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Read more: Brown, Columbia, Cornell, Dartmouth, economics, endowment, Harvard, money, Penn, Princeton, recession
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December 3rd, 2008 at 2:21 pm
Yale, meanwhile, is dropping millions on its new India project. Bad timing in so many ways.
December 3rd, 2008 at 3:44 pm
I prefer “The Panic of ‘08″ as Gawker puts it.
December 3rd, 2008 at 10:42 pm
@thatcornellguy — i don’t know why it took me SO long to realize that IvyGate really is sort of like a b-side Gawker. It’s just hard to be consistently funny or insightful at the age of 19 (this fully applies to me too).
December 4th, 2008 at 12:53 am
as much as i like to poke fun at harvard, this depresses me. it is sad that institutions of higher education are suffering. even harvard legitimately does good things for the world…
December 4th, 2008 at 8:50 am
Yeah, but at least it’ll shrink their inflated heads for a while. I just cannot see how they’ll ever survive with $28 billion going forward. OH THE HUMANITY! psh.
December 4th, 2008 at 11:07 am
Well actually it’s more of the problem that Harvard’s finance people fucked up than the actual drop itself…look at the percentage and not the actual number, or did your fugazy school not teach you that?
December 7th, 2008 at 3:04 am
^ At previous poster:
Well, 22% of $100 million is insignificant compared to 22% of 250 billion am I right. You look at both the percentage number and the actual value of the endowment. A screw up is a screw up. There is not point in trying to mask a mistake. Harvard messed up, it is happening to every school in the Ivy league and in the top 15 institutions around the world… Relax about it.
December 7th, 2008 at 10:02 am
Penn’s CASI beat Yale to India by a decade and a half anyway. And bless their little hearts