But in the end it does all come down to money. University endowments have shrunk. Alumni donations will surely drop. Less tax revenues will hurt government support of public universities. Industrial research labs may also take a hit if their corporate parents have financial difficulties.
Schools like Northwestern have structured their finances so they can weather short term shocks in the economy but a prolonged recession or depression will start to take its toll.
New faculty hiring will likely be the first victim in universities. Tenured professors may delay their retirement after taking a hit in their CREF accounts holding up slots for new hires. Unversities worried about their long-term finances may also slow down opening up new positions.
On the other hand we should see increased enrollments on every level which may push the need to hire more CS faculty. Computer Science has lost its lustre in recent years, but still reliably produces jobs and there is a flight to safe majors in times of economic turmoil.
People who have trouble finding a good job often go back and get their Master's while they wait out the recession. We should also get more people interested in Ph.D.s as alternatives dry up. My sources told me we have seen a major drop in Indian IIT graduates going on to Ph.D.s because banks have offered them high salaried positions. With the banking industry taking the biggest hit, we welcome those IITers back to academics.
Finally in every crisis, we look for someone to blame, and some blame the algorithms.
Somehow the genius quants – the best and brightest geeks Wall Street firms could buy – fed $1 trillion in subprime mortgage debt into their supercomputers, added some derivatives, massaged the arrangements with computer algorithms and – poof! – created $62 trillion in imaginary wealth. It's not much of a stretch to imagine that all of that imaginary wealth is locked up somewhere inside the computers, and that we humans, led by the silverback males of the financial world, Ben Bernanke and Henry Paulson, are frantically beseeching the monolith for answers. Or maybe we are lost in space, with Dave the astronaut pleading, "Open the bank vault doors, Hal."