Buttonwood Gathering's Words from the Wise

I just got back from The Economist's "Buttonwood Gathering" in New York and thought I'd share a few of the more interesting (and, in some cases, quite enlightening) quotes (in no particular order) from the movers-and-shakers at the (well attended) conference:

Secretary Tim Geithner, United States Department of the Treasury:

Generally, we did not do enough. (Referring to the failure to address growing concerns over excessive risk-taking in the period leading up to the financial crisis.) [Editor's note: understatement of the year?]

Stephen Roach, Chairman, Morgan Stanley Asia:

Those who are looking for a "V"-shaped recovery are in for "a rude awakening."

The imbalances going into the crisis were large to begin with. Now, they are bigger than ever.

George Soros, Chairman, Soros Fund Management:

Bankers have too much power. (Referring to the hold that Wall Street has over Washington.)

The "globalization of financial markets is built on false premises: namely, that markets can be left to their own devices."

Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation:

Insured deposits are being used in ways that I don't like to see.

Wilbur L. Ross Jr., Chairman and Chief Executive Officer, WL Ross & Co.:

People were focused on "risk-ignoring rates of return." (Describing one of the things that went helped bring about the financial crisis.)

If regulators had taken the time to visit a Countrywide Lending office, they would have seen something akin to "a Wall Street boiler room," rather than a bank branch. (Referring to regulator's unwillingness to go out into the field and see what was really going on during the housing boom.)

Government is its own systemic risk in the mortgage market.

Lawrence H. Summers, Director of the National Economic Council, The White House:

The root of most financial errors is "when you try to do today what you wished you had done yesterday."

I can assure you that on Main Street, it is a very different conversation. (Referring to the contrast between the optimism on Wall Street and the more pessimistic mood of those struggling to get by in other parts of the country.)

It is not the administrations's view to bribe those who have been part of the problems we have experienced to do what is in the national interest. (Referring to the suggestion that banks and other financial institutions need financial incentives to support proposed regulatory changes.)

Jeffrey D. Sachs, Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management, Columbia University:

It was grotesque. (Referring to the fact that, despite its extraordinary size, the $62 trillion credit default swap market was essentially unregulated.)

This was a crisis made in the U.S. (Referring to the suggestion that China's export policies played a key role in creating the credit bubble.)

Niall Ferguson, Laurence A. Tisch Professor of History, Harvard University, William Ziegler Professor of Business Administration, Harvard Business School:

We are living though a gradual shift away from a dollar-centric system.

Is China the Germany of our time? (Referring to the combination of economic dynamism and growing nationalism that stoked the aggressive ambitions of Nazi Germany.)

The problem of being a declining empire doesn't have a solution. (Referring to the suggestion that a great many, if not all, of America's problems are fixable.)

Robert J. Shiller, Arthur M. Okun Professor of Economics, Yale University:

Look up 'bubble' in an economic textbook and it's not there. (Referring to the shortcomings of the traditional economic curriculum.).

People "are living in a 'pretend-and-extend' environment, waiting for the economy to recover." (Referring to the precarious state of the commercial real estate market and the wave of resets coming due between 2011 and 2013.)

Elizabeth Warren, Chair, TARP Congressional Oversight Panel:

The reason banks lost confidence in each other is because they looked at their own books. (Referring to the loss of confidence that roiled markets during the darkest days of the crisis.)

Ttwo of the bloggers I read on a regular basis were also at the event (which also meant I had the pleasure of meeting them in person), and they managed to make note of some of the little gems I missed.

From Rolfe Winkler, who blogs -- and, during the gathering, "tweeted" -- for Reuters:

Niall Ferguson, Laurence A. Tisch Professor of History, Harvard University, William Ziegler Professor of Business Administration, Harvard Business School:

History has acclerated. In ten years we'll realize this was the moment that power started to shift from West to East.

Stephen Roach, Chairman, Morgan Stanley Asia:

There is no exit strategy. [Referring to the question of when the current aggressively expansive monetary policy would be wound down.]

George Soros, Chairman, Soros Fund Management:

There is a general flight from currencies.

And from Adam Sharp, who publishes Bearish News:

Elizabeth Warren, Chair, TARP Congressional Oversight Panel:

What we have confidence in is the fact that big institutions will be bailed out. (In reply to a question about the importance of confidence.)

Diane Garnick, Investment Strategist, Invesco:

The credit crisis may be over, but the credibility crisis is just getting started.

Richard Bookstaber, Author, A Demon of Our Own Design:

Derivatives are the current weapon of choice for gaming the system.

Derivatives create risk, not protect against it.

There's plenty more at both sites. It's worth checking them out.

Comments

[The Geoffster:]

My favorite:
Elizabeth Warren, Chair, TARP Congressional Oversight Panel:
The reason banks lost confidence in each other is because they looked at their own books. (Referring to the loss of confidence that roiled markets during the darkest days of the crisis.)

Oct 19 08:39 PM