As we struggle to deal with this financial tsunami, it is painfully obvious that the global financial crisis we are enduring today is rooted in a breakdown of personal responsibility, exacerbated by the dominance of greed over common sense,” said Fidelity Group Chairman and CEO Anwer Sunderji.
With the theme of “Global Crisis: From Disaster to Painful Recovery”, the conference’s presenters this year were entrusted with a slew of questions, including: How will we recover from this disaster? What price will we pay? What can the new Obama administration do? How should our plans for the future change? What do we need to know as we move into a new year and a new reality? And what have we learned from all this?
True to tradition, they did not disappoint.
Keynote speaker, business professor Charles Calomiris tracked the elements that pushed the US into a recession and led to an international financial crisis. He identified the US government mandate to increase home ownership and federal regulators turning a blind eye to clear problems inherent in the real estate and financial institutions as key factors.
Fellow speaker Todd Buchholz was optimistic about what will happen this year, predicting the US is already feeling the worst of the recession.
“But I think we will see an upswing, signalling the start of a recovery, in time for back-to-school shopping at the end of the summer,” he said. “When the US starts the upswing, it is also likely to be the locomotive that pulls along other countries.”
He spoke of how each country recovers and the degree to which they will vary.
Noted Congressional scholar Thomas Mann said he believed the US public did not have a lot of confidence that economists knew how to get the US out of the financial mess.
He noted the world needs the promise and high expectations of an Obama presidency as much as the US needs it.
“I’m upbeat that the political system has a chance to lead us out of this mess rather than producing it,” he said.
Fellow speaker Nilesh Vasani, said the world has begun moving away from a credit–based financial system towards a cash–based one.
“We’re going through a cleansing of our financial system,” he said.
Mr Vasani was not optimistic about a quick recovery from the economic crisis, saying the US Government had no choice but to step in and try to rectify the situation, although the current stimulus package would not be enough to prevent unemployment rates from rising and the GDP from falling.
Adding his take on the commentary on the new Obama presidency, addressing the topic of the threat of increased threats against offshore centres, Barry Ritholtz advised the Cayman Islands to take a proactive approach with increased transparency and voluntary reporting.
“History shows that self–regulation is less stringent and less punitive than if it comes from on high,” he said.
A highlight of the day was a debate between the Leader of Government Business Kurt Tibbetts and Leader of the Opposition McKeeva Bush.
Moderator Gary Linford, a former regulator with the Cayman Islands Monetary Authority, said one of the conditions of his accepting the role was that the debaters could not be shown the questions in advance, which along with financial issues touched on population growth; trash; tourism; infrastructure commitments; youth and criminality.
Mr Tibbetts said he did not think criticisms from the financial industry about a lack of political commitment to the financial sector were fair.
“We have been engaging in consultations with the industry,” he said.
Mr Bush disagreed, saying: “The government hasn’t done enough. Innovation has not taken place. Legislation hasn’t been put in place…We don’t have lobbyists in the UK or Washington, or in any of the places that matter,” he said. “A mere trotting out of articles in newspapers cannot help us.”
Mr Tibbetts sought to assure the audience that the current economic crisis would pass and that Cayman would survive.
“We’ve been through times like this before and… we will see times like this again,” he said. “It’s going to take all of us to see our way through these times; and we will get through them.”
Mr Bush was more specific in what needed to be done.
“We need an economic recovery plan,” he said. “We need a list of policy changes; we need a list of fiscal changes.”