One thing seems probable to me. The U.S. will lose its status as the superpower of the global financial system.
—Peer Steinbrück, the German finance minister.
Given the burden of debt that has accumulated, it’s hard to see the U.S. economy growing as fast as it did over the past few decades. There is a profound mood shift occurring.
—Niall Ferguson
They know its ability to turn around problems is really unmatched, historically. At the same time, they ask themselves, Will the United States get at some of the root causes that could determine its real strength over the next 10 or 20 or 30 years?
—Robert Zoellick, President of the World Bank, speaking of a prominent Chinese economist’s view on the US.
If you told me we were spending like crazy to build schools and send everyone to college, that would have infinitely different implications than borrowing like crazy to finance current consumption.
—Christina Romer, an economist at the University of California at Berkeley.
The political system does not deal well with gradual, long-term problems. It deals with crises, often imperfectly, but it does deal with them. The current experience makes the case.
—Peter Orszag, the director of the Congressional Budget Office
This morning I am casting that convention aside. I speak for all of us when I say that the Federal Reserve will continue to explore every avenue and consider every option to see the credit markets through the credit crisis…We can and we will restore order to the credit markets.
—Richard Fisher, Federal Reserve Bank of Dallas President, at an International Institute of Finance conference.
The excesses of financial entrepreneurship have been abetted by a kind of ”hollowing out” of the financial regulatory system.
…This regulatory fragmentation, and the loopholes it provides, has not been lost on Wall Street. The leading securities houses have all sought to increase their financial leverage by forming elaborate holding companies. To this end, they use creative, though permissible, accounting techniques to hide from public view their gross asset and liability structures.
…Under such a stiffened regulatory approach, Wall Street firms would probably be confronted with more stringent capital requirements and closer supervision of all the activities under their holding companies. With the loss of much of their franchise, the number and size of securities firms will eventually shrink.
In the more concentrated U.S. financial structure of tomorrow, conflicts of interest will flourish. This will invite governmental intrusion, less innovation and, ultimately, a more inefficient allocation of capital.
—Henry Kaufman: Gloom at the Stock Exchange
A Power That May Not Stay So Super
By DAVID LEONHARDT
Published: October 12, 2008
Britain overreached imperially. The U.S. has been doing it financially.
[Source for Uncited Quotes]
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