Some quotes that made the news last month... and some that didn't.
There has been a lot of introspection in the first month of the year, as America's bankers were called to account for themselves at the Financial Crisis Inquiry Commission, and world leaders gathered in Davos to consider where we go from here.
Tsk, bankers!
Clearly, some of these people just don't read our discussion boards.
Jamie Dimon, Chairman of JPMorgan Chase:
- "We just missed that housing prices don't go up forever."
John Mack, Chairman of Morgan Stanley, when asked if his bank had stress-tested for a fall in house prices:
- "No, that was one we missed."
Mack again, on the subject of sub-prime mortgages:
- "We did eat our own cooking and we choked on it."
I can't argue with this from Jacob Frenkel, Vice Chairman of bailed-out insurance giant AIG, calling for more transparency in financial markets:
- "What you see is what you get. If you don't see it, it will get you."
The bail-out
Warren Buffett opined:
- "The government has done a lot of good things for the economy, and net I'm a beneficiary, and Berkshire Hathaway is a beneficiary … but they cost us real money at Wells Fargo."
While Buffett is eager to praise the actions of governments during the crisis, others believe the markets should have been allowed to take their course.
Hedge fund boss, Hugh Hendry:
- "The bailout that our country orchestrated flies in the face of capitalism, it's not a capitalism that we recognise, and it has given capitalism a bad name and that's unfair. Because what we did was we socialise the provision of credit loss. The govt came in and said 'there will be no tears, we will write a big cheque here and no-one will be a loser'."
Where do we go from here?
Many see salvation in emerging markets. Mark Mobius, the Indiana Jones of the investment world, is typically bullish about developing economies, and in particular about Brazil:
- "Brazil's economy is more sustainable because they don't have to import anything. China has to import oil, iron ore and foods … Brazil is in a situation where it has tremendous resources. Not only mineral resources, but agricultural resources."
Hendry is not so sure, and explained his particular perspective to Evan Davis on BBC Radio 4's The Bottom Line:
- "I think [emerging markets] are a disaster waiting to happen ... we've had a splurge in bank credit in China."
- "The Chinese are not interested in the accumulation of wealth, the Chinese are interested in power, power over us; by selling us product, we send them our money, and we develop a dependency on the services they provide. That is their number one sovereign ambition and it's not profit."
PIMCO's Bill Gross is concerned about the effect of the bailouts on government finances, especially Britain's:
- "[British] Gilts are resting on a bed of nitroglycerine."
Arch-contrarian David Dreman takes a similar view of the US's finances, and has reportedly shorted its 30-year Treasury Bonds:
- "We're going to have some major inflation … the Fed really is in a box. It's forced to print money, but at the same time they know they shouldn't. It's an impossible situation ... There just doesn't seem any way out. I don't see how we're going to avoid that."
More from Padraig O'Hannelly:
Disclosure: Padraig owns Brazil (well, a tiny bit of it via an exchange traded fund).
