Financial Crisis, Banking Union and New Financial Regulation seminar

Peter Mogensens introduktion til seminaret:

Welcome everybody to our Seminar.

"The difference of being a US secretary of the treasury and a professor at Harvard University." (Larry Summers)

The financial crises is such a huge global thing. In Kraka we believe that we all should be committed to analyze how to prevent – or at least reduce the risc – of repeting all the mistakes. The costs of a crises like this are equally huge. From an economic point of view but certainly also from all those unfortunate people – in some countries entire generations of young people – who gets their lives devastated in the turmoil of the crises. To do all we can to prevent this from happening again is really what
drives us at Kraka. Therefore - the question we ask today is What kind of financial regulation should be adopted in order to improve financial stability without jeopardizing growth and employment. Are we on the right track? And what can we learn from experience – why don’t we have a banking-union already, and what is the message from history on earlier banking crisis?  

That’s why Kraka have taken the opportunity to put – yet another - Financial crises commission in place. We believe that this crisis is setting a new regime and has far reaching implications. We need all the eyes we can on it, in order to learn the lessons and understand the mechanics of the financial sector in depths.

It’s not about pointing out sinners, it’s about understanding the crisis and making sure that we do all we can at this point to minimize the chances that another crises, in the same shape and form, will occur again. Krakas financial crisis commission is independent of all political and sector interest.

We appreciate that we have persuaded professor Torben M. Andersen and professor Peter Birch Sørensen to take leading roles in the work we do, which not only guarantees the quality of the work’s being done, but also guarantees the independence of Krakas commission. Krakas commission on the financial crises is an open commission – you may call it a very large open workshop – and you will hear from us on a regular basis during the next couple of years. We want to debate, we want to be debated, and we want to turn every stone in sight – if we can? In that respect we are more than pleased to see so many of you here today, to what you may call our kich-off seminar. In Kraka we take that as a proof of our view, that certainly within the community of economists - but also in broader parts of our society - there are an interest, a curiosity, an eagerness to discuss and understand what really happened during these past years.

So thank you for joining us today. Before I introduce the first speaker of the day I would like to show you three quick slides – as food for thought. Just to underline a very trivial point: The Danish crisis reflects two things. A massive chock to our economy, coming from abroad. And a significant overheating of our economy, for which we are responsible our selves.

Følgende er forklaringer til Peters slides:

1 slide
Just to set the scene let us look this first slide. It shows the development in GDP per capita since 2003. As you can see, the impact on the Danish economy
following Lehmann, was significant. But the key problem seem to be, that growth have continued to be week in Denmark compared to our neighboring countries – such as Sweden, Norway
and Germany. There are several reasons for this, but one important one is our housing market. We had a “bubble”, the Swedes and the Germans did not.

2. slide
We have – just to illustrate this point – set up a very simple “what if” calculation – using the econometric model ADAM.
The question is the following: Employment in Denmark dropped by some 70.000 from 2007-2010. How much of this can be explained by the housingbubble (housingprices peaked in the late part of 2006) – and the major slump in our export markets in 2009 and 2010?

3. slide
As you see, these two factors accounts for a lion share of the problems in Denmark during the crises. Actually the entire drop in employment I 2007-2010 can be explained by these two forces.  This is of course a very partial calculation – many things have happened, and fiscal and monetary policy (lower ECB interst rates) has been extremely active, supporting the economy.

But it shows that domestic as well as foreign forces are important, if we want to understand what actually happened during the last ten years. We have to dig and keep digging until the indications of different economic answers, patterns regarding the financial sector, the legislation on it and the effects on the economy as a whole, turns into a more sound understanding, on which we can base our future setup in this country. For Kraka this journey has just started, and that’s why I’m delighted to give a special welcome to mr. Graham Bishop, who for decades - in different roles- has worked on issues regarding the financial markets vis a vis the European union.

Graham Bishop has played a key role in the 1990’s on preparing the changeower to the single currency in the EU. Mr. Bishop has worked as an adviser to the European parliament, the European commission and has taken countless other vital roles regarding the development of the financial setup in the European union.  Mr. Bishop has worked on the legal consequences in Britain regarding the findings of the British commission on the financial crisis, SO on that note –Graham – I’m delighted to give the floor to you, as our first speaker of the day.

Thank you for coming.

Klik her, for at se billeder fra dagens seminar: http://www.kraka.org/sites/default/files/billeder_fra_seminaret_til_hjem...