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Michael D. Hagedorn Vice Chairman Chief Financial Officer Chief Administrative Officer UMB Financial Corporation. The Making or Breaking of American Economic Prosperity. Making the case for a return to civility, honesty and integrity in business, politics, and the financial industry.
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Michael D. Hagedorn Vice Chairman Chief Financial Officer Chief Administrative Officer UMB Financial Corporation
The Making or Breaking of American Economic Prosperity Making the case for a return to civility, honesty and integrity in business, politics, and the financial industry.
Agenda Inside and outside the frame: The Great American Debt Crisis A sequel in progress: The Greater Global Debt Crisis Getting ready for our close-up?
“Cinema is a matter of what's in the frame and what's out.” Martin Scorsese
Inside the frame in 2008 Low interest rates and cheap capital Too much leverage Complex financial instruments Passive regulatory environment Shift from “debt load” to “monthly payments”
Total Credit Market Debt as a Percentage of GDP In 2008, $1 earned equated to $3.75 in U.S. debt
Total Household Debt as a Percentage of GDP In 2008, Americans earned as much as they spent
Long-Term Savings and Investment Trend American Savings Rate
Long-Term Savings and Investment Trend Household Equity to Debt
Outside the frame in 2008 • Capitalism’s role • Sovereigndebt levels • Credit-worthiness • Misplaced blame • Unintended consequences • Rushed resolution • Sound-bite mentality • Who’s really pays • “You have the wrong forgotten man! The forgotten man is the man waiting for the recovery that you are not delivering or that you are preventing.” • -From Hoover/FDR debate
Top Ten Movies About the Economic Crisis 1. In Debt We Trust 2. Capitalism: A Love Story 3. I.O.U.S.A 4. The Ascent of Money 5. Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders 6. Frontline: The Warning 7. American Casino 8. We All Fall Down: The American Mortgage Crisis 9. Capitalism Hits the Fan 10: The Story of Stuff
“By definition a sequel can't be original. So you've got to figure out what worked the first time around.” Barry Sonnenfeld American Movie Producer
Parent Brand Image What kind of society do we want?
In the frame now US Department of Treasury, Comptroller of the Currency Administration of National Banks
In the frame now US Department of Treasury, Comptroller of the Currency Administration of National Banks
In the frame now First mortgage loans, thousands Case-Shiller National Home Price Index SA 2006Q1=100
In the frame now Federal, state and local fiscal woes Consumer rebound falters Persistence of foreclosure crisis European debt crisis More extensive and costly regulation Government targeted spending cuts and possible QE3
Outside the frame now Lack of Integrity Macro structural issues that need to be dealt with will be painful, require more than a band aid. Lack of Civility Unrest and discourse, look at U.K. violence, rise in German nationalism, political demonizing on both sides rather than statesmanship. Lack of Honesty No government or politicians are being truly truthful about what caused the world’s financial problems and the painful solutions necessary to address.
“All right, Mr. DeMille, I'm ready for my close-up.” Gloria Swanson in Sunset Boulevard Gloria Swanson as Norma Desmond in “Sunset Boulevard” American Movie Producer DRAFT 20110822
“Democracy is doomed once the citizens realize they can vote themselves other people’s money.” • Francois-Marie Arouet, better known as Voltaire, French Enlightenment writer, historian, philosopher
200 Year Cycle ofGreat Civilizations Alexander Fraser Tytler • From bondage to spiritual faith; • From spiritual faith to great courage; • From courage to liberty; • From liberty to abundance; • From abundance to selfishness; • From selfishness to complacency; • From complacency to apathy; • From apathy to dependence; • From dependence back into bondage.
