DLD09 live

1. New realities: Reding, Weimer, Halusa

   Tags: best guesses· crisis· finance· world  -  0 comments

   (all quotes just roughly verbal)

   I will be covering the following panelists:
   Martin Halusa (Apax Partners)
   Viviane Reding (European Commission)
   Theodor Weimer (HVB)

   Moderation: Carlos Bhola
   
   (Celsius Capital)

   Andrea Vascellari, my colleague will cover the other three panelists. (I will link as soon as his post is up)

   Carlos: We will try to provide best guesses in dialogue with you.

   How did we get here?
   Viviane Reding: Was cheap money and lack of government regulation the problem?
   We can lead towards an equilibrium between control and a free market.

   Martin Halusa: Private equity has profited hugely from the banking market. The greatest achievment was bringning 900 Million Chinese out of poverty through US consumers. So this cheap money created the globalized market.

   Theodor Weimer: The cycle is going be so deep and so profound that it will ensue structural changes. Debt and equity costs will be not available, their cost will increase massively. Investment banking is gone. The profitablity will be lower. The revenues will be lower. We will have huge amouints of innovation necessary to make the financial sector profitable again.

   Attendant: The discussion seems too tactical to me. The unavailablity of credit is a mayor point.

   What have we learned?

   Martin Halusa: We go through a structural change but capitalism is not dead. It's driver is greed and that is not the case today. [Explains how much money was paid for one bank and what "real" companies you could buy for that.] The stocks are so low that the machine will start again.

   Viviane Reding: The used savings to give to startups and industry. About the subsidies: They are not to keep something alive for three years and then let it die. But all this is a very balanced equilibirum between subsidizing a new industry or subsidizing to keep something alive for political reasons.

   Globalization

   Carlos: Are we experiencing the direct effects of Globalization?
   The 37% who had most of the walth of the world will experience reduction in a process of balancing.

   Halusa: To fix the crisis the governments will have to take the bad aspects out of damaged banks. Then I think Globalization is unstoppable. As soon as the finacial crises is compensated Globalization will pick up fast. But this will take 2-3 years before this happens.
   We will have both deflation and inflation. The assets are about at triple of the values of the GDP. This needs to be more balanced. First there will be deflation and then inflation. I don't see any other way.

   Viviane Reding: Before Globalization and the crisis Europe was not as united as today. Our only way out is to take care of our intenal market, to reduce barriers and regulations. And we need to deal with climate change. Together with the new US president we can bring the world to a new decision.

   Weimer: National and particularist tendencies of countries or regions are a problem in this situation. We have tried to get China into global governace structures, This is very important if we want to make positive effects of Globalization stronger.

   Will there be further corrections in the Financial Market?
   Mayority says: yes.

   When will we see the markets to grow tremedously?
   2 years, 5 years, slow rise starting end of 2009.
   Not many believe it will start between in the next 2 years.

   US less or more attracive for foreign investment.
   Panel: less, less, less, more, less, more

   China less or more attracive for foreign investment.
   less, less, more, same, less, more,less

   Are companies that have performed in the past in good years, will they plateau?
   yes if they are nnovating, after 15 years all companies reach plateau, they are investing in the future, there will be 'new Googles', it depends

   Do the best innovation occur in down values?

   Martin Halusa: The Financial market was actually creating values, this is gone, other sources will have to be looked for. The ability to handle complexity is now necessary, and this will come and it will come through IT.

   Viviane: I am against subsidies and for investment in the future. and that is innovation. With this ageing society we will have to invest in the health system. When we start to come out of the crisis, this will be a suiccess stoiry coming up. The same is true for research and innivation in energy (?: sources) and energy efficiency. I see this happening in the end of this year and in the beginning of next year.

   Weimer: Universities will play a big role in applied reserach.

   

   Oliver Gassner
   How did the crises come about? What have we learned?

   January 26, 2009
   02:03 PM