Uneak White's Personal Brand Exploration Presentation
This time is different
1.
2.
3. This Time is Different Syndrome
Syndrome Financial Crises are things that
happen to other people in
other countries in other times.
Past Crises
Types We do things better, we are
smarter and we’ve learned
Was it from our past mistakes.
Different
What’ve We’ll know about a crisis long
we enough before it happens.
learned?
4. The Great Depression 1929
• No World War is coming.
Syndrome
• We have great political
stability.
Past Crises
• Strong sustainable
Types economic growth by
exports.
Was it • Debt burden in
Different developing countries
were low.
What’ve • Relentless global
we optimism.
learned?
5. The Great Depression 1929
• Formation of Bubble.
• Accumulation of debts
• Shrinking money
supply by wrong
economic policies
• Stock market crash
• Banking crises
6. Latin America Debt Crises 80’s
Syndrome
• Commodity prices are strong.
• Low interest rates.
Past Crises
• Oil money is being recycled.
Types • Heavy investments.
Was it • Bank loans instead of bond
Different loans.
What’ve
we
learned?
7. Latin America Debt Crises 80’s
Syndrome
Past Crises
Types
Was it
Different
What’ve
we
learned?
8. Asia debt crises 1997
Syndrome
• Conservative fiscal policy
Past Crises
• Stable exchange rates
Types • High rates of growth
Was it • High rates of savings
Different • No remembered history of
What’ve financial crises.
we • Rise of Asian Tigers.
learned?
9. Asia debt crises 1997
Syndrome
• Bubble of “hot”
Past Crises money.
• Increase in US $
Types interest rate.
• Cutting peg to US $.
Was it • Crises of confidence.
Different
• Large withdrawal of
What’ve cash from Asian
we countries.
learned?
10. Latin America Debt Crises 90’s
Syndrome
• Bond debts (opposite of 80s).
• No desire to repeat 80s crises.
Past Crises • More democracies than 80s.
Types • Mexico in NAFTA
Was it
Different
What’ve
we
learned?
11. Subprime Mortgage Crisis 2008
Syndrome
• Powerful economy and world
Past Crises
domination.
Types • Rise in House prices.
Was it • Huge investment in Real Estate.
Different
• Loans for mortgage.
What’ve • Formation of Housing Bubble.
we
learned?
12. Greece Debt
Syndrome
• As part of a strong monetary union, a trust
Past Crises was maintained.
• Since it joined the Eurozone, it has ceded
Types control of monetary policy to the ECB and
can no longer print money
Was it • Greece had not a credible financial reporting
Different of its fiscal position.
• Two of its largest industries, maritime
What’ve shipping and tourism were hit strongly from
we the global economic downturn.
learned?
13. Greece Debt
Syndrome • If Greece were to default
on its debt payments it
Past Crises would amount to the
biggest sovereign default
Types in history, bigger than
that of Russia and
Argentina combined.
Was it
Different
• If Greece were to
What’ve default, it would raise
we fears that the crisis will
learned? spread to other Eurozone
members.
14. Types of Crises
Syndrome
Past Crises Crises Episodes
Types
External Domestic Banking Inflation Currency
Default Default Crisis and related Crash
Was it
Different Illiquidity
Domestic
Currency
What’ve Foreign
Insolvency
we Currency
learned?
15. I. Sovereign External Debt
Consequences
Syndrome
Past Crises Loss of economy reputation and trust.
Types Decrease FDI and investment run.
Was it
No access to international fund (Greece 1800s).
Different
What’ve Followed by Banking crises.
we
learned? High inflation and low growth.
17. I. Sovereign External Debt
Number of Defaults of
Country
Rescheduling since 1800
CANADA 0
CHINA 2
EGYPT 2
GERMANY 8
INDIA 3
INDONESIA 4
MEXICO 8
SINGAPORE 0
USA 0
All countries 250
18. I. Sovereign External Debt
Solutions
Syndrome
Cut lender heads (King Philip IV & knight Templars)
Past Crises
Types Force to pay by invasion or union (Britain and Egypt 1881,
US and Haiti 1915, Canada and Newfoundland 1936-1949)
Was it
Short term borrowing (for illiquidity crises)
Different
What’ve Improve economic performance
we
learned? Rescheduling (Russia with Odious debts)
19. II. Sovereign Domestic Debt
Syndrome Usually in domestic currency.
Past Crises
Usually long-term (50-80%).
Types
Comprises 40-70% of all public debts.
Was it
Different Since 1800 AD, only 70 defaults or rescheduling.
What’ve Too rare to have domestic default because it’s easily
manageable by inflation.
we
learned? Built up more rapidly after external debts (Argentina in
1982,1989, 2001).
20. II. Sovereign Domestic Debt
Solutions
Syndrome
Kings seize lands and cut heads (Philip IV and
Past Crises Knight Templars 1307)
Types
Debasement (with metal coins)
Was it
Different
Inflation (most famous solution)
What’ve
we
learned? Economy restructuring
22. III. Banking Crisis
Consequences
Syndrome
Past Crises Very sharp decrease in TAX revenues.
Types
High rise in sovereign debts (Spain 70s).
Was it
Different
Costly wave of recession (Japan in 90s until now).
What’ve
we
learned? Cause all other crises.
23.
24. IV. Inflation
Country Max % Inflation since 1800 Year
Syndrome or Independence
CANADA 23.8 1917
Past Crises CHINA 1579.3 1947
EGYPT 40.8 1941
Types GERMANY 2.22 * E 10 1923
GREECE 3.02 * E 10 1944
Was it HUNGARY 9.63 * E 26 1946
Different
INDIA 53.8 1943
INDONESIA 939.8 1966
What’ve
MEXICO 131.8 1987
we
learned? SINGAPORE 23.5 1973
USA 24 1864
25. V. Currency Crash
- Dollarization $$$
- Hysteresis
- Loss control of economy planning
26. Banking Crisis
Default on external
AND/OR domestic Currency crash
debt
Peak of bank crisis
Inflation crisis
(if no default)
27. Was it different?
The great
Syndrome depression
1929 Banking Crises.
Latin America External and domestic defaults, banking
Past Crises debts 80s crises, inflation crises.
Types Asian debt Currency crash, external defaults, banking
crisis 1997 crises.
Was it Latin America External and domestic defaults, banking
Different debts 90s crises, currency crash.
Subprime
What’ve Mortgage
crises Banking crisis.
we
learned? Greece debt
crisis Banking crisis, external default.
28. What’ve we learned?
Syndrome There’s nothing new except what’s
forgotten.
Past Crises
No country have ever escaped economic
Types crises.
Was it Crises are not different, only the approach
Different to solution is what makes the difference.
What’ve Economic sustainability is all about balance
we of all economic aspects.
learned?