Notes From A 2008 JFK Forum That Included Joseph Stiglitz And Robert Dugger From Tudor Investments | Exploring Markets

Notes From A 2008 JFK Forum That Included Joseph Stiglitz And Robert Dugger From Tudor Investments

Notes from a FORUM: Financial Re-Regulation: The Economics and the Politics -- A conversation with Richard Parker, Joseph Stiglitz, Jack Blum & Robert Dugger

Date: Wednesday, November 19 2008

Time: 06:00 PM

Location: John F. Kennedy Jr. Forum
Joseph Stiglitz: Professor, Columbia University; Robert Dugger: Managing Director, Tudor Investments; Jack Blum: Counsel, Baker Hostetler, LLP; Richard Parker: Lecturer in Public Policy, HKS

  • Dugger is a smart man, well spoken, and uses hand motions avidly to keep listeners attentive. 
  • Dugger said, our consumption has come before our production
  • Consumption is so necessary for us, that we needed to sell our assets. and, once out of assets to maintain our consumption, we dug very deep.
  • Our country is so cunning, that we were able to package these sub prime instruments, dress them up with insurance, and collateralized debt obligations and sell them in order to maintain our income for consumption. 
  • Subsequently, these dressed up packages were not "filet mignon" but rather "ground beef." And once that was found out, people stopped buying, and people realized the markets illusional and inefficiencies. Supply outsourced demand, money began evaporating everyday until we reached equilibrium. 
  • From G7 to G20 is a way to get countries to trust us again. USA is the cause of the sub-prime. 
  • The system needs more regulation. But people argue that more regulation will thus give countries with less regulation an advantage, and arbitrage will find its way.
  • Our spending though is outsourcing our revenue.
  • 4 great crises that lead to 4 great changes. Civil rights, men vs women, slavery, freedom of speech... next gov't intervention? 
  • A structured investment vehicle (SIV) was a type of fund in the shadow banking system. Invented by Citigroup in 1988. The strategy of these funds was to borrow money by issuing short-term securities at low interest and then lend that money by buying long-term securities at higher interest, making a profit for investors from the difference.
  • In 2007, the sub-prime crisis caused a widespread liquidity crunch in the CP market. Because SIVs rely on short-dated CP to fund longer-dated assets, they are frequently refinancing.
  • Lawyer took extreme notice of how corporations use certain tactics. They send bad debt to small island accounts and fake corporations within these islands.