Pimco, Frank Motech, Bank Of America discussed on KNX Programming
One degrees going up to the mid eighties. It's eleven sixteen back to Motech on money. Motech money continues as Frank Motech this weekend marks the tenth anniversary one of the biggest events of the two thousand eight financial crisis. The bankruptcy of investment Bank. Lehman Brothers, the largest bankruptcy in US history. It was a dramatic end for the one hundred fifty eight year Old Firm after weekend, which both Bank of America. Barclays pulled out of the Goshi to acquire Liman which lost billions of bad real estate, bats and the credit markets collapse. Continuing my conversation now with Dr Mohamed El Oriente, GV conomic adviser, Ali aliens and ten years ago. You will see oh pimco in Newport Beach. Give us your thoughts on this big ten year anniversary. So I don't think anybody can forget the weekend and years ago, if you were in the financial markets, I remember pimco where you were at the office all day. Some of us were in the office most of the night because we recognize that there was a lot at stake and not to be too technical. What was steak, what's what's called the payment and settlement system, the notion that for example, when you buy something off the internet, you're willing to give your credit card and gets charging beautifully. Even though whatever you both doesn't arrive until the next day or the day after we have a whole system built on trust trust that you can pay and trust that you then get whatever you paid for and following LeBron and especially follow it. The reserve fund which was a money market fund broke the buck, and Dan AIG people lost trust in the system and in each other. And when that happens, you get what's called a Sutton stopping when that happens you suddenly looking at the prospects of not just the great recession, but a depression multi-year, depression that is how close we got to it. In fact, we've got very close within days, according to officials who have told us what actually was going on at that time behind closed doors. We came within days of shutting down the backing system. So we have added a major catastrophe, and that is a positive thing. But unfortunately, once we stopped the crisis management face we didn't pivot to restoring high. And so we've had and she called a eight. Years of disappointing growth and eight years in which the inequality sector of income wealth and opportunity has got worse. So good news on the one hand, we could have done better on the other. And you've given this a lot of thought in a column for Bloomberg noted nine lessons from the global financial crisis. Can you briefly highlight those forests? Yeah. And I divided them up in terms of accomplishments in terms of fought, falls and unintended consequences so accomplishments or things like a banking system today is stronger. There's no doubt that the banks have more capital better behaved. And I doubt that the next crisis will come back existing the payment and settlement system is stronger. That's also good news. But there's been shortfalls lack of growth is a big one. It's one that has resulted in Las. Of social issues and loss of political anchor. And then you have the unintended consequences things like the big banks got bigger. So we used to have a big debate about too big to fail. We'll guess what? The big banks have actually gotten bigger than years after the crisis than they were before. And as much less flexibility to deal with the next turn. So it's really it's a mixed report. Caught the good news is that we notice solutions to the shortfalls and to the unintended consequences. The bad news is that that requires political actors to really step up to the plate and delivered. That means mainly congress. Where do we go from here? Muhammad. Do you see any storm clouds on the horizon, one always has to be careful? There's three or four things that we don't fully understand one. Is we know? I know that one central Bank can normalized can get out of the emergency regime have been in and the fed has done a really good job to deliver good for normalization. We don't know what's going to happen. When two other systemic team for the European Central Bank, and the Bank of Japan also talked to God. So if you have three central banks, suddenly it can foot off the accelerator and waking all together. It's not clear how the system reacts doctor Muhammed, Al Orion. The chief economic adviser Ali ons and former pimco, CEO, Newport Beach Muhammed. Thank you very much for your thoughtful analysis on this big ten th anniversary weekend of the financial crisis. And we really appreciate it. And look forward to talk to you again, very very soon. Thank you. It's always great to talk to you. Frank. Coming up, the two thousand eight financial crisis largely focused on the mortgage business. We'll take a look back at where we stand now straight ahead on Motech on bunny surveys.