 Thank you very much, Dermot. It really is a real pleasure to be here today. And I have to touch with the man to get here on time, or slightly behind time, even though we had to change planes in Paris. But when I was invited here to Dublin, I immediately said yes, but I couldn't get my time right. And the reason, of course, is very, very, very straightforward. I have to come see my old friend Patrick Honohan. We were a mutual admiration society when we were in the World Bank. He had the office just down near mine, and we used to debate a lot in the early 90s, when in a sense financial crisis was just beginning to appear in the emerging markets. Our then boss, a minute long, when he started digging into emerging markets, almost all the banking system there were bankrupt. And he hired me and Patrick, I think if I'm not wrong, although you came with Alan Gelb to think about these issues. And it was then that we began to realize that financial crisis has become global. And it is a little bit of the theme of today's talk. I think I do want to thank Brendan and Dai and Shane for inviting me. Shane put the title as Fixing Financial Regulation, Lessons from the Asian and Global Financial Crisis. But I asked the regulation to be changed to crisis, because as you know, regulation is part of it, but it's not all of it. And just to blame the regulators for the problems clearly is, you know, they have some responsibility, but in my view, not the main ones. And the issue is complicated, because it's global. And in a sense, it's structural. So now let me see how do I use this? Oops. Oh, just point. That's right. Yes. Right. We all have to start with a caveat. I think you all know about your crisis, and the European crisis. I claimed to be an expert on the European one, although I was in somewhat sense, I wasn't the governor, but I was the deputy during the Asian crisis when I was in the Hong Kong Monetary Authority. And to a large extent, there are no one-size-fits-all solutions that we need to understand, particularly at the national level. Each country has their own specific conditions, and you need to think about this. But the global issues have much more things in common. And so I want to fix on the global questions, particularly, and see what is in common to all these series of crises, particularly after 1971. And then draw on some of my experience in analyzing this, and then make a very important question. Do you fix the financial sector, or do you fix the real sector? And which is more important, and then make some suggestions. Now, my key message is basically, all financial crises are crises of governance. And we now see, and I don't need to repeat this, it's become a major political issue. Not a question of blaming, but a political issue, how to resolve, even though the roots of it may, and the roots of it, in certain cases, may have been political also. Now, the key message is that we are at an inflection point between the state and the market. And the ideology was that the market is always right, and mostly the market is right. But at some point of time, the market goes crazy. And at that point of time, the state has to step in. What is the right balance is a crucial issue. And my viewpoint is that we actually are looking at the 21st century problems with 20th century lenses and tools. And until we clarify that, we are in both what I call the fallacy of composition and collective action traps, which are systemic issues. This is not a partial problem. This is a systemic problem. And until you understand it's a systemic problem, you can't solve it. That's the primary message that I want to think. And of course, back to Keynes, he was the one who said that the difficulty lies not in new ideas, but escaping from old ones. And these ones are very difficult. Now as you know, in 1971, the gold standard was abandoned. And we need to understand why the gold standard was abandoned. The gold standard was abandoned because the global liquidity was constrained by the supply of gold. If the supply of gold doesn't increase, the world will go into deflation. It's a very simple that. And this is too painful for everybody since nobody likes deflation. And so they abandoned it, even though the United States retained its gold supply, but abandoned the link. And thereafter said, well, let's go away from fixed exchange rates towards a flexible exchange rate regime. And thereafter, if you really look at very carefully, Kindleberger was absolutely right. Financial crisis has been a hardy perennial. It's coming faster and faster, and larger and larger by scale. And the real reason is due to the famous carry trade, that globally we are arbitraging everything, and that we're not measuring the issues correctly. So we have now a huge moral hazard. It's not just the Godzilla's. I don't mind Godzilla's, but they grow as you know. They were discovered by the Japanese, if you've seen the film, through radio activity. And they just can't stop growing. And the question really comes down to what is the limit of the financial sector? And it's a question that Adair Turner in London is now asking very seriously. And it is a serious problem. This is my favorite chart. It's the McKinsey Global Institute 209, which shows that the world is highly interconnected, and where the two major hubs are, basically London and New York. And it's not surprising that given the very large size of Western European financial assets, that the crisis is highly interlinked between the United States and Europe. So the point that I really want to make that is the financial crisis, our systemic crisis. And as the point that I was trying to make, the book that I wrote in 1993 after I finished my stint at the World Bank came to a major conclusion that there are four steps or phases in bank restructuring. This is not crisis restructuring, but bank restructuring. I was concentrating on the banking issues. One of diagnosis, damage control, loss allocation, and changing incentives. And if you diagnose the problem wrongly, the prognosis is wrong. That's a very fundamental issue. The damage control, we've gone past that, but we are now actually in the most difficult part, which is the loss allocation, because that's politically the most difficult. And then we haven't even begun to change the incentives. That's the thing that I really worry about. Now, why are we in this problem? As you know, the Queen of England asked in a very nice way, why didn't we all see this? And our friends at the British Academy, God bless them, said, no, no, none of us saw it. And not just none of us in Britain saw it. None of us, all these bright guys around the world didn't see it. And I thought that was a bit of a cop out. We didn't see it because academic disciplines have become too specialized. We're drilling deeper and deeper. We're no more and more about less and less. And we assume the very simple economics expression, catarious parables, but actually catarious parables is wrong because it's all reflexive. It's all the feedback mechanism between the different silos. So if you really wonder what's the problem in any country, the most difficult part is how to knock heads between the different silos in the government departments who are all responsible for the same problem and it's somebody else's problem. And then at the global level, every nation says, this is not my problem, this is the foreigner's problem. And so we have a massive collective action trap in this regard. So Mervyn King was absolutely right. Global banks are global in life, but national in death. And when the banks grow seven times larger than GDP, in Iceland's case, 12 times, the nation can go bankrupt trying to bail it all out. And that's a fundamental problem. But in a sense, finance is still a servant of the real sector. And it's a reflection. And of course, all our economic models, those of who are very, very concentrated on the models, finance is an afterthought. You think about it, you model the real sector, and you worry about the finance a little bit later. But actually, we have twin crisis going on. We have both a financial crisis, which is a crisis of fiat money. And we have a global warming problem. And they have the same root over consumption of the global resources financed by over-leverage. I mean, borrowing is basically consumption today you pay tomorrow. That's essentially the name of the game. And if you just shuffle bits of pieces of paper, so long as other people are willing to accept it, you can consume based upon other people holding your paper. And of course, it can't deal with this. So we are in the most difficult part and we need to think about it. Now, I thought the easiest way to think about the financial system is what I call the five P's. The financial system, like every market, is our people's transacting products, which are property rights, right? Based upon a policy, which are all there, and depends upon processes. Now, people tend to forget because standard equilibrium theory assumes that feedback mechanism is negative. You go back to equilibrium. They forgot, like most engineers, most engineers would know that there is positive feedback in the system. And the system can go bigger and bigger until the system blows up, right? Which is the prosyclicality. I mean, the major debate about why I say economics of mainstream thinking is completely outdated is because it was muddled upon Newtonian physics. And we've gone into relativity. We've gone into quantum physics, which are all relative. And this mechanistic way of looking at the world, linear way of looking at the world is absolutely wrong. And of course, it depends upon platform. If the platform is wrong, if your payment system, if your clearing systems break down, your system breaks down. We're very lucky during this crisis that enough work was done before the crisis to fix the platforms. But if the platforms had also gone, I think we would have been in deep, deep trouble. Now, as you know, Kindleberger, writing in the 1970s about mania panics and et cetera, said that there were five causes for a crisis. Firstly, a displacement, then monitoring expansion, then overtrading, then revulsion, then discredit, basically the Fisher debt deflation. What was the 1970s displacement? It was basically the 89 Chinese and Soviet entry of the labor force into the world. That huge labor shock on top of financial liberalization, financial innovation, and globalization, created what was called the Great Moderation. And not to sort of criticize our central bank and friends, because I was a central bank, and Patrick still is. There were a lot of people who patented themselves. It was all due to central banking, a good monetary policy. I'm sorry, I beg to disagree. I think it was the real sector issues that people tend to forget. But that moderation allowed massive monetary expansion. And it began with the loose monetary policy in Japan, and then loose fiscal policy, and then it started spreading, causing this massive global credit card. And of course it was due to overtrading, and why it overtraded you no better than me. And now we're going exactly through that period of revulsion and the debt deflation. So I think, you know, Adair Turner uses these two charts very, very well. And if you go to his website and all his talks, you would see that it's all about the shock from an emerging market like Malaysia, which I grew up in. It was very simple to see. If Malaysia depended upon oil, I mean rubber and tin, and there was globally a demand for oil and tin, the displacement. There was a sharp increase in surplus of the current account, your foreign exchange reserves increased, money flows in bank deposits increased, the banks then began to lend, right? And if more money goes into the market, and traditionally people take that money and then say, aha, the country's becoming prosperous, let me put this into the stock market, let me put this into the property market. And the more they credit, they pour into it, the more the property rises, self-fulfilling, and then you have this boom that's ongoing. And then of course, you start overspending because you use the money to import, the foreign exchange then drains out, causing liquidity, and then the bus starts coming in. Now that's the old model. The new model is, of course, you have the global players like the hedge funds, whoever who says, aha, I can borrow at cheap interest rates, pump it into Thailand, and since Thailand's a very small market relative to the global leverage, the market can go up very, very fast. The more I pump in, the more it grows, I can't lose. And that's why during 1997, Hong Kong was called an ATM machine. These funds came in, ding ding, short sell you, scared the market a little bit, interest rate rise to defend the currency, and then the stock market collapses, your short wins, and if you devalue your short on the currency wins, you can't lose. Now where is the game that you can lose in this world? It's just asymmetric, right? But that's the problem. The problem today is that we have a mindset of managing national stability when globalization means that we can influence monetary policy when the capital flows can come in and go out easily. And so to a large extent, emerging markets face this problem, complain about these capital flows, but even post Asian crisis, everybody ignored it. And the Japan's lost decades was really due to these excessively low real interest rates. They thought on standard theory that if you lower interest rates to zero, you will revive growth. And for 20 years, they didn't. They pumped lots of money, putting concrete all over the place, as you know. They have more concrete in Japan than per capita and everywhere else in the world, and they didn't solve many things because all it did was finance, I'm sorry to say a little bit of pork barrel politics because of the nature of the construction business, and didn't solve their structural issues, right? Of course, the Japan's problems are much more complicated, but by bringing interest rates down to zero, the Japanese basically created a carry trade because the more you borrow the yen, right, on a large basis, the yen would devalue. The more you put into the whatever currency you want, South Africa, Iran, the Australian Dora, the Australian Dora would rise, and it's a double win, right? Your liability depreciates, your asset increases, and so when it reaches what you think the time comes is too much, you actually reverse. So when you reverse that trade, the foreigner gains, because you have better information, you see all this, guess who pays for it? The locals pay for it. Guess who's holding the baby? The locals hold it, right? So you know, the complexity of this global arbitrage is global gain and local pain. Which is another version of Mervin King's view. So the Asian crisis in a sense was the first 21st century network crisis. I think Kamdei Su called this, called the Mexican crisis, the first 21st century crisis, but it was a single country crisis. But the Asian crisis was actually very special because when it happened in Thailand, and I was the neighbor in Hong Kong, we didn't think that we would be affected. Not with Hong Kong's fundamentals, whereby there was no fiscal debt. Zero, I repeat this, Hong Kong had zero fiscal debt, okay? Foreign exchange reserves equivalent to nearly 40% of M1, right? And you think that Hong Kong dollar could be attacked? It was attacked. So the contagion effects were very serious. And when I did my analysis for that book, I suddenly realized my goodness, this is a network crisis. This is not a crisis of, in fact, the crisis happened in Japan. It was the losses in Japan that had to be distributed in some way. And of course, when the Japanese banks could not lend in Japan, they went to lend to their neighbors part of the Asian supply chain. And then during the crisis, as they got hurt in 1995, 1996, when they had their first bank runs, the banking crisis in Japan, they were the first to pull out their foreign liabilities assets. And in fact, so Asia suffered two capital withdrawals. One, the portfolio funds that ran because they thought that Asia was overvalued. And the other was the Japanese bank credit that was being pulled back. And the numbers were larger than most people thought. Now, to nearing the end of that crisis, when they attacked the Hong Kong dollar and the Hong Kong government intervened, nobody expected that within a few chain reaction that occurred, LTCM Russia and Brazil also happened. So the thing spread widely. Now there were mistakes that were made in Asia and I don't need to repeat it. Asia made the mistake and I'm sure you've seen elements of this, borrow short, invest long, borrow foreign currency, invest local currency, double mismatch. And when the thing reverses, instant collapse. But during 1997, 1998, carry trade became more and more strong. But the Asians took the tough medicine. I show this chart for you because when I started analyzing the Asian crisis as to say, what's the biggest indicator that would tell me that we're getting into crisis? In 2003, 2004, these numbers first came out with Giancarlo, is it Giancarlo? Mylesi Ferretti and Philip Lane are, I think Philip works somewhere around here, right? Yes, and that's right. They made this global balance sheet which is the net international investment papers and I got the tables and I did the calculations and I said, wow, you see exactly who went to the crisis during the Asian crisis? Anybody who had net foreign liability greater than 50% of GDP is instantly in crisis with a single exception of Korea. Look at what's happened in Asia, I mean in Europe, same issue, right? With the exception of Italy. But that's also contagion and to some extent, large domestic debt issues. So when you owe foreigners more than 50% of your GDP, it's a very, very good indicator. Now, it raises a fundamental question. Is finance the engine of growth or an engine of a bubble? That's the heart of the issue that you need to think about. And we all started, our colleagues in the World Bank did a lot of work about how finance was very, very critical. And today the World Bank or rather the IFC would say every country should have a stock exchange just like you have an international airport. And you should all imitate Citibank and your investment bank should all imitate Goldman Sachs and Hallelujah. Both fell into trouble. And now the emerging markets don't know what to do, right? Because their models have serious problems. So the question really is, what do we really care about? And that's where we're at an inflection point. Can finance, is there a social optimality for finance? And my answer is yes. When you overstepped it, you're in deep trouble. So where is globalized finance out of sync with the real sector? Look at this. Again, McKinsey's numbers, 1980, finance was only 108% of GDP. Today, average 400% of GDP, but in Europe, 555% of GDP, five times. Excluding derivatives. Including derivatives, 16 times GDP, right? Notional value. Even gross market values, roughly 40% of GDP. FX turnover rose from 1.2 trillion daily to 4 trillion daily. You think 4 trillion reserves for Asia is large. That's only one day's transactions, right? So on 200 over days of transactions, foreign exchange transactions amount to $1,000 trillion a year. That's huge amount. And with flash trading, it's instantaneous. This is the real problem. The financial markets move far faster than the real economy. And the real economy moves fast. I mean, even the real economy may even adjust fast faster than the mindsets of the people who can't adjust to this speed. So the market today says immediately, immediately that you're bankrupt. Can countries go bankrupt easily like that? And at a price like that? This is a real question of the tail wagging the dog. I seriously think that we've overgone. Now, why do we need to see this as a systemic whole? And suddenly I realized that my God, you really need to look at this systemically from a historical point of view because it's path dependent. You need to look at the structural issues. You need to look at the macro issues. You need to look at the micro issues. And it's all interconnected, right? First of all, what is the structural issue? The structural issue is today, you have government systems in which every day you are told to cut taxes because it's good for the market. And every day you're told you've got to reduce, increase welfare expenditure, increase expenditure, a lot of which is welfare expenditure because that's good for the people. But we come back to McCorber's statement, income one guinea, expenditure one pound, happiness, income one pound, expenditure one guinea, misery, right? And that's exactly where we're into. Now the macro problem is that the global reserve currency issue violates the Triffin dilemma. And I think you need to understand this because whoever issues the national currency has to provide the world with excess liquidity which by definition is a current account deficit and years of the Triffin dilemma means that you automatically get into a very large net liability position. You have advantage because you can pay your liability in your domestic currency but you can't pay it forever, right? So that imbalance is structural. And until we solve that structural imbalance we have a lot of problems. Now at a micro level all the incentives are to actually print paper and create credit so that we take money off the table and we leave the losses on a too big to fail basis for all the rest to pay up. That's the micro behavior problem which we haven't solved. And now we come to a loss allocation problem. Now the loss allocation means that when you've overspent you either ask the next generation to pay for this or you do it through inflation or you do it through deflation because everybody loses jobs. Take a pick. There are no simple solutions to this, right? That loss allocations either you can loss allocate to the foreigners but in a close world somebody has to pay. So either this generation pays or the next generation pays or you do it to contract. And the whole scheme financial engineering is a Ponzi scheme, right? It's, you know, you increase the leverage. The more you create the credit in the leverage system, right? Let me ask you a very simple question. I finally saw this. As you know, I think Patrick can confirm what this is true but this is a paper given by Claudia Boreo at BIS and Desayat who basically said that what happened during this current crisis and tie up with the subprime crisis was that actually Europe borrowed in dollars offshore and reinvested quite a lot in the shadow banking system in the United States. So that when the subprime crisis occurred there was a fair amount of losses for the European banking system. And then the European banking system also invested in sovereign debt. The expansion of the European bank system was very, very large. I didn't have the time to show you the numbers but the European banking system expanded far too fast. And therefore when the real interest rates on sovereign debt rose, the insolvency of the sovereign debt problem then infected the banking system and it's all tied up in that regard. But anyway, the shadow banking system as you know is the under-regulated investment banks, Fannie Mae's, Ginny Mae's, money market funds, et cetera that don't have reserve requirements and therefore actually can create money. And of course the New York Fed published the numbers that showed that at 207 the shadow banking system was larger than the regulated system. But all that credit glut, you know, in a sense lowered interest rate far more than the savings glut as it were. Okay, by arithmetic, the deficits of the United States was had a surplus in the surplus countries, largely China, Japan, and the OPEC countries. That's true, but the bigger impetus for global credit growth was the lack of control over the shadow banking system and the banking system itself. Now, if you then look at the way the accounting is done, if the more you print money, the more you create credit, interest rates go lower and lower, risk spreads go lower and lower. And guess what? Everything is today measured according to a discounted cash flow model. And that discounted cash flow model as interest rates goes down, the value of the financial asset increases. Hallelujah. Present value accounting allows me to take this upfront and put all liabilities below the line. I'm an accountant, I know, right? And so below the line means all of you, all of us are going to, so finally going to pay it, but 50% of bank profits are actually bank salary, right? More or less roughly, depends upon 30 to 50. And so I take the profits upfront, you all pay for it when I collapse. And that's the micro model, right? And then of course, it's bailout because every time the market begin to tank, there's so much pressure on the Greenspan put. So the central bank lowers interest rates, the market gets stable, but all you're doing is to postpone the problem and the financial engineering repeats the same game. So, and all this liquidity is illusory. And we know it, right? It is illusory because the more I reshuffle the paper, the more the liquidity is in the game. The higher the liquidity, the lower the interest rate, the higher the trading profits. But if the repo market begins to dry up for whatever reason, I begin to sell the underlying, right? The liquidity disappears overnight and liquidity is no longer a liquidity crisis, it's a solvency crisis. This is exactly what we're seeing. And of course, so central bank has no long, central banks have no longer become lender of last resort. It become the lender of first resort and the zero interest rate policy is just a pain killer. And of course, you can do greatest heritization to do this. And so, and these are of course the United States lessons from the bubble and the low interest rate and this is a serious issue. Now how serious is this? It's the global imbalance problem. I've described the global imbalance problem. Global imbalance problem is the rich countries, which are the deficit countries, are going through deleveraging, slower growth, devaluation, deflation. And then the emerging markets are surplus countries having inflation as a bubble, capital flows and reevaluation. And that sounds perfectly logical. But this is the heart of the problem. If suppose all this money that flows from the deficit countries which are reserve currency countries and they're growing at zero and the interest rate is zero, I borrow largely and I invest in emerging markets hoping that emerging markets would have an instantaneous adjustment. The law of one price will obviously work. The law of one price says that even emerging markets should have zero interest rates. Boom, they have a massive bubble and a massive crash. Exactly what happened in Japan between 1985 and 1990. So we either have imbalanced growth hoping that some emerging markets can pull everybody else out of the game or we have balanced recession or balanced deflation. And that's the heart of the strategic issues that we face in the world today. And if you take this table, if you study it very carefully, the G4 countries, basically US, Euro, yen and sterling account for 55% of world GDP in 12% of world population runs the current account deficit and owes the rest of the world, excluding Japan 6.4 trillion or 20% of their GDP, right? And if you look at those financial assets behind below the line, you would realize that a lot of their so-called financial assets are financial liabilities. And so what you see in Europe today is as the real interest rate, just as the real interest rate undershot, that means real interest rate did not reflect the true fundamentals, today the interest rate has overshot. I cannot believe that large countries within Europe should be paying more than 67% real interest rates because everybody knows that beyond that level, any country with 100% that GDP ratio is technically insolvent. And this is the fallacy of the analysis. Companies can go bankrupt. Countries don't because it's a massive political game. It comes back down to Keynes's point about the economic consequences of the peace. If you force a country to pay more than it can bear, you have very large political consequences. And in Germany's case, as you know, two world wars were fought for that. So I don't have a technical solution for this because this is a political issue, but it's something that you best thinking about. So look at what has happened. Thailand is, I think, two or three times larger than Greece, right, certainly in 97. And it was 17 billion, the rescue amount was 17 billion. Korea, which is, what is it, 500 billion economy had 55 billion. But Greece alone had 150 billion, more than eight times what was required for Thailand. And if you add all the others, it's significantly larger. And then of course, if you add or include the other countries, we're talking about amounts greater than the trillion dollars now. Now it's not that Europe is not a rich economic bloc. The numbers are becoming larger than even single countries can deal with. And maybe even economic blocs can deal with. This is not a, you know, this is a global issue. So, you know, just want to say that until we fix the problem, this problem will escalate in size. And my personal view for what it's worth, leveraging, if you recall what happened when the Bank of England borrowed a billion pounds in 1991 or 1992, that was the end of the game. Of the defense of sterling, right? So in a sense, the heart of the problem is that central bank reserves are not leveraged. The market can attack a currency with huge leverages and options and forwards and futures. These are, you know, this is just not sustainable. Now the risk of efforts require, you know, both funding and enforcement. Now the Asian crisis basically revealed to us that the IMF was not allowed to be the lender of last resort, okay? Actually, if you really look at it, the Asian crisis was a dollar crisis. All the countries in East Asia were basically trading in dollars, right? The big mistake was the Japanese lent in yen, but the income was in dollar, so there was a huge unhedged position. And, you know, that's why the yen was highly volatile. But that's, you know, a longer story. But since the IMF is not allowed to be a lender of last resort and the Fed didn't want to be, ultimately, you adjusted through the pain. And that's why the fund insisted on all the cutting the fiscal, you know, raising interest rates, everything that was opposite is actually what was done, you know, during this crisis. Right? And, but the IMF has a major role. It is the enforcer of last resort. It is the reason why I in Hong Kong objected to the Asian monetary fund. As you know, the Asian countries were exactly like Europe today. Asia as a whole, East Asia didn't have a fiscal deficit, didn't have a very large fiscal deficit, didn't have a large current account deficit. There was a lot of savings, right? So the Japanese said, well, you know, if North Asia or all of us put our chip, you know, a foreign exchange together, we can establish an Asian monetary fund. Guess what? The Europeans objected, the Americans objected, the IMF objected. And, you know, we were a dilemma. So I thought about it and I said, can you build a fire engine during a fire? I mean, you know, can a fire engine be effective? You can't because, you know, if it's not effective, you might as well rely on the older fire engine. That's the IMF. You know, this is the... And then the second question is, even if we accept the IMF, how do we discipline our friends? You know, we Asian economies were exactly like European, we're part of the family, right? You know, you're a rich country, I'm a rich country, the crisis proved otherwise, but it doesn't really matter. But you know, if I lend to you, how do I discipline you? It's a very difficult task. It's better to have an honest cop, completely independent, and the IMF was the right institution. They overdid it, as you know, in the early part, and we complained about that, but eventually it reversed its policies, and that was when it was done. So to a large extent, my conclusion was the multilateral solution is better than the regional solution. So what are the options for addressing this global financial stability problem? Well, in my view, the European problem is actually a global crisis. It needs a global solution. It's not something, you know, that everybody can say that you can't deal with this. The real question is, to what extent can there be a multilateral funder, right? Like the IMF, who has both the carrot and the stick? At the moment, it doesn't have the carrot, it's only a stick. So nobody, you know, nobody's, you know, maybe that's why they weren't brought in in the first place, because we thought we had the carrots, right? Now, but the, any IMF program must have a standstill exit program. Now this is Armageddon, as far as the financial market's concerned. How can you have a standstill? That was exactly the problem in Thailand, in Asia. In Thailand, when the, you know, I just, it's in my book, but I'll share this with you in 30 seconds. You know, we in Hong Kong had 100 billion dollars of reserves. We were willing to put a billion to assist Thailand. And we pulled together, you know, the Australians, the Singaporeans, you know, China, et cetera. Everybody gave a billion, you know, to help Thailand, right? And, but the, and so we got the 14, 15 billion together in August, 97. But the US Treasury insisted on transparency. And so, voila, the central bank revealed that they had 34 billion worth of foreign exchange exposure. 17 versus 34, the rift doesn't add up. The amount of money that's available to aid is not enough to the liabilities. Guess what, everybody ran, right? That's completely understandable. So, the result is, you know, and I rang up, you know, Stan Fisher, who was my old boss in the bank, and I said, why can't we do this? Why can't we have a standstill? He said, well, you know, there's no mechanism, a legal stand-eye to do this. And of course, they only introduced a standstill in Christmas 97 when South Korea began to default because everybody realized that in South Korea defaulted, you know, the Western banks that lent to South Korea would also have huge holes in their balance sheet, right? And then they imposed the standstill. And that's how, you know, with the standstill, the markets eventually began, you know, to heal. So, I'm a great believer in some kind of standstill arrangement to sort out the assets and the liabilities side and then, you know, sort it out. Can you remember the standard method of solving banking crisis is a bank holiday? And the reason why banks, you know, get into trouble is that of instantaneous currency flight. I also argue that a global financial transactions tax is the only way to put some friction into the wheels and to actually to prevent excessive leveraging through derivation, you know. The reason why there are no hard budget constraints on financial derivatives because financial derivatives are actually figments of imagination. If you believe they are worth that amount of money, they are worth that amount of money. If you don't believe they're worth the amount, they're worth zero, okay? And I use a very simple illustration to do this. And pardon me, what's a derivative? Is a piece of paper that represents a real good. Every time I make one derivation, I take something. If you believe it's worth four bucks, it's worth four bucks. At the end of the game, I have a 1632, 64 and no water in this bottle. That's financial engineering for you. Right? I mean, you know, that's the hard issue that we need to tackle. So we need to get out of this short-termism. You know, private greed is good. We need to work on long-term collaborative issues. It's not about risk shift. It's about risk share. Risk never disappears. We're all in the same planet. Your risk is my risk, right? You think contractually, you can pass the risk to me, but if I collapse, the risk go back to you, right? So I think, you know, the whole mindset of the financial engineering has got real problems. And we need to get back to balance. So actually finance is useful in its early stages, but beyond a certain stage, and I don't know where, finance becomes socially, you know, non-optimal and could be in fact, you know, a burden on the real sector. So ultimately, you really come back to a very fundamental difference between the way Asians think about the problem. In Asia, there's no question, finance is a servant of the real sector, not its master. Okay? And that explains why in Asia, there is so much regulation. Now, it may be overdone, but at least it has, you know, we've learned some very, very major problems of this. Now, how do you solve the problem at the national level? And I'm not here to give you advice on this. I just wanted to share with you my own experience. The Hong Kong experience, which is a fixed exchange rate problem, is that the real economy adjusts around that exchange rate. And that's, if I may make a very simple logical extension, that's exactly the issue of the euro. When you are pegged to a domestic fixed exchange rate, you can't use the exchange rate. The whole economy needs to adjust to it. And who do you adjust to? In the Hong Kong case, you have to adjust to the US economy, one of the most productive and efficient economies in the world. And so therefore within Europe, you may have to adjust to the competitiveness in the benchmark currency, maybe in the case Germany. Now, that's very tough, because, you know, if they are very powerful, I mean, you know, productivity-wise, it's a difficult game. So ultimately, clear away the paper, the fog of finance, if you cleared away, the bottom line is who is the last man standing? And you better be at the real market level, be better and faster than the last guy. Because if you're not, you know, the crisis is, you know, the devil takes the high notes, right? Now, so, you know, there are very serious real sector, you know, implications for this. And then you need then to start thinking, given your own national comparative advantages, what is your real sector strategy? And ultimately, it really is about, you know, jobs. So to a large extent, if I may repeat an old adage, a crisis is too good an opportunity to miss. Because the Chinese phrase crisis is actually the word danger plus opportunity, right? Normal times, you will never get everybody to agree. In crisis, you have a very short window when you can agree. During that crisis period, if you don't make that commonality of understanding of what the real diagnosis of the problems are and where you want to go, you can't do this. But the reality of this world today is that we are living not in a world of you can have everything you want in the free market. We actually have constrained optimization, constrained because we are living, we have natural resource limits. We have legacy institutional frameworks, legacy mindsets. We have a large debt overhang and we have obsolete mindsets. And those things are the ones that if you really look at the constraint, you know, a simple, you know, linear programming issue, you would find that your options are actually fairly limited. But that's when your creativity really comes in. And so it needs planning for the long term. It goes to show why, you know, we in the Fung Global Institute are studying, you know, four major research projects. One, where is the global supply chain changing? In the past, it was all from east to west. Once the world rebalances, it will be from west to east, south to south. But after Fukushima and the Bangkok floods, we suddenly realize, if you concentrate your production anywhere, you're heading for disaster, right? And so, you know, the real sector is changing very fast. The finance sector is also changing very fast in Asia. Let me give a simple illustration. It's not just about the renminbi internationalizing. Everybody's kind of worried about, you know, the Chinese are coming, the Indians are also coming. They are, in fact, three 1.3 billion people in the world. In fact, the last 1.3 is bigger than that, but never mind. Everybody knows about the Chinese. Everybody knows about the Indians. They are growing at 8% and above, right? And that trajectory, because of sheer demographics, is increasing. The one with the greatest demographic actually is the Islamic world. The Islamic world is growing, you know, demographically faster than everybody else, and it has over just under 60% of the world's oil and gas resources, right? And a very young population. And so, if you really take a look at the 7 billion in the world, just under 4 billion is going to grow at significantly faster than the advanced countries can grow, right? Now, so what are the financial issues? Is, you know, by 2020, there will be three reserve currencies, international currencies in Asia, the yen, the R&D, and the rupee. Don't underestimate the scale of the Indian economy. It may look small, very, very fast growing. But look at Japan. Japan is the richest country in the world, a very rapidly aging population with no income for their retirees. The stock market went from 40,000 in 1990 to 8,000 today, right? And still paying PE ratios slightly higher than, you know, other markets, and dividend lower than Western markets. The long bond is yielding 1.2%. If the inflation rises at a 200% GDP ratio, the bond market could implode. The banking system pays zero interest rates for deposits. And with aging population, the demand for housing is actually declining. So you have very high savings for the retiring population. But where's the income? Where's the cash flow? So, you know, these are very serious Asian financial issues that we need to, you know, to deal with. But the third problem is very straightforward issue, which we're studying now, which is what is the relationship between the state and the market? You know, in the past, you know, after, you know, the Soviet collapse, you say, you know, the planning is wrong, the state is wrong, the market is right. Today, obviously the market has overstretched. And so we're studying the 12 five-year plans between China and India to see what is the right balance between the state and the market. And actually, the World Bank study in 1993 about the Asian miracle was not wrong. Asian governments succeeded in development because Asian governments mimic the market. They basically mimic the market. They didn't create the market because in the early stages of the market didn't exist, but it mimicked it. Now, you know, so the final problem is really one, if, you know, the West has been saying to the East, we can't consume now, you should consume. But I asked myself the question, if every Chinese, every Indian, every Asian consumes like the average American and average European, there are no natural resources left, period. The world simply cannot take it, you know, as all the environmental studies show this. And so, you know, the finance is a short-term crisis, but the real economy is a long-term crisis which you haven't solved. So what can Asia do? And I just want to finish on this very, very simple point. I think Asia is a major beneficiary of multilateralism and globalization. So Asia has a major stakeholder in European and global financial stability. Maybe the way to do is to put some of that savings with the IMF, with some kind of facility that would enable the system to be recycled using a global system, which would enable the system to have some form of stability. But that does mean that the Bretton Woods shareholdings and representatives and governance must change. Now, we have to recognize that global deleveraging is going to be extremely painful. And we either do this through inflation or through severe deflation, and there are no simple answers. And particularly in a multipolar world, decision-making is going to be much, much more complicated. And that really means that we have to have much better dialogue between all of us. And that's, I hope, is a hopeful answer because if we don't have some hope and some cooperation, I think we're gonna have heading for some very, very deep waters. Thank you very much indeed.