 Your time, maximum of 10 minutes, I will show you. Sure, no problem. Well, thank you very much for this invitation to discuss CEPOS talk. I think he has made an excellent presentation on an important topic, the link between financial liberalization and economic crisis management. Now, as you saw, the Nordic countries, they provide a rich experience, both for developed and emerging countries. For developed countries, as you know, they do have a pretty high level of income per capita. They have, I think, more important than that, or totally connected, they have very advanced institutions. And I find it hard to believe that when you are facing a crisis and when you're talking about financial liberalization, issues such as financial inclusion or the quality of institutions are irrelevant. But they're also important in terms of the potential lessons for developing countries, for emerging economies. And there are several reasons. I'm gonna show you some figures, but there are several things that are similar in the Nordic countries with these emerging economies. I'm thinking about the size, and I'm gonna be more precise in a few minutes in terms of GDP. I'm also thinking about the fact that these countries, to some extent, are kind of exotic, like the Latin American countries are, in the sense that they are perceived as different. And with differences, you have more liberty, more freedom to do things, but at the same time, you have this feeling of abandonment. I'm gonna try to be precise about this, and about how important I believe it is for police implications in a few minutes. Now, since I don't have a lot of time, and I like to talk, so for me, 10 minutes is nothing, let me basically mention that, and since this is not a mystery novel at the same time, let me just in one line stress what I think is my most important point. Maybe I should say that if really bad things, and when I say bad things, I'm thinking about policy mistakes and market mistakes happening in the Nordic countries, they can happen anywhere in the world, okay? So I'm gonna try to be precise about what that implies in terms of a police implication and the type of concern which you have, especially since you're talking about a high human capital and very advanced institutions, like the one that you find in Nordic countries, imagining countries with low human capital and bad institutions has, or at least imperfect institutions to be more polite as you find in Chile or in Vietnam. So let's talk about that in a few minutes. Now before starting and since I'm coming from Chile and I have the perspective of the Latin American countries with a focus in Chile, let me show you just a few figures that compare the Nordic countries and some of these Latin American countries that I'm referring to. So just in 14 seconds, several years, I don't want to start a discussion, I have Argentinian Brazil to be not so childish, but I'm gonna just talk about Chile. Go to the last column to your right, 2013. Size, none of these countries is really large. I mean, none of these countries, let's leave Brazil aside, it's even 1% of GDP in the world. I'm trying to say that we're not so important, no matter how rich we are, we're not so important for the rest of the world in terms of size. The second thing, go to the second panel of my slide. Of course the Nordic countries are much richer than, say, Chile, even today at least twice as rich in terms of GDP per capita. The third thing that I want to say from this table is that when we're gonna compare crisis, like once they had in the 90s in the Nordic countries, in the early 90s, look at, these are current dollars numbers, but I mean, you see what my point is, they were rich enough at that time, at least in comparison to the rest of the world in those years. The crisis in Latin America happened in the early 80s. So it happened when these countries were much poorer. And as I said before, it's gonna be very different to face a large crisis, especially a financial crisis, when you have a lot of challenges that you don't have when you're rich. And when not being rich implies to have bad institutions at the same time, and credibility has something to say about these things. Now, just two figures, two pictures, and then I go to my talk in the last seven minutes. So the crisis that Seppo was referring to happened in the crisis happened in the Nordic countries in the early 90s, in Latin America in the early 80s. I just called T two years before the crisis, 1980 for Latin America, the dot line for the three countries that I mentioned, I'm referring to Chile now specifically, and the straight line for the Nordic countries, at least the one that Seppo was referring to, where T is 1989. Just I don't want to get into discussion. So see what happened in T plus two where the crisis started either in 1982 in Latin America or 1991 in the Nordic countries, you see this huge fall, I mean these are drops in GDP of something close to 15% what we're talking about this yesterday. Now in Chile, the crisis was even more deep, more intense, right? Was deeper than the one that you found in the Nordic countries. But what I like about this picture, and what I think we need to concentrate in is the fact that we have three things here that we should concern about, and that may have different policy implications or at least have to do with different issues. Three things, or three phases if you want. The first one is what happened before the crisis. So we can discuss about what incubates a crisis. And of course to have good policies is gonna be important, I'm gonna try to mention that for me the key, I just destroyed this, I hope I don't need to pay it. For me the key thing when you're incubating the crisis and you don't know the crisis is coming is the fact that some similar things are happening all over the world, no matter how rich, how dark your skin is, or how much money you have. And the fact that you have a lot of, something happening in the financial sector, a lot of credit is going on and so on. And suddenly you have the gray line, the crisis, bad thing happens. There's a shock, shocks do happen, and the crisis is triggered. That's the second part, which may be different from the previous one is connected, but it's a different issue, it's a different paper. And the third part is what happened after the crisis. Here, I'm gonna try to say that what happened before the crisis is very similar in the Nordic countries and in Latin America and in the US and so on. The crisis, there can be all kind of shocks, but I mean at the end you have a shock, something bad happens, you have a fixed-section way, you made a marker mistake, and you need to liberate, you have problems of credibility and then things go wrong. Or maybe something wrong happened overseas, maybe the URSS disappears and you have problems with your exports, or maybe you have a German unification and you have problems with your interest rate, or maybe Reagan is in charge of the US and raises interest rates and you had a lot of debt before and with flexible interest rates in Latin America and then you need to use all your export to pay just the service of the debt. But what is also interesting, and this is the third paper, is what happened after, is the recovery. Because as this picture shows, recoveries can be very different. I'm gonna just show you one picture in a few seconds. And I think the recovery also has a lot to do with the decisions that you make, and that's a lucky thing. I'm also sure that the first part, incubation of the crisis is something we can control. I'm gonna finish with that line in a few minutes. I don't have a lot to say about the trigger. We can talk about what you were talking about, problems, marker problems, but I think the recovery is something we have a lot to say. Let me just mention that, and this is based on the kind of things I have work on, that productivity is gonna be key in the recovery. The kind of decisions that you make that allow the market to adjust after the huge initial cost are gonna have to do mostly with productivity all over the world, and also sometimes labor, as it happened in Finland. And then when the recovery is the right one and you did the right things and you learn from the lessons, you are in a fantastic picture like this one, when you have the Nordic countries, but even better, I'm sorry to be so aggressive, Seppo, but just you can defend yourself. But even better in Latin America, look, I mean, this is just fantastic, these poor countries that face the worst crisis in 100 years and nothing happens there. This is 2008. All of them are 100 in 2007. So Chile is just growing like crazy in the middle of the second worst crisis in the post-industrial revolution era. And this has to do with the kind of things you decide to do after the original crisis, what you're learning from those experiences. Okay, so let me start my presentation. I have 10 minutes then, right? No, just kidding. No, I'm starting my presentation. I know, I know, two minutes, imagine. Well, thank you very much, I know. Okay, so just a few comments. I mean, come on, I mean, this is a lot of material. I was reading Seppo's papers, they're really interesting. I mean, the experience in the 80s and in the 90s and so on. So I'm gonna just focus on a few things to try to stress a few messages, but then we can maybe have a very broader discussion during the 30th or 40th last minute. And you're gonna see this by yourself. I mean, not much to say here. Basically, I already mentioned what I wanted to mention. A lot of agreement with respect to what happens before the crisis, exposed of course. I like the quote by Christine Lagarde from the IMF in 2011, all financial crisis. She doesn't say in advanced economies, all financial crisis are brought about by the same circumstances. Easy money, so a lot of credit. Slack regulation, regulators didn't do their job, and optimism, blue skies thinking. I like that, I think that happens in... The fact, I mean, it's so amazing too, because if you tell me this is gonna happen in Chile, I can see that. But if you tell me it's gonna happen in the Nordic countries with the human capital and good institutions they have, I think, wow, this is a powerful thing. And we need to accept that and see why that happens. Even if you have such a different institutions in these two type of countries. Just one second, there you have an example of the same incubation of the problem, the same shock, but then very different recoveries in the early 80s. These are two countries, Mexico and Chile, with terms of trade shocks. One exports only oil, the other one copper. All of them go, both of them go down 15%. Look at the difference since then. In one case, and I don't have time to talk about this now, the resolution of the banking problem. Both of them had fixed exchange rate, by the way. Both of them have the speculation against exchange rate. Both of them were small open economies, because I mean, there's an oxymoron if you're gonna talk about exchange rate and you have all kinds of restrictions to the capital market then. I mean, if you are a small open economy with a fixed exchange rate, I mean, we learned the first day in the first macro class that you were not supposed to do anything with the monetary policy. I'm just making an extreme comment. So, but these countries did that and then they had the attack, the speculative attack and you see the result. What was important is the resolution. In Chile, after a 15% drop in output, after four years after that, 1985, the whole financial system was healthy. We should talk about what happened there in terms of the way you use the market, the way that you provide some relief to the lenders and the borrowers, but relief in the short term doesn't mean forgiveness in the long run. We can talk about that in one second. Just two more slides, please. So basically, I think that, and I'm gonna try to connect this to what yesterday Basel was saying in his plenary talk when we started this conference. I believe that at the end, standard economics explains well how the crisis unfolds, the incubation of the crisis and the crisis itself. We have learned a lot about that, about bad shocks and about macro policy mistakes. We know also that there was a lot of risk exposed. And we also understand the recoveries. But what we don't understand very well is why countries like Chile, Mexico, the US and the Nordic countries have in common the fact that they exempt, expose, end up accepting so much risk. That's something that we don't understand. There are people like Schleifer that claim that, and this is why I was talking to Basel, about Basel, the thing that the only way to do this is to incorporate other social sciences like psychology and try to understand what happens in our brain. I think it's beautiful when you compare again, a country like Chile and say Denmark and Finland, they're so different, so different. And at the same time, we do make exactly the same, I shouldn't say stupid mistakes, exposed, exposed. Now, if you don't like to bring the psychologists here, we can think as a traditional economist and bring all problems with imperfections like agency problems or political economy problems. And I think we need to talk about these issues in order to try to understand what the policy lessons are. One more slide and we finish. We talked yesterday night when we were having the beautiful party about this. So, and he mentioned that separate today. There is a fifth Nordic country which is Iceland and there are some interesting things to learn about Iceland, especially since Iceland is so small and is exotic. And I finish in one second. And the fact that at least exposed you realize that no matter how important macro is, no matter how important to understand shocks is, at the end, I believe that even though it's not sufficient, a clearly, clearly necessary condition has to do with a strong and strict financial supervisory authority with a strict prudential regulation. That's something that you cannot forget. Let me finish, you see, my last slide. Just as I said before, so that we can maybe talk a little before they're about the things during the next few minutes when you ask your questions. I believe that we do understand the key precondition, the strict prudential supervision. I think it's important to talk about the market, you mentioned that, recoveries are important, but at the end, I believe, and I could be wrong, I just want to try to motivate a discussion that given that these so different countries face the same problem exposed that has to do with this excessive risk-taking, if we really want to face this, we need to consider seriously to accept the trade-off of losing part of the contribution of these financial institutions in growth and making them simpler. I don't see another way until somebody teach me something different. I believe that we need to move, and this is my final comment, after we learn what happened in countries like the Nordic countries and the Latin American countries in terms of facing the same challenges, we need to move in the direction of accepting a second best, which is to have simple financial institutions to force them not to take the risk that they typically end up taking every 10 or 15 years. Thank you very much.