 So thank you very, very much for this exposition. It was really smashing with a lot of issues addressed. So can I ask who wants to take the floor immediately? Yeah, please. With solutions, you have the floor. I don't have many solutions. I just want to refer to Barbara Tuckman's March of Folly, which starts as the first chapter with the stupidity of governments, the king of Troy letting in the horse, and he shouldn't have none of that. I was a bit involved in the Euro crisis, and a lot what we did had to do with governance, governance inside the European Union, that is. For instance, we transferred a lot of powers from the capitals to Brussels, as far as fiscal discipline is concerned, and we transferred a lot of national powers to the central bank, as far as prudential supervision was concerned. Now, I thought about that when Professor Frieden was referring to new socio-political models. And I was wondering whether we are thinking enough about something which may seem too far-fetched, given the fact that multilateralism is going down a slippery slope anyway, but that we shouldn't think a bit more about what instruments we can build, we could build, we could build over time to try and make sure that the policies one country is following is not harming and hurting too much the other countries. That's the basic line we have inside the European Union. The economic policy of an individual country is considered to be a matter of common interest. You cannot do, even if you did, it turns against you like it was a case in Ireland. So I would like to know, Professor Frieden, whether there is any thinking on the governance side of all the crises and catastrophes which are looming over us. Thank you. Thank you. I ask the speakers to take note of questions which they are addressed. Thank you very much indeed. Other issues, please. Jean-Claude, you started by saying that you were concerned about the world economy now and the prospect of a new crisis, but you didn't explain why. I wonder if you could do that. But let me ask a very uninformed American question, which has to do with your assessment that a key to resolving some of the current European problems, the euro problems, lies in Germany and inflation. Could you explain that and tell us why they won't do it? Part of your questions is on the echoing my own interrogation on Japan and Germany and perhaps the Netherlands countries where the unions in particular, the labor force, is so keen, rightly so, to reach full employment and not take any risk on full employment that finally you don't have what you would have expected at a certain level of heating or overheating, namely the real demand coming from the labor force. In a way, this is a phenomenon that we are observing in all countries, but it's particularly acute, it seems to me, in certain culture and in certain culture which are at the level of full employment and where everybody in the social fabric likes very much to stay and doesn't want to take any risk. I must confess, myself, I made a mistake on the German fabric because I thought that at a certain level of full employment then you would have this kind of request for augmentation of wages and salaries that would augment uniquely the cost that would permit Germany to be back to, I would say, a more normal level of inflation taking into account the current account surplus of 8% of GDP and would permit them to be back to their traditional yearly inflation during the 40 years before the euro, which was significantly higher than what we are observing since we have the euro. So my own response provisional would be we are in a situation first where, again, unions in general and the labor force considers that the wage restraints were extremely effective and efficient in getting full employment and that before changing their own behavior, they would reflect a lot and they are still reflecting in some respect. A second explanation, which is also new and I am reflecting on that since, say, two years, is that we were perhaps under assessing labor mobility inside the euro area. We observed much more Spanish, Portuguese, Italian going in Germany than we would have expected. And you know that the main criticism of the euro area at the very beginning was you will not have this labor mobility which exists in the US and you will be hampered by that. The paradox is that we had not much labor mobility at the start and that in the crisis, because of the crisis, we are perhaps observing a high level of labor mobility. I was struck by the fact that it looks like 300,000 workers coming from the euro area came in Germany in your 15. That was not expected, frankly speaking. Of course, it's such a big influx of new labor that you can understand that it weakens considerably the demand of the German citizens that are themselves working in the labor force. So that's for your second question. Your first question was different. What was to ask you to explain? Yeah, why am I worrying? Well, as you could see, it is a sentiment which is quite generalized, obviously. If I would concentrate on only three elements, say three in order not to embark on eight and nine or whatever, because you can go very far. First, I am struck by the fact that we still have augmentation of financial leverage at the global level. There are different methodology, different computation. I myself chaired the G30. I'm still an honorary chairman of the G30. We produced a report which was clearly signaling, but it was two or three years ago, that the pace of additional outstanding debt public and private at a global level as a percentage of global GDP had continued after the crisis, more or less at the same pace as before the crisis. Might not be exactly the same now. The IMF has worked a lot on that and produced figures that are different from the figures we had. The idea, nevertheless, that it continued to go on at the global level is still there. Another element which is, of course, a little bit intriguing is that the epicenter of the crisis was in the advanced economy and the advanced economy have delivered a little bit in some of them, at least substantially, or less substantially in the private sector. But apart from very few cases, they continue to augment leverage in the public sector, in the public finance sector. And so, all taken into account, I would say that the pace of additional debt outstanding public and private as a percentage of GDP, which was 90% before the crisis of the augmentation of debt outstanding is now only 50%. So you could say, if the pace is the same, it is a big diminishing by a factor two of their contribution to global leverage, financial leverage. If you take the emerging economies and all the other economies, then they had a contribution of 10%, and it's now 50%. So it has been multiplied by five. Of course, China is a case in point because we see a very big augmentation of debt outstanding, particularly, I have to say, in the private sector, or so-called private sector, with an explosion particularly of corporate bonds. But all that taken into account, of course, signals something which is very unhealthy, namely that we did not draw the lessons from the fact that the crisis was, one of the major dimension of the crisis was over leveraging. And I would fully echo what has been said on Fisher and also on Minsky. We have their elements that are worry. Second element, of course, asset inflation that we have observed in a number of countries, and of course, particularly in the United States of America. So a correction will happen. Jean-Claude is particularly, I would say, worrying on that. I think that many, many very good American economists are also particularly worrying, I have to say, and Martin Feldstein, in particular, regularly says, oh, oh, oh, something will happen. Of course, it never happens at a time that you can predict. So when you continue to make money out of the increase of the assets that you have on the share and stocks markets, you appear as a stupid guy if you disinvest if you give good advice to your clients. But at the time, these, these advices will be good. But that's what we all always observed. Last point, which is not to be neglected, is that in the cycle, we are in a number of countries 10 years after the start of the recovery, we had counter cyclical measures that were taken in a number of countries, particularly in the United States of America. So this is not good in terms of, I would say, smoothing the cycle. It amplifies the possible cycle, particularly when time comes for recession. And of course, when the recession comes, as has been said, you have very meager immunizations as regards both the monetary policy, I have to say, particularly in Japan and in Europe, but also in the US in many respects, where normally they say, I'm speaking of the control of eminent economies, that they would need 5% decrease of interest rates to have something which would be significant to combat the recession. And they are not there. And it's very unlikely that they would be there when time comes. And of course, the fiscal element in countering the crisis is not there either. And only a very few countries in the world can say we have room for maneuvering. So you see all these elements, but I'm only stick to the three, are not putting me in a situation to be very optimistic, obviously. So thank you very much for your question. Of course, the speakers can intervene any time if they think appropriate. I have Renault and then you, okay. Should I understand from this session that there was too much quantitative easing from the Fed and from the European Central Bank, which is a kind of quantitative easing. That's my first question. And my second question is, can we consider that for this crisis that you are all more or less predicting us, quantitative easing would not be an efficient tool? Maybe we could take note of this question and then the speakers will respond and take the last question in that batch of the first question. Thank you very much. I'm sorry, I missed the beginning of the workshop, so I may have missed some of the things. Coming from my perspective, I'm a banker, I've been a banker for many years. I'm still in financial services. I work for European banks and American banks. And my sense, I've lived through many financial crises, including in the last financial crisis. And one of the things that struck me is that, of course, there was a lot of leverage in financial institutions at the beginning of the, the case of Lehman is obvious, there was a leverage of 50 or 40 to 50, which is now things have improved a lot, particularly for American banks. I would say it's fair to say that American banks are probably better capitalized than European banks on average. But having said that, don't you think that we are in a situation where regulation has been implemented? Dodd-Frank nevertheless has some shortcomings and weaknesses. There's been attempt to reform. And my sense would be, because you're looking for solution, don't you think that if we want to reduce the burden of some of the regulation, we have to increase the capitalization of banks? And recently at the opportunity of listening to Alan Greenspan was speaking to the economic club in New York, and Alan Greenspan was making the case that we probably need to be in a safe situation. And we're talking of regulated institution, but also obviously the comment that has been made about shadow banking is very pertinent and absolutely adequate. Don't you think that the leverage, which is now probably, I mean, the capitalization of banks is about 10%. Now I would say 10, 11, 12%, depending for the ciphers, it can be up to 12%. Don't you think that we can request 15 and perhaps 20% to be in a safer environment, to be able to take care of all the problem that will come up at some point? It's a good question. In Europe, I think we are approximately at 14% if I take the significant financial institution. In the US, it's higher, it seems to me. Anyway, thank you very much. Then we have several questions and perhaps we can make it to the tab. So in the order of intervention, perhaps can I ask each speaker whether he has any comment to make or any response to bring to the questions we had? You have the floor. Ida. I answered the question regarding the quantitative easing. I still think maybe QE created a lot of a problem particularly as someone claim. The QE take care of Wall Street first, then take care of Main Street later. That means using, quote to other people say, is a classical logic. But at least QE makes sense to save the whole financial crisis from totally collapse. In that sense, I guess, for example, in China, we don't see, don't define the stimulus package in 2009 as a QE. But actually, the total money China put occupy 12% of GDP of China. Much more than U.S. I guess U.S. money total is 9% of U.S. GDP. But in some way, it is working. Although there create lots of negative problem, but I don't think there's another better way to deal with these kind of systematic collapse. Thank you very much indeed. So can I turn to Jean-Claude now? How would you respond? Maybe I can comment on Renaud's question about quantitative easing. You would better do so than me. But I think it has been a very good thing. It has been a miracle that has been invented with his quantitative easing, both in the United States and in Europe. The problem is when you stop it, it's a kind of drug, you know, you have a drug and then you stop your opium and then you feel very bad. That's the question we raise, which you can raise today. When we stop it, especially when the things are not very good, because again, we must not then smoke opium today. Things are not good today. There's a lack of trust, there's an anxiety. As a matter of fact, I wrote my paper beginning, end of September, beginning of October, wrote it, drafted. Well, 10 days after, markets, pshh, 10% less. So tomorrow, I don't, not tomorrow, because markets are closed. But Monday, I don't know. We're in a new world now. The end, in a way, in a way I must say from a moral viewpoint, it's quite good. Because it has been obscene to see the stock market going up every day by 1%, with people with 1% being extremely rich and the rest of the pollution, which has, who has no stock, stocks in his pocket being poorer and poorer. Q, I turn to Jeff. A lot to comment on. I'll try to focus on some of the more political or political economy issues. Just, I have to say on the quantitative easing, to me, the crucial lesson I take away from, obviously from the economics, if I agree with what's been said, the crucial point that I would take away is that this was a result of the unwillingness or inability of governments to engage in a sufficient fiscal stimulus. And the fact that the relatively independent central banks carried all the water, pretty much, for the recovery indicates the very weak political bases that we have for confronting the problems that arise. We should have had a much bigger stimulus in the US and European policy was pro-cyclical rather than counter-cyclical. So I think that tells us something about that's the beginnings of the understanding of the political failures that we've seen. I wanted to start, sorry, I wanted to address particularly the point about global governance, which, after all, is the dilemma or the slogan of the meeting. There is a very clear normative view, very straightforward. Just as when financial markets went from local to national, there are public goods associated with financial markets, whether it's Levin or Blaster's Art Facilities, financial stability in itself is a public good. And so we got national financial institutions that provided the public good of financial stability. We have global financial markets today. There's clearly a demand for something resembling global public goods provision in the international financial system. Some could argue that to some extent it's been provided by cooperation at the level of the G7 or the G20. Some could argue that it's been provided some aspect of lender-of-law resort facilities provided by the IMF, augmented by national governments. So there's a clear normative argument for something that we would call global governance. And the financial system as in elsewhere, but the financial system is particularly striking both because the theoretical underpinnings of understanding why there's a need for public goods provision in finance are very strong. And also I would say that to some extent it's gone farther in finance than anywhere else. If you had asked me 25 years ago, would there be this level of cooperation at the regulatory level with the Basel or with the fund, with bailouts, with programs and monetary policy cooperation, all this I would have probably said no, no way. So there's been more progress made. The problem is that for the continued provision of those global public goods or even something resembling global public goods, there has to be domestic political support. People are not going to support government policies that are aimed at some abstract ethereal notion of global financial stability. First, if they don't see that it's gonna help them. And second, if they believe that it's gonna hurt them, which they do. As an example, some of you may remember that there was massive opposition in the US to the bank bailouts, not the bank bailouts, but the sovereign debt bailouts of the 1990s such that there were a whole series of laws passed which seriously hamstring the ability of the Fed and the Treasury to engage in these packages. The sponsor of both significant legislations of Bernie Sanders. And he has continued to make the argument that American involvement in these packages is against the interests of the American people. And Donald Trump doesn't have that sophistication, but if he did, and his people do, they will make the same argument. And this is directly relevant actually to Jim's point or to the question that Jim asked about Germany. And the point is not that countries malignantly decide to impose costs on other countries, right? It's that they're concerned legitimately with their own political, economic, and social well-being. The Germans did not continue to run massive surpluses at a time when they should have been spending them down and running deficits. I mean, the old line is that the problem of Europe and the crisis was German economic thinking which said that every country in Europe should run surpluses with Germany and Germany should run surpluses with every country in Europe. Obviously unsustainable, but it didn't come from some bloody mindedness on the part of the German people. It came, as John Klob was saying, I'd say some people, there are arguments in the literature about why. Some people think that essentially it's an unholy alliance of exporters and the elderly in Germany insisting on low wages and low inflation, but you could talk about national cultures as well. The point is that German economic policy is driven by the demands of the German people. And if you can't get in an integrated, in a region as integrated as Europe, where Germans support European integration, if you can't get a commitment to do something that is essential for the prosperity of other members of the Eurozone out of the German people, then the underlying problem of what is the domestic political support for that kind of global cooperation or global government's going to look like. It did not look good in the crisis. It does not look good now. We face more difficulties and we now have political movements that are in some cases very, very explicitly opposed to anything that looks like global cooperation. I wanna mention one more thing because people have been talking about leverage. I think leverage is always an important issue. To me, it's not leverage per se, but where it is, who it will harm, and how it will be addressed. And people talk about the emerging markets. I think that there's a crucial fact about leverage in the emerging markets that has gotten far too little attention. The big story of the last 15 years in the emerging markets is that for the first time in modern history, sovereigns can borrow in their own currency. So there's the old original sin argument. That original sin has somehow been atoned for. So Peru sells all of its government debt to foreign funds. So sovereigns are borrowing in local currency. But the private sector is borrowing almost exclusively in foreign currency. And so when a government faces, let's imagine a government, let's call it Argentina, that faces a crisis, that Argentina actually is a case where no one was doing any borrowing, so it doesn't come up. Let's say a crisis like the Argentine crisis happens to Peru, and the government finds that its only way out is to substantially devalue the soul. It's not gonna hurt government finances because government liabilities are our own solace. It's gonna bankrupt the private sector. And that's gonna be the political challenge that the emerging markets are going to face. And by extension that the financial system's gonna face when these countries start facing difficulties. It's going to be a rerun of the 80s on steroids. Thank you very much indeed, chef. I see that, no, no, no. I'm continuing the speakers to the table. They have to respond. So it's Daniel terms. I think that one could try to answer at a surface. I shouldn't say superficially, but taking it as a working hypothesis that basically the system should stay as it is, but we have, I shouldn't say we tinker on the fringes, but if we raise capital ratio, I mean, more capital. Admati and Helbig have been saying for years that banks need to have much more of a cushion, of own capital that banks do not have. And why? Because the system in itself, the way it's been constructed over the years starting with the 70s with a major decision of the American administration, the Nixon administration, has been increasingly destabilizing. I mean, financial markets have been increasingly destabilizing economies. And one could argue that the global system is over financed, over financed. And finance has been extracting rents. Something has to be done about it. But so this is why there are people, and by the way, we're not discussing it almost at all. Like Mervin King and others turn, turn out at air. We're saying there is something terribly wrong with the basics of the system. We have to change the system, but this is very tough. It's like repairing the airplane. What is the solution? Why the airplane? No, no, I'm telling you the solution. I'll tell you what I think should be done. When it comes to your area, because you mentioned, I think we have to complete the banking union. The banking union, if it is to be completed, has to do with the fiscal arrangements. There is no other way. A collective deposit insurance scheme boils down to fiscal arrangements. You could call it fiscal integration. You could say not fiscal integration, but it is a fiscal arrangement, which means basically mutualizing risks. Germany, I don't see Germany accepting it. If it's not done, we'll have an extremely fragile banking union, and I think it is a must. It has to be done. Otherwise... More optimistic than yourself, but we will... No, I think it has to be done. I mean, you asked me what I think should be done, and I think it should be done. Secondly, and this is what Olivier said this morning, I mean, this afternoon, he said, and in Germany also, I mean, it's also to be pointed out that it's the policy stance. Germany's fond of saying rules have to be observed. I mean, we have to play by the rules, okay. But Germany has never accepted that such a big current account surplus has to be addressed. And that's also a rule, I mean, is the commission have been saying for years. I mean, the limit is 6%. I mean, so this also has to be addressed. I believe that banks, in spite of being better capitalized, I think banks should have more capital. They should be, they should be more robust. Relatedly, we have to deal with the non-banks. Non-banks have to be tightly regulated. Many of them, they call themselves non-banks, but they operate like banks. They have to be regulated, the non-banks. I mean, we cannot allow such a big loophole. Policy coordination, Geoff said no way, and I agree. G20 was capable of doing something. Now, it's much tougher nowadays because of the erosion of multilateralism, and we see it's not happening in the Euroraya, as it should. But we just, we can't accept it. We have to work hard and do something in terms of policy coordination. Otherwise, we are doomed. And in addition, the example of Japan. We cannot clone Japan. We cannot say, I mean, the rest of the world is not like Japan. It may, part of the rest of the world may turn into other Japan's when it comes to how many residents hold public debt and saving and so on and so on. So that the system should be much more resilient because there is resiliency in the Japanese system. But other parts of the world are not Japan. Okay, it's a good transition. You have the floor. I have three comments, one on financial crisis. The second is on QE, and third is a point which I didn't make, which is related to targeted inflation. Now, because I'm from Japan, I know very well about earthquake. It is very difficult to predict earthquake. It is impossible to stop earthquake. So what we are thinking about is how we can just respond after earthquake happen. Now, if you use that metaphor, can you predict when financial crisis is coming? Or can you stop financial crisis? Hopefully, but not. So even President's policy, mostly, is how we can just react in good way after just the financial crisis is coming. So yes, it is better if we don't have financial crisis. Maybe the second best is smaller financial crisis. And then it should come more. I mean, small earthquake is coming more than we can just have less large amount of earthquake. Now, I have a very good observation of the Korean financial crisis in 1997. It's very bad when I saw the economy. But if you look at the data, say, five years later or 10 years later, Korean economy just, you know, recovered very nicely. So you cannot identify very big bad effects of the financial crisis by looking at the data for 10 years. So I think the resilience or just how we can recover from fiscal financial crisis, it may be probably more important. Now, second QE, I think I just echo to just Chairman's point, just because interest rate is so low, zero for us, if we have some kind of a very big shock, it is almost impossible to just respond by interest rate policy. So the only remaining policy is quantitative policy and fiscal policy. So in that respect, it may be quantitative policy will become more important when there's some kind of financial crisis. Now, important thing is quantitative expansion is not only just expansion or balance sheet. And there's the other aspect that is what you are going to buy. You can buy government bond or you can buy some kind of just the asset from stock market where you can buy from foreign exchange market. Now, if Japan buy something from foreign exchange market, maybe Mr. Trump will be very angry. So I don't know whether it's particularly easy or not. But the stock price, for example, stock market may be very interesting way to inject the money. And also when the financial crisis happened or economy is not very good, fiscal policy, in some type is very important. Like when bank has some kind of problem, capital injection may be very important. And that may help the just negative impact will be soften. The last point, which I didn't mention, but related to the point just was mentioned just the debt GDP ratio. Now, Japan debt GDP ratio is probably around 200% or it depends on how you just measure the debt. And because we need to just have some kind of balancing of deficit, deficit should be maybe below 3% or 2%. But even though we have just the zero deficit from some time, but still that 200% cannot be decreased without increasing nominal GDP. Now, well, it's maybe very good if we can achieve a very high growth rate. But unfortunately, real growth rate, or potential growth rate is not very high because TFP is not good. So the only solution. And demographics after that. Oh yeah. So the only solution is just inflation. So not very high inflation, 2% or 3% inflation help a lot because most of the accumulated debt for Japan did not come from aging. It just came from just deflation and shrinking tax revenue because of the economic slam. So I think the way inflation targeting should be set is very important not only just because for the short-term problem, but more the long-term problem. It is very much related to the fiscal consolidation problem. Although I'm sure I know it's not very easy to achieve high inflation rate. Thank you. Looks difficult obviously. Okay, thank you Motoshiga. I turn to Bertrand. The privilege of being last, I will try to be short. Four little comments. First I will echo what you just said, Jeff. You have two issues with debt is the level and what is it used for? And as I said, we could have used this period of low interest rates to prepare the future and we have not, right? Not enough at least. And that's part of the issue. So the quantitative element is obviously absolutely crucial. But if at least it would have been used to do something great, that would have been a different story. A second point to answer the question of Jean-Claude on banks, it's precisely the points I've made. Again, we are back to focusing on different pieces of the puzzle instead of focusing on the holistic perspective of the puzzle. I think the ratio of banks are okay today. I mean, you can discuss with our ear and there. I think we have to finish the banking union. Then we started, we still have differences in the financing of economies. I mean, this was one of the issue before the crisis when people argued that in the US the markets are leading and in Europe it's banks and China is different, Japan is different. It has not really changed. So we had the marvelous slogan of the capital market union in Europe, which as far as I know is still a magnificent slogan, but there is no reality behind it. So we have not really addressed that issue. So I think we really need to move back to a holistic approach. What do we need to finance this economy? I mean, how do we value equity investment versus debt investment? We have not discussed that. How do we mobilize money for infrastructure? How do we mobilize money for the long term, et cetera? We have not addressed that. The rules have not changed. Nothing, that's my third element. It's more a malicious comment, but not that malicious on quantitative easing. Why did we never discuss green quantitative easing? It would have been an interesting occasion to allocate part of the money channeled into buying bonds, specifically to green. Why not? I know Central Bank. I've had this conversation with Bono, actually, with more open than new Jean-Claude. I think it was worth discussing. I think it was worth discussing. And last on Germany. I'm for that. I cannot help intervening. Then you will have all, absolutely all, social and highly praised investment that will come. Yeah, but the difference is that we, I mean, now with the U.S. outside, everybody has signed on COP 21. It's a global engagement signed by heads of state. It's not, it's not a kind of... And the fight against inequality... I mean, you buy 100 billion of green bonds, et cetera. I mean, it's at least worth discussing. I do that only to... No, of course. But I think... I said it was malicious, but I think to have at least this conversation would have been interesting, even to talk to the population, actually, not just to have this technical discussion between bankers. And my last point on Germany. I love Germany. I come from Alsace. I have really considered why not as a border, but as a way to cross a passage, a bridge. My only concern when we discussed with German and when they add the high moral, I do say the moral high ground in the conversation. It's not necessarily just rational, everything you discuss, but we are right because we are right. And that's really where it's a little difficult. I mean, that's again, I say that, I'm not participating to anything. I've left Europe six years ago, but I feel that every time I go to Germany, I presented my book a few weeks ago, and it was so obvious in the room, I couldn't believe it. Thank you. Well, I disagree also with you on that point, but we will discuss that later. So thank you very much. We have still something like 25 minutes. And I think that we have a lot of discussion to take place. So I will interrupt both, I would say, questioner and responders in order to be sure that we are exploiting our ideas. You have the floor, sir. I'm going to do this with great trepidation, but I want to build on something that Jeff introduced and Bechner took further. The way humans behave is to develop a set of heuristics and then apply them consistently until the system fails. And when we develop models for the purpose of modeling for simulations and related things, that's what we do once again. So simulations work brilliantly as long as the underlying assumptions associated with the simulation are effective. And the moment those underlying conditions are no longer replicable, the simulation breaks down. That's how society functions too. And that's why we have revolutions from time to time. There's a significant change in respect of social, economic and technological circumstances and the institutional response to it is inadequate. Jean-Claude has made the point, I think, wonderfully in the past that in effect, the central bankers who had to grapple with the crisis in 2008 did not have textbooks, did not have recently published articles that they could easily refer to and in effect they had to make policy on the roof. And that's why I guess we refer to it as unconventional monetary policy even today. But the fact of the matter is policy frequently has unintended consequences. And some of those are what we're grappling with in respect of both the unintended consequences of extreme liquidity on the one hand and the issues that we haven't addressed as a consequence of the crisis on the other. Now there's nothing surprising about that. That's what human systems do. But I think what we're failing to recognize in a certain sense is the system around the technical system is broken. We're not getting the rise of people from Duterte to Trump, from Putin to Erdogan, from Bolsonaro to everything else because of the fact that unconventional monetary policy produced too much liquidity in the system. We are getting that response because the level of trust within society in the political institutions and the economic manifestations of those institutions including monetary policy but it's a relatively small part of the whole no longer are seen by significant segments of many populations as serving a purpose. Now that's the vulnerability, it seems to me, within which we will have to face the next financial crisis, great or small. And the potential for escalation in conditions where social cohesion has broken down dramatically, social polarization has increased highly significantly, trust in institutions has been appreciably reduced. It's going to be far more difficult to come up with technical solutions to technical problems under those particular circumstances. So unless we use this moment to drive that debate forward, what we are properly discussing in this workshop this afternoon is going to prove likely to be impossible. The trust that you could rely on, Jean-Claude, back when in 2008 doesn't exist today. Bundeskanzler Merkel may not be the CDU leader in January of 2019. The Hessian result is probably going to cause a further loss of roughly 10% to the CDU. The Bavarian result produced a similar loss in respect to the CSU and the pressure that exists in respect of all of the centrist parties in the European space before you get to Russia, Turkey, the Philippines and Brazil. The pressure that exists on those centrist parties whence our norms come, whence that normative framework within which we are expected to deploy fiscal and monetary policy in order to bring about a restoration of stability is fracturing. And that, I think, is the most frightening element of the present moment. It's not something that too many people around this table can deal with directly, but I think it would be a serious mistake to imagine that technical instruments are going to be adequate to deal with the next crisis. No, you're absolutely right. I think there is a consensus to consider that populism, the new wave of populism, is something which is now the main challenge for all, I would say, political parties, leaders and so forth, everywhere, finally, including in a country which is succeeding admirably in terms of employment, in terms of cohesion of the society, at least seen from the outside. And still, the governmental parties are vanishing. In my own country, it's a caricature. We have, fortunately, it's not the extremists that are taking over, but it is a new centrist that is totally eliminating and it's a real, real issue, the traditional right and the traditional left. So thank you very much, but okay, we all agree that it's the problem, and of course, it's a political problem which cannot have technical response, but the technicians have nevertheless to bring about the best possible solution taking into account my own interpretation that I don't want to monopolize the response is that we have this problem probably for the next 30 or 40 years, because the, I would say, most vulnerable part of the population in the advanced economy, the working class, less educated than the best, I would say, member of, part of the labor force, will have the competition of India, Brazil, Mexico, China and the like and Indonesia and so forth for the next 30 or 40 years. Until the, Yeah, yeah, on top of that, plus the changes of values that they observe in society which makes this anxiety gigantic because it's an economic anxiety, it's, I would say, obsolescence of skills and it's also a change of value. So I think we have to tell political leaders and parties of all persuasion that they have a structural problem which is really gigantic and they have to think boldly in this respect and again, it's not for us, unfortunately, to give the appropriate response. I think that maybe we could take two or three new question and then we could wrap up. Let me take all the questioner. Yes, madame, you have the floor, madame, you have the floor. No, no, it's not you. Yes, you go, you go and go. No, no, the first is madame. Yes, thank you. And then you and then do we have other questions? No, two questions now or remarks or observation. Well, I'll share my observation and I have a question. You have the floor. Thank you for bringing a discussion back to emerging market economy and Jean-Claude and Jean-Claude, you talked about the rising, uncomfortably rising levels of debt, including and particularly in emerging market economies. What I worry about as a sovereign debt restructuring practitioner in particular is the quality of the debt and the components of such levels of debt and particular non-Paris club bilateral indebtedness which is kind of obscured at the moment but it will rise as a new problem from my perspective just having been in that space for over 20 years. So how would non-traditional bilateral creditors like China and India would respond when their sovereign debtors cannot repay their loans and it will happen, they will not be able to repay their loans. So I see three options. One is negotiating ad hoc arrangements, perhaps securing political or geopolitical concessions as a price of forgiveness of such loan. Option two is joining Paris club and option three is forming a new club such as Beijing club of non-OECD members. So far, for example, China, the major principle lender in emerging market has dealt with the situation using the first option negotiating ad hoc arrangements. Just earlier this year, and touched briefly about it in the panels, China secured 99% of the major port in Sri Lanka plus 15,000 acres of adjacent land, a very strategic place in exchange for debt relief, a total debt relief of Sri Lanka as a sovereign. Would Venezuela and Ecuador be the next contenders in using the same option? I hope not. So what would be the government solution for that issue? So I will be thinking about that. I'm just curious what panelists thought about that. Thank you very much, madam. It's a real question. You have the floor and then you, sir, please, madam. I was just gonna try and go back to the real economy for a moment and talk a little bit about growth. So one of the things that concerned me a bit when I was in the Treasury Department was putting out a number like 3%. When you know your labor force is growing at 0.3 or 0.4, you're putting a huge amount of faith in productivity growth, which is, of course, the key to long-term growth in per capita income and what we really, in a long-term sense, are all seeking. So I think my question is really, is there a role for finance in supporting, improving, fostering productivity growth has, or has finance been part of the problem? So sometimes you hear the story that QE and extraordinary liquidity has essentially propped up very low productivity firms for a very long time. We really haven't had this kind of creative destruction that we normally have during recessions, but this one was just so terrifying that we just had to put a floor in there and a lot of people were supported. You also hear, or I've heard, that because we're in a more IT and IP intensive environment, some of that's a little bit harder to collateralize and so financials are having a harder time lending to those firms or understanding the way in which to lend to those firms. So I'd just be curious from the people in the room whether you think finance is part of the problem and also part of the solution and if there are things that should be changing. Thank you, thank you very, very much indeed. So the last question, if I may, and then we will try to wrap up, please. I come from Germany, so it took me a while to take the courage to ask my question. There is no government policy to create a trade surplus. So what do you want the Germans to do? And I know Mr. Scheupler always talks about the Schwabian housewife who only spends the money that you have previously earned. What do you want them to do? So we maybe, I will not make the tour de table in order to be sure that those of us that have a response to bring about would do that and we have a lot of new questions and observations and I reserve my right to respond also to some of them. But who wants to speak now? Jeff, have you? No, there was a lot of question which are of a political nature. Right. Well, I mean, the simple one on the German front is fiscal policy, fiscal policy and then the German government plays a role directly or indirectly in wage negotiations and has been, I mean, it's been back and forth but I think the two things that have been pointed to the first is would be undertaking a more expansionary fiscal policy and the second will be trying to encourage loosening of some of the wage restraint that was so central in the early 2000s but is now counterproductive, I think. I think that in many ways, one of the most interesting questions is the one that was raised about what China will do when its debtors start going under. We do have, as you say, the Sri Lanka precedent which is really a debt-to-equity conversion, you know. In this case, the equity being some pretty important, yeah, 99-year lease on some pretty, on some things which some people believe are centrally important to Sri Lankan national security and since the amounts involved are very large relative to the country's economies, I think that it will raise a whole series of political questions in China and may well find itself in the crosshairs of some nationalist, it already has in Sri Lanka but may find itself in the crosshairs of some pretty powerful nationalist sentiment which might mean that it might want to join the Paris Club or talk with the fund about that restructuring under the auspices of the fund. I think it would be foolish for the Chinese, this is not advice but it is advice but it's free advice so worth what it's paid for. It would be foolish of the Chinese, I think, to maintain these things on a bilateral basis because the history is that they always become politicized and always in a bad way for the creditor. I think yours is the crucial question if we only knew why productivity was slowing down, we could do something about that. I do, I am struck by the fact that no one has addressed the, I want to call it hypothesis, I think it's a fact but the hypothesis that even today in many countries especially in Europe, the credit channel is fundamentally restricted or not functioning fully. There's a lot of evidence, we have bank firm loan specific data for Portugal for example that shows that small media enterprises today still cannot raise all the funds that they need to which goes back to the potential misallocation of resources even with zero interest rates. When the credit channel is impeded that means that good projects don't get funded. I think that actually is also true in the US although not to the level of Europe because there were so many bad loans on the books and there's so much risk aversion in the private sector that good projects are not being funded. So I don't have an answer but I think that would be part of it would be looking at the impediment, the impediments to credit channel. Thank you very, very much indeed. You want to say a word please? I just comment on just a possible role of finance to just raise productivity and growth and it may be related to also the current account surplus problem. Now looking at the Japanese case, the so-called investment saving, saving investment difference divided by GDP is 5.5% in the last 10 years. So which mean just corporate sector, it's not a corporate sector, corporate sector is accumulating about 60% of GDP for the last 10 years. They don't spend, they didn't spend. Now in order to just mobilize the economy from supply side, I think investment is very critical. Not only just for expansion of the capability, more important thing is how they can change business model under the innovation. So in the case of Japan, this is very important. So government try to just stimulate, just moving money which is already there which is not used to the more active action to the corporate sectors. Now in German case, the saving investment difference divided by GDP is something like 2.6%. So it may be better than us. I mean, you save less but still that part, if it can be used to just stimulate the economy for supply side change, that may be more collection of the current economy. I don't know how the government policy can just move that but I think anyway, saving investment difference in corporate sector is very important. Thank you very much indeed. Yeah, please. I'm going to address the debt issue from a little bit broad perspective. I recall 40 years ago when China started to open door on economic reform, they're also facing the financing issue. Fortunately, at that time I recall there's a debt crisis in Latin America. So China facing, you borrow money abroad or you do FTI, attract the foreign direct investment. Fortunately, China is taking second measurement which I think is successful. Also, I guess I just read the book called 329 Days, I guess, load by the personal advisor for former prime minister, Kou. 329 Days call the collapse of a burning wall to the unification of German. When I finished reading the book, I suddenly recognized why Soviet Union failed in some way because I guess at the last they make a phone call, call Gorbachev, they're talking about money, talking about how much money Western Germany to give the Soviet Union to get agreement from Soviet Union to have a unification of Germany. So Soviet Union also get lots of foreign debt to support their economic reform. So that's the issue. Also back to the current situation, I guess still developing country can do some regulation on private borrowing, overseas borrowing. Maybe that's not totally capital account opening, but after the global finances system, IMF will be changing their position along in some way capital control still in the part of tool of potential management. So in that way, for example, currently China, if private company want to borrow money overseas, they have to get approved from Chinese government. That way, China can control the foreign debt for private. Sovereign debt, of course, is a separate issue. It's relatively can be controlled. Thank you very much indeed. So very rapidly, perhaps if you wish, Bertrand and Daniel. Two quick comments. First, I'm sorry I don't know your name, but I would really emphasize what you said. I said if by any chance after for the next crisis, Odysseus and Hector came to a good technical solution, it would be a very hard sell. And that's I think a big issue. And so I'm afraid we will repeat the curse of the war of Troy. That's not to add to a positive note to this end. Second point, as finance being part of the problem, just one element, if my memory is correct, the highest rate of financing GDP in the US and UK was 1929 and 2007. So I think it was part of the problem. And now one of the issue after everything which has been put in place is that finance is really echoing the lack of trust in the system. Again, I mentioned compliance, but the bureaucracy, et cetera. So it takes much more time to do things. It's much more complex. It's a drain on the economy. And if I take a tiny bit, which I spend a lot of time on the World Bank, which is correspond banking, it's below the radar, but it's just disappearing day after day after day. So this basically is a relationship between emerging and developing economies and the central system, which was handled by city group, JP Morgan, Deutsche Bank. One after the other, they cut the ties. That will be a problem for the global economy, which is not visible yet, but someday it will surface and then we have another problem as a backlash for the population. Let's keep in mind about China. China in particular has been behind, has been behind creating alternative arrangements to the Bretton Woods arrangements. It's happening in Asia and many countries have joined this. So I would use this as an analogy for you said the Beijing group. I don't know if it's going to be called. It could be Kuala Lumpur group, it doesn't matter. It's going to happen. Clearly it's going to happen. And we should not believe that the guys in Beijing do not understand, I mean, it's the pitfalls. Okay. Now secondly, about Germany. Why Germany has to think about the policy stance? If Germany had had its own currency nowadays, I mean, the Euro is like an undervalued Deutsche Bank. When it comes to competitiveness and industrial strength of the German economy. I mean, Germany would have experience with a much stronger currency, a lot more unemployment. So this is something people should understand and it's the task of politicians in Germany to explain it. However unpalatable is for German citizens. Last but not least about finance. It may be there is a lot which is wrong with finance and finance is not like a bakery. Finance has a particular role to play. It could argue that finance has many of the attributes of public utilities. So if finance is frozen nowadays, when it comes to reshaping, it's redirecting, it's funding of activities, so on and so on. Now, in Germany there's the credit to the Albao. We're talking nowadays in Europe about promoting promotional banks. I think we should set up a range of banks with the backing of the governments. We should fund new industries. Otherwise we're going to be stuck. There is so much risk aversion. I mean, there is so much fear than there should be something. You go, yes, this is government intervention. This, give me a break. I mean, it's like a case with shopped. And there are promotional banks in Europe, in Germany, in Austria, even France. I mean, the French government is behind banks. So we should not fear it. I mean, it is such an extraordinary set of circumstances and we should be bold. So I would not fear setting up, even in the United States there is talk about setting up such a public finance institution. Why not? What's wrong with this? I think if we are blinded by ideology, we're going to continue to go in the wrong direction. We should be pragmatic. Thank you. In the US, you have Freddie Mac and Fannie Mae, which are semi-public institutions, are taking a lot of risk and are preventing the banks, the commercial banks, from taking a lot of risk that are taken in Europe by the banks themselves. So we are in a very complex situation as regards the financing of the economy on both sides of the Atlantic. If I may try to wrap up, first of all, we had a very good discussion, obviously, a lot of interaction. I cannot help saying a word on Germany. The problem of Germany is really twofold. One is the very bigger account surplus, which is signaling something which is not absolutely normal. That being said, I shared a view of Wolfgang when he says, but what do you want me to do finally? I don't command the industry and the entrepreneurs. I don't command the unions. They have their own deal. All what we could do is to encourage the union to be more demanding, which was done by the German government and by the President of the Bundesbank.