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Michael D. HagedornVice ChairmanChief Financial OfficerChief Administrative OfficerUMB Financial Corporation
The Making or Breaking of American Economic
Prosperity
Making the case for a return to civility, honesty and integrity in business, politics, and the financial
industry.
Agenda
Inside and outside the frame: The Great American Debt Crisis
A sequel in progress: The Greater Global Debt Crisis
Getting ready for our close-up?
“Cinema is a matter of
what's in the frame and
what's out.”Martin Scorsese
Inside the frame in 2008
Low interest rates and cheap capital
Too much leverage
Complex financial instruments
Passive regulatory environment
Shift from “debt load” to “monthly payments”
Total Credit Market Debt as a Percentage of GDP
In 2008,$1 earned equated to
$3.75 in U.S. debt
Total Household Debt as a Percentage of GDP
In 2008, Americans earned as
much as they spent
Long-Term Savings and Investment Trend American Savings Rate
Long-Term Savings and Investment Trend Household Equity to Debt
Outside the frame in 2008
“You have the wrong forgotten man! The forgotten man is the man waiting for the
recovery that you are not delivering or that you are preventing.”
-From Hoover/FDR debate
• Capitalism’s role
• Sovereign debt levels
• Credit-worthiness
• Misplaced blame
• Unintended consequences
• Rushed resolution
• Sound-bite mentality
• Who’s really pays
Top Ten Movies About the Economic Crisis
1. In Debt We Trust
2. Capitalism: A Love Story
3. I.O.U.S.A
4. The Ascent of Money
5. Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders
6. Frontline: The Warning
7. American Casino
8. We All Fall Down: The American Mortgage Crisis
9. Capitalism Hits the Fan
10: The Story of Stuff
“By definition a sequel can't be original. So
you've got to figure out what worked the first
time around.”Barry Sonnenfeld
American Movie Producer
Figuring out what worked
Box Office Gold
2008 Economic Crisis
2011 Sequel
Parent Brand Awareness
What and Why: Excessive debt
What and Why Else: Excessive debt + austerity + tax
increases
Figuring out what worked
Box Office Gold
2008 Economic Crisis
2011 Sequel
Distribution Intensity
Wide Net:Over-leveraged
individuals, corporations, mortgage-
related industries, financial institutions,
American housing problem
Much Wider Net: 2008 list + whole
governments + whole societies+ downgrade of government debt
Figuring out what worked
Box Office Gold
2008 Economic Crisis
2011 Sequel
Parent Brand Image
Crisis Taglines: Wall Street greed;Banks are ‘bad’; Regulation is the
answer
Sequel Taglines: Change the structure;
Bigger questions; bigger answers;
Put regulation on the back burner;
Keep interest rates low; What kind of society do
we want?
Parent Brand ImageWhat kind of society do we want?
Figuring out what workedBox Office
Gold2008
Economic Crisis2011
Sequel
Star Continuity
In the frame now
In the frame now
US Department of Treasury, Comptroller of the Currency Administration of National Banks
In the frame now
US Department of Treasury, Comptroller of the Currency Administration of National Banks
In the frame now
In the frame now
In the frame now
First mortgage loans, thousands Case-Shiller National Home Price IndexSA 2006Q1=100
In the frame now
Federal, state and local fiscal woes
Consumer rebound falters
Persistence of foreclosure crisis
European debt crisis
More extensive and costly regulation
Government targeted spending cuts and possible QE3
Outside the frame now
Lack of IntegrityMacro structural issues that need to be dealt with will
be painful, require more than a band aid.
Lack of CivilityUnrest and discourse, look at U.K. violence, rise in German nationalism, political demonizing on both
sides rather than statesmanship.
Lack of HonestyNo government or politicians are being truly truthful
about what caused the world’s financial problems and the painful solutions necessary to address.
DRAFT 20110822
“All right, Mr. DeMille, I'm ready for my close-up.”
Gloria Swanson in Sunset Boulevard
Gloria Swanson as Norma Desmond
in “Sunset Boulevard”American Movie Producer
“Democracy is doomed once the citizens realize they can vote themselves other people’s money.”
•Francois-Marie Arouet, better known as Voltaire, French Enlightenment writer, historian,
philosopher
200 Year Cycle ofGreat Civilizations
Alexander Fraser Tytler
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to selfishness;
From selfishness to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.
What are we going to leave in and out of the
frame?
Integrity Conviction Honesty
Critical thinking Compromise Civility
What is going to be our legacy?
