Nanyang Business School's Professors Discuss the Financial Crisis

This video is an 1 hr long, however I find it really informative and gives a really good insight of the crisis from different perspective. The link can be found at :

http://www.nanyangbusinessschool.ntu.edu.sg/announcements/public/images/attachments/pdFinancialCrisis_20081020.wmv


Below is a rough summary of what I feel is good to know, categorized by the different speakers.

Prof Tan

• 0 growth for 2009
• The recovery of the Singapore economy will be a U shaped one, different from the V shaped ones we had in the past.
• Small and Medium Enterprise (SME) will have difficulty getting funding from the banks, as the banks will view SMEs as entities with higher risk than as compared to in the past.
• If countries/ world bank would like to get money from the East, they should also incoperate the money values of these countries. I.e give more monetary power to the east after this crisis.

Prof Huang

• Missing out on the 10 best days in the last decade, will affect your investment gain by half.
• Unless you can perfectly time the market, it is better to remain vested in the market and ride the bear market.

Dr Low

• The reason for MAS to guarantee all deposits, is because other countries in the region are doing so. So in order to remain competitive as a regional wealth management hub, we do not have the choice but to follow.
  

• By guaranteeing all the deposits in the bank, we are punishing those banks that are prudent in their risk management. This is because people will just put their money into the banks who gives the highest interest rates. Hence this might change the way banks manage their risk in the future. In another words, there is no incentive to be 'good' in good times, as there will be always someone you bail you out when a crisis happens.

Prof Suman

• The actual defaulting of loan in the US is not really the main cause of the sub prime. But rather it is the lost of confidence of the people in financial institutions. He mentions about how their sub prime debts, which are high risk, can be packaged and rated as A and sold to people all over the world. And when problems from the 'relatively' small sub prime arise, people started to wonder about the ratings and lose confidence, thus pulling their money out of the market, causing a chain reaction.

Prof Singh

• This could be a start of the shifting of economic powers from the west to the east.( Just a theory of his)
  

* Credits given to NTU's Nanyang Business School for hosting this event