"Dr. Doom is back—and age has done nothing to soften his views. ...In a speech on Wednesday evening to the National Economists Club in Washington... Kaufman argued that efforts to stabilize the financial system following the financial crisis may actually have heightened risks by encouraging more debt and increasing concentration among too-big-to-fail institutions. .. that financial innovations, such as securitization, have mainly spurred an explosion of debt, much of it for speculative purposes. ...As the quantity of credit has exploded, its quality has fallen... Deregulation fundamentally changed... from the era of clear divides between commercial and investment banking and government-set interest-rate caps. Regulation has been insufficient to balance “entrepreneurship and fiduciary responsibility,”... which was checked when Wall Street firms were partnerships, with partners’ net worth on the line."
Henry Kaufman is president of Henry Kaufman & Company, Inc., a firm established in April 1988, specializing in economic and financial consulting, and is known by the nickname "Dr. Doom."
"The proliferation of credit instruments, financing techniques, and vast matrices of trading and investing opportunities requires highly objective evaluations of risks and rewards, and a sense of historical perspective, if excessive risk taking is to be avoided."
"Often the real value of management decisions does not become apparent until many years later. Perhaps what we should do is try to analyze the impact of decisions in any one period on longer-term performance. In the political arena, for example, why should we emphasize the skill and acumen of national policy-makers only on the new initiatives they introduce and legislate? Sometimes the events that do not materialize are more important than those that do. We should try to ascertain what decisions political leaders are undertaking that will benefit their nations subsequent to their terms in office."
"Judgements on the performance of our economy require a clearly defined objective. Too often... there are multiple and contradictory objectives. Unless we are clear on our... objectives, we are not able to evaluate performance as good or bad..."
"I take great pride in being an American. Consequently, when financial excess threatens our economic moorings, and thus our extraordinary dynamic and pluralistic nation, I have often spoken out for saner behavior and more effective policies."
"[A] balance sheet is a snapshot of one moment in time, and thus presents a very limited view... To be a good banker, therefore, a business is much more than its balance sheet."
"The current plethora of instant interpretations tends to emphasize the near-term without adequate regard for longer-term objectives. The problem is compounded by the compressed time scales within which business and government function."