The following is a snippet of an interview between Globe Investor Magazine’s Jason Chow and Ben Stein, dated 18 September 2008 (see the full interview here):
Chow: Financial stocks have gone down because of scandals and mismanagement in subprime lending. What needs to be done there?
Stein: We need more regulation. We need, in particular, rules for non-banks, the highly leveraged entities that raise money by securitizing instruments and loans. They are so large at this point that they rival banks in size, and they’re virtually unregulated.
Also, what we really need—and I hate to say this because it sounds so naive—is a moral awakening on Wall Street. They need to know they’re not just there to make some quick money.
Chow: Are there any moral models to follow?
Stein: No. We have one supermodel, maybe, and that would be Warren Buffett, but even he’s a speculator.
Moral awakening. What a beautiful phrase that is, implying regret, enlightened realization, reform, redemption! Perhaps the time for a moral awakening has at last come. Perhaps it took a global earthquake of shattered confidence and a look into the abyss of financial apocalypse to bring us to this point. But perhaps this is the good that will come of the situation. There is always some good in every bad situation, always some opportunity in every crisis. The Chinese character for crisis is made up of two other characters: danger and opportunity.
As for Warren Buffet, I feel that Ben Stein is right in calling him a moral model, or rather supermodel. And I think he is wrong in taking away from that by calling Buffet a speculator. In my book, a man whose ‘favourite holding period is forever’ cannot be called a speculator. If he buys when others are selling and is fearful when others are greedy, that is not speculation, it looks more like leadership to me. His prudent foresight provided him and Berkshire Hathaway with 31B$ in cash on hand going into this crisis, which now allows him to lend a hand to poor billion-dollar internationals in need. His ideas, like his plan to partly privatize the toxic securities, are needed today.
Warren Buffet called this crisis 'an economic Pearl Harbour’. I think Buffet may well turn out to be ‘an economic Winston Churchill’.
See also : Moral Leadership and Integrity – the lesson of the swamp plant
P.S. From Globeinvestor today 10 October 2008 (read full article here):
Many investors have been looking for global leadership, but Mr. Bush is a lame duck ahead of the Nov. 4 presidential election…. One strategist said he feared a political vacuum with weak governments in Europe and North America. “It's not like we have a Franklin Roosevelt and a Churchill,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.