Gustavo Ballvé on March 2nd, 2010
Banks, Corporate Governance, Food for thought, Home, Industries, Portfolio Management, Risk management

A rare but always welcome interview by Charlie Munger embedded inside, courtesy of an attentive reader and the Stanford Law School. Some highlights inside as well. The main theme is the economic/ financial crisis (what else?).

Highlights:

On accountants: “A majority of the horrors we’ve faced would not have happened if the accounting profession were organized properly.”

On the actions taken in the middle of the crisis: “The problem is so extreme that nothing “un-extreme” has any chance of fixing it. So I basically applaud the people in the government that are doing these extreme things. I’m sure they’re making a lot of decisions that in retrospect will be seen as mistakes, but given human condition where they have to do extreme things under fire, I’m not inclined to criticize them.” (…) “I’m happy to see that the Obama administration has brought in Larry Summers, who is a ferociously smart man and will try to do the right things even if it offends some people.”

On what needs to be done in the US: “Not only do we have to save the financial system, (…) but we also need a huge spending stimulus from the federal government… I don’t regard that as all bad at all, there’s so much that needs to be done in this country. We need a whole electricity distribution system (…) Much can be done in medical care. The hospitals in this country are about to get a vast improvement in its facilities and that’s all for the good. (…) The dangers from what we have to do are less than the dangers that would plainly come if we responded as we did in the 1930’s.”

On the US allowing Lehman to fail: “It was not a mistake. It actually helps to have one or two go (…) You have to have a loud failure.” – he did have to think about it a lot before he actually said it, though...

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