Schmoozing on a Global Scale: The Economist Draws the Pooh-Bahs of Finance For a Pretend Meltdown

Mr. King did not speak for long. “The real failure was a lapse into hubris,” he said. “There was an

Mr. King did not speak for long. “The real failure was a lapse into hubris,” he said. “There was an inability to see through the veil of modern finance to the fact that the balance sheets of too many banks were an accident waiting to happen.”

Afterward, three of the most important men in banking, mustachioed PIMCO CEO Mohamed El-Erian, unsmiling Deutsche Bank star Anshu Jain and the slight S&P president Deven Sharma, were outshined by Philippa Malmgren, a former adviser to George W. Bush. “The sharks are circling,” she said. The men wore matching dark suits over light shirts, but she had what looked like a leather skirt and black heels. “The whale is there, and the whale is the United States.”

They were followed by Citi chief executive Vikram Pandit. He opened with the idea that the new global banking rules known as Basel III “don’t go far enough.” It was eventually clear he meant exactly the opposite. Because of the new restrictions, he threatened, banks will take “deposits from mom and pop” and “lend to big businesses.” Ed Skyler, the Bloomberg aide who left for Citi this year, stood against the left aisle, looking very serious, and recorded the speech on his iPhone’s Voice Memos application, although he also seemed to be following along with a printed version of the speech. Nearby, a blond woman in a frilly shirt spoke into her wrist, very quietly.

“I do think we should end too big to fail, it’s absolutely the right thing to do,” said Mr. Pandit, whose bank, Mr. Rubin’s former place, is usually the first example of cross-border giants that are still impossible to wind down. “It’s being looked at right now.”

After the speeches, an usher went through the audience and held on to a microphone while questions were asked. The analyst Mike Mayo pulled it away. “I heard that I was shut out from meeting with Citigroup,” he said into his microphone. “And that was similar to the experience I had in 2002,” he said. There were minor problems with crotchety questions a day later, when, among other things, Mr. Stiglitz spoke with the billionaire Wilbur Ross; the Treasury deputy Neal Wolin spoke with RBC CEO Gordon Nixon; and Jim Chanos talked with Morgan Stanley’s Stephen Roach.

“Mike! Good to see you again,” Mr. Pandit said. He politely suggested that maybe the other members of the audience were probably interested in other matters. “And you are always welcome into Citigroup anytime you want.”

Ms. Tyson asked about what’s known as the shadow banking system. “We’d like to see more of that addressed,” said Mr. Pandit.

Nassim Taleb, the trader and N.Y.U. professor known for the book The Black Swan, came on next. “Can we do something about these lights? I’ll say the truth, don’t worry, but I can’t concentrate with these lights. Excuse me,” he said from the podium to a large man who was possibly a lingering member of Mr. Pandit’s detail, “Can you do something about these lights?” The lights on him dimmed.

“I’m quite disgusted at these discussions,” he said. “We can’t change humans, make them less greedy. We can’t make them less stupid.” He spoke about a new theory called anti-fragility, and, like Mr. King, spoke furiously about leverage. “You have the illusion of going faster, but the probability of crash is so high that you’ll never get there,” he said.

Afterward, the day ended like it began: theatrically. Two white rappers in fake mustaches battled as John Maynard Keynes and F.A. Hayek. They rhymed “ever so pious” with “confirmation bias,” “psychology’s role” with “fearless and bold” and “ex-post simulation” with “real estimation.”

Mr. Stiglitz grinned in the front row. Mr. Micklethwait watched from an aisle, beaming so broadly that his chin stuck forward.

“We thank The Economist for bringing us here,” said Hayek.

“And to the lobby for cocktails,” said Keynes, “some wine and some beer.”

mabelson@observer.com

Schmoozing on a Global Scale: The Economist Draws the Pooh-Bahs of Finance For a Pretend Meltdown