… Because, what scares me is, the Chinese are indicating that they’re not too comfortable with the trillion dollars in US Treasuries that they’ve already got, and what I’m scared about is, when I see the CDS’s on US treasuries going — trading now at close to 100 basis points. The implied probability of the US government defaulting according to the market is now 10 percent. I think that that’s a scary proposition. – Desmond Lachman
Housing Doom is pleased to present the sixth installment of our unauthorized annotated transcript of the American Enterprise Institute’s March 17, 2009 seminar "The Deflating Bubble, Part V: Forecast and Policy Recommendations for the Next Six Months."  This is the discussion by the panelists that followed the presentations and preceded the Q&A session. The event site has several resources, including both an audio and a video recording of the 2 hour proceedings. There is a brief summary, but as yet no official transcript.
Alex Pollock [1:15:15]: I want to do 2 things. I want to talk about the — before we let the panel jump in some more — I want to talk about the pronoun "who?", and then I want to tell an Irish joke.
The several things in this panel came up with … question of management. And you know — when we talk about policy, we love to talk about institutions and policies, and formulas, and what are inaccurately called mechanisms, when it comes to markets, which of course are really organic behavior —
But we don’t talk enough about the question of "who?". Everybody who is an actual manager knows that more important than the organization chart, although it’s important, is who you have in charge of various functions, and this brings me to one of my favorite characters in financial history, who is Jesse Jones.
Jesse Jones ran the Reconstruction Finance Corporation during the 1930s, which was the bank, and other things — bailout, government corporation of its day. Reconstruction Finance Corporation made investments in more than 6,000 banks during that crisis, which was about 40 percent of all the banks there were. Who was Jesse Jones? Well, he wasn’t even a High School drop-out. Because he never got to High School. He quit school in the 8th Grade to take over one of his father’s cotton farms. He was a self-made man, a very successful entrepeneur, both in politics and business. He was very experienced … getting on towards 60 when he took over the Reconstruction Finance Corporation. He was a tough minded, tough, very financially savvy guy.
And I think it’s generally considered, he did quite a good job, and was highly trusted. So the question I’ve been putting to people is: "where is our current version of Jesse Jones, to run these bailout operations?"