The most significant cause of the downturn, according to Siegel is that financial firms bought, held and insured large quantities of risky, mortgage-related assets on borrowed money.
Due to deliver a keynote address at the first-ever Wharton Global Alumni Forum to be held in the Middle East from March 11-12, 2009 in Dubai, Professor Siegel is an expert on macroeconomics, financial markets, long-run asset returns and demographics.
“During dot-com IPOs of the early 1990s, the firms that underwrote the stock offerings did not hold on to those stocks. They flipped them. But in the case of mortgage-backed securities, the financial firms decided these were good assets to hold. That was their fatal flaw.”
says Siegel as quoted on Knowledge@Wharton, the Wharton School’s journal of business analysis.
According to Siegel the U.S. economy is not nearly as battered as it was during the early 1980s, when unemployment, inflation, and interest rates were all considerably higher than they are today. Stocks, as evaluated by their price-to-earnings ratios, are undervalued to the point where they could draw enough investors to spark a recovery before the end of 2009. “I think by the second half of this year, things might turn around faster than people are now predicting,” says Siegel.
The Wharton Global Alumni Forum in Dubai organised by the Wharton School of the University of Pennsylvania, the world’s first collegiate business school, is expected to attract over 300 Wharton graduates from all over the world. Speakers include some of the prominent Wharton alumni from the region such as Mohammed Alshaya, Executive Chairman of M.H. Alshaya Co and Chairman of the Organizing Committee for Wharton Global Alumni Forum; Sami Baroum, Managing Director, Savola Group; Aladdin Saba, Chairman, Beltone Financial; Tarek Sultan, Chairman and Managing Director, Agility Logistics; and Ghassan Barrage, Senior Executive Advisor, Booz & Company.
Wharton School Dean Thomas S. Robertson commented: “The Middle East region, like the rest of the world, is looking forward to a positive shift in the global economic climate. The Wharton Global Alumni Forum in Dubai will discuss the current challenges from a regional perspective, and try to seek answers to restore market confidence and boost entrepreneurship.”
Themed ‘At the Crossroads for Global Economic Change’ the two day forum will examine the current economic challenges through six panel sessions led by Wharton professors. Panel participants include Sheikh Nawaf Saud Nasir Al-Sabah, Deputy Managing Director and General Counsel, Kuwait Petroleum Corporation; Mutlaq Al-Morished Vice-President, Corporate Finance, SABIC; Lady Barbara Thomas Judge, Chairman, UK Atomic Energy Authority; Hussain Al Abdulla, Executive Director Qatar Investment Authority; Rasheed M. Al Maraj, Governor, Central Bank of Bahrain; Nabil Ali Alyousuf, Director-General, The Executive Office of His Highness Sheikh Mohammed Bin Rashid Al Maktoum; Dr. Fahad Al Mubarak, Chairman Saudi Stock Exchange (Tadawul); Ammar AlKhudairy, CEO and Founder of Amwal Alkhaleej; and Joe Saddi,Chairman of Booz & Co.
The Lead Sponsors of the event are Agility, M.H. Alshaya Co., Amwal Al Khaleej, Booz & Co., and Dubai Holding. Event Sponsor is National Bank of Kuwait (NBK) and ‘Africa Emergent: Transformational Leadership’, is the Platinum Sponsor.
Monday, March 2- 2009 @ 15:03 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.