By Dave Matlow
Two financial heavyweights met at the Westport Public Library tonight to shed some light on what one described as “a strange moment in economic history.”
David Komansky (l) and Marc Lasry discuss the economy tonight at the Westport Public Library as Richard Murphy, contributing editor of Fortune Magazine, listens. (CLICK TO ENLARGE) Dave Matlow for WestportNow.com
David Komansky, retired chairman of Merrill Lynch, and Marc Lasry, CEO and co-founder of Avenue Capital Group, a global player in distressed securities, met in the library’s McManus Room to share thoughts on the recession, rising unemployment and the confusing fact that corporate profits are up.
It was the third successive year the two Westporters had teamed up for a February library appearance to talk about the economy.
Moderated by Richard Murphy, contributing editor at Fortune Magazine, Komansky and Lasry had a rapt, packed audience holding on to their every word, as most hoped to see a glimmer of hope on the financial horizon.
Prosperity is just around the corner? Not quite, but each offered some hope.
“It’s a strange moment in economic history,” Komansky said. “We’re out of the recession, and corporate profits are up, but there is still lots of unemployment. What it’s going to take to get the economy going is to get employers convinced to hire again.”
He described a vast disconnect between markets and how average people live.
“Corporations have big earnings, but we have to look at what that means,” said Komansky. “It’s the result of cost cutting. People with jobs are working harder. We’re not on the road to recovery till revenues increase.”
Unemployment statistics are actually worse that they appear, he added, noting that many of the employed are under-employed, working part-time.
Komansky continued that the unemployment problem has been exacerbated by the fact that “other nations are making products more cheaply.”
“It will take time to bring the economy back,” he said, adding that job training is key.
Lasry said that it will take several more years before the nation works its way out of the unemployment problem.
“We’re not hiring because we’re making our people work harder,” he said. “By the second half of ‘11 employment will improve, but we’ll never go back to the 5 percent unemployment levels again.”
Lasry also described a more competitive hiring market.
“There’s now a bigger pool of people to hire from,” he said. “You can hire well educated people, but less well educated are basically doomed because employers can give the job to college educated people.”
He noted that technology will continue to drive the growth in the economy. The trouble is that not enough people are skilled for those jobs.
“In the United States we make excuses for our kids,” he said. “That’s why they are falling behind the countries who emphasize technology and force their kids to learn it.”
Komansky also gave a shout out to clean energy, arguing, “We must find a way to use less imported oil.”
He also stressed that turning an ailing economy around crosses party lines.
“Republicans want to shrink the size of government,” Komansky said. “Obama wants to invest in education and infrastructure. The most important economic challenge facing the country is how to increase investment in infrastructure and know how to do it while shrinking the size of government as Republicans want.”
Unfortunately, he added, “Democrats and Republicans are equally inept. The government is dysfunctional, more than I have ever seen.”
