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Notes for Columbia University Graduate School of
Business Annual Dinner, Waldorf-Astoria,
May 5, 1986

I am delighted to be here tonight for the annual dinner
of the graduate school of business.

It is a particular pleasure

to receive this award which I consider one of prestige and honor,
thanks in large part to the efforts of Bob Yavitz and Sandy
Burton who have put so much of their energies into making the
Columbia School of Business the great institution it has become.
Please accept my heartfelt thanks.
I must warn you all at the start that I don't plan to
tell any funny stories tonight.

I became concerned about a week

ago when the New York Times ran a short article contending that I
was acquiring a reputation as something of a stand-up comic.
That's really strange because I didn't think any of the stories I
tell are particularly humorous.

At anyrate, that's not the type

of reputation that any central banker would relish.
central bankers are supposed to be like Puritans —
haunting fear that someone, someplace, may be happy.

After all,
they have a

- 2 -

My remarks tonight will be brief.

I would like to

leave you with a few thoughts about the economy and why we should
not be complacent about it.

Many people are feeling pretty good

about the economy right now, despite the obvious imbalances and

But lest you all think I'm too upbeat about

conditions let me quickly remind you that the dollar has declined
about 35 percent over the past year, industrial production is
flat, the farm and energy sectors have problems and the United
States is carrying too much of the load in the world economy.


balance, however, there is well-founded confidence in our longerrun prospects and confidence that we can sustain and consolidate
our gains.

But the outlook is one of both good and bad news.

The Good Signs

Fourth year of expansion; more people employed;
accomplished without any pick-up in inflation; no sign of


Favorable impact of oil price developments.


Ebullience in financial markets.


Developments in industry —

inventories; wage restraint;

improvement in competitive positions.

Interest rate developments (and cooperative actions).

All of these forces, in combination, help provide the solid base
for sustained growth and greater price stability.

But I also Get Paid To Worry.

Let me now play the Puritan

lest our partying and cheering get out of hand:

There are still imbalances, pressure points and strains.


The downside of lower oil prices on oil companies,
foreign energy producers, financial institutions.


Over-building and see-through offices.


The farm economy.

Increase in indebtedness.

All of this points to a mixed picture and to several
fundamental unresolved problems:


Other problems

LDC debt —

marshalling the will and effort to make

fundamental policy changes at home and to regain

Political strains caused by trade deficits, borrowing,
inadequate growth.

Economic imbalances must be dealt

with at source to avoid the political pots boiling over.

Siren of protectionism.



Recognition of need for discipline plus margin of
external financing.


Baker plan.


World Bank and regional development bank lending.


Years of good growth.

Can we, as nations, collectively, find the common ground to solve
these problems?

I think the answer is yes.

It will take a very

strong cooperative effort among borrowers, banks, international

- 6 -


But we have some experience now, and all of that

can take place.

It's a time of opportunity and optimism, yet a time to

be vigilant about the dangers and the future course.

As I said

earlier, I think we can all agree that we're headed in the right

But like bloodhounds we need to keep scent and sight

of our quarry and on the track of the economic goals we have set.