Jetrader - March/April 2010 - 12

The Return to a NEW Normal Preparing for a Post-Recovery Aviation Industry By R. Stephen Hannahs, Group Managing Director and Chief Executive Officer, Aviation Capital Group “All of us have been severely tested in the past 15 months as the global financial system proceeded to effectively shut down.” uring the past five months, many individuals, corporate business partners, bankers, airline executives and associates have asked me, “When do you believe that the financial markets will return to normalcy?” All of us have been severely tested in the past 15 months as the global financial system proceeded to effectively shut down. This virtual collapse ushered in the grandest scale of global government intervention not seen in 80 years. Few of us have lived through this scale of financial trauma in our business careers, and this question is critically important for a capital-intensive industry. It is my view that the problems that have been exposed in the financial system will not provide for a return to the norm of the past 10 years. The financial system will heal, and there are signs of this now. However, the financial system will be a different functioning entity. It will be stable and functioning but not as forgiving. It will be a “New Normal.” Regulations Galore The aftermath of all crises typically yields more regulation. As we continue to pick up the pieces and rebuild the economy, there will be extensive modification of the current regulatory system, both domestically and globally. There will be a concerted effort to create international standards and even perhaps a global international regulatory body. This additional regulation will throw aside the view that completely free markets will be self regulating. The belief is now that mankind, left to our devices, will always go too far. The alignment of mathematics, finance and physics will be called into question. It’s clear from the failure of long-term capital in the late ‘90s, CDOs, CLOs and synthetic CDOs in the early part of this decade and the extensive use of exotic derivatives in recent years that there are more Black Swans than anyone ever imagined. The models that created the various instruments were clearly flawed in their formation. As such, various government regulations will attempt to walk a line between too much and too little. In fact, as I write this article, the U.S. Congress is drafting new regulations for financial institutions. In this legislation, provisions have been proposed to disassemble even healthy institutions if it’s deemed that they have engaged in risky behavior that could be systemic. If 12 The official publication of the International Society of Transport Aircraft Trading

Jetrader - March/April 2010

Table of Contents for the Digital Edition of Jetrader - March/April 2010

Jetrader - March/April 2010
A Message from the President
Contents
Calendar/News
Q&A: Gil Speed
The Return to a New Normal
The Funding Gap
Reaching Out
The Gift of a Lifetime
Aircraft Appraisals
From the ISTAT Foundation
Aviation History
Advertiser Index
Jetrader - March/April 2010 - Jetrader - March/April 2010
Jetrader - March/April 2010 - Cover2
Jetrader - March/April 2010 - A Message from the President
Jetrader - March/April 2010 - 4
Jetrader - March/April 2010 - Contents
Jetrader - March/April 2010 - 6
Jetrader - March/April 2010 - Calendar/News
Jetrader - March/April 2010 - Q&A: Gil Speed
Jetrader - March/April 2010 - 9
Jetrader - March/April 2010 - 10
Jetrader - March/April 2010 - 11
Jetrader - March/April 2010 - The Return to a New Normal
Jetrader - March/April 2010 - 13
Jetrader - March/April 2010 - The Funding Gap
Jetrader - March/April 2010 - 15
Jetrader - March/April 2010 - 16
Jetrader - March/April 2010 - 17
Jetrader - March/April 2010 - 18
Jetrader - March/April 2010 - Reaching Out
Jetrader - March/April 2010 - 20
Jetrader - March/April 2010 - 21
Jetrader - March/April 2010 - 22
Jetrader - March/April 2010 - The Gift of a Lifetime
Jetrader - March/April 2010 - 24
Jetrader - March/April 2010 - 25
Jetrader - March/April 2010 - 26
Jetrader - March/April 2010 - Aircraft Appraisals
Jetrader - March/April 2010 - 28
Jetrader - March/April 2010 - 29
Jetrader - March/April 2010 - 30
Jetrader - March/April 2010 - From the ISTAT Foundation
Jetrader - March/April 2010 - Aviation History
Jetrader - March/April 2010 - 33
Jetrader - March/April 2010 - Advertiser Index
Jetrader - March/April 2010 - Cover3
Jetrader - March/April 2010 - Cover4
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