of a benign adjustment process, not least because at some point the interests of those on one side of the balance may change. i think this mix of challenges in our fiscal and external positions deserve concern and attention. they may end up being diffused gradually and benignly, but they necessarily bring with them a greater risk of higher risk premia, a more adverse investment environment and poorer growth outcomes. under some circumstances, this could undermine an important foundation of the environment for innovation that has delivered our productivity acceleration. what can we do to mitigate the risks in this constellation of forces? we can work to keep monetary policy credible, to preserve confidence we will act to keep inflation and inflation expectations stable at moderate levels. we can act to raise public sector savings, begin to bring our entitlement commitments and our resources closer into balance and build a greater financial cushion into our financial future against the risk of a less benign world. we can make sure we keep our markets open, and to support rather than resist the integration of china and india into the world economy. we can work to make sure that our financial system remains strong, with a substantial capital and liquidity cushion, a more resilient infrastructure and continued rapid innovation in financial intermediation. and we can work to improve educational opportunities in this country, to improve educational achievement and to improve public awareness of economics and finance. nurturing a sophisticated, technologically advanced workforce that is capable of contributing to the competitiveness of our society has to be one of our highest goals and most rewarding objectives. these are achievable ambitions. they would not guarantee that the future will look as good as the recent past, but they will improve the probability it will. the hardest of these are those where the politics are hard. and this is why it ’ s so important that we work to strengthen the constituency in the united states for good fiscal choices and good trade policy choices. education is an important part of this. and the work of the economic and financial education alliance of puerto rico can play a valuable part in creating a stronger foundation for future economic growth in puerto rico and in the country. thank you.

might be more potent than we might think. 5 so, i wonder, for example, whether the thought of “ getting caught ” even crosses someone ’ s mind if a prohibition is so routinely disregarded that violating that rule is normal. in the libor and fx cases, for example, traders discussed openly their manipulation of 4 / 6 bis central bankers'speeches reference rates in electronic chat rooms that they knew were recorded and monitored. the fact that those traders used a back channel to communicate evidences an awareness of wrongdoing — not to mention the brazen content of their communication. i have to conclude that the risk of getting caught either never crossed their minds or was massively discounted. on behalf of their firms, compliance personnel can help identify the root causes — especially the situational factors — that contribute to control failures. a thorough and honest exploration of those factors can help inform structural and governance changes mandated in enforcement actions. it is in everyone ’ s interest for those reforms to succeed, to fulfill the mantra of “ never again. ” i do not think this type of inquiry is easy — not because the root causes are unknowable. rather, it may be uncomfortable to ask the right questions. here are some examples. there are sure to be others. are behavioral expectations — and the consequences of violating those expectations — clear? in other words, does the company say, “ this is the conduct we want, and this is how we will hold you accountable for it. ” does the company employ leaders who are visible role models of good conduct and fire those who are not? are systems of compensation and promotion aligned with corporate goals and purposes? and, if there is a pattern of misconduct, are you sure that your incentive programs are based on merit? can the heads of business lines — the people responsible for p & l — explain how it is that each part of their business makes money and manages the associated risks? if not, are they really capable of effective oversight? when misconduct comes to light, does the company assess itself and challenge assumptions with brutal honesty? upon learning of misconduct, is the company willing to intervene in a timely fashion? if there is an emerging pattern of misconduct, how quickly is it identified and addressed? finally, are there particular desks or teams in which everyone is quite junior? too junior, perhaps, to have worked through a down business cycle or the financial crisis? if so, are we giving that area adequate supervision and compliance attention? concluding thoughts i