Schwab's Deep Impact

In an interview led by CNBC anchor Maria Bartiromo from the keynote stage before roughly 2,100 advisors and other guests, the founder and chairman of the investment company that bears his name reiterated his critical views of both Federal Reserve Chief Ben Bernanke and President Barack Obama’s economic leadership.

Schwab echoed some themes he raised in an opinion piece in The Wall Street Journal in late September. He views significant change in Washington as critical to a turnaround in the U.S. economy.

On Nov. 2, Bernanke expressed support for the Federal Reserve’s Operation Twist program, which, as part of its overall accommodative policies, will keep the target range for the Fed funds rate at zero to 0.25%.

“What Bernanke is saying is a bit of BS,” Schwab said in response. “The U.S. does not have full control of prices and inflation, which can come from China or could be from oil or another commodity on which we are interdependent as a country.”

“I should say that I am generally more positive than what I see on CNBC,” added Schwab. “From a 39,000-foot view, the economy doesn’t look so bad. We have 139 million or 90% of the workforce employed, liquidity is incredible, we’ve deleveraged the economy … many things are highly positive.”

As for Republican leadership, the party has to have “someone electable,” Schwab said, noting that he sees Dodd-Frank as a “disaster.”

In terms of the Wall Street and other protests over economic inequality, he wants free-market mechanisms to lead the way: “Let’s reward success and not suppress it, and yes, we need tax reforms,” Schwab shared. “To level the playing field, we have to have a robust economic expansion. There’s no other solution. Occupy Wall Street doesn’t get how free enterprise works.”

Tony’s Take

Despite its challenges, Tony Blair was upbeat on the prospects of U.S. economic and political leadership moving forward.

Blair said on the morning of the second day of the conference that the resolution of today’s global economic and financial challenges could get derailed by short-term political thinking, though he remains optimistic that leaders can address long-term issues.

“The best short-term politics do not make the best long-term policy,” said Blair, who was prime minister from 1997 to 2007. “Right now is a moment of big decisions and key decision makers. And there is a danger that short-term politics get in the way of the best long-term policies.”

He described the challenges and changes affecting the world as similar to those affecting the financial services industry. “The speed, scope and scale of change and the challenges themselves are immense. Challenges come together, though—when I was in office—I had hoped they would be sequential,” Blair explained. “And if you think the [financial] markets are tough, try the Middle East,” he added.

Speaking of foreign affairs, Blair acknowledged that there was some “wariness with our continued engagement overseas” in the minds of the American and British public. He urged those in the West and elsewhere to look at the security threats from terrorism as the direct result of extremism. “This is not a conventional battle, and we are unlikely to see a clash of the conventional kind between any of the larger powers,” Blair said.

To defeat the extremist ideology, “You have to win not just with arms, but with ideas,” Blair said, pointing to the continued spread of instability to countries like Kenya and Nigeria.

A Tiger Hug

The show closed with a presentation from Joshua Cooper Ramo of Kissinger Associates. Ramo told the assembled advisors and other guests that in order to meet the challenges of the 21st Century, they need to come to grips with the abundance of shifts happening globally—especially in China.

“The rise of China is one of the most important changes of our lifetime, and the outcome remains uncertain,” said Ramo, author of “The Age of the Unthinkable.” “For the U.S., it involves the challenge of ideas, economics and values and also the opportunity for cooperation,” he said.

The Chinese, explained Ramo, see the major U.S. events of Sept. 11, 2001, and Sept. 14, 2008 (when Lehman Brothers went under) as related. “They are markers of big, powerful events,” he said. Like the Arab Spring, the Chinese work to stay abreast and to understand the connections between events that cause organizations to change or collapse under new and different pressures.

“How do the Chinese look at this? It’s the nature of the age. Looked at from their worldview, they are looking for instability. This is one of the fundamental cultural differences between the United States and China,” Ramo explained.

Ramo described “the unthinkable” as trends such as the loss of U.S. jobs and the increase in Chinese ownership of U.S. debt.