As stock market turmoil continued (AP) Wednesday, a panel of financial experts met in Chicago to discuss the implications of the financial crisis for world markets and the future of regulation.

The panel, sponsored by the Chicago Council on Global Affairs, included Niall S. K. Booker (PDF), CEO of HSBC Finance Corporation and Deputy CEO of HSBC North America Holdings, Inc. Booker said power is “shifting back from the West to the East.” World gross domestic product growth “will now be shared by other parts of the world,” he said, citing China’s financing of a large percentage of U.S. debt and profits for oil producing countries. In the coming years, Booker said, the West will have to save more and spend less. But, he said, that is “not a message politicians can deliver” this close to the election.  The result of the election will likely have an impact on consumer confidence, Booker said, but he predicted a downturn over the next few quarters in the United States and the United Kingdom.

Kenneth Griffin, CEO of Citadel Investment Group, LLC, also said the greatest challenge facing the incoming administration will be the devastation of American consumer confidence. Washington need to “focus again on positives and less on pushing fear as a means of pushing through programs as a means to stabilize the market,” he said. Griffin said most forms of regulatory arbitrage are  now dead, pointing to Fannie Mae, Freddie Mac, Wachovia, Washington Mutual and others, as regulated companies that still went bankrupt. “We need to keep in mind that it is our regulated entities that failed us first,” Griffin said.

Raghuram Rajan, professor of Finance at the University of Chicago Graduate School of Business, said he anticipates a “massive attempt at rethinking regulation. Rajan said an increase in regulation could set the stage for the next financial crisis.

A major problem, Rajan said, is that the United States seems to “have arrived at a sense that we have a god given right to avoid downturns.” He expressed skepticism about proposed economic stimulus programs, saying economic destruction is part of the capitalist process. In the near future, Rajan said, “let’s be prepared for some pain. Because some pain may actually be a good thing.”