Sunday, September 28, 2008

REWARDING INCOMPETENCE...

When a business makes good decisions, it prospers. When it makes bad decisions, it suffers. Sometime that can even mean it going out of business or being taken over by a more successful business. That is not a nice thing but it is a necessary thing since it is how the market regulates poor performance. (Obviously such a system disturbs those in the State sector who are most often accustomed to poor performance being rewarded and even promoted.) So why are we supposed to feel so concerned about those companies in the finance sector who have been shown to have made very poor management decisions? The fact that so many have over-exposed themselves (and their share-holders and customers) to bad risk is proof those companies need to suffer. It is vital that poor decision making is punished otherwise the problems gets worse. That's why I cry no tears for those institutions now going under, one by one. It may be seismic but it is timely.


Of course we should all understand that the origins of the sub-prime disaster lies directly with former US President Bill Clinton and I offer you this video as a little overdue historical context setting. I am not saying that Clinton and the Democrats carry ALL the blame however since it is obvious that far too many in senior management in the money markets went along with the farce and made it worse. The FREE market works - but when government intervenes it works less well. The Bail Out in the States is NOT the end of our problems, it may just be the beginning.





Posted on Sunday, September 28, 2008 at 09:31AM
by David Vance

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