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Financial Crisis culprit: from denial to acceptance as 2008 wanes?
By Kaufmann | December 31, 2008 No Comments »
A brief message as a troubled 2008 comes to an end, wishing for a new year that sees rebound and renewal on many facets. And longing for a tad of introspection.
Edward Hopper 'Morning Sun'
It may bode well that the year is now leaving us with the battered stock market is on a mild upswing. And that we are finally starting to come to grips with the real causes and consequences of the financial crisis. With a few exceptions, for many months there was generalized denial that misgovernance, corruption and capture was a real culprit of the financial crisis. Denial meant instead that blame went to technocratic misteps or ignorance. Some politicians spoke vaguely about ‘greed’, others tend to point a finger at a couple of CEOs or CFOs.
In this space, we have been disagreeing with such facile diagnosis for quite some time, pointing to the more systemic and pervasive failures in governance, and the existence of ‘legal corruption’ and capture, as well as pointing out that the financial crisis has had some system-wide Ponzi scheme manifestations...
In this we have been joined by a few bloggers, notably Angel Cabrera, President of Thunderbird School of Management, who aptly labels his blog entry ‘Ponzinomics’. And it is also worth reading a very recent column by Paul Krugman in the NYT on this very topic.
So, as we are about to enter a new year, and with it the dawn of a new ‘regime’ in the US, the tide perhaps will turn — away from politically correct denial, towards acceptance, frank recognition, and concrete evidence-based reforms. Lessons from misteps across the Atlantic also need to be learnt and applied by the european political elite in a number of countries.
Such a financial tsunami requires, with dire global consequences, does require sharper (and transparent) diagnosis of what really took place, and why. And we need to face up to to the implications of the new world order today — even if anathema to some powerful interests. In this we need to openly question afresh a number of orthodox ‘mantras’, such as self-regulation, voluntary codes of conduct, CSR, and ‘anticorruption drives’. In the future, we cannot ignore, or mask, what the data is telling us.
Governance and ethics in some powerful industrialized countries and multinationals require further emphasis and action–not only in developing countries. Concrete incentive and transparency reforms deserve particular attention, guarding against excessive regulatory control by fiat. Focus on governance reforms is now imperative, particularly with the new role of government in economy and finance.
Time to let the year go… See you in 2009.
Siemens' bribery list (NYTimes)
Topics: Corruption, G-20, Public-Private Linkages, Transparency, capture, financial crisis | | Read and Submit Comments