Paul Krugman on bankers
As a change management consultant, I see the effects on business of what bankers did – the meltdown they caused. Paul Krugman won a Nobel prize for economics. He knows what he’s talking about. In this article in the New York Times – Bankers Without a Clue – he makes some very critical comments about bankers. I agree with what he says….
Consider what has happened so far: The U.S. economy is still grappling with the consequences of the worst financial crisis since the Great Depression…. And this disaster was entirely self-inflicted. This isn’t like the stagflation of the 1970s, which had a lot to do with soaring oil prices, which were, in turn, the result of political instability in the Middle East. This time we’re in trouble entirely thanks to the dysfunctional nature of our own financial system. Everyone understands this — everyone, it seems, except the financiers themselves.
There were two moments in Wednesday’s (Congressional) hearing that stood out. One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that “happens every five to seven years. We shouldn’t be surprised.” In short, stuff happens, and that’s just part of life. (…)
As an aside, it was also startling to hear Mr. Dimon admit that his bank never even considered the possibility of a large decline in home prices, despite widespread warnings that we were in the midst of a monstrous housing bubble.
Still, Mr. Dimon’s cluelessness paled beside that of Goldman Sachs’s Lloyd Blankfein, who compared the financial crisis to a hurricane nobody could have predicted. Phil Angelides, the commission’s chairman, was not amused: The financial crisis, he declared, wasn’t an act of God; it resulted from “acts of men and women.”
One thing that this makes clear is that predicting the future is very hard, yet that is something all businesses must try to do. We need to have an idea about what the economy will be like, what people will be interested in, and so on, and plan accordingly.
But when we realize we have got it wrong, we need to react quickly.
