Archive for April, 2009

Ask a stupid question . . .

Wednesday, April 29th, 2009

The current financial crisis has been exacerbated by fear. Not fear of losing money, but fear of losing face.

At no point, it seems, were any of those self-declared smartest guys in the room brave enough to admit that they didn’t have a clue how the exotic financial derivatives they were spewing into the world worked.

Perhaps we’d have been spared financial Armageddon had one of them just put a hand up and said: “Actually, guys, can you run those CDO-cubed thingies by me one more time? How is it they make us money again?” (Hint: they don’t.*)

Why am I musing on this? Well, last week, two different clients told me they really appreciated the outsider’s perspective that I provided. It backed up what I’ve long said – that being able to admit you’re not an expert gives you an advantage. (more…)