Time to get on my soapbox for a minute. Paul Volker, covered in the NY Times, said, "Even the experts don't quite know what's going on." That's a very scary statement.
The house of cards has fallen people. Oz has been discovered behind the curtain. Unfortunately, we are also the enemy. Let me explain.
I've worked in corporate for the last 20 years and have coached for the past 10. During that time, I've seen it all - especially the seven deadly sins sloth, greed, you know what I mean.
We've let the lowest of the low run our corporations. We've worked for them and watched them corrupt the time-honored practice of delivering high-quality products to customers who buy them for a reasonable price and focus TOTALLY on profit. They will do ANYTHING to make a profit, hit their quarterly targets, get the EBITDA just right to make their Wall Street projections. ANYTHING.
It doesn't matter that the product suffers. Or the employees. Or the brand. Just hit the numbers. And they've been doing it for YEARS. It's just a matter of time until everything comes apart at the seams. I used to believe that real companies operated on the theory that if they keep their employees happy and motivated, then their employees would develop and deliver quality products that the market would buy, then the company would make a reasonable profit, making it a strong company. Stockholders would recognize a strong company and invest heavily in the future of that company.
Unfortunately, this theory has been turned upside down. We now focus on what Wall Street demands, deliver unrealistic quarter-to-quarter returns, put pressure on the company to deliver more profit with less spending, and put increased pressure on all the employees to deliver — or fire them. Is this the shining example of a healthy company? I know that it is the standard for many companies today. The majority of companies (not all, mind you) have this upside-down behavior, trying to spin the numbers and forget about who delivers them - customers and employees.
So why do I have a picture of the CEO of Bank of America? He's just one of the many who thought they could spin the market, deliver better and better numbers from highly risky investments, and ultimately be one of the causes of our current economic predicament.
Our trust in the markets is gone, people. Until President Obama and Congress take radical steps to change this behavior, trust will never return. Not for a LONG time.
To help me (and a lot of other people) trust the markets, you need to do two things:
1. You need to get rid of the people that caused the problem. All of the culprits that took unwarranted risks with the trust of the public must be banned from employment. I know this is harsh, but frankly, they have money, so they won't starve. But to kill a cancer, you have to cut deep. And also send a message - you continue this behavior, it will happen to you too. Unfortunately, you see that they are still up to their hijinks as the TARP money flows in. So can them (prison would be better, but unemployment is just fine for me).
2. Develop regulations, laws and standards to ensure that this will never happen again. By the way, there will be some really smart people out there that will try to work around these new rules - can them too. They used to have stocks and pillories many years ago - maybe we should build a few in front of each stock exchange. We need a little more shame.
Only when our government, our companies, and our markets acknowledge that they have been rigging the game for the past decade or two, the public will begin to trust them again. Until then, I will keep my money out of the market. And I think I have a lot of friends that feel that way too.
Now I will get off my soapbox.