The financial sector excrement hit the ventilator at greater velocity than ever this week as four major institutions fell foul of a credit crunch that shows no sign of abating.
On Monday, US investment bank Lehman Brothers filed for bankruptcy and Merrill Lynch got taken over by Bank of America. On Tuesday everyone had a breather, but then yesterday the US government bailed out mega-insurer AIG to the tune of $85 billion, while over here Lloyds TSB bought out HBOS at 232p per share. HBOS shares were worth over 700p at the start of the year and over 1000p in July last year.
Many commentators are describing this as the biggest financial crisis since the Great Depression and what is still hard to understand is how the senior management and boards of directors of all these huge, venerable, public companies allowed this to happen.
"The boards of directors of a number of these imploded financial firms utterly failed to successfully implement some of their primary tasks"
We don't claim to have any answers here at HEXUS.channel but activist investor Carl Icahn has recently started blogging on the topic of corporate mismanagement. In his latest post, entitled "We Pay So Much For So Little", Icahn says "...the boards of directors of a number of these imploded financial firms utterly failed to successfully implement some of their primary tasks - to oversee management and monitor and evaluate risk controls."
Again, why? Some people put it down to greed and the flaws inherent in "The Capitalist System". This infers that there is an alternative to a culture in which individuals are rewarded for their productivity by material gain. Many countries spent much of the last century trying out other systems and, with the exception of the sinister regime in North Korea, everyone seems to have concluded that a free market is the best system available.
