Monday, November 24, 2008

Bailout : Death of American Pride and Performance

There are news about bailout everywhere. Any Bank which is in the verge of collapse is saved by the Govt. by bailout. But the more they save, the more are ready on the queue creating a chain reaction in the market.
Reason : when there are two ways to go, people chose the easier way.

When Enron collapsed and IT Burst happened, US govt. choose to let it happen. Few people think, govt. should have kept them alive. Might be they are correct, and after-all why should market punish the general investors when few of the top level executives go wrong. This is a valid point.
The case of Bank is even more serious, not only investors but also the depositors need to be saved. So giving life to troubled banks is very important for economy.

But see the negative part of it. Most of the European govt.s are serious about creating new jobs and keeping existing jobs. They are against outsourcing and always ready to help companies when they face any problem. The result is a peaceful and joyful Europe. But it has to be see, has this done good to Europe? I think NO.
Europe has almost become a museum and old aged economy. The more control they keep with the govt. the lesser is the performance. There are hardly any Revolutionary Company (like Oracle, Microsoft, Google, Pfizer,Mckinsey etc.)that came from Europe in last many decades. They have chosen to live in modesty and stability, and not performance.

I have always found the opposite with the US govt. They have the Green Card Lottery through which they bring in 55k people from all over the world to US providing them Green Card. This is increasing immigrant population in US, but it is moving their economy ahead too. There are always people who work for low cost due to this initiative.

The other good part of US Govt. is letting companies fail, when they don't perform. This makes people cautious of things they do and the company boards always think to improve efficiency and effectiveness within themselves.

But with the introduction of bail out, this culture of performance is gone. Signals are on where company board don't try to live at all cost. They play safe and just cry for help. This is likely to go for many years now. It is the human nature; reversing might be a great challenge for the new govt. And continuing it might hit the already sick American Fiscal Balance. Bad days ahead.

The biggest hit will be on the pride. Americans now cannot boost their belief in Performance. And neither they can do for liberalization and free market. If they come up with such suggestions for other countries like they did to Asian countries in 1995 Asian crisis, they will find no takers.

Someone once asked me what is the religion of Americans. I said Christianity. He said thats of Europe. I gave up. He said, "Europe's religion is Christianity; Middle East's is Islam; India's is Hinduism; Japan's is Buddhism; China's is Communism; and America's is Performance." Wow. I was so impressed. I too worked for FICO earlier, and I was impressed with the culture within the organization to value performance. If you are good, you are sure to grow!

But will it remain same? A big question lies ahead. After-all now the management does not need to value performance, they can seek help and survive!!!!!

1 comment:

dr fringe said...

wow? No comments? This is brilliant! Well well written and said. Kudos

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