photo credit: Bast
I bet some of you have been in situations, work and otherwise, where the hard questions weren’t asked. Where, out of fear of reprisal, consequences or even simply not wanting to appear dumb or the odd person out, no one spoke up or asked frank questions. The elephant in the room – perceived or not- continued to munch away contentedly, unreferenced. Here’s how this can play out:
Today the US Federal reserve had to bail out yet another financial company – AIG – to prevent an shattering impact not only on the US economy, but the global economy. This means the American public is now an 80% shareholder of AIG (how ironic! The US may become socialist, yet!).
This isn’t hyperbole: we are at real risk of an economic shakedown the likes of which none of us have seen. Follow the path:
1. Lenders offer mortgages to people who did not have the means to keep up the mortgages.
2. Those lousy mortgages got bundled up with other financial products and sold to investment firms/banks as packages.
3. The truth will out, and the mortgages started to default.
4. Because the mortgages were bundled, it took a while for anyone to realize they had a lousy package.
5. When the horrible truth started to dawn, and banks/firms realized they held a lot of lousy mortgages, they were unwilling to continue lending money to anyone but super-stars (if even them) with top-tier credit.
6. This means your average decent joe can’t get a loan … to buy a home … to invest in a business … and the economy starts to slow.
7. The US gov’t tries to encourage spending by giving away cash to everyone. Central banks cut interest rates to encourage people to at least TRY to borrow.
8. And meanwhile, stalwart companies like Fannie Mae, Freddie Mac, Merrill Lynch, Lehman Brothers and AIG get sucked under.
And as people are starting to bitterly remark, it’s your average person who is stuck holding the bag.
What does this have to do with Asking Hard Questions?
Well, a lot of people didn’t ask hard questions in the process above.
- Which product managers did not ask whether 40-year, 0% interest etc. mortgages should be given?
- Which mortgage brokers did not ask whether they should approve a mortgage to people clearly incapable of handling the payments?
- Which investment dealers did not ask exactly what was inside the bundles they bought?
- Which investment advisors also did not ask, before selling them to investors?
- Which governments, happy with laissez-faire did not intervene?
Well, the ones who didn’t were the ones probably happy to take the commissions and fatten their wallets.
It’s easy to be judgmental. The fact is, we, in our little lives in our little spheres, don’t ask questions either.
I vote we start asking. We start pressing even when it feels awkward. Who knows — we might just save the world.