Executive and Board Performance – Disavowing Financial Gravity
By Forbes J. Rutherford, President, Rutherford International Executive Search Group Inc.
www.rutherfordinternational.com – www.rematrix.com
May 2008
“Double, double toil and trouble; fire burn, and cauldron bubble”
Macbeth Witches, Scene 1
Little has changed – the pursuit to disavow the existence of financial gravity inflated the Dot Com bubble, continued into a home equity bubble and will likely feed the commodity bubble. We’ve learned little - the manipulators of corporate stock values slipped from the constraints of Sarbanes Oxley and moved downstream to apply their talents at excavating middleclass wealth by pump/priming home values and debt. This time, instead of engaging stock brokers to sell the phantom values, they used real estate agents and mortgage brokers to sell the American consumerist dream which eschews sacrifice and toil. Dupes or “useful idiots,” the retail financial services sector sold debt and empty dreams utilizing fraudulent financial mechanisms that were created by “financial grifters” on Wall Street.
The sub-prime melt down, the predictable collapse of a 140 year old investment bank, the approaching derivative tsunami that is expected to sweep away more historical investment banks is simply a consequence of monetization of ethics and delusional deception of financial principles – all with the assistance of the Federal Reserve, a fawning supplicant which colluded by selling cheap money by accepting junk bond quality mortgage backed securities as collateral. The system is cracking under the weight of this inflationary madness.
August 2002
This following commentary on creating shareholder value by linking staff bonuses, business unit managers and first tier executive compensation through the establishment of a hierarchy of performance measurements was written in 2002. It has even more relevancy today.
My horoscope suggested today was a good day to sit down and read books on mysticism, metaphysics and ancient religions. It went so far as recommending the “Tibetan Book of the Dead” as a suitable summer read. I’m not in the habit of stocking the corporate library with such titles, although I do have a few executive resumes that might qualify. However, the daily reports on Enron, Worldcom and various “mini-ron’s and com’s” in the financial press of late, should suffice as a comparative alternative. Certainly, there will be no lack of reading material over the ensuing months, as further accounting distortions are reported by financial forensic investigators.
How has the executive suite and investment community of corporate America reached such an all-time low in the eyes of stakeholders with respect to ‘trust’, that a politician feels obliged to lecture Wall Street on ethics! A politician lecturing on ethics is akin to the philanderer expecting their spouse to be virtuous. The political response will result in increased regulation, and conveniently eschews a loosely held belief in the principle of ‘market forces'. The solution to regaining the retail investors trust in our financial markets is not by increasing the regulation of business, nor is it a vacuous promise to take a few unscrupulous executives out to the symbolic woodshed.
Complete Text - Link to REmatrix.com Career Section
By Forbes J. Rutherford, President, Rutherford International Executive Search Group Inc.
www.rutherfordinternational.com – www.rematrix.com
May 2008
“Double, double toil and trouble; fire burn, and cauldron bubble”
Macbeth Witches, Scene 1
Little has changed – the pursuit to disavow the existence of financial gravity inflated the Dot Com bubble, continued into a home equity bubble and will likely feed the commodity bubble. We’ve learned little - the manipulators of corporate stock values slipped from the constraints of Sarbanes Oxley and moved downstream to apply their talents at excavating middleclass wealth by pump/priming home values and debt. This time, instead of engaging stock brokers to sell the phantom values, they used real estate agents and mortgage brokers to sell the American consumerist dream which eschews sacrifice and toil. Dupes or “useful idiots,” the retail financial services sector sold debt and empty dreams utilizing fraudulent financial mechanisms that were created by “financial grifters” on Wall Street.
The sub-prime melt down, the predictable collapse of a 140 year old investment bank, the approaching derivative tsunami that is expected to sweep away more historical investment banks is simply a consequence of monetization of ethics and delusional deception of financial principles – all with the assistance of the Federal Reserve, a fawning supplicant which colluded by selling cheap money by accepting junk bond quality mortgage backed securities as collateral. The system is cracking under the weight of this inflationary madness.
August 2002
This following commentary on creating shareholder value by linking staff bonuses, business unit managers and first tier executive compensation through the establishment of a hierarchy of performance measurements was written in 2002. It has even more relevancy today.
My horoscope suggested today was a good day to sit down and read books on mysticism, metaphysics and ancient religions. It went so far as recommending the “Tibetan Book of the Dead” as a suitable summer read. I’m not in the habit of stocking the corporate library with such titles, although I do have a few executive resumes that might qualify. However, the daily reports on Enron, Worldcom and various “mini-ron’s and com’s” in the financial press of late, should suffice as a comparative alternative. Certainly, there will be no lack of reading material over the ensuing months, as further accounting distortions are reported by financial forensic investigators.
How has the executive suite and investment community of corporate America reached such an all-time low in the eyes of stakeholders with respect to ‘trust’, that a politician feels obliged to lecture Wall Street on ethics! A politician lecturing on ethics is akin to the philanderer expecting their spouse to be virtuous. The political response will result in increased regulation, and conveniently eschews a loosely held belief in the principle of ‘market forces'. The solution to regaining the retail investors trust in our financial markets is not by increasing the regulation of business, nor is it a vacuous promise to take a few unscrupulous executives out to the symbolic woodshed.
Complete Text - Link to REmatrix.com Career Section
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