Thursday, October 16, 2008

Credit Crisis ? or is it a Credibility Crisis

One hour past midnight, I get an emergency call from the hospital where my father was in the Intensive Care Unit after having suffered a massive heart attack a few days ago. I rush to the hospital with my brother-in-law. My father, who is a doctor himself, has revolted in the hospital ICU. He tells us to move him out of this hospital immediately, as he feared that the specialist doctors attending on him have been grossly negligent, complacent and self-serving. He said this may eventually kill him. We stayed with him till day-break, discussed his concerns with the doctors and moved him out in an ambulance to another hospital, where he eventually recovered.

Looking in hind sight, we wondered how my father, being a doctor himself, could question the integrity of senior and experienced specialists in a reputed hospital. Simple ; he knew the trade and the trade secrets; the good, bad and the ugly faces of the medical profession.

The “Credit Crisis” the world faces today, which is now snow-balling into a historical world wide economic recession, is the handiwork of a few greedy bankers who wanted to make a quick buck, hook or by crook, taking the economics of the whole world for a ride with them.

Kent Beck, the father of Extreme Programming, talks about four new Values for Agile to work. He calls it a customer value focussed “Responsible Development”

  • Responsibility
  • Accountability
  • Transparency
  • Relationships

Does this ring a bell? If the American Bankers were Responsible, Accountable, Transparent and Honest, we would never have had this Credit Crisis nor suffered the irreparable damage it has caused in inducing a world wide economic recession and the untold suffering it will cause to “Mankind” for years to come.

Do we learn a lesson?

The only way to survive this mess is for Organizations and Entrepreneurs to build a new set of business rules that goes by the Kent Beck’s four values for Agile.

This will surely help build a more realistic and responsible market place, a more accountable corporate society and an honest, transparent world that can prosper eternally.

This was never difficult, but today it has become an “Imperative for Survival”. We can still choose to hide our cupboards full of skeletons, but for how long can we do this?

Thanks Kent Beck, for your courage in bringing the harsh reality of our ignorance to the fore. May be one day the world will see the truth behind the “Agile Values” proposed by you.

1 comment:

Geoff Slinker said...

I agree that Kent Beck has introduced many to sound principles. These principles have been known to many for thousands of years.

Granted the current Credit Crisis has exposed many at fault it is not the actions of only American Bankers that has created this situation.

Research the Community Reinvestment Act. It is arguable that the Community Reinvestment Act created the situation of declining lending standards which means the lenders were required to make loans to people who would not qualify for the loan under previous qualifications.

This allowed people to succumb to their own selfish desires to have something they could not afford. These people willing laid down their own judgment and turned the choice over to the government regulated lenders. Now these people are prideful enough to say it is not their fault they can not make the payment on their house.

As for greedy CEO's, bankers, and Wall Street traders, the world is filled with them. This problem has long existed before the current credit crisis.

Yes, the credibility of CEO's and Executives is in question. Where are their ethics? Their pride and ego has allowed them to believe that they are truly worth millions of dollars and that the risk they take justify the compensation. I am sorry but the idea that a CEO is taking more risk than any employee is not reasonable. However, if you realize that to them risk is always defined in terms of money and financial gain and loss then you will understand RISK in their world.

For me the root cause is individuals living beyond their means and borrowing more than they can afford to pay.

Can Kent Beck's writings help the individual to understand to live within their means? Maybe, I don't know.

My advice is this:
Never buy a house that costs more than twice your annual salary. If that means you will never own a home then increase your skill set or move where the cost of living is less.

Always have 20% of your annual income in "cash". This could literally be cash, a savings account, or such things as gold.

Never have more than 1/24th of your annual salary charged to a credit card.

Businesses should be more like these: