The financial markets–holy smokes.
Of course, these kinds of adjustments periodically happen and wise investors understand the how to ride the waves panic free. However, the mortgage trouble is instructive to any leader or leaders charged with decision making.
A Realtor friend of mine , commenting on the sub-prime problem said, "So many of those loans should never have been granted." He went on to make other comments, but I was stuck right there. I began to imagine one moment after another, where a lender said "yes" or a buyer avoided the harsher facts about her financial condition, and "presto" — a loan was born. Multiply that decision out by a few million, and now we have a problem. One that requires correction at a macro scale. OK, enough about economics, which is clearly not my expertise.
I’m more interested in the little decisions leaders and people in organizations make everyday that lead them, down the road, to problems–problems they don’t need or often know how to fix. However, if you could press rewind and watch the tape, you would see those leaders making tiny decisions–one after another–that cumulatively led them to the trouble spot (or a positive place for that matter).
The Point: The daily and seemingly little decisions we make, matter more than we think. But, we may not see that difference until the consequences start rolling in.
The Next Point: Lead awake! Pay attention to the small decisions. They are not so small.
By the way, while writing this post, a Wall Street Journal Alert came across my email:
Aug. 10, 2007
The Federal Reserve, in a statement that underscores the deepening severity of developments in credit markets, said it is "providing liquidity to facilitate the orderly functioning of financial markets," and will pump enough money into credit markets to keep the Fed’s target for the federal funds interest rate at 5.25%. U.S. federal-funds futures early Friday priced in about a 100% chance that the Federal Reserve will reduce its key lending rate by a half-percentage point to 4.75% by the next policy meeting on Sept. 18.
All of this, because of one decision after another after another after another after another….