Sean Park Portrait
Quote of The Day Title
I say profound things

Flatlanders don’t even know a 3rd dimension might exist

And so it’s hard to blame them when they ignore it. Still, call me crazy but I can’t help but being somewhat surprised and disappointed when one of the smartest, most reasoned leaders of the financial world writes that “the signs of a deep transformation in the financial landscape are very visible” and then ascribes this to two main driving forces without once mentioning the impact of changing technology (Mario Draghi from the Financial Times, 17sep10):

The first is a different perception of risk. For many years an optimistic view that underestimated the level of risk and overestimated its dispersion across participants had become the conventional wisdom; that view has been wiped out by the crisis. A re-pricing of risk of all sorts, higher volatility, reduced valuation of certain assets, more careful examination of credit quality and greater attention to the longer-term sustainability of debt positions – as highlighted by the recent sovereign debt crisis in Europe – are all manifestations of this changed perception. Business models are being reassessed according to their ability to manage risk. Complexity and opacity of financial instruments are no longer rewarded; the demand for transparent, complete and accurate information has increased.

The second source of change is policy driven. After Lehman, any remaining doubts on the need profoundly to reform the financial sector were dispelled. It became clear that a common, internationally co-ordinated approach, involving both advanced and emerging economies, was needed.

I’m not taking issue with his two drivers – they are clearly both important and relevant. I just think he should have added a third driver. And the fact that he didn’t, just confirms my conviction that way too many of our leaders – political, economic, financial, industrial – are increasingly disconnected from the world as it is (as opposed to the world as it was.) Which in my opinion can’t be a good thing. Indeed it’s worse that ‘not getting it’ – it’s not even knowing it is there…

Of course this throws up a multitude of opportunities, but it also carries with it the risk of more a more volatile and dangerous transition from old to new paradigm as our leaders remain blithely unaware of the sphere that is about to envelope their plane…

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