Simone Wapler Friday, March 4, 2011 12:33:59
When everyone thinks the same thing, nobody thinks
The IMF did not see coming the subprime credit crisis. Why great minds in the service of an organization with great resources they have not sounded the alarm in time?
Not later than July 2007, the staff felt that "the global expansion remains [would] strong" and revises upward growth prospects while pointing to the increasing vulnerability of certain markets emerging. The financial market turmoil of early 2007 were seen as "does not justify a fundamental review of global prospects" (March 2007).
Why?
The answer is contained in a 67-page report that autopsy failure. As I read these 67 pages, I'm not going to immediately give you the answer. There is no reason, dear reader, that you reach the Truth without penalty. It's very unhealthy.
aware that this report has been prepared by the Independent Evaluation Office International Monetary Fund, IBE for short. It's a bit what the "horse-carrot" to the national police, the Court of Auditors to the French government. Its title is: Evaluation of the IMF during the period before the financial crisis and economic downturn - IMF Surveillance 2004-07.
All responses are concentrated in Part IV of the report: "How to explain the absence of a clear warning from the IMF."
▪ The IMF is nil as he practices the doctrinaire
In fact, the report does not say exactly as I say. He speaks of analytical weaknesses. "These weaknesses are broadly of two types: doctrinaire thinking and other intellectual assumptions, methods of analysis / incomplete knowledge."
A "doctrinaire thinking dominant ... in IMF staff ... was that the discipline and self-sufficient market to avoid any major problem of financial institutions."
So there, dear reader, the bottom of my lair lined newspaper clippings announcing the upcoming rich countries bankruptcy debts, I am suffocating with indignation. Suppose
. You are an employee of an honorable and dignified GSO (supra-governmental organization) Financial Supervision (nothing to do with the IMF). Studies and internal memos piled on your desk to conclude that there is nothing to watch because everything is better in the best of possible worlds.
You believe in the thick reports. They have hypnotized you and you sometimes had the eyelid heavy reading them. You know nothing of successive bubbles in financial history. Bubbles whose very existence proves that market efficiency is crap (bullshit, in good American). Until then, nothing wrong, he is allowed to be naive, ignorant and employee of a GSO ...
But if you're really honest, you ask your transfer to a place where you could be helpful, really work, right? It wastes you, the money from the International Taxpayers without any remorse?
Unless you have the idea of seeing a bit if you think outside and inside. But that explains our report, it is not possible because of "Confirmation bias, cognitive well-known propensity to consider only information that substantiates an assumption and ignoring data that refutes."
▪ The IMF is void because it is a great machine autistic
"The staff tend not to share information and not to consult with colleagues beyond the unit to which they belong" . Not terrible, that. The IMF is running out of coffee machines.
"The reports were seldom refers to work outside analysts pointing out the growing risks of financial markets." Not great either. But it can be arranged, the IMF can subscribe to MoneyWeek in English and French. We can put a pile at the foot of coffee machines.
The IMF is zero because the outspokenness is punished
"Staff have indicated that incentives lead to align with the prevailing view at the IMF ... The affirmation of dissenting opinions can affect a career (...). The expression of conformity is never penalized, even if proved wrong later. "
Yes, it is better to go wrong with everyone that to be right alone. It's more comfortable to play "the trend is your friend" to want to be contrarian.
▪ The IMF is zero because there are wars of petty leaders
"The struggles of precedence, which is closely related to the issue of partitioning and incentive framework, have been reported as a major obstacle to cooperation and collaboration between services ". According to a seasoned executive, "the IMF functions as a set of small chiefdoms / clans.
▪ The IMF is void because it is a yes-man to boot large countries
"It is impossible to use outspokenness against the authorities" because "governments are the shareholders of enterprise ".
Clearly, the Fund is subject to political pressures. Not the United States, not: services and management of the IMF said they did not receive any direct pressure to change the messages from the missions. "But instead of other advanced countries where" it happened that the authorities adopt approaches insistent lobbying explicit messages to mitigate criticism. "In the words of one staff member assigned to a large country, it was" difficult to make a critical observation, even when it was supported by a analysis in formal meetings (...) end of mission is essentially negotiating sessions on issues formulation.
The IMF seems badly for alerting us to the next crisis, that of sovereign debt and bankruptcy of big states. He still misses the executives who can provide "the intellectual leadership required to perform of high quality work. "
Although disturbing thing ...
[Wapler Simone is an analyst, journalist and engineer. She has contributed to publications such as Le Point Stakes, Les Echos, Chart's ... Specializing in industrial stocks, commodities, energy, gold, mining Wapler Simone has a passion for investments "Tangible" and that's what she brings each week to serve subscribers of The Investor Gold & Materials. She is editor of MoneyWeek magazine, a monthly analysis and the gold sector investment in the letter of your finances.]
http://www.la-chronique-agora.com/articles/20110304-3458.html
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