Quote:
Originally Posted by flstf
Even if the government failed to pass these reforms I still don't get it. Why would the leaders of these companies set themselves up to go bankrupt? I know that hindsight is 20/20 but any halfway intelligent person could see that real estate was going to make a big correction to the downside. Are they really this greedy and/or incompetent?
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The people making the decisions know they are accountable for today's results. They needed to continually show profitable growth quarter after quarter. Their salaries and bonuses were based on short-term results. The executive willing to sacrifice short-term results for long-term results is rare unless they are accountable to people with a lont-term view. The incentives of these organization's executives were not aligned with the long-term good of their shareholders, the public, or other constituents. When we look at problems in capitalist markets, this conflict is usually at the root of the problem.