Is there any one, or any country for that matter, responsible for the economic disaster the world is in today. Indeed, this is an incredibly open-ended question. There is not one person or country who is completely responsible for the troubles we face today in the financial system, but there is a particular type of person who is. This is the kind of person who is so overconfident that he or she starts overlooking to double check the accuracy of the figures. Ultimately, the name of the game is risk management.
The most recent development in human error occurred over the Halloween weekend. The German government discovered an accountancy error to the tune of $78 billion. The error discovered actually instantly improved the financial situation in Germany. The blunder discovered actually uncovered that Germany’s debt is lower by 2.6 percentage points than earlier expected.
In 2010, Germany’s debt load dropped from 84.2% of GDP to 83.2%. It is currently at 81.1% of GDP, which is clearly a good thing. Regardless of the fact that the mistake improves the German economic situation, these types of mistakes are not acceptable. Especially in a time when the global economy is fragile, the numbers have to be exact.
Given the high amount of volatility, individual companies as well as entire countries have been making the wrong calls because they have let their overconfidence get the best of them. It is therefore important for individuals and Governments to be accurate in their research and to know how to apply these results. Incompetent finance officials have to be replaced by those who take decisions based on accurate research, not political motivations.
EU-Digest
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