After 21 years of writing my weekly column for the FT, I have decided to move on. When I started in February 2001, Enron’s “smartest guys in the room” were on their way to the engineering the biggest crash of the young century. Now we’re headed into yet another recession and I have the sense that the excesses of our time can only be resolved with another dramatic institutional failure.
Not the big banks this time, at least not the big American banks. My guess is that we’ll see the unexpected failure of a private equity firm, sick with hidden leverage, and with no central bank willing to take sole responsibility for the mess.
When I worked for an investment bank in the early 80s, one of the partners told me to “find a company that’s worth more dead than alive”. There were a lot of zombie American corporations at the time, old names that had expanded far beyond their initial industrial competence. They were treated like medieval fiefdoms by the chief executive, who had little reason to fear the Securities and Exchange Commission or shareholders. Not surprisingly, most were globally uncompetitive and had little focus and poor internal reporting.