Leadership and Strategy in the Bubble

I just commented on a post by Scott Berinato over at washingtonpost.com (here).  Per my comment, it was a strong, link-rich post that pulled together a lot of threads.

As promised, I did take a closer look at Umair Haque’s piece on “Saving Strategy from the Strategists” (here).  I still think he’s seeing a strategy disconnect that isn’t there, but with an additional twist.  Yes, the expanded definition of “too big to fail” made inflating the bubble a perfectly rational (if not legitimate or public-minded) approach for many players. 

The twist is that the security blanket the Feds provides infantilizes financial industry strategic thinking — especially during serious easing cycles.  As the feeding trough gets crowded and frenzied, a firm’s strategy becomes very basic:

  1. Push hard to get your snout in.
  2. Lobby hard to ensure you’re not the one institution the Feds will make an example of.
  3. Settle in for a long meal.

As I said before, what does “the long run” mean when much of the financial industry expects Uncle Sam to keep filling the trough, even if/when things went south?

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