DAVOS: This year’s Davos forum comes at a crossroads for the global economy. As I stood on this spot last year, markets and governments were dealing with the direct fallout of the crisis. Now, we must choose the right route to move forward – or so they keep telling us.
To discuss further, I asked the chairman of the global accountancy firm, KPMG, Tim Flynn, for his take on where we stand.
“We are moving forward. It’s still very fragile, but I do believe that we are in a much better spot than we were a year ago and that we’re beginning a very fragile, but, I hope, a steady, sustained recovery, Flynn said.
Richard Quest: That fragility is, by definition, a dangerous toward double dip. Do you think there is a realistic or a real possibility of double dip?
Tim Flynn: You know, I think, Richard, where we are today, I don’t see that. But it’s a real issue on confidence and trust and it’s still fragile. So we’ve got to make sure that as we move out of this terrible recession and move forward, that we instill confidence and trust in all the players in the capital markets.
That is core. Confidence, perhaps is a necessity. But trust is essential. And I just wonder, there is a bankruptcy of trust, a vacuum, whatever adjective you want about trust, at the moment. People don’t trust leaders.
And I don’t care if you’re in business, you’re in government, you’re a regulator, [it’s] critically important that we act with the highest degree of trust and confidence so our people see it.
I also think that we have the ability to help people understand the importance of making highly ethical decisions, understanding – not just following any of the rules, but what’s right and wrong as they go forward.
What’s the value system we’re going to judge that against?
How did we get it so wrong? I know that’s rearview mirror stuff. But only if we know how we got it so wrong can we hope to rebuild that trust in the future.
You know, a lot of people are asking that question. And from my perspective, you sit back and look. How did some really well-intended people get so far across the line? What happened?
And I talk to our people about it and I talk to students. And, actually, there’s really three things. It’s how they made decisions.
First of all, I think people rationalize things. I’ll do it just one time to get by this quarter. I won’t do it again. Just let it work out this one time. So they rationalize their decision-making.
Secondly, implied permission – they look for other people’s value systems and used it instead of their own. My boss knows I’m doing this, he’s not telling me to stop, it must be OK. Somebody else’s value system, not their own.
And, third, fear – fear if they raised their hand and said something, might they have lost their job?
So I tell our people who I come across with, make sure when you’re making really tough decisions, you don’t rationalize your answer. You don’t use other people’s value systems and implied permission and you don’t do it based upon fear. You do the right thing for the right reasons.
So, let’s do the traffic lights on this trust question. Where do you think the level of trust is at the moment, when it comes to the public, to our leaders?
Richard, there’s a lot of upset and anger in the environment today. So I think we have to say it’s red today. But I truly believe we’re moving toward green and rebuilding that trust and confidence in the capital market system.
Tune in to Richard Quest each weekday at 9 pm Cairo (9 pm Kuwait, 9 pm Riyadh, 10 pm Dubai) on Quest Means Business. For more information go to www.cnn.com/qmb.
