The camper-protesters around the world are accused off offering no alternative. That is not fair. The first step is to establish the fact that we need to start thinking radically. I’m writing a piece on Christ to Coke for the Wall Street Journal Source online. My eye was caught by a contribution by Don Tapscott. Given the reality that we won’t be able to sweep away all the capitalist and monetarist apparatuses, he is at least suggesting that we should be able to see what’s going on:
The day-to-day gambles of Wall Street almost brought down global capitalism and yet, so far, nothing fundamentally has changed.
Restoring long-term confidence in the financial services industry requires more than individual banks changing their behaviour or even government intervention and new rules. The industry needs a new modus operandi, where all of the key players (banks, insurers, investment brokers, rating agencies and regulators) embrace principles such as transparency, integrity, collaboration and sharing of information. For example, banks should open up financial modeling and make pertinent assumptions and data transparent to all interested parties.
Financial modeling allows analysts to estimate the value of goods ranging from a company’s stock to a barrel of oil. The valuations, and associated risk estimates, are behind almost every financial instrument. Over time, both the products, and the underlying financial models, have become increasingly complex, and therefore, opaque.
In contrast, the Open Models Valuation Company is using the web to create a global community of experts dedicated to establishing credible valuation and risk assessments for credit securities and contracts such as CDOs, CDSs and other derivatives. It rejects the current system’s opacity, using an open process for academics, industry experts, quantitative analysts, banks and investors to collaborate and determine the worth of such securities.
Craig Heimark, a long-time industry veteran and one of the founders of Open Models, likens it to the scientific peer-review process: “In the scientific world when people publish something, they don’t just publish their results, but also the steps in the process, their methods and assumptions so that they can be vetted by others.”
Clarity, simplicity and transparency are characteristic of all great revolutions. The time has come for a the first ever true revolution in our our financial institutions.