Leadership Kudos and Gaffes: Tenacity and courage from Merkel and Sarkozy
Leadership Kudos for the week go to Germany Chancellor Angela Merkel and French President Nicholas Sarkozy. Their tenacity and political courage enabled them to forge a deal to prevent the pending default in Greece and requiring the bankers to take a reduction of 50 percent in the value of their bonds. This was not an easy sell politically in either country, but they both recognized the importance of the Euro and keeping a single trading group in Europe. Only time will tell whether Europe’s other high-debt nations like Spain, Italy and Portugal will move aggressively to get their economies in order and reduce their debt, but Merkel and Sarkozy have sent an important signal of what is required to save the Euro.
Leadership Gaffes go to MF Global and CEO Jon Corzine for taking the firm into bankruptcy by betting $6.3 billion on the sovereign debt of Italy and Spain, refusing to listen to colleagues who pleaded with him to reduce the risk, and declaring “our positions have relatively little underlying principal risk.” In this volatile era solid risk management, adaptability to changing markets, and high levels of liquidity are essential for survival.