IMO, There is also has been a severe finacial model error in use by major companies as well. Publically traded compaines have and still do in some cases provide an over optimistic 5 year outlook. No CEO or CFO in they're right mind would ever broadcast that they forecast a significant loss. If they did, they might as well get in line at the unemployment office. Instead they forcast net gains with mitigation plans for the forseen losses. In many cases these mitigations are not sufficent or successful. Now, once a plan is published, any labor negotiations will take the forcast net gain into account and use the data as leverage for wage increases, better benefits, etc. Then, once that plan starts to fail the companies have trapped themselves with lowering stock values and higher costs due to the negotiations based on their forecast.
Allot is made of short term quarterly forecasts, and allot of emotionally driven stock value changes result from them. However, quarterly reports can be very misleading becuase of how data is presented (IE GM has sold thousands of vehicles to rental car companies at below cost rates to boost their sales numbers. Only to buy these vehicles back from the renatal car companies at a severe loss after the report was published) Unfortunately, these kind of things are not uncommon and capatilize on the emotion of the market, but in the end hurt the company, the stock holders and employees. Becuase of this, when I invest I try and find the compaines long term plans and goals, then use to the quartly reports of the company, and their suppliers to see if A. The major suppliers are seeing gains along with the company (If not, there's BS afoot IMO). And B. If the company's quarterly report is on track to achieve the long term goals.
I think one positive of the recession will be more viable finacial models will be created to more accurately prodict futures, and hopefully the companies will learn how to effectively communicate those futures good or bad, and perhaps more importantly, create more proactive triggers to identify realtime short comings and effective mitigations.
