Oh well, back to normal...

[johnny9fingers]

http://www.guardian.co.uk/business/2008/mar/17/marketturmoil.creditcrunch?gusrc=rss&feed=worldnews

We've got problems. It appears we'd have had problems even without the military-overspend-on-two-wars-situation. We're going to need a lot of white collar prison places if we deem the perps of these problems criminals or fraudsters. Perhaps it shows a need for stricter controls upon the financial industries? Or, given that these folk 'Police' themselves, would that be gilding the lily?  

Comments

Rubbish, my dear

[(Anonymous)]

The industry is policed by the FSA in the UK and the SEC in the US. This is not being policed by themselves - both are independent. The last thing that is needed is tighter controls - what actually needs to happen is that the controls that are already in place need to be enforced intelligently. Given that (and I am possibly being overly harsh here) it seems that in the money industry, those who can't, regulate, it may be difficult to acheive this.

I would be very surprised if there was anything even approaching systematic fraud here - foolishness yes, fraud no.

M

Re: Rubbish, my dear

[johnny9fingers.livejournal.com]

True.

And folk work in the regulation until they acquire all the skills needed to work for the private sector, who can pay them much more. Keeps the private sector regulation compliant.

And we can't legislate against foolishness, especially when the whole market does it.

And it would be foolish to stop giving the industry our money to invest too.

Ergo, it's all whatever foolishness suits your pocket and income and investment and understanding. But the finanace industry en masse appears to have 'speculated unfortunately' with a significant part of quite a few people's portfolios and pensions.

When the Lloyds scandal's of the 80's was exposed it needed some tightening of controls to avoid repetition. What measures are going to give the finance industry the ability to reassure folk that they are reasonable and sound folk to take charge of our money?

Re: Rubbish, my dear

[(Anonymous)]

How long have you got? I'm sure that you already know it's nowhere near as simple as that and not nearly so suited to gross generalisations. Nick would be the person to ask but only if you have a couple of free hours...

Basically, people are being irrational in response to a threat to profits of unknown magnitude. In addition, this threat to profits is causing banks to hunker down and hold onto their cash - if banks won't lend to each other, the oil that greases the wheels is gone and things seize up.

And before you say government should "do" something - someone at work likened monetary policy to throwing depth charges in the ocean until a dead whale floats to the surface. It's a bit of a blunt tool. As an example, the central banks release more short term funding - which should help - but people either take it as a sign that things were much worse than they thought, or the stigma attached to having to take funding from central banks means they either borrow and pay the price (e.g.: Northern Crock) or they don't borrow and pay the price.

And we cannot legislate against foolishness, nor should we - the value of your investment may go down as well as up, past performance is not a guide to future performance - do people not listen to the warnings? And who was being foolish - the banks lending the money to people who can only sign with an x, or those who were borrowing?

People generally do not "escape" to the private sector - in many cases, they couldn't get a job in the private sector due to being less good than their peers, so ended up in regulatory bodies. This generally does not lead to private sector employment at some point in the future. The private sector remains compliant in the face of ever-moving goalposts through fear of fines, not through hiring ex-regulators.

Re: Rubbish, my dear

[johnny9fingers.livejournal.com]

I agree with much of that, but it is about (as we both know) confidence. Confidence that the institutions aren't going to expose folk to unnecessary risk, or a proper explanation of that risk. The UK mortgage situation looks volatile at present. Folk aren't being sold quite the same financial products as they were two years ago. Economics have driven politics for a long time this cycle....I think that is about to change.

[winterlion.livejournal.com]

Actually I wonder what the fallout really will be.

As for every time in the past - I look for the empty warehouses and the shadow business - because that's where it will implode.