Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. On Shrinking the CityTwo FT pieces today on regulating international finance. The first covers some rather remarkable statements by the head of Britain's Financial Services Authority (the regulator of financial services in the UK) on the place of the City of London in the UK's economy. Lord Turner, the head of the FSA, says nothing less than that the FSA should "be very, very wary of seeing the competitiveness of London as a major aim", and that the city's financial sector has become a destabilising factor in the British economy. It also says that the FSA is looking at a Tobin Tax to curb the excesses of global finance.In the second piece, columnist Gillian Tett continues her thoughts from last week on regulating global finance by assessing the cogency of the Tobin tax. Labels: Adair Turner, banking system, City of London, financial regulation, FSA, Gillian Tett, James Tobin, Tobin tax Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Great Stuff in Today's FTFirst, Gillian Tett's appreciation of the contorted dialectics of finance (she quotes Bourdieu!).Spencer Jakab on a shift in China's dollar purchases. Labels: China, dollar, financial crisis, Financial Times, Gillian Tett, Spencer Jakab Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Gillian Tett on Corporate TransparencyAs ususal, Tett does a great job. The ending is key. From The Financial Times:Idea of 'living wills' is likely to die quiet deathBy Gillian Tett Financial Times Published: August 13 2009 19:50 | Last updated: August 13 2009 19:50 Preparing a will is usually an emotionally charged experience. After all, no one really wants to ponder their demise when they are in the prime of health. Nor is it pleasant to spell out difficult issues such as how to divide up all the family silver--or not. But could the lessons learnt from preparing for death prove useful for the modern banking world? Some western regulators are tossing the idea about. In recent months Treasury officials in Washington have been scurrying to create a so-called "resolution" regime, which would make it easier to wind up large banks if they fell into a crisis. The British Treasury and central bank have gone further by suggesting that banks should be forced to write "living wills" as part of a resolution system. These documents would in essence force banks to stipulate in advance how their operations could be wound down in a crisis and how their assets might be distributed, in the hope that such clarity might help to avoid a replay of the type of panic that erupted when Lehman Brothers collapsed last autumn. What spooked regulators and investors at the end of last year was not just the bank's collapse, but the fact that it was unclear where Lehman’s assets lay, or who could claim them. Thus, by injecting more transparency--and forethought--into corporate structures, another panic might be averted, or so the argument goes. Read the rest of the article Labels: banking system, corporate transparency, financial regulation, Gillian Tett, shadow banking system Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Essential Reading from Yesterday's FTIn case you missed it, due to Friday night carousing, or whatever...--Whistleblower contacted US regulators (should they even be called this anymore?) on fraudster Sir Allen Stanford five years ago. --Banking editor Peter Thal Larson writes that the UK plan for Royal Bank of Scotland amounts to nationalization in all but name, "maintaining the fiction that the ailing bank is anything other than fully state-owned." This certainly has relevance in light of US policy with regard to Citi. --The excellent Gillian Tett on how CDOs may be worth even less than the pitiful estimates bandied about these days. And, in a point too rarely rarely made in the financial press, "as the zeroes relating to writedowns multiply, a peculiar--and bitter-- irony continues to hang over these numbers. Notwithstanding the fact that bankers used to promote CDOs as a tool to create more "complete" capital markets, very few of those instruments ever traded in a real market sense before the crisis--and fewer still have changed hands since then." Labels: bailout, CDOs, financial crisis, Financial Times, Gillian Tett, Peter Thal Larsen, Royal Bank of Scotland, Sir Allen Stanford Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Dumb (Ideology) and Dumber (Modelling)Fine piece by the Financial Times' exceptional Gillian Tett:Insight: Volatility returns with a vengeance By Gillian Tett Monday Oct 27 2008 11:25 A couple of years ago - or before banks started to go bust - economists sometimes liked to talk about a phenomenon they christened The Great Moderation. This was the idea that the 21st-century financial system and global economy had become so stable and sophisticated that dramatic swings in activity had seemingly disappeared. Volatility, in other words, was supposed to be an issue of the past. These days a new phrase is needed to describe these Not-So-Moderate-After-All times (the Great Panic, perhaps?). On Friday, the Chicago Board Options Exchange Volatility Index, the Vix, rocketed 32.1 per cent to 89.53, as equity markets suffered another dramatic sell-off. The gyrations of the yen, euro, sterling and dollar have also been wild, pushing levels of currency volatility to heights barely seen in decades. Read the rest of the article Labels: financial crisis, Gillian Tett Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
