Has the FSA gone too far regarding bank stress tests?
As we covered in one of our earlier articles, the Financial Services Authority (FSA) has issued a new set of guidelines regarding bank stress tests which will effectively force each and every financial institution in the UK to identify its own potential weaknesses. This is a rather bizarre way in which to protect the UK economy because all the regulators are doing is highlighting weak companies and making them susceptible to potential takeovers, mergers or limited financial backing.
If a company is forced identify a potential weakness in its own business model, then what is there to stop a predator approaching the company's shareholders and claiming that they could run the company better than its current board of directors. There are no industries in the world which force companies to do the homework of their potential predators and competitors and weaken their own reputation and financial strength in the eyes of investors. So why has the FSA decided to act now?
Even though the idea of "reverse stress tests" does appear to have some merit in the current economic climate it is absolutely crazy to ask a company to research its own weaknesses and then publish these for public consumption.
Can Inflation Really Get Any Worse?
News that inflation in the UK jumped sharply last month has prompted a wave of fear and concern amongst many of the population but some are finding it difficult to understand how it can rise any further and the long term implications. Can it really get any worse?
The immediate threat is that inflation will rise to in excess of 5% later this year before falling back next year. Howe...
Where did all the climate change money go?
The United Nations has revealed that despite the fact that 20 nations pledged $410 million a year back in 2001, to be used by developing countries to tackle climate change, there is only $260 million available today despite the fact the fund should be worth in excess of $1.6 billion. There is concern as to whether all obligations signed by the 20 nations back in 2001 have been fulfilled or whether...Read More
Why did the US authorities change their mind about the rescue plan?
It has been revealed over the last few days that the US authorities have changed the breakdown of their $700 million rescue package. They appear to have taken a page out of Gordon Brown's book and are now suggesting direct equity stakes in the various US banks in order to increase their financial strength.
So what about the toxic assets?
This change in strategy is set...
Mervyn King warns of sharpest economic slowdown for 30 years
Mervyn King, the Governor of the Bank of England, has stepped forward with this most downbeat statement for sometime. He is suggesting that the UK will experience a downturn the like of which has not been seen for over 30 years having pinpointed the collapse in the banking system as the main culprit. This is by far and away the most serious and depressing report from the Bank of England for many y...Read More
Could anybody have done better than Gordon Brown in the economic crisis?
Despite the fact that Gordon Brown, after initially being hailed as a saviour, has come in for significant criticism with regards to his handling of the UK economic crisis, could anybody else have done any better?
Despite the likes of David Cameron and Menzies Campbell suggesting that Gordon Brown has made mistakes and effectively put the UK at risk of further recessionary p...