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.
Falling consumer morale measured by new survey
Consumer confidence declined in October, GfK NOP said today.The research firm's index of shoppers' morale dropped from -32 to -36 across the month.A particularly large drop was also marked for major purchases, with confidence dropping to -43 - the lowest on record.High-value buys are commonly partially or wholly funded by credit - provision of which has been restricted thanks to the economic downt...Read More
Is George Osborne making a mistake with UK financial regulation?
As many had feared, George Osborne has confirmed that the Bank of England will become the central and the focal point of the UK financial regulatory structure in the future. The FSA will become a subsidiary of the Bank of England, will be disbanded completely or replaced by other new authorities. Either way, there is growing concern that George Osborne could be about to set the UK financial regula...Read More
Is the Eurozone economy stalling?
Only a few weeks ago the Eurozone appeared to be pulling away from the worldwide economic downturn and into a new era of strength. However today we hear that the German economy stalled in the fourth quarter of 2009 with zero growth against expectations of a growth in the economy of 0.2%. This comes against a backdrop of growth in the third quarter of 2009 which hit 0.7% and appeared to show the wo...Read More
Will we see a pre-general election boom?
As we draw closer to the next general election, which many predict will occur in mid-2010, a number of experts in the field of economics are suggesting we may well see a pre-general election boom orchestrated by the UK government. It is no surprise to see the UK authorities taking a more hands-on approach towards regulation, possibly to the demise of the Bank of England, although how they will use...Read More
Middle management suffering at work
A report by PricewaterhouseCoopers has confirmed that the recession is hitting all areas of the economy and population with the revelation that middle management across the UK are feeling the pinch. A survey by PricewaterhouseCoopers suggests that 40% of companies surveyed have been the victim of accounting fraud, theft or some kind of mismanagement (often to manipulate bonuses) over the last 12 m...Read More