more northern rock October 9, 2007
Posted by Bradley in : Uncategorized , comments closedToday the UK Treasury, FSA and Bank of England announced:
HM Treasury, on behalf of the Tripartite Authorities, can today confirm that the guarantee arrangements previously announced to protect existing depositors of Northern Rock plc will be extended to all new retail deposits made after 19 September, including those made from today. These arrangements will cover all retail deposits, including future interest payments, movements of funds between accounts and term deposits for the duration of their term.
New Northern Rock depositors appear to be in a better position than depositors in other institutions (now protected up to £35,000). The announcement states that Northern Rock will pay a fee for this arrangement so that it will not receive a commercial advantage over other institutions, but there are no details. The general approach is to say that regulation cannot and should not prevent firms from failing. See, for example this statement from the FSA’s annual report for 2006-7:
We accept that we cannot achieve, and that it would be counterproductive to pursue, a zero-failure approach. Investment involves risk, and risk entails occasional failure.
Except when it doesn’t.
The FSA published a memorandum to the Treasury Select Committee in which it acknowledges its failure to predict in advance the dramatic deterioration in market conditions which precipitated Northern Rock’s crisis. And the FSA recognises the need for more discussion about depositor and investor protection.
The [Financial Services Compensation Scheme]’s main function is consumer protection: it provides consumers with a measure of compensation in the event of failure of an institution in the financial sector. The existence of a compensation scheme helps to reduce the systemic risk that a single failure of a financial firm may trigger a wider loss of confidence. But while it contributes to encouraging consumer confidence in the markets, the FSCS was not designed, on its own, to be able to deal with all potential failures of financial firms, nor to be a crisis management tool in the event of a largescale failure.
So is Northern Rock an exceptional case, a situation where stepping in now to support confidence can protect other firms, or is it something more?
entrepreneurship and business failure October 8, 2007
Posted by Bradley in : Uncategorized , comments closedThe EU Commission has published a communication on overcoming the stigma of business failure along with beginning a media campaign to reinforce the idea that providing a second chance after business failure promotes entrepreneurship. One of the images is of a perplexed looking baby. The idea seems to be that babies have to get up all the time after falling down, but this one seems to be rather mystified about the whole thing:
deposit protection in the uk – new rules October 2, 2007
Posted by Bradley in : Uncategorized , comments closedThe FSA announced yesterday its new deposit protection rules under which depositors will receive 100% of the first £35,000.
british food fortnight October 1, 2007
Posted by Bradley in : Uncategorized , comments closedBritish Food Fortnight was half-way through before I even noticed it. On the other hand, I live in Miami and had noticed Miami Spice. Twice as long and …. If only it weren’t raining constantly.
loan shark fishing season September 27, 2007
Posted by Bradley in : Uncategorized , comments closed
While concerns about subprime lending have dominated the news recently there are other areas of lending which raise concerns. The UK Government is supporting a number of projects to address loan sharking (mostly illegal lending) in different parts of the country, including for example London and Bristol. The Association of British Credit Unions has welcomed the attacks on loan sharks, arguing that credit unions, which currently serve a small proportion of UK borrowers, are a much better option. There are some similar concerns expressed in rule-making in the US, although much of the current concern in the UK seems to be aimed specifically at the informal sector, and payday lenders in the US have close links to mainstream banking.
The online etymology dictionary suggests that it is possible that the term shark applied first to lenders and only subsequently to the marine animal. My Concise Oxford Dictionary suggests a slightly more complex relationship between the two meanings (and see languagehat on this point). But the linkage has been convenient for those who have tried to focus the attention of legislators on predatory lending.
On a more general level, the behaviors of lenders illustrated by loan adverts like this one have provoked critical reactions
multilingualism September 26, 2007
Posted by Bradley in : Uncategorized , comments closedOn this day of European languages the EU Commission announced an online consultation on multilingualism in preparation for a Communication on languages to be published during 2008.
scottish eating habits and politics September 25, 2007
Posted by Bradley in : Uncategorized , comments closedFrom John Sutherland at the Guardian:
It’s the sick heart which has been the curse of modern Scottish politics. Try this counterfactual experiment: if Cook, Smith, and Dewar had been granted another 15 years apiece, how different would that entity which Gordon Brown calls “our Britain” be? Would the Labour party be a better, or worse, thing?
lasting powers of attorney September 24, 2007
Posted by Bradley in : Uncategorized , comments closedI have just noticed (via the Guardian) that the UK is moving to a new system for powers of attorney, introducing lasting powers of attorney (which will give the grantee a wide range of powers including powers about health care decisions) to replace enduring powers of attorney (which give the grantee power with respect to financial decisions). After 1 October 2007 it will be possible for people to set up LPAs. But the new documents are much more expensive to produce and explain to clients than those for EPAs so it seems that many people are trying to set up EPAs before the new system comes into effect.
This is one of the changes brought about by the Mental Capacity Act 2005, and it is another area where the UK Government used an easy read consultation document (the full consultation document is here).
In looking into this development I noticeed that a number of solicitors’ firms have posted documents on their websites with the title: Lasting Powers of Attorney The New Law in Detail. The Lockharts Solicitors version is here, the Peter, Peter and Wright version is here, and the Oliver Fisher version is here. But these different versions are in fact all the same, although they don’t state that they were not written by anyone at the firm in question. And Oliver Fisher states at the top of its web page that “Not all law firms are the same…..”
women's lives… September 23, 2007
Posted by Bradley in : Uncategorized , comments closedI have an uncomfortable fascination with the style sections of the New York Times. And today’s front page story with the title Putting Money on the Table is an example of why I find it uncomfortable (rather than fascinating). The subtitle for the article is: “With rising incomes, young women discover the pitfalls of “dating down.”” It’s uncomfortable because it is shallow (the topic might merit serious treatment, but doesn’t get it). Similarly shallow, the Sydney Morning Herald seems to be preoccupied with the question whether all the best ones are taken (connected to the “dating down” phenomenon?).
The Guardian’s women’s page used to debate all the time whether it was OK or not to have a page for women (wasn’t the whole paper a women’s newspaper?). That was interesting if sometimes uncomfortable. The Guardian’s style section now has an article which argues that most working mothers would lie if they were late for work because of problems with childcare. What about the working fathers – don’t they have problems with childcare? And would they tell the truth about them if they did?
metaplace September 18, 2007
Posted by Bradley in : Uncategorized , comments closedMuch more cheerful than what is happening in the financial markets is the announcement that Metaplace went live today at TechCrunch40. Not too many details yet, but they do have cute pictures….
It’s a venture headed up by Raph Koster and John Donham which is designed to allow people to build their own mmorgs. The announcement states:
Our goals are sort of idealistic. We think there are all kinds of things on the Internet that would be improved if anyone could have a virtual place of their own. Right now, there aren’t enough good games, for example, and they all seem to be about elves in tights or soldiers in battle armor. Metaplace allows more diversity. Right now, there are lots of people who want to use virtual worlds for research, or education, or business, but it’s just too darn hard to get one going. Now you can create a world in just a few minutes and start tailoring it to your needs. Basically, we wanted to democratize the process of making online spaces of all sorts.