Friday, March 14, 2008

Days Like These No. 2

I begin with a memo that was recently posted on the financial pages of CNN online. It was a test that it advised readers give their financial advisors. Now some may say that we would have little to learn from such people and you would be right. For it turns out that the previously mentioned test was designed to determine if the financial advisor knew anything at all about finance or was just – as the memo put it simply ‘a salesman’ . The worse case scenario was when the ‘advisor’ refused to answer the questions and replied that ‘figures are the back offices concern’.

Today of course that can’t be the right answer as figures are everybody’s concern – from the price of wheat, petrol and – money. But in these days of so many turning points the financial adviser, who knows nothing about finance, is yet another indicator of the melt down in the economy. After all what one needed before now was to keep the faith that every thing was on the up. Financial advisers then gave no advice they just promoted stock options. Now many will be transferring to the back office to have a look at those same figures not to brush up their knowledge of the market but to avoid the people on the phones worried how much money they will loose as a result of the recent advice they received. Those who replace them will of course have the additional personal skills to be able to impart bad news and sympathise with the client in distress - rather like bereavement councillors.

If there was any shock at the news that the government had finally nationalised the British bank Northern Rock after a death agony of some four months it had all but dissipated by the final act. For we have now moved on form the ‘free market’ (which was neither free or a market) to free money that is costing us all packet (£100billion to be precise). Because as it transpired there simply was no effective way that the regulators (the people we pay to monitor the banks) could establish the truth behind the web of Off Shore companies that was Northern Rock. Not under the current law or management at any rate.

Not that the other Atlantic government is doing any better than it’s British subsidiary which just recently gave a present of $200 billion dollars to the four most sub prim exposed banks. Once that had been done, in the hope of halting the effects of more bank failures in the deadlines - the world wide stock market and the dollar tumbled in any case some 2.5%. The Federal Reserve or ‘the fed’, as it is affectionately known on Wall Street, had made matters worse. What now?

That’s not just a question for government financial advisers but for every one of us.

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