A new world?

We live in complicated financial times, where new markets such as the Credit Default Swap market have grown from virtually nothing to become major markets in very short periods of time. 2 days’ ago, the SEC Chairman Christopher Cox described a regulatory hole in the CDS market – see here.

As a result of what appears to have been a rather short-term rally of stocks last Thursday and Friday and the ban on ‘short-selling’ of certain financial stocks, there will be many funds (investment and hedge) that find themselves with losses that result from them having to close positions at a time not of their own choosing.

The problem with politicians’ discussions (and I include myself in this criticism) of these things is that very often they are based on the latest discussion that they have had, rather than on any real understanding and deep involvement in the market that they are discussing. What appears to me to be a problem with knee-jerk regulation is that very often we end up choosing the wrong target or we end up increasing risk and so losses – and even potentially contributing to the very volatility in the market that concerns us.

Those I talk to who work in financial services are not very impressed by the tone and level of the discussion that takes place on the news programs – and are sometimes incensed by the apparent ignorance of politicians pontificating.

Moving closer to home territory for me, watching Question Time last night I nearly ended up throwing my shoes at the television.

Vince Cable’s description of his proposals for changes to the court process for creditors to gain possession of homes from defaulting debtors appeared to me to ignore completely the existing barriers that mean, in cases I have been involved in, that it can take years from default to possession being obtained and a sale completed. My guess is that the minimum period would be about 3 months from the commencement of court proceedings – and a court order is required.

Hazel Blears then twittered on about legal advice ‘now’ being available for individuals taken to court by creditors; ignoring the changes to civil legal aid that means that ‘free’ legal representation has effectively been removed by Labour in power in the time that I have been in practice!

Grrrrrrrrrrrrr!!!!!!!!!!!!!!!