I was going to start by bitching that there was nothing interesting about which I could write…oh, Putin declared that he was done with carving up the Ukraine and world-wide markets breathed a sign of relief with everything going up, but that was in the cards…for the time being. As an aside, don't you just love he sanctions The Leader slapped on Russia, I mean, who are these guys? It was in fact reported that a couple of the notorious 11 were on the list because they were among the legislative leaders in Russia's anti-homosexual campaign but I can't confirm that. Would I be surprised? No. But that's neither here nor there.
Mark Carney made the day with a wonderful segue from last week's blog. Mark is shaking up the Old Lady. Moving people around. Lean and Mean. Better positioned etc., etc. Says he's going to make sure that the organization is ready for the next round of financial mishaps should they occur but is hopefully that they can be prevented. One of his new deputy Governors is a lady by the name of Nemat Shafik, of Egyptian nationality, the ex-wife of Mohammad el-Arian late of PIMCO and a former executive of the IMF. So I inquired: very bright, very educated very female which apparently is her highest qualification. Even Over There it appears. There is another Deputy who is ex Goldman Sachs. 'Nuff said.
Now far be it from me to get in the way of qualified people and political correctness, but has anyone, anywhere, been given to the thought that one of the contributing problems to the disaster of 2008 was that there was nary a sole in Blighty who had the slightest idea of what the hell was going on, the regulatory and oversight authority of the Bank of England having been handed over to the newly created FSA in 1997 by then Chancellor Gordon Brown in one of the seriously unintelligent moves in financial history. The Old Lady was good; she was very, very good, knowing all the players and the businesses and having the one thing that in finance is irreplaceable: standing and the confidence of the community. The FSA had neither.
Now from all reports, Mark Carney is one hell of a smart guy, but here is a message: new faces in new deck chairs provide protection against nothing. They are particularly useless when their have never operated within a market or global markets for that matter. It is an especial tragedy at the Bank of England who at one point had one of if not the finest regulatory operations around, not based on non-sensible, completely unintelligible and disparate regulations such as Dodd/Frank but on the experience and longevity of people who really knew the business. That was dismantled. If Mr. Carney believes it can be reinvented by rearranging the deck chairs, he is mistaken.
I have often been critical in this piece of the attitudes and morality of the people who operate in the financial sector these days. In another time if you were to say, "you're done," the other party had every right to expect that whatever was the transaction it would be executed as agreed. Not today. One had best have written confirmation because no one's word is anyone's bond. But the other side is suffering from the same problem. One shouldn't need 1300 pages or regulations to know what is right. Certainly the business is far more diverse but right and wrong isn't. I don't want regulators who need be told in complex form what it is that should be done and how to do it. I want regulators who know. Frankly, I'm sick and tired of reorganizations and replacements. The don't change the bottom line and the bottom line is what happened in 2008 can happen again and Too Big to Fail is still Too Big to Fail. That was a pretty good central bank there Mark old son. Try to make it so again, and here's a hint: you can't do it in five years. Make a commitment.
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