It has been argued that hi-tech accounting wizardry, including the “fair value” principle of valuing current assets at market value, has played a devilish part in the present credit meltdown. After all, it allowed banks to overstate their assets and understate their liabilities with recourse to off-balance sheet “structured investment vehicles” that everyone thought had […]

Newton’s equations describe the motion of bodies, earthly and celestial. Correct application of his gravitational laws will keep an aircraft flying – but it’s the same law of gravity that could send it crashing to the ground. In similar vein, next time you hold a new £20 note take a moment to behold the profile […]

Banks deserve our opprobrium: they have forgotten all basic principles   The Chinese Sage Lao Tsu wrote, on the subject of government, that in the golden age people do not even know they are being governed; in the silver age they revere their leaders; in the iron age they respect them; and in the age […]

I have always assumed that gains and losses balance out in the big picture, assuming the lapse of sufficient time.  If I sell an investment for less than I paid I incur a quantifiable loss.  This does not mean that whoever buys it will make a profit since he too may sell for less than […]

The lending spree is over.  It will be a while before credit and risk are re-acquainted.  It is symptomatic of the latest squeeze that virtually every rule of sound banking was ignored. If, in the 1990s, conventional risk assessment dictated that mortgages should not exceed either 90 per cent of the property’s value or a […]

Since gaining its independence from the Treasury 10 years ago the Bank of England’s pledge to control inflation as its overriding priority has, until now, been visibly honoured and we have all benefited. Unlike the Treasury, however, the Bank’s sole weapon in fulfilling its mission is its autonomy over setting interest rates, and the present […]