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Kamran
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| Joined: | Sun Apr 12th, 2009 |
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Posted: Sun Apr 12th, 2009 19:54 |
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Hello and welcome to all. Peace be upon all the readers.
I wanted a platform to let my ideas spread and wished to receive a feedback on those ideas. I know everybody posting their posts, think of the topics very helpful. I too write with such an intention, and wish to receive your kind and humble feedback on it.
I believe there have been many, and by many I mean uncountable Qualified individuals involved in our formulation of statutory rules, principles and guidelines. But then why had they been missing, or say, overlooking such factors that are causing today the complete world a threat of existence. With the threat of existence, I mean, for business’ their market competitiveness and individual’s there bread earnings. The factors have already been highlighted, that what are the causes for such economic downturn. Banking sector plays the most of the part in that but what is the solution?
As I read in an article, recently posted on ACCA’s website of an official, she quoted that the banking sector already has stringent statutory requirements, but the reason of such shortfalls is the supervision of such requirements. This, according to her, is the reason for the wrong that is done.
My question is Regulator might have been less concerned about one or two banks, or may be all the banks for say 1 yr. (it is a though very big assumption) but what was before that, where were the they all the time before it?
With all due respect to her views, I still think that ‘supervision’ is not JUST the solution. The importance is of “supervision to what?” Policies might be stringent but are they looking forward of all the aspects?
I RECOMMEND “LET’S START IT ALL OVER AGAIN”
(To be continued…)
I wish to receive a feed back before I go on just to make sure, that what I wish to portray is being understood and individuals who can make a difference consider upon giving such an article a single view at least. Your humble feedbacks are most welcomed.
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Sadiq Ali
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| Joined: | Sun Nov 1st, 2009 |
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Posted: Sun Nov 1st, 2009 13:40 |
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Kamran, I agree with your thought and thanks for sharing...
As we all know it was the credit, mortgage and derivatives that became the real apples of discord in Economic crisis. These are financial weapons of mass destruction. Now, question is that to start it all.... are we going to give up these things for good or we just amend the system and make it compatiable to the prevailing circumstances...
what do you exactly mean by start it all over??
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sgman
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| Joined: | Sun Aug 17th, 2008 |
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Posted: Mon Nov 2nd, 2009 21:29 |
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Debt is obviously an issue. Unfortunately we view the debt-equity division incorrectly. If we are to decide on the correct debt-equity mix, we tend to take out the risk component and view other aspects such as the cost of capital and any tax benefits.
I think we need to look at the riskiness of debt vs equity. Although equity is more expensive, it is not as risky as debt.
Next, we need to stop arguing that cash reserves are a poor use of a companies assets and we need to change the culture regarding M&A where companies are taken over BECAUSE they have cash reserves to repay the debt that is taken on.
Ultimately, we need to change the way we view the use and the riskiness of debt.
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