| 07 October 2007
If I mention the dread words 'accounting standards' you will stop reading at
once. Nothing comes across as more boring. But you are wrong. Globally harmonized
accounting standards are a vital component of a level playing field for investors.
And that's the prerequisite for getting rid of all the research analysts, brokers,
journalists (yes, end of me, as well), independent financial advisers, hedge
fund managers and the rest of the unholy mob that takes such a massive bite
out of our savings (see, I survive the chop because I have turned myself back
into being an investor).
Once financial instruments (shares and bonds to you and me) are transparent,
who needs analysts? In order to be transparent, they have got to be comparable,
and that means built on the same structural skeleton. And that means accounting
standards.
So the squabble going on between EU and US regulators is much closer to home
than you thought. More or less, the UK's IFRS, the brainchild of Saint Andrew
Tweedie, is on the side of the angels, and the Americans, who are quite internationalist
when they're allowed to be, are tending to agree with him that the very prescriptive
GAAP rules should be allowed to wither in the shade of the principles-based
IFRS.
Of course, in Brussels this is just another twist of the Anglo-Saxon screw.
Once those devilish barbarians at the gate can understand the accounts of European
companies, they will be swept away into the arms of the Wall Street investment
banks.
Well, not quite, because those self-same banks don't want to own anything nowadays,
they just want to securitize it all instead and live off their spreads. And
that, translated, means regulatory transparency, so that you and I can see what
we're buying.
You have been reading an entry on the following blog:
Penelope Wise
Penny Wise but not Pound Foolish! But remember: I am not offering investment advice. My comments are just for your general information; I do not recommend investments, and you should take professional advice before entering any investment contract.
Penelope blogs on investment and financial services around the world: mainstream and alternative. Contact: penny@lowtax.net
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