How To Learn To Love Accounting Standards
07 October, 2007
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.
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