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a personal view from Erithacus
20th September 2003
My apologies for the long break in the regular "News Comment". For the next few months at least, a new page should appear here each week and I hope you will all find it at least a little interesting and (occasionally) informative. Please feel free to send your comments to firstname.lastname@example.org.
UK stock markets fell heavily on Friday, with the FTSE100 index losing 57.7 points to finish at 4244.8 although it was more than 40 points up on the week and had reached its highest level in 13 months on Wednesday when it broke through the 4300 barrier.
Banks and financials were the heaviest losers, with telecoms and oil companies also suffering. HBOS dropped 21 points and ended at 717 which apart from a dip at the end of August was its lowest level since May; Barclays lost 5.5 points to finish at 497.5; Royal Bank of Scotland was down 11 points to 1624; Bradford & Bingley, Legal & General and Friends Provident all saw their shares fall substantially.
Analysts were generally cautious in their comments, suggesting that although they believe the market direction is generally still upwards there is a definite lack of impetus and nervousness about the possibility of higher interest rates and levels of public spending. Falls and very high volumes on Friday are seen as only a result of the expiry of futures and options ("double-witching") and this particular fall in share prices is not seen as significant in itself. The more optimistic pointed to the Techmark index which rose 3.53 points on Friday, continuing its six-session climb to around 40 points up on the week (4%) and about 200 points (over 30%) higher than its lows of March this year.
This promises to be very interesting. I will not bore you with the details of Dick Grasso'’s resignation (which has been the subject of far too much press speculation and comment over the last few weeks). Suffice it to say that he was probably getting far too much money and he certainly has not left empty handed.
What will be interesting is how much of a mess they manage to make in the search for a replacement; how much the whole administration of the Stock Exchange has to be overhauled to keep the critics happy; and how much of it all spills over into the financial world generally and forces changes elsewhere.
Already battlelines are forming. The Boston Herald, for example, is trumpeting lines like "Dick Grasso shouldn't be the only one to leave the New York Stock Exchange," while the National Post in Canada comments "Dick Grasso is gone, chewed up in the great destructive force that is eating away at the soul of U.S. capitalism...... The corporate governance movement....reached its lowest point on Wednesday when it succeeded in removing Mr. Grasso."
The phrase "media frenzy" springs to mind. Over three thousand articles about Dick Grasso and the "scandal" of his pay package have appeared in newspapers worldwide since the beginning of August, and now the focus seems to be switching to the whole running of the New York Stock Exchange, not least because it was the board of the exchange who approved Grasso’s pay package in the first place, but also now looking at whether it is proper for the regulation of the major investment banks and brokers to be done by a board made up of top executives from those they are supposed to be regulating.
It may all be very worrying. But as this is the way it has always been done, is there really reason to change it? Or should we, and they, be constantly vigilant that the ‘unacceptable face of capitalism’ remains veiled.
There is good news. A "search committee" has been formed to find a new chairman, and apparently the formation of the committee was achieved without the need to form a committee to select the members of the committee.
Excellent. A step forward. I do hope they remember that someone (Mark Twain, I think) once defined a camel as "a horse designed by committee", and let’s face it, whoever they decide on and whatever they do, someone will get the hump.
An animal rescue shelter in South Africa were baffled on finding two sick crocodiles in a tree in the suburbs of Johannesburg. The crocodiles died after being rescued, but animal experts still claim that crocodiles cannot climb trees.
A South African MP is in deep trouble after sending a sexy text message to his wife. He had meant to send it to his girlfriend.
A South African pensioner is refusing to get rid of his dog, even though the dog has just eaten the pensioner’s hearing aid, false teeth and clothes while he was asleep.
I wish her the best of luck on her seventh test.
20th September 2003
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