But one regulator won't be forced to answer those questions just yet: Mary Schapiro, Barack Obama's pick for new S.E.C. chairman. Rest assured, her time will come.

Schapiro runs Finra, the brokerage industry's self-regulatory organization. Since Bernard L. Madoff Securities was a registered broker-dealer, Finra was at least partially responsible for policing its operations.

According to a story in the Wall Street Journal today, regulators including the S.E.C. and Finra examined Madoff's firm no less than eight times during the past sixteen years, and they found only minor violations. Indeed, in 2007, Finra's full-scale investigation of Madoff's firm concluded that "it violated technical rules and failed to report certain transactions in a timely way," according to the Journal.

This revelation will almost certainly cast Schapiro's nomination as S.E.C. chair in serious doubt. It is understandable that Congress should skewer the outgoing leaders of an S.E.C. that failed time and again to uncover this massive fraud. It is almost unfathomable]]> 2009-01-05T18:07:35+00:00 http://www.spectator.co.uk/business/trading-floor/3208196/broken-glass.thtml Is Waterford Wedgwood luxury, or "masstige"? Either way, it's bust. Its $625 million in debt is essentially worthless, it's been losing money before interest payments for a couple of years now, and its prospects, as we enter another grim year for the retail market, have never been poorer.

My guess is that someone, somewhere, will pick up the iconic brands -- Waterford, Wedgwood, Rosenthal, Royal Doulton -- for a song, while laying off substantially all of the manufacturing capacity and laying plans to start over from scratch if and when the market in such things improves. While the receivers are looking to sell the business as a going concern, I can't imagine that anybody has much appetite right now to buy a money pit with little prospect of turning profitable in the foreseeable future.

Ireland will probably end up losing a national icon -- and it won't be the last big brand to fall prey to the current economic crisis. During boom years, investors love storied brands like Waterford and Wedgwood. In bad times, they start to concentrate more on the P&L. These days, if all you've got going for you is a long history and a high]]> 2009-01-05T18:05:03+00:00 http://www.spectator.co.uk/business/trading-floor/3207416/most-odd.thtml Business owners are losing confidence in the ability of Lord Mandelson's Business Department to help them through the recession.

In order to lose confidence don't you have to have confidence in the first place?

Are there actually any rational business owners who have confidence in the Business Department to do anything other than hinder their efforts?

I'll assume that they really do have that top notch free health care and that literacy is indeed just fabulous: although the importance of that in a country where the Government decides what you can read or write somewhat escapes me.

So, this US embargo then, how much of an effect has that had on the island? Yes, I'm certain that it has indeed been deleterious, but given that Cuba can trade with the rest of the world (if they've got anything the rest of the world wants of course) if it wishes, how much do they actually do so?

Exports as a percentage of the Cuban economy are about 16%. Imports 18%. Total trade 34% or so.

Hmm, but is this high or low? Well, it's worth noting that all three of these figures are higher than those for either the US or Japan. So more of the economy of]]> 2009-01-05T13:36:58+00:00 http://www.spectator.co.uk/business/trading-floor/3203631/this-is-the-end.thtml Thanks to David Brooks's Sidney Awards, I've just caught up with Michael Lewis's article 'The End', which appeared in Portfolio magazine last month.  It's one of the most incisive and exhaustive pieces on the credit crunch that I've read so far - exactly what you'd expect from the man who wrote the supremely readable account of 1980s Wall Street life, Liar's Poker - and I'd recommend it to all CoffeeHousers.  As with most of these accounts, it's stuffed with debt-bubble anecdotes which still have the capacity to astonish.  This one, concerning pre-crunch mortgage-lending, jumped out at me:

"In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000."

So many of these snippets seem like the the first half of a modern parable; with the second half - the bit that tells us what we've all learnt from this - still being hammered out by governments and financial institutions across the globe.  It's obvious that credit conditions need to be tightened, but they can't be tightened to the point that credit dries up.  Hitting on the correct]]> Peter Hoskin 2009-01-03T18:58:35+00:00 http://www.spectator.co.uk/business/trading-floor/3202886/a-second-bailout.thtml So there we have it.  The first substantial rumblings that Alistair Darling's going to sanction a second banking bailout, after the first one didn't free up credit as intended.  According to the Times, the Chancellor will "decide within weeks" whether to pump £billions more into the sector.  One option being considered is the creation of a "bad bank"; by which the state would take over bad loans from the banks, thereby detoxifying the main banking system.  It was an attractive idea when Hank Paulson first suggested it in the US, but would practice match the theory with Brown at the helm?

Should a second bailout be necessary, the Government will spin it as proof that they're doing "everything it takes".  While the Tories will - not without reason - say that Brown's policies just aren't working.  This to-ing and fro-ing will most likely form the overarching political narrative of 2009.  But even with Mandelson and Campbell back on board, it will be increasingly difficult for Labour to counter the Tory message as the downturn affects people's everyday lives more - and as the debt burden faced by future taxpayers goes up]]> Peter Hoskin 2009-01-03T11:35:31+00:00 http://www.spectator.co.uk/business/trading-floor/3201021/has-the-death-knell-sounded-for-the-euro.thtml Peter Oborne makes a bold prediction in today's Mail: that the Euro - ten years old yesterday - won't live to see its twentieth anniversary.  Whether or not you agree with that prognosis, Oborne's case is compelling:

"Indeed, far from being the staggering success its supporters claim, the euro-zone is already inflicting huge damage on the nations within it. Many currency market experts believe that some of these struggling members may be forced to peel away from the euro - with devastating consequences for the rest of the world.

The greatest problems, in the short term at least, are in the four Mediterranean economies known as the PIGS - Portugal, Italy, Greece and Spain.

For each of these countries, the euro has already proved a disaster. Put simply, most of the PIGS are so heavily indebted that the market no longer believes they will be able to repay their borrowings.

Normally, if a country falls into too much debt, it can devalue its currency, essentially devaluing its debt burden - this is exactly what Britain has done over the past few months. In the euro-zone, however, the currency's value is

The £84million ISA scheme was recommended as a way to avoid a repeat of the Soham murders, by requiring anyone who wants to work or volunteer with children or vulnerable adults to have their backgrounds checked by officials first.

An estimated 11.3 million adults in England will have to register their details, at a cost of £64, and even children's authors who regularly visit schools and parents who want to welcome pupils from overseas on exchange trips will be drawn in.

Those numbers show that of course the plan isn't going to cost £84 million at all. 11.3million people each paying £64 is, err, £723 million or so. I assume that the £84 million is the cost of administering it, not the total cost. Of course, there are also other unseen costs that we might usefully add. How many people will think it not worth the bother of having such a check to do those marginal activities? So how much of civic]]> 2009-01-02T09:42:14+00:00 http://www.spectator.co.uk/business/trading-floor/3200676/the-sterling-turning-point.thtml I'm fairly pessimistic about the prospects for sterling - or the GBPeso as some CoffeeHousers have dubbed it. But as a counterbalance to the stuff I've been posting recently, here is a forecast from Royal Bank of Scotland which reckons sterling has been oversold, the turning point has arrived and that we will be able to afford to go on holiday after all. Our pounds will be buying €1.20 by next Christmas and €1.30 by Christmas 2010, but we can forget about those $2 pounds. Here is its graph (below). RBS inverts things, and asks how many pence a Euro will buy. RBS reckons the BoE will cut rates to 1% by Easter and keep them there - but nonetheless argues sterling is "cheap by historic standards" and "eventually, this should tempt foreign investors to move back into sterling". Here's hoping.

On average each household with a total income of £25,000 paid taxes of £10,362 and received state benefits of £10,503, it found.

Looking at the actual report (OK, well, the press release, whow much of these things do you think journalists actually read?) that's not quite what they say.

The original statement indicates that we're simply churning the money to and from the same people. This is something that we certainly do in fact do with the working poor, they being in both the income tax system and receiving tax credits. However, the statement is really:

If you earn slightly above the average income of £25,000, you will have to pay taxes of just over £10,000 and find that you get back cash benefits and public services (like health and education) worth slightly more - an extra £141 to be exact.

Which is something rather different. You're getting back in state benefits and state supplied services roughly what you're paying in.

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