An interesting aspect of the Northern Rock saga, is its demonstration of how weak shareholders can be in terms of influencing executive action particularly when events are moving quickly.
By going quietly, understandably, to the Bank of England to get emergency loans, Northern Rock management has been party to what appears to be the total dilution of shareholder value, or as good as, and at the same time the influence of shareholders. Northern Rock last year, I think was worth £5bn, today it is worth less than £400 million.
No wonder the shareholders are taking their case to the media. Sadly there is very little sympathy for their case from the media because the main shareholders now are hedge funds looking to see what might happen as the carcase is picked over. However many small shareholders were/are Northern Rock employees who have worked for the company for many years.
The hedge funds are not used to being so ignored but it would appear they are potentially sitting on major losses if as expected that Northern Rock is sold for a nominal sum. Certainly the driving force in sorting out Northern Rock appears to the UK government via the Treasury and Bank of England. The board of Northern Rock essentially all resigned last week. It is not often you see a FTSE100 publicly quoted company with no details at all on main board, audit committee etc - take a look at the web site.
Might the shareholders take their case to the courts. Certainly it is being managed by government as though it is nationalised. What is its exact legal entity currently and might this have issues for any decisions taken in this interim period. When companies talk about running the company on behalf of shareholders - remember that does not include banks which have had to run to the Bank of England.
Thursday, 22 November 2007
Thursday, 15 November 2007
Barclays Capital - follow the flow of communications
A good opportunity to analyse the information flows related to Barclays Capital comes with today's rushed announcement to calm City concerns.
Last week major rumours swept financial markets that Barclays was in greater trouble than it was admitting over collaterised debt obligations (CDO). Barclays Capital, part of Barclays, and one of the main driver of profit for the group, had been one of the most aggressive operators in terms of handling and repackaging subprime mortgages. Interesting to note the intensity of the information flows around this topic of Barclays rumours. According to Google there are over 500,000 search results on the topic. I went to page 10 of these on the Google Search page and they were still highly relevant. A good example of an information "firestorm".
Today they have rushed out an announcement from Barclays Capital, see link above which has covered in great detail, Barclays treatment and exposure to collaterised debt obligations. Seems reassuring and initial coverage on the story seems to be reassuring markets.
Barclays share price at 1251, Thursday was: 533p up 6p on the day suggesting that markets take this positively. A good example of market transparency at work? Let's see the reaction tomorrow and later in the week.
Last week major rumours swept financial markets that Barclays was in greater trouble than it was admitting over collaterised debt obligations (CDO). Barclays Capital, part of Barclays, and one of the main driver of profit for the group, had been one of the most aggressive operators in terms of handling and repackaging subprime mortgages. Interesting to note the intensity of the information flows around this topic of Barclays rumours. According to Google there are over 500,000 search results on the topic. I went to page 10 of these on the Google Search page and they were still highly relevant. A good example of an information "firestorm".
Today they have rushed out an announcement from Barclays Capital, see link above which has covered in great detail, Barclays treatment and exposure to collaterised debt obligations. Seems reassuring and initial coverage on the story seems to be reassuring markets.
Barclays share price at 1251, Thursday was: 533p up 6p on the day suggesting that markets take this positively. A good example of market transparency at work? Let's see the reaction tomorrow and later in the week.
Wednesday, 14 November 2007
Syndicated loans - underwriters show how to run an issue campaign
A good example of how financial media can be used to develop an issue campaign can be seen by recent coverage on syndicated loans.
Syndicated loans is another area being affected by the spreading ripples of the subprime financial problems. Just as subprime mortgages are packaged up and sold off, so corporate loans are packaged up and sold off by the lead institution(s). However this has become increasingly difficult in the general and gathering credit problems and for example the backers of Boots, a massive management buyout, at the top of the market, has only been partially syndicated, leaving the lead banks nursing a potentially significant hangover on their balance sheets.
The conference, sponsored by Reuters, has highlighted that the major underwriting banks are refusing to discount the syndicated loans on their books unlike US banks. Other members of the large underwriting community, perhaps feeling the lack of business, are highlighting the role of some European banks which are not discounting below par i.e. taking a loss.
By bringing it to wider attention and media coverage, they are ensuring that the investment community will be discounting these loans on the underwriting banks' books and so in effect forcing them to probably start discounting over the coming months.
Syndicated loans is another area being affected by the spreading ripples of the subprime financial problems. Just as subprime mortgages are packaged up and sold off, so corporate loans are packaged up and sold off by the lead institution(s). However this has become increasingly difficult in the general and gathering credit problems and for example the backers of Boots, a massive management buyout, at the top of the market, has only been partially syndicated, leaving the lead banks nursing a potentially significant hangover on their balance sheets.
The conference, sponsored by Reuters, has highlighted that the major underwriting banks are refusing to discount the syndicated loans on their books unlike US banks. Other members of the large underwriting community, perhaps feeling the lack of business, are highlighting the role of some European banks which are not discounting below par i.e. taking a loss.
By bringing it to wider attention and media coverage, they are ensuring that the investment community will be discounting these loans on the underwriting banks' books and so in effect forcing them to probably start discounting over the coming months.
Thursday, 8 November 2007
What's in a word
Alot more than you think. The Financial Times today has highlighted the example of both Chuck Prince former CEO of Citigroup and Stan O'Neal, former CEO of Merrill Lynch both departed over the past week due to the sub-prime crisis and the impact this has had on their respective banks in terms of write-downs. They have both "retired" rather than "resigned". Take a look at the official announcement of Chuck Prince's departure on the
web site press centre I saw it a few days ago and did not pick up on significance of use of language.
Silly. As John Gapper of the FT points out today, there is a great deal of significance in the word. According to the article and because they retired not resigned, they will walk away with significant amounts in unvested shares i.e ones which he has not bought even at a low price but has been able to leave on the shelf until required. In the case of Chuck Prince this means a further $40million. So now we can see the reason for the delay in Chuck Prince's announcement. The lawyers were hard at work agreeing a statement and there was a great deal of signficance in the words. Good lesson - always remember to deconstruct the official statement, the use of words is invariably very important.
Gapper nicely brings into the piece the element of moral hazard about the deal. He says this is an example of moral hazard, encouraging potentially reckless behaviour. Brings us back to Northern Rock and Governor of the Bank of England. Do you remember that moral hazard was the very real concern he had when considering whether to support the bank or let it fail as he indicated when appearing before the House of Commons Parliamentary Finance and Treasury committee. Interesting how certain phrases which we may or may not have heard of or used before, suddenly become common currency for a while.
web site press centre I saw it a few days ago and did not pick up on significance of use of language.
Silly. As John Gapper of the FT points out today, there is a great deal of significance in the word. According to the article and because they retired not resigned, they will walk away with significant amounts in unvested shares i.e ones which he has not bought even at a low price but has been able to leave on the shelf until required. In the case of Chuck Prince this means a further $40million. So now we can see the reason for the delay in Chuck Prince's announcement. The lawyers were hard at work agreeing a statement and there was a great deal of signficance in the words. Good lesson - always remember to deconstruct the official statement, the use of words is invariably very important.
Gapper nicely brings into the piece the element of moral hazard about the deal. He says this is an example of moral hazard, encouraging potentially reckless behaviour. Brings us back to Northern Rock and Governor of the Bank of England. Do you remember that moral hazard was the very real concern he had when considering whether to support the bank or let it fail as he indicated when appearing before the House of Commons Parliamentary Finance and Treasury committee. Interesting how certain phrases which we may or may not have heard of or used before, suddenly become common currency for a while.
Wednesday, 7 November 2007
Investment in financial media
Take a look at an article in Le Figaro today highlighting investment in financial media both in France and globally.
Sunday, 4 November 2007
Press coverage on victims of subprime mortgages
Here is some coverage from US local media on the experiences of ordinary people taking out mortgages and the problems they are getting into potentially leading to foreclosures. This is driving the issue of subprime mortgages and the current problem facing all the major banks - how much provisions should they make for these. There is a particular category of sub-sub prime mortgages which some analysts are saying may have to be provisioned nearly up to 100%.
From Battle Creek, Michigan in the heart of the American industrial belt.
Finally a sobering perspective of the scale of the problem from the Sun Times Chicago Group with a US wide perspective on US repossessions. Potentially over a millon homes are likely to be involved in repossession orders over the coming 12 months up 100% from last year. Florida, California and Nevada have the highest rates.
Stories like these highlight how regional and local stories on this issue providing information from the front line will have an impact on financial markets as they are picked up by analysts and investors. Equally the Florida, California and Nevada housing markets will be closely watched over the next 12 months to see the point where better news (hopefully) starts to permeate through to financial markets and where reposessions start to head down.
From Battle Creek, Michigan in the heart of the American industrial belt.
Finally a sobering perspective of the scale of the problem from the Sun Times Chicago Group with a US wide perspective on US repossessions. Potentially over a millon homes are likely to be involved in repossession orders over the coming 12 months up 100% from last year. Florida, California and Nevada have the highest rates.
Stories like these highlight how regional and local stories on this issue providing information from the front line will have an impact on financial markets as they are picked up by analysts and investors. Equally the Florida, California and Nevada housing markets will be closely watched over the next 12 months to see the point where better news (hopefully) starts to permeate through to financial markets and where reposessions start to head down.
Thursday, 25 October 2007
Visit to Bloomberg
What struck me strongly as a result of our visit to Bloomberg's were the following:
1. Power of Bloomberg global network. 250,000 on a proprietary network is a very large and significant number. The importance and value of networks, both real and virtual, has become a major area of research in communications.
2. The importance of what Bloomberg's call Analytics which is the information at the heart of the Bloomberg Terminal. This is part news, part data, part knowledge and analysis.
3. The building in Finsbury Square which is a very visible statement of their strategy of being transparent as an organisation and bringing transparency to the workings of financial markets.
4. The ambiguity of their business model, with financial media, their most public face, only responsible for a very small share of their revenue.
1. Power of Bloomberg global network. 250,000 on a proprietary network is a very large and significant number. The importance and value of networks, both real and virtual, has become a major area of research in communications.
2. The importance of what Bloomberg's call Analytics which is the information at the heart of the Bloomberg Terminal. This is part news, part data, part knowledge and analysis.
3. The building in Finsbury Square which is a very visible statement of their strategy of being transparent as an organisation and bringing transparency to the workings of financial markets.
4. The ambiguity of their business model, with financial media, their most public face, only responsible for a very small share of their revenue.
Bank of England responds
Reply received from Bank of England to an email which I sent in via their web site, urging the Governor to take some action. This was just at the time of scenes of people queuing up outside Northern Bank brandches. Response below:
Dear Mr Phillimore
Thank you for your e-mail.
As you may know, the Bank has two core purposes - monetary stability and
financial stability.
Perhaps I can first explain the Bank's responsibilities regarding
monetary policy. Our task is to set interest rates to meet the
Government's inflation target of 2% (as measured by the 12-month
increase in the Consumer Prices Index). In setting the official Bank
interest rate, we have to judge the outlook for the economy and
inflation and decide what level of interest rates will ensure inflation
remains low and in line with the target of 2%. Our decisions involve
difficult judgements about the direction of the economy, the state of
overall demand and the pressure on prices. There is inevitable
uncertainty about the future. But what we are clear about is the need to
ensure that inflation stays low. Only by keeping inflation low can we
ultimately maintain the value of our money - in terms of what it will
buy - and avoid the cycles of high inflation, high interest rates and
recession which characterised previous decades.
The Bank's financial stability objective entails detecting and reducing
threats to the financial system as a whole. In pursuit of this objective
the Bank works closely with the FSA and HM Treasury under the terms of a
Memorandum of Understanding which formalises the responsibilities of
each institution. The turmoil in financial markets since the beginning
of August has increased demand for liquidity by the banking system,
leading to a rise in inter-bank rates. As a consequence effective
borrowing rates facing households and companies may also rise somewhat,
but it is too soon to tell how persistent and how large any change in
credit conditions for household and corporate borrowers will prove to
be. However, the MPC is continually monitoring these factors to
establish their likely effect upon consumer credit and, ultimately,
inflation. If the economy was to weaken more than we anticipate,
resulting in future inflation potentially falling below our 2% target,
then our likely policy response would be to reduce interest rates.
For further information you may like to refer to the Governor's recent
speech to the Northern Ireland Chamber of Commerce and Industry at
http://www.bankofengland.co.uk/publications/speeches/2007/speech324.pdf
Thank you again for your views.
Kind regards
Di Davies
Public Information & Enquiries Group
Bank of England
Tel: +44 (0)20 7601 4878
E-mail: enquiries@bankofengland.co.uk
Dear Mr Phillimore
Thank you for your e-mail.
As you may know, the Bank has two core purposes - monetary stability and
financial stability.
Perhaps I can first explain the Bank's responsibilities regarding
monetary policy. Our task is to set interest rates to meet the
Government's inflation target of 2% (as measured by the 12-month
increase in the Consumer Prices Index). In setting the official Bank
interest rate, we have to judge the outlook for the economy and
inflation and decide what level of interest rates will ensure inflation
remains low and in line with the target of 2%. Our decisions involve
difficult judgements about the direction of the economy, the state of
overall demand and the pressure on prices. There is inevitable
uncertainty about the future. But what we are clear about is the need to
ensure that inflation stays low. Only by keeping inflation low can we
ultimately maintain the value of our money - in terms of what it will
buy - and avoid the cycles of high inflation, high interest rates and
recession which characterised previous decades.
The Bank's financial stability objective entails detecting and reducing
threats to the financial system as a whole. In pursuit of this objective
the Bank works closely with the FSA and HM Treasury under the terms of a
Memorandum of Understanding which formalises the responsibilities of
each institution. The turmoil in financial markets since the beginning
of August has increased demand for liquidity by the banking system,
leading to a rise in inter-bank rates. As a consequence effective
borrowing rates facing households and companies may also rise somewhat,
but it is too soon to tell how persistent and how large any change in
credit conditions for household and corporate borrowers will prove to
be. However, the MPC is continually monitoring these factors to
establish their likely effect upon consumer credit and, ultimately,
inflation. If the economy was to weaken more than we anticipate,
resulting in future inflation potentially falling below our 2% target,
then our likely policy response would be to reduce interest rates.
For further information you may like to refer to the Governor's recent
speech to the Northern Ireland Chamber of Commerce and Industry at
http://www.bankofengland.co.uk/publications/speeches/2007/speech324.pdf
Thank you again for your views.
Kind regards
Di Davies
Public Information & Enquiries Group
Bank of England
Tel: +44 (0)20 7601 4878
E-mail: enquiries@bankofengland.co.uk
Tuesday, 16 October 2007
Fox Business
Appropriately for the first course, and just prior to the visit to Bloombergs, we have a major media giant, Fox, part of News International, launching a dedicated business TV channel and web site. News International has just bought the Wall Street Journal further strenghtening the Group's position in this sector. Take a look at the coverage
which highlights that Fox Business is taking a different, lighter viewer on business coverage. You might want to take a look at the web site
which highlights that Fox Business is taking a different, lighter viewer on business coverage. You might want to take a look at the web site
Thursday, 11 October 2007
Transparency and hedge funds
The "great and the good" in the UK hedge fund world, have decided that the political and regulatory pressure is getting too great and it is time that the veil of mystery is lifted. Not too much (probably) but just enough to satisfy stakeholders and regulators.
The Hedge Fund Working Group has come out with a report and recommendations. Interestingly this body currently does not appear to have a web site, at least a search on Google did not turn one up. However the Wall Street Journal has a copy of the report embedded in its coverage of the report.
Key recommendations of the initial report suggest that there are four areas of disclosure which need to be addressed:
Investment policy, commercial policy, performance measurement and disclosure to lenders. The report looks set to also provide us with a good insight into how hedge funds operate.
There is no doubt a thread runs from the subprime crisis to this Report even though this was set up over six months ago. Regulators and bankers are concerned about understanding better the location of risk with more sophisticated financial products. There is also political pressure growing in Europe in particular Germany at the role of hedge funds in takeovers.
It is interesting to see a survey in 2003 of US hedge funds which suggested that transparency only where it did not impact on the proprietary nature of the fund was necessary. Those days are long gone. Greater disclosure, if the markets are operating efficiently, will result in reduced profitability for the sector, but that is a process which all markets go through in their development.
Other links:
US regulation
US financial blog
Germany and hedge fund concerns
The Hedge Fund Working Group has come out with a report and recommendations. Interestingly this body currently does not appear to have a web site, at least a search on Google did not turn one up. However the Wall Street Journal has a copy of the report embedded in its coverage of the report.
Key recommendations of the initial report suggest that there are four areas of disclosure which need to be addressed:
Investment policy, commercial policy, performance measurement and disclosure to lenders. The report looks set to also provide us with a good insight into how hedge funds operate.
There is no doubt a thread runs from the subprime crisis to this Report even though this was set up over six months ago. Regulators and bankers are concerned about understanding better the location of risk with more sophisticated financial products. There is also political pressure growing in Europe in particular Germany at the role of hedge funds in takeovers.
It is interesting to see a survey in 2003 of US hedge funds which suggested that transparency only where it did not impact on the proprietary nature of the fund was necessary. Those days are long gone. Greater disclosure, if the markets are operating efficiently, will result in reduced profitability for the sector, but that is a process which all markets go through in their development.
Other links:
US regulation
US financial blog
Germany and hedge fund concerns
Thursday, 4 October 2007
Two sides of the coin
Last week we looked at the financial news process, this week we look at the investor relations and financial communications. A good example of the different perspectives on the same story can be seen in how Marriott, the major US global hotel chain operator's latest quarterly results have been covered by CNBC
Then take a look at the financial quarterly announcement made by Marriott's financial PR and investor relations team which set off the coverage of the story by financial media and commentators. You have to go down a long way before you see the announcement that quarterly profit is down compared with the same figure last year - 12 paragraphs down. Interestingly debt is up significantly over a US1bn over the last 9 months. Overall headline for the story is: Marriott International Reports Strong Third Quarter Results. Spin or a fair assessment of underlying trends? Has the media just concentrated too much on the net profit figure? A good contrast of the different agendas for different parts of the communications chain. Remember what the journalists were saying about how skeptical they were of company announcements in last week's academic paper.
What has been the market reaction to the story. Thursday pm, Marriott is trading at 43 dollars, (CNBC) down nearly 3% on the start of the day and down nearly 9% on the year to date. The market is perhaps suggesting that the press are closer to the heart of the story than the Marriott IR team.
Then take a look at the financial quarterly announcement made by Marriott's financial PR and investor relations team which set off the coverage of the story by financial media and commentators. You have to go down a long way before you see the announcement that quarterly profit is down compared with the same figure last year - 12 paragraphs down. Interestingly debt is up significantly over a US1bn over the last 9 months. Overall headline for the story is: Marriott International Reports Strong Third Quarter Results. Spin or a fair assessment of underlying trends? Has the media just concentrated too much on the net profit figure? A good contrast of the different agendas for different parts of the communications chain. Remember what the journalists were saying about how skeptical they were of company announcements in last week's academic paper.
What has been the market reaction to the story. Thursday pm, Marriott is trading at 43 dollars, (CNBC) down nearly 3% on the start of the day and down nearly 9% on the year to date. The market is perhaps suggesting that the press are closer to the heart of the story than the Marriott IR team.
Sunday, 23 September 2007
The developing story
The Northern Rock story continues to fascinate. Northern Rock itself has shuffled off-stage for the moment while bigger prey and issues take their turn to come under the spotlight. Last week was the Governor of the Bank of England's turn and his continuing future. His defence of his actions regarding Northern Rock in front of the Treasury Select Committe, were not impressive and in news terms have set other hares running.
Timing is everything in news stories and with Labour having its conference this week in Bournemouth, the Northern Rock story looks set to shift again and allow the media to look carefully at Labour's economic competence, particularly early decisions made when they first came to power on the structure of City regulation. Labour has been hard at work in the studios this weekend on this issue.
However the Economist has raised a more damaging issue that could well start to gain more coverage in the coming weeks. Namely that the management of the Northern Rock crisis by the Bank of England has damaged the City of London's reputation for financial competence. Reputation loss is a serious concern to any organisation particularly one employing so many people and so important to UK plc.
It is the ability of the Northern Rock to continue to metamorphose which highlights how in communication terms it is still exhibiting positive feedback, still somewhat unmaneable making it very difficulty and concerning for organisations and people caught in its wake.
Timing is everything in news stories and with Labour having its conference this week in Bournemouth, the Northern Rock story looks set to shift again and allow the media to look carefully at Labour's economic competence, particularly early decisions made when they first came to power on the structure of City regulation. Labour has been hard at work in the studios this weekend on this issue.
However the Economist has raised a more damaging issue that could well start to gain more coverage in the coming weeks. Namely that the management of the Northern Rock crisis by the Bank of England has damaged the City of London's reputation for financial competence. Reputation loss is a serious concern to any organisation particularly one employing so many people and so important to UK plc.
It is the ability of the Northern Rock to continue to metamorphose which highlights how in communication terms it is still exhibiting positive feedback, still somewhat unmaneable making it very difficulty and concerning for organisations and people caught in its wake.
Sunday, 16 September 2007
Northern Rock - positive feedback and reputation loss
The current situation with Northern Rock is an excellent example of postive feedback where every day bring fresh news which amplifies the problems facing the bank. In communication terms (and banking terms) nothing can be more serious and terminal for a bank than TV coverage of people queuing up to take their savings out of a bank, in spite of full government and regulatory support. The reputation and corporate brand of Northern Rock is literally disappearing along with customers deposits.
The reaction by the Sunday papers suggests that the situation has become too serious and has the situation to ripple out and amplify problems elsewhere in UK financial markets (further positive feedback). Note Governors of Central Banks operate on a negative feedback model basis (dampening down feedback by putting up interest rates for example). Take a look at the BBC Businss Editor Robert Peston's blog, some good background and issues for consideration next week. Will Northern Rock still be a standalone organisation on Friday?
If you are interested in reading more about positive and negative feedback in economics, take a look at The Origin of Wealth by Eric Beinhocker.
The reaction by the Sunday papers suggests that the situation has become too serious and has the situation to ripple out and amplify problems elsewhere in UK financial markets (further positive feedback). Note Governors of Central Banks operate on a negative feedback model basis (dampening down feedback by putting up interest rates for example). Take a look at the BBC Businss Editor Robert Peston's blog, some good background and issues for consideration next week. Will Northern Rock still be a standalone organisation on Friday?
If you are interested in reading more about positive and negative feedback in economics, take a look at The Origin of Wealth by Eric Beinhocker.
Friday, 14 September 2007
Northern Rock - the ripple effect continues
Today's Financial Times (Friday 14th Sept) highlights the most serious impact so far of the financial turbulence in UK terms. Northern Rock has announced that it has had to go to the Bank of England to ensure proper levels of liquidity going forward. As a company with 20% share of the UK residential mortgage market, this has potentially important consequences as it brings the impact of the financial turbulence into ordinary UK households (with mortgages or with deposits with Northern Rock) and so has much greater political ramifications. It brings greater political pressure on the Governor of the Bank of England to take a more active process than he has wanted to. See how this story develops over the next week. Take a look at the FT.com web site as they have an actual copy of the statement put out by Northern Rock. Consider the style of the communication and also the number of people assigned to handle this important communication. The market may take the view that this is the end of Northern Rock as a standalone company and it will be acquired over the next six months.
Monday, 10 September 2007
Print/web sources on present financial turbulence
There are starting to be some very good features on the present financial situation which highlight how print/web media can arguably be a more powerful medium than TV for example in describing a complex situation and one which is gathering further ripples in its effects. Ones I have spotted which are worth looking out are:
Fortune. Sept 10th edition. Market Shock 2007. http://money.cnn.com/magazines/fortune/fortune_archive/2007/09/03/toc.html
Financial Times has been consistently strong. Look out today's issue, Monday 10th Sept 2007 as a for instance. http://www.ft.com/
I'll have a look at web only sources in my next posting and TV coverage.
Fortune. Sept 10th edition. Market Shock 2007. http://money.cnn.com/magazines/fortune/fortune_archive/2007/09/03/toc.html
Financial Times has been consistently strong. Look out today's issue, Monday 10th Sept 2007 as a for instance. http://www.ft.com/
I'll have a look at web only sources in my next posting and TV coverage.
Thursday, 6 September 2007
Smoke and Mirrors
You could not plan it better. A new 12 week undergraduate module starting this month at the European Business School in London on Financial Media and Communications. Just before it starts we have a serious eruption of instability in global financial markets, started by subprime mortgages in the USA. Crisis may be too strong a description, but it is certainly squally and the ramifications if anything appear to be widening. It is not normal for Central Banks to inject such large amounts of liquidity into the banking system and it is not normal when commercial banks are concerned about lending to each other.
So what's the relevance of the current financial situation to the course apart from providing an interesting backdrop?
Well, here is a list of some of the themes running through the current financial instability and which we are going to explore in the course:
All this and with a financial environment which has the potential to throw up many more financial media and communication issues in the coming weeks.
So what's the relevance of the current financial situation to the course apart from providing an interesting backdrop?
Well, here is a list of some of the themes running through the current financial instability and which we are going to explore in the course:
- Financial transparency. It is generally argued that markets operate most efficiently when there is a free flow of information. Commentators are saying that lack of transparency over subprime mortgages and other exotic debt instruments is a major part of the problem. Why has the communications flow in financial markets broken down - or have they?
- Breaking the story. In journalistic parlance this story has legs. Nearly every day there are new breaking stories and it is already about three weeks old. The overall story is continuing to break out of the confines of the financial pages into mainstream media. Have the financial media done a good job on this story or should they have picked up the growing problems earlier? Has this story given the print media a real opportunity to show their strengths compared with TV or new media?
- Communicating to the markets. How have the Central Banks done in communicating to the markets? Are they rather edgy and uncertain and has their hesitancy caused additional problems? What about the banks - are they natural communicators or in fact rather clumsy with leaden feet? How do organisations plan for communicating in times of crisis and have recent weeks shown that the financial community may not be as well prepared in this respect as for example the airlines or oil sectors?
All this and with a financial environment which has the potential to throw up many more financial media and communication issues in the coming weeks.
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