Wednesday, 3 December 2008

FSA: "Drink With Moderation"

"The Finnish Financial Supervision Authority said in a statement Wednesday that some households' debt encumbrance was "alarmingly high".

The FSA quoted its survey as indicating that about 18 per cent of Finnish households used more than half of their disposable income to service mortgages.

"That is a high figure," said Jukka Vesala, a deputy director-general at the FSA.

'It was some degree of a surprise for us.

I suppose, as all the regulators and watchdog around the world, they were either legitimaly or intentionnaly sleeping.

I think it's a surprise to hear that it surprises them : "a surprise for us"...but again doesn't FSA stand for "Failing Still Again" since they have got a so poor track record. At some point you wonder what those agency are overseeing since at best they notice the problem, after the event, when it burst in daylight. Is that due to the famous bureaucraty or/and incompetence or/and strategy.

So they notice the problem, surprisingly late. What they do about it? nothing really except maybe trying to extract tax payer money to create a net for those who behaved quite clearly irrationally (not only debtor but creditors that allowed this to happen).

It's a little bit like a pikku joulu...people drink and drink, the barman (creditor) give more drink...and it seems that the night will never finnish so people keep on drinking, the world looks great...until morning. A big headache and a realisation than you were better off not you try to handle the headache for few days, and promise you won't drink any more..until 2 weeks passed and start again. Well just transform day in years and you have a typical credit cycle (housing, stock cycle with the usual boom and bust).

So If I was the CEO of the FSA-AA (Finnish Special Alcoholic Administration Association), I will advise : "drink with moderation"