| The value of quarterly reporting |
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| Written by Tim Worstall | |
| Friday, 09 November 2007 | |
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There's one point about this credit crunch/sub-prime crisis (call it
what you will) which I've been banging on about a bit here and there.
Everytime someone announces huge losses and writedowns I cheer. Not
because I actually like such things, of course, but because it's
getting us closer to the solution. For the thing is, the actual crisis
hasn't been caused by people having lost money. It's that we don't know
who has or how much they have. This is what makes people unwilling to
lend and thus the crunch itself. Over at Chicago Boyz they've noted something about quarterly reporting . The very fact that US companies do have to report quarterly figures means that the losses there are being brought out into the open faster than they would be with a system of simply annual reports. The solution, knowing who has lost what, is therefore that much closer. So, in this instance at least, far from quarterly reporting being a problem, something leading to that dread "short-termism", it's a boost, a benefit, in clearing up the current financial mess.
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