American Financial Crisis Moved to Great Britain

Great Britain Representatives passed their words for Northern Rock depository bonds. Still it didn’t calm down those who are trying hurriedly to retrieve their money. They are expecting Chancellor of the Exchequer resignation in Great Britain while Russia is estimating potential losses of the liquidity crisis risk.

Northern Rock, which is one of the five largest banks in Great Britain, depositors kept standing in huge queues in hope to retrieve their deposits. In July 1.4 million depositors possessed the depositors of 24.4 billions. The bank unfortunately “shook” when faced cash lack in august this year.

Within the day the Northern Rock valuation has fallen by the third and within 2 days by 49%. According to experts” predictions it will not stay alive under preset conditions. The stock values of other mortgage banks have been decreased as well among them – Alliance and Leicester, Bradford and Bingley. So to say one crediting establishment “illness” rows to an epidemic caught by the others.

Chancellor of the Exchequer said the Government will help both Northern Rock and the other banks which have faced the strain on liquidity. Still the very Government was criticized for the wrong policy which led to such situation.

Admittedly, the strain on liquidity came to Great Britain from the USA where the ‘bulb” of mortgage credit blew out. Today specialists are following events at the USA markets trying to foresee the following actions.

Someone thinks American financial crisis bring about a double threat to other countries. First of all market requirement decrease may “bite” the countries which direct considerable mount of their product to the USA. Among them are Mexico, Israel and Columbia. And Mexico has the record index – 85%. Moreover Thailand the growth of economic development of such countries as Thailand may also fall down for they depend on American demand considerably.

Secondly American financial crisis may reflect on the “growing markets” which however will undergo this influence on different levels. Such countries as Brasilia and Russia have created significant reserves to be able to wait out the instability.

At the same time other countries have basis or threats. Turkey and Hungary which faced budget deficit and the countries which have problems in financial policy, including Argentine and Venezuela are in the poorest conditions. Rating agency Standard and Poor’s gave a list of the countries which will suffer from the strain on liquidity. Within the list there are countries which “borrow more than save” – the majority of African republics and several Eastern Europe countries.

Financial Management of Plant Operation

On conditions of the market system the focus is shifted from manufacturing to financial planning, and according to this the very structure and direction of informational flows should change.
For such operational efficiency modern technical and soft information processing means are required. So the fist task is to provide the proper technical arrangement of internal control. This hard and demanded work include following events:

• Control Machinery Rearrangement for the whole enterprise taking in account the necessity of “transparence’. For the great enterprises and holdings the best choice is budget authority.
• Management organization development according to business unit division.
• Financial service organization to provide the opportunity to monitor the processes in all the directions: - for financial management objects
- for management processes (planning, analyses, prediction)
- for financial flows

Financial Management Objects

In its classical interpretation financial enterprises (it means money) are the financial management objects. So the sources of their formation and the relations that appear in the process of their formation and realization can be counted to financial management objects as well. All the company non-monetary assets should be added to this option for these are the same money but in a bit different form. So the financial manager should pay attention to the enterprise assets usage.

The financial director should be interested in the process of the financial result formation. Not the least aspect of financial management of plant operation is the financial risks leading for they inevitably accompany any enterprise in its economic and financial activities.

It’s important to notice the targeted activity of the enterprise in general and financial management as t is. Moreover the firm aims should be clear, formulated, fixed in internal documents and be communicated to all employees. Only then the activity of each enterprise branch will contribute to the tasks achievement. This is the condition for any company development otherwise it will stagnate and will loose in competitive struggle.

Financial Result Formation

It’s known that the main phases of the manufacturing process are – supply, production as it is and goods realization. The financial manager participation is important on all these levels.

Let us take for example distribution of money received from the goods realization. In this case the financial manager should solve the following problems:

1. How to finance the current production according to the enterprise reconstruction planning.
2. What part of a net income direct to the dividends payment and how much money to spend on technical development.
3. Whether the enterprise may allow any social programs.