Mar. 15--Corporate governance activists may be able to hold their heads high, but as Hector Sants, boss of the Financial Services Authority, pointed out last week they are few and far between.

Some may have been asking searching questions of bank bosses. Most just went along for the ride -- often encouraging behaviour, such as over-stretching the balance sheet, that has brought the sector to within a whisker of destruction.

Some major funds -- notably Standard Life, L&G and the Pru -- tried to put collective fingers in the dyke with efforts, such as their doomed bailout for Bradford & Bingley, to hold the financial system steady. Most simply ran for cover.

Rightly, Sants called for better surveillance by investors and a broader sense of responsibility. However, improvement will come at a price.

And with most insurance and pension fund managers incapable of demonstrating that they add any value, their clients will quite rightly refuse to pay more.

Who, after all, will have a warm feeling about a bog standard index tracker manager charging possibly two per cent of their investment each year when share prices are back to the level of 2003?

More diligent box-ticking is not the answer. Rather, there should be better quality governance oversight.

And if clients cannot be made to pay in the market conditions, the only answer is for fund managers to take out other costs. That suggests mergers and a greater use of voting advisory services.

The two-way squeeze -- for better supervisory involvement from regulators and better investment performance from clients -- will not let up in the short or medium term.

In the blame game now taking place, Sants is clearly looking to shift some responsibility for banking failure from his own organisation and on to shareholders.

But this does not mean he has not correctly identified weaknesses in the system.

The short-term pain of the credit crunch may be pretty excruciating, but the world will be reaching for painkillers for years to come if the apocalyptic noises emerging from the shipping industry are to be believed.

Buoyed up by cheap money, shipowners around the globe have spent the past few years in a Panglossian ordering spree -- by some estimates there are 3,000 dry cargo ships lined up for delivery between now and 2011 -- worth an astonishing $500 billion (UKpound 357 billion) and nearly half what is already afloat.

This was predicated on the never-ending growth of the Chinese economy, which is now slowing. Eight per cent growth is this year's target.