Wednesday, 15 July 2009

The Raven continues to be baffled as to why GB isn't doing more about this. There seems to be a fundamental question that remains largely unasked and definitely unanswered: "What benefit will this regulation bring?". The French and German thrust for regulation seems predicated on a notion that anything not controlled by the state is both dangerous and a threat to 'stability', from the bankrupcy proceedings of Eurotunnel and their "champagne quaffing" investors to the German's "locust" private equity investors we see arguments thick with rhetorical yet no substance. The Raven will make the same point he's made many times before, but how many hedgefunds have been bailed out? How many have required emergency funding? ZERO. Which institutions are the most regulated in the US, ah insurers like AIG.

If politicians and the popular press weren't so pig ignorant when it came to hedgefunds, private equity, derivates and short selling (or any other buzz word they like to chuck into a conversation to try and sound like they have a clue what they're talking about) they wouldn't spend so much time point fingers with their knickers in a twist. Company CEOs who blamed short sellers should be ashamed of themselves, they're either so thick they believe that drivel or they're cynical coke-bottle-shouldered buck-passers, neither of which deserve to be looking after shareholders capital. The cash flows don't lie in the long term, RBS was buggered and its shareprice was reflecting that, rather than the shareprice buggering up RBS. The Raven fails to see how shorting homebuilders and CDOs like John Paulson did caused the subprime problem? surely his actions would have made mortgages more expensive and hence reduced the scale of the problem. The facts are pretty clear unregulated capital has nothing to do with the crisis.

Now the Raven imagines a stammering politico would point to the Madoff scandal as a reason that HFs should be regulated. Sorry to disappoint but this is a case of an investment advisor, technically different, but lets ignore that for the moment, lets just ask who suffered - wealthy private investors were defrauded. 'Sophisticated' investors are supposed to be capable of doing their own due diligence, he fails to see how a limit on leverage, a limit on which funds can operate where or having a register of names and strategies would do to prevent a Madoff type case?! He finds it incredible that dim witted EU politicians think that the private investors just handed over their cash to a US investment advisor without knowing their name, what leverage they were running, what strategy they were using, etc??? What protection will these rules provide? about as much as a cocktail umbrella in a hurricane.

So why propose such a stupid idea? Well for the politician it isn't such a silly idea when their own sly motives are taken into account - expanding government departments and independant regulators is seen as action - and we've all seen how much people like GB like to wear their underpants over the trousers, whack on a cape and pose like they're a grinning demented half brother to Wonder Woman. All these independant regulators also provide a useful excuse when things do go wrong, after all its always useful to have someone else to blame. Then you have the kicker that an expanded state gives you as a politician more power and you're not the sucker that has to pay for it. So, who's the mug? The Raven is clearly in the wrong game.

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