This was one of the headlines in an email from the FT this morning:
To confuse grubby profiteering with any form of reputable capitalism is bad enough.
To think it worth encouraging is just sordid electioneering at cost to society at large.
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The Co-operative Bank needs rescuing but the rescue is scuppered by the hedge funds. What makes the Co-op Bank distinctive is their ethical stance. Hedge funds are distinguished by the lack of ethics. Is this a case of grubby profiteering and reputable capitalism?
As I understand it Ian, the Coop’s troubles started when it bought Britannia Building society without properly checking the scale of Britannia’s bad debts. Those debts, plus thr requirement for more capital following the crash of 2008, meant that the Coop bank suddenly has a black hole of £1.5 billion.
Now, these hedge funds who are creditors of the bank are blocking a rescue plan requiring them to put more money in. I’m afraid this whole sorry saga shows just how rotten the financial sector is. The recklessness of the City as a whole spread into the Building Society movement, and the Coop bank itself.
I completely agree that hedge funds are ethics free zones, but what was the Coop bank doing borrowing from them in the first place? If the Coop bank now ends up being controlled by these sharks, what is the point of it continuing in business?
I’m with the Co-op and am now asking myself the same question. The Co-op should not be touching these rotten hedge funds. The chief exec resigned over the britannia mess with the new one virtually saying that they didn’t know how it happened. A familiar pattern: CEO’s not knowing what the hell is going on due to labyrinthine, circuitous flows of finance using ‘complex’ instruments with no-one with an overview of the laundering – more rewards for abject failure.
Does anyone have a useful link for the Co-Op hedge fund issue?
thanks for that info. I kept my savings in a building society that remained one.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10392925/Bondholders-poised-to-seize-control-of-Co-operative-Bank.html
http://www.theguardian.com/business/2013/oct/21/coop-group-bank-us-hedge-funds
Co-op Group loses majority control of banking division
Thanks for those links Jas. Rather depressing reading and yet another massive blow for mutuals and another victory for the ‘debt restructuring’ market which is about the only way of ‘making’ money these days. No wonder 46% of ivy league students want to work in this area. Credit Unions are collapsing regularly (http://www.theguardian.com/money/2013/may/11/credit-union-liquidation-money-save). It seems wealth syphoning is unstoppable -what can one do now, the co-op was the last hope?
Proving yet again, if that headline is correct, what an utterly hopeless government this is. They’ve got no real policies to deal with the failure of the over financialised economy that Thatcherism helped to create, so as most people get poorer and poorer, they resort to selling off yet nore state assets at firesale prices to try and bribe their way through the next election.
Meanwhile, the failures of previous privatisations in energy, housing and transport become ever more apparent. Perhaps Parliament could be sold off? I’m sure some obliging Chinese or US billionaire could buy Big Ben as a trophy, then the rest of it could be knocked down, the land sold (at a generous discount to it’s market value of course) to some property developer friend (party donor) of the Tories who can then build super luxury flats to be bought off book by wealthy foreigners who will either just use them as investments, or live here and pay bugger all tax (naturally), courtesy of our wonderful ‘wealth management’ industry. I assume the legal aspects could be handled by some friendly law firm; say, Rip off, Bodge it, Flog off and Con?
I think labour has a plan to use historic buildings as some sort of hypothecated asset. French Chateau are going the same way. Soon people will be hypothecating their internal organs to pay off Wonga debts!
Gideon’s best man is one of the largest benefactors of this asset stripping. It seems shares were ‘accidentally’ sold below value! See appropriate Keiser report on this topic.