Does anyone understand this stuff enough to regulate it?
So a hedge fund has lost $400million in last week’s sudden plunge in the oil price and the slide in commodity prices that it tripped, according to the Financial Times. Poor investors in Clive Capital, more used to raking in 27 per cent profits in their “betting investments”, suffered losses of close to 10 per cent.
To 99.99 per cent of the population, the whole concept of hedge funds is a complete mystery. The only hard fact is that they make or manufacture or produce nothing at all, other than profit – and this time around loss – on bets on market movements.
One of the biggest mysteries is whether any regulatory authority in the world understands enough about what they do to be able to regulate them.
The whole question of regulation and corporate activity is back in the frame today because of the MG/Rover scandal.
It has cost the taxpayer £16 million to investigate the four directors of this company, who took some £40 million out of it before it went bust. It would matter less if the money they took out hadn’t been supplied by the taxpayer in the first place – and if the workers had not lost their jobs into the bargain.
What kind of a world pays £16 million to a department of government (the Insolvency Agency is part of the Business Department), to come up with the conclusion that the four directors who netted around £9 million apiece should be banned from holding directorships for varying periods of between three and six years? Amazingly, the actions of these men – and they were, naturally, men – were not criminal. They were just naughty – in a business sense.
Can’t you just imagine what these guys are thinking? “I have made more money out of this MG/Rover thing than most people can ever hope to make in several lifetimes, and I can no longer work as a director…for a bit.” Now that must be some rap over the knuckles!
Doesn’t it perhaps raise questions over how “our” banks – Lloyds and RBS – are being regulated? Does anyone truly understand the bonuses, the losses, and the future prospects?