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Monday, January 26, 2009

Reverting to type

A story I missed but which has been drawn to my attention by Tom Harris' blog is this one in the Daily Mail from Friday. The paper reports that a hedge fund run by two Tory donors made a £12million killing in days by exploiting the collapse of Barclays shares:

Financiers Paul Ruddock and David Craigen have donated more than £300,000 to the party, most of it since David Cameron became leader.

Within hours of the ban on the controversial practice of short-selling being lifted last Friday, their company Lansdowne Partners sold shares in Barclays worth £28.4million.

They were bought back on Wednesday, by which time the bank's value had nose-dived by almost £1 per share, netting a handsome profit for the financiers' investors.

As we face the prospect of 2,000 UK job losses at Corus it is hardly the sort of activity that David Cameron would wish to be associated with. As soon as the Government re-establishes the regulations that had banned this sort of gambling with share prices the better.
Yes short sellers are gambling- everyone who invests is stocks is. They aren't always the bad guys though. In fact they are the one group of investors who make their money by forcing companies to be honest and transperent about the difficulties they face.
All other investors benefit if a company covers up problems to protect their share price. Short sellers are a needed corrective in the system.
But Labour it seems has it's own sleaze problems with a news paper asking silly old men to help them change laws and they fell for it.

but now it seems a lot of money has been passing hands I wonder if any have been on the welfare reforms.
Party-donors turn out to be bad, ergo the party to which they have given money turn out to be bad (or still bad, 'reverting to type').

I haven't seen you apply the same logic to Michael Brown, Peter.
Well there is a logic there. We took one series of donations from Michael Brown. When we realised he was not what he said we had nothing more to do with him. The Tories keep coming back to these short sellers over and over again.
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