Hedge Fund Managers who use a form of trading called 'short selling' were blamed for the near collapse of the Halifax Bank of Scotland Group (HBOS) which resulted in them being taken over by Lloyds TSB...and the Government. Following that deregulated fiasco the Bank of England banned financial institutions from 'short selling' banking and other shares due to the instability they caused and the likelihood that other banks would collapse because of short selling.
In their infinite wisdom the Government/Bank of England lifted that ban last Thursday and on Friday, RBS and Barclays shares go into freefall for Barclays it was down 25% on Friday and 10% today. Now I can't accept that this is a coincidence and the following is a letter I wrote to the Daily Post yesterday:
Dear Editor,
The collapse of Barclays shares when they lost 25% of their value last week raises serious concerns about this government's competence in financial management. It was Alex Salmond that called traders who profited from falls in company share prices, 'spivs and speculators' for causing the collapse of HBOS. The Government and the Financial Services Authority finally acted by banning traders from 'short selling' banking shares but that ban was recently lifted and what happens...financial shares collapse with Barclays suffering the most.
When will the Government learn that what the financial sector needs is more regulation to prevent the 'spivs and speculators' causing havoc with the lives and futures of people by contributing to the recession and unemployment that many hundreds of thousands of people are enduring. It is clear that the faceless Fund Managers who gamble away our futures cannot be trusted to act in the public good, so they must be regulated.
I personally am looking forward to the Treasury Select Committee's report on the impact of 'short selling' on the credit crunch...I am sure it will make uncomfortabale reading for Gordon Brown and Alistair Darling.
Your sincerely,
NB - Short selling: Dealers profit from dealing on share prices falling by flooding the market
with shares thereby manipulating a fall in prices.
I think you've hit the nail on the head - the casino bankers just can't stop gambling, except that now they're using government (i.e. taxpayers') money.
ReplyDeleteWhat I don't understand is why - having bailed out the bankers once - Brown and Darling are doing it again. Surely the first round revealed that the bankers will use the money to increase their funds and profitability rather than start lending again?
And if we now own these banks,can we have worker directors and taxpayers' directors on the board?
I think the answer to your question is that bankers were not upfront with the government when they bailed them out to the tune of £37 billion in October...they didn't tell them the extent of their toxic loans. This explains RBS announcement of £28 billion loss and share price crash of 66% to 11 pence a share. I find it unbelievable that the Government/Bank of England will give banks £37 billion without finding out exactly how much of a mess they are in. Now we as taxpayers are expected to INSURE their future incompetence.
ReplyDeleteSo how many billions did Alistair Darling give to the banks this time?
ReplyDeleteI heard the package could be worth as much as £200 billion!!
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