Monthly Archives: September 2008

Short selling and Liberal Democrat hypocrisy

September 29, 2008 9:10 pm by Jim Pickard

Lord Oakeshott, Lib Dem Treasury spokesman, was horrified by the idea that Tory donors might have short-sold stocks, HBOS in particular (see my previous blog).

But what of Paul Marshall, co-founder of hedge fund Marshall Wace, who has given the Lib Dems about £162,000 in recent years? Guido alludes today to the fact that Marshall Wace likes to short stocks.

What he doesn’t mention is that three separate funds run by the hedge fund were among those who disclosed short positions in HBOS after the FSA four-month ban on financial short-selling was brought in .

Oakeshott (pictured left) had described hedge funds which shorted HBOS as “wolves”. How come the discrepancy?

A Lib Dem spokesman says that the party has chastised short-selling despite having taken the Marshall donation. The Tories, by contrast, have refrained from any criticism. Not sure this explanation really washes.

And then there is Michael Brown, the controversial character who gave the Lib Dems £2.4m. Brown loved speculating in the City, although it is not clear if he went short as well as long.

Tags: Banks
Posted in Lib Dems, Recession, UK politics | Permalink

City Wolves, short-selling and the Church of England

September 29, 2008 10:36 am by Jim Pickard

Some readers may be excited by the fact that Tory donors have sold some equities short during the recent financial crisis. That may seem like a gift to Labour during these perilous times.

But this is a time for cool heads. Bear in mind that the last high-minded group to attack short-sellers – the Church of England – was revealed as hypocritical last week when it emerged that its own investment arm uses similar practices.

Not only does the church lend stocks to short-sellers but…I quote…

“As well as aiding shorting by lending stock, the church commissioners had £13m invested in Man Group, the biggest listed hedge fund manager, at the end of last year. The commissioners also sold a £135m mortgage portfolio last year, says their annual report, despite Dr Williams’ criticism of trading debts for profit.

“Through the Church of England pensions board, which manages another £847m, the church invested this year in a fund from Auriel Capital, a London hedge fund, which aims to make money from currency trading – including short selling currencies.”

Could any of the newspaper groups attacking the Tory hedge funds have any investments (direct or indirect) in the same vein? Or any of the Labour donors? Just a thought.

UPDATE: Jon Aisbitt, non-executive chairman of Man Group (one of the world’s largest hedge fund managers) gave £1m to Labour.

Tags: Gordon Brown
Posted in David Cameron, Labour | Permalink

Watch the brave hacks in action

September 28, 2008 7:22 pm by Alex Barker

If any of you are interested in seeing the football prowess of George Parker, the FT political editor, in the Tories vs Hacks football game this morning, take a look at this video. Note the late, slightly pedestrian break into the box, and the stunning free kick that misses the bar by just 20 ft. Final score: Press 4 – Tories

Posted in UK politics | Permalink

The age of irresponsibility is over…..until next time

September 26, 2008 4:18 pm by Jim Pickard

Gordon Brown has just told the UN that the “age of irresponsibility” is now close to its end.

Raising the obvious question: if everyone was so irresponsible, why did the Chancellor of the Exchequer (G.Brown, 1997-2007) do so little about it? The silliness in the banking world was not confined to the US, whatever the prime minister might claim.

All very well for Ed Balls to say this week - in the same vein – that those urging light-touch regulation had been “routed”. This argument is an attempt to rewrite history and unlikely to convince many.

Expect to see this all over the papers on Saturday morning.

Tags: Alistair Darling, Banks, Business vote, Gordon Brown
Posted in Tax, Treasury, UK economy | Permalink

Sarah Palin meets Sarah Brown

September 26, 2008 1:32 pm by Jim Pickard

Three hundred and fifty powerful women from around the world gathered in New York on Wednesday night on behalf of the White Ribbon Alliance, a charity which campaigns to prevent death in childbirth. They included the PM’s wife.

The surprise guest was Sarah Palin, Republican vice-presidential candidate in the US presidential elections. I’m told by more than one source that she was rather unfriendly and resembled a “rabbit in the headlights”.

It seems that being mobbed by the likes of Wendi Murdoch and Rebecca Wade (trying to secure an interview for The Sun, I’m told) isn’t Palin’s idea of a good evening. Ditto making small talk with Queen Rania of Jordan. Nor chatting to Australian model Elle MacPherson about global development (trust me, this is not as much fun as it sounds).

Tags: Gordon Brown
Posted in UK politics | Permalink

The 19 Wall Street magnates….were they all there?

September 25, 2008 10:39 pm by Jim Pickard

We were given a list of 19 attendees at Gordon Brown’s Wall Street breakfast this morning. At least one didn’t make it…being rather busy. I wonder how many were actually there?

Posted in UK politics | Permalink

Gordon Brown diverts to Washington to meet Bush

September 25, 2008 4:47 pm by Jim Pickard

The PM gave his backing to Bush’s $700bn bailout plan this morning and has now announced plans to fly to Washington tomorrow to meet the US president.

This follows reports (FT and elsewhere) that Gordon Brown was snubbed by Hank Paulson, Treasury secretary, who has no time to see him during this week’s visit.

So it will be good for No.10 morale. The PM’s aides have also set up a meeting with Tim Geithner of the New York Fed for this afternoon.

It’ll be interesting to see whether anything concrete emerges from tomorrow’s session at the White House*, or whether it’s just more vague talk about transparency etc (see this morning’s blog).

re TARP (the controversial Paulson scheme): The prime minister is opposed to a similar “toxic dump” scheme in the UK because he is convinced that we don’t, and will not, have the same problems as the US. That may be true, for now: It won’t be in 18-24 months’ time.

US finance is in trouble primarily because falling house prices exposed stupid lending practices. We are a year or two behind in a very similar cycle.

* I forgot to mention this: bizarrely, they ended up discussing…the Doha round and Iraq.

Tags: Banks, Gordon Brown
Posted in Recession, UK politics | Permalink

The Derek Draper blog fightback

September 25, 2008 2:21 pm by Jim Pickard

Some excitement in Westminster (apparently…I’m in New York with the hack pack following the PM) about Labour’s new plan for an online rebuttal unit.

This idea was floated at a fringe seminar in Manchester in Sunday at which Derek Draper – along with myself and two people from LabourHome and Liberal Conspiracy - discussed how the party can use blogs to improve its communications. Draper (pictured) is now advising the general secretary and his ideas are at an early stage.

I said I had no interest in helping either the Tories or Labour win elections, given the neutrality of this blog. But I made a few obvious points.

1] New Labour people who tried to control the media in 1997 – when there were relatively fewer commentators – are now facing a very different world. The blogosphere, by definition, is full of people whose independent views can’t be manipulated so easily.

2] The party could do more to rebut FACTUAL inaccuracies on blogs. But this will take a huge amount of time and money, which Draper himself admitted “we don’t have”. Incidentally, government press officers don’t seem to take much interest in online content – although that’s a different story.

3] Labour and/or the centre left needs to be ready for losing power, at which point left-wing blogs could become much more interesting than they already are. Defending government is always more “boring” – to the general public – than attacking them.

In theory Labour could hire an aggressive investigative journalist to do this. If it could afford one. But in practice it might be better off letting an independent (a sort of anti-Guido of the left) to arise without being hampered by pro-Labour bias.

Posted in Labour, UK politics | Permalink

Gordon: Not snubbed by everybody

September 25, 2008 1:25 pm by Jim Pickard

The FT was among many newspapers this morning to point out that Hank Paulson, US Treasury Secretary, had not found the time to meet Gordon Brown on his visit to New York. The PM had suggested – at Labour conference - that he would be meeting US financial regulators.

This doesn’t mean he has been snubbed by everyone. Mr Brown has just emerged from a power breakfast with some of the top names on Wall Street. They include Steve Schwarzman, chairman of Blackstone, Anne Marie Petach, CFO of BlackRock, and George Soros – who needs no introduction.

Soros made an attack on the Paulson rescue plan ($700bn fund to buy up toxic US assets) in the FT this morning. Martin Wolf also criticised the plan in a trenchant column yesterday.

But George W. Bush said the US was facing a “serious financial crisis” and risked a “long and painful recession” if Congress failed to pass his administration’s proposed bailout.

Gordon Brown has just – in an interview with the BBC World Service – given his backing to the scheme. “It is necessary to get these bad assets out of the system as quickly as possible…. to make sure we stabilise the financial system immediately.”

The PM held talks last night with various world leaders ranging from Brazil’s Lula to Australia’s Kevin Rudd. Much of what he had to say – on regulating the world financial system – was along the 5 principles he has already outlined.

1] Greater transparency, 2] Sound banking principles, 3] Improving how boards work*, 4] Changing incentive schemes (including bonuses), 5] Improving global financial regulation.

If that all sounds a bit vague, there are some details. For example, he does want new “colleges” which would regulate the 30 biggest financial groups in the world. How would this work? RBS, for example, would have its own RBS College – made up of regulators from every national market in which it has operations – meeting to discuss the Scottish bank. It’s not Gordon’s idea; it was put forward by the Financial Stability Forum. But he said he wants it to be accelerated rapidly.

* How exactly? Ban non-bankers from bank boards? (This would have stopped Andy Hornby, former retailer, from being ceo of HBOS). Can’t see that happening in practice.

Tags: Credit Crunch, Gordon Brown
Posted in Recession, UK politics | Permalink

Enough sniping

September 24, 2008 9:27 pm by Alex Barker

Someone near Rugby is running around taking pot shots at trains. We’ve no idea whether anyone has been hurt, but the sniper is doing no favours for those of us travelling back to London from the Labour conference.

The entire West Coast mainline appears to have ground to a halt while a police helicopter hunts for the gunman. Our train has been stationary for at least an hour. Apparently Andrew Adonis, the schools minister, is in the train behind, singing along to his Ipod. If the queue at the canteen is any sign, a run on the coffee and wine has already started. The staff are doing a valiant job of keeping up spirits.

This is a much, much better excuse than leaves on the line.

UPDATE: We’ve arrived, three and a half hours late. No casualties. Everyone looks exhausted. Thanks to Sir Richard Branson for the free tea and water.

Posted in UK politics | Permalink

Ruth Kelly’s conscience

September 24, 2008 8:48 am by Jim Pickard

The transport secretary is resigning to spend more time with her family. It is an old and familiar formula.

In fact Mrs Kelly, a devout Christian, has been troubled over the upcoming embryology bill. I predicted this move in a blog last week.

The prime minister sought to play down the potential political repercussions of Ms Kelly’s resignation, saying he had known she wanted to leave the government since May (incidentally, when she stayed away from the bill’s second reading).

The decision by the transport secretary, who has four young children, to leave was purely personal and ”nothing to do with politics”, Brown said this morning.

I don’t think that will be the private briefing later.

Posted in UK politics | Permalink

Does Gordon know what naked short-selling is?

September 24, 2008 8:43 am by Jim Pickard

I only ask because on the Today programme the prime minister explained “naked short-selling” as the practice of institutions lending stocks to hedge funds who then sell them in order to buy them back later.

Er, that’s normal short-selling.

Naked short-selling is where the hedge funds sell stocks which they have not borrowed from anyone else. This may sound geeky. But it matters. The UK government has temporarily banned short-selling (in any form) of financial stocks. The US government has only cracked down on this naked short-selling.

Gordon, being the political expert on such matters, should know this.

ALSO

Labour were briefing like tops yesterday that Sarah Brown decided to go on stage before her husband only 20 minutes before the speech. This morning, Gordon Brown admitted: “We talked about it over the summer.”

Tags: Credit Crunch, Gordon Brown
Posted in Labour, Treasury, UK economy | Permalink