Day 19 of UK lock down: hedging their bets

Recently there have been some heart-chilling reports of how hedge funds are making massive profits out of this global crisis.

https://www.thisismoney.co.uk/money/news/article-8112273/Millionaire-hedge-fund-bosses-Sir-Paul-Marshall-Ian-Wace-make-50m-coronavirus-crash.html

https://www.9news.com.au/world/bill-ackman-hedge-fund-bet-coronavirus-economy-collapse-pershing-square-capital-management-finance-news/aa519075-202d-4bbb-a853-432240d6bcac

For those of us who normally try not to think too much about the murky world of big finance, this raises the question of what the hell is a hedge fund anyway ?

Seemingly, the hedge bit means a barrier, to prevent losses whether the market is expanding or contracting, so investors will profit either way.

And one of the most dodgy aspects of these dodgy funds is the concept of short selling. Investors look for stock whose worth is likely to drop in the short term, before bouncing back. For instance, budget airlines in a time of global immobility which, despite the hopes of anyone who gives a stuff about the environment, are likely to come back with gusto as soon as the lock downs are lifted, regardless of whether they manage to wheedle some publicly funded bailout from the governments.

So, essentially, hedge funds are a means by which the richest 10% of the global population, who already own 85% of global wealth, can get even richer by betting on the outcome of catastrophes.

Day 18 of UK lock down: the future we choose

The pandemic has put much of the world into a kind of limbo of inactivity, as we wait for the virus to run its course, or to come under our control. This stasis brings an abundance of both problems and benefits. Problems in terms of the personal, social and economic cost of lockdown which, as ever, are likely to impact most severely on the poorest in our global society. Benefits in terms of the immediately positive environmental consequences, and the timely reminder that governments are well able to instigate structural & systemic changes when they deem them necessary.

Tempting though it is to indulge in a snark-fest about the latest outrage from Westminster or the White House, and there is certainly no shortage of opportunities, a better use of our time might be to think about what happens next.

The economic cost of the lock down is massive, both in lost revenue and in the burden of loans carried forward by businesses. Whilst governments have been pouring money in to stop the system from falling apart, the longer term payback could easily cause a worldwide depression similar to that of the 1930s. Big corporations and hedge fund managers will already be working on their survival strategies. In such a context the transition to a system which is revolves around respect for the global biome, instead of around exponentially increasing consumption of resources and short term profiteering, just got harder. Harder, but not impossible, if we stay focused.

In their excellent book, The Future We Choose; Surviving The Climate Crisis, Christiana Figueres & Tom Rivett-Carnac put forward the concept of stubborn optimism. If ever there was a time for stubborn optimism, it’s now.

https://globaloptimism.com/the-future-we-choose-book/