More insight into how speculation is endemic in our financial system in a piece by Will Hutton in the Observer, this time examining the role of hedge funds and short selling in relation to British financial institutions. Hutton demonstrates how businesses in the real world are being damaged by this hyper-aggressive speculation, fuelled by investors’ greed.
And the money to do this comes from people’s savings and pension funds – it’s the future of ordinary decent people that is being played with by these unaccountable gamblers. As one cynic is quoted in the article as saying, one definition of a hedge fund is that they are essentially devices to enrich those who risk other people’s money. And, as Hutton demonstrates, the effect of this gambling is to destabilise the system of a whole, to the detriment of employees and savers.
It’s possible to argue that a sound company won’t fall victim to the short sellers. But there is a growing sense that these are speculators picking over the bones of other speculators; that the gambling mentality is endemic in modern free-market capitalism. And the fallout from the instability that arises from this is felt most keenly by the innocent – by workers losing their jobs, by savers losing their pensions, while a small anonymous group of traders enriches itself.
It’s very scary, and, in an environment where the media are obsessed with the trivial doings of celebrities and sportsment, it goes almost completely unreported.