Financial Times. EITI is a move to improve transparency in the trading of oil cargoes from their source, usually national oil companies, to their buyers - independent traders and oil majors. The wholly justifiable suspicion that there may be some industry shenanigans involved with doing business with producing countries such as Angola, Nigeria, Venezuela, Russia (I could go on...and on) gave me a fit of nostalgia for the good old days.
The good old days were when a trader could take a sackful of cash on a private jet to secure the deal. He (and it was almost always a man) was a brave, resourceful McGyver-with-a-bodyguard kind of trader who often got shot at, or at least threatened with his life, in the name of getting the deal. The stories of oil trading as Wild West were what made working in the oil industry as a journalist so much fun. Not that we could ever publish them...
EITI is mainly a good thing, no matter how much I will miss the stories. Money paid to corrupt government officials in the name of doing business was never a good thing. The money did not go to the people of these mostly poor, third world countries, it stayed in the pockets of the corrupt bureaucrats.
There is a snag, however. Once the bribery is stopped the price of oil coming from a lot of places will rise to market levels, raising overall prices for oil. And trading companies will suffer because there will be little margin in doing such deals. If so, it is another case of 'be careful what you wish for.' On the other hand, a trader friend tells me not to worry, saying: "We'll find a way around it."
Thursday, April 19, 2012
The one thing the hedgies did not expect was that the Swiss would tighten regulations, making it into one of the most “exacting” jurisdictions in the world for money managers, according to the Financial Times. The Swiss government is claiming that it wants to be in line with new EU regulations, but that can't be it. Switzerland has never deigned to even be a part of Europe, and especially not the EU.
So why are they doing it? Here is one clue: "Wealthy individuals would also be stripped of their automatic status as 'qualified investors' permitted to deposit money with hedge funds directly," the FT said.
And here is another: There is anecdotal and press evidence that Swiss citizens are having to leave the country to find apartments and houses to rent or buy, because it is too expensive to live in Switzerland. The hedge fund managers, with their vastly deep pockets, are pricing the Swiss out of the market.
My conclusion is twofold:
1.) Swiss private banking is one of the mainstays of the economy, and these banks have been losing business to hedge funds.
2.) Swiss citizens do not want to live in France or any other second-rate country outside their own borders.
The Swiss government takes care of the Swiss first and foremost. Hedge funds better start looking for another place to hide.