King of ChaosBoris JohnsonHas Delivered for Hedge Fund Donors
As the media rightly focus on the PM’s alleged COVID rule-breaking, financial institutions quietly report pandemic profits, reports Tim Coles
Boris Johnson’s term as Prime Minister has been the political equivalent of a smash-and-grab: NHS data sold to US tech giants; billions-worth of failed track and trace projects handed out to consultants and cronies; not to mention further billions awarded to friends and donors for the supply of personal protective equipment.
With one of western Europe’s worst rates of COVID-related deaths, the human consequences of corruption have been painfully real.
But as the media correctly focus on the alleged rule-breaking of the Prime Minister and his aides during lockdown, attention is diverted from financial news: that the same hedge funds that brought Johnson to power have profited throughout the pandemic.
Given that hedge funds – managed investments that use pooled funds to make money – thrive on instability, it was inevitable that Johnson’s wrecking-ball style would benefit his donors.
The UK Government’s Actuaries website openly states that: “Many hedge funds are designed to withstand market volatility, or even exploit it”. It goes on to acknowledge that “hedge funds often seek opportunities to make gains when specific companies or sectors perform badly”.
Britain’s economy performed poorly in the first year of the pandemic, giving hedge funds the chance to cash in. In fact, the Office for National Statistics (ONS) reported in February 2021 that, “international comparisons of GDP highlight how the UK has been hit relatively worse than other advanced economies”.
In large part, this was due to Johnson’s dangerously shambolic response: locking down later than other western European countries after comparing the UK to Superman; telling reporters that he had personally spread the virus by “[shaking] hands with everybody” when visiting a COVID-infected hospital; relying on the ‘chumocracy’ to deliver health provision, and so on.
It is also worth noting that decades of NHS privatisation and fragmentation left the country vulnerable to a viral outbreak, as did the “extreme form of capitalism” engendered by successive governments – relying on market and monopoly solutions to social problems.
This month’s financial pages feature numerous stories of hedge funds either doing well or rebounding. The UK-based Gladstone Capital Management, a so-called equities investor, is worth $2.7 billion and enjoyed a 7% profit increase in 2021.
The Times reports that billionaire Conservative donor, Alan Howard, made £55 million at his Brevan Howard fund in the last couple of years. “[His] bets on bonds, currencies and interest rates paid off as the Coronavirus roiled the financial markets,” the article reads. Another Conservative donor, Chris Rokos of the eponymous Capital Management fund, made £900 million for his company in the first year of the pandemic. Despite a downturn in 2021, investors remain confident and have put $1 billion into Rokos’s fund for this year’s investments.
The Telegraph cheers Crispen Odey’s self-named hedge fund as having “the best year since 2007”. The Conservative donor and Brexiter “[added] to his fortune by betting against British bonds,” according to This is Money. Bond market instability is not solely pandemic-related, but is also due to the Brexit – a policy supported by Odey and his peers.
The King of Chaos
Hedge funds have been around for decades, but only in recent years have they become dominant institutions. The hedge fund business model is high-risk, high-reward. Fortunes are made and lost in minutes as funds bet against businesses and currencies. Their modus operandi has deleterious effects on society because disaster is incentivised.
Brexit has triggered endless political and economic instability. In 2016, the great ‘patriot’ Nigel Farage allegedly bet against the pound on the eve of the EU Referendum result (a claim he denies). Farage’s American friend, Steve Bannon, was instrumental in installing human cannon-ball Donald Trump in the White House. Through Cambridge Analytica, Bannon worked with US hedge funder, Robert Mercer, to radicalise the British population into backing Brexit.
Prior to the pandemic, Britain faced a series of high-profile company collapses. The construction giant Carillion was hollowed out from the inside by investors, which accelerated its demise. Hedge funds raked in millions by short-selling stock. Not long after, the age-old travel agency Thomas Cook went bankrupt, again to the financial benefit of hedge funds.
The pandemic was a golden opportunity for these and similar investors to benefit from the collapse of stocks, shares, currencies, and entire businesses.
Johnson came to power in an era when chaos-thriving hedge funds became dominant Conservative donors. Former Johnson advisor (many say puppeteer), Dominic Cummings, was friends with Brexit funder and spread-better, Stuart Wheeler. In the summer of 2019, with a general election looking inevitable, Cummings was reported as saying that he would contact his hedge fund colleagues to raise money for the Tories. The Conservatives subsequently raised record cash from such institutions.
The chaos continues. The Times reports that as the economy is supposed to be heading for recovery, under the watchful eye of former hedge fund manager Chancellor Rishi Sunak, “hedge funds are betting £800 million against British retailers”.
What Can We Do?
Like any wealthy class, hedge funders consolidate power and political influence to suit their own interests. Since 2019, just 140 financiers have donated £11 million to the Conservative Party. This is anti-democratic, because it means that policies are directed away from public spending and instead to light-regulation, low-tax regimes.
By bombarding them with culture warfare, hedge fund populists like Bannon, Johnson and Farage attempt to tell white working class people that they are not having their pockets picked by the super rich. Usually they hide behind alleged symbols of national pride, while helping their mates to ransack the country’s bank account.
But there is a solution. Independent media, grassroots organising for education and progressive political activism can galvanise those who are otherwise alienated and apolitical. Such efforts could force opposition parties to take tougher stances against the disaster capitalists and their culture war – guarding us against their reign of chaos.