Sun Sep 28th, 2008 at 06:34:06 AM EST
I read the FT's defence yesterday of free markets
In praise of free markets
and was moved to write the following LTE, which will undoubtedly go the way of most of the rest...
Update [2008-9-29 9:5:21 by ChrisCook]:
Further to your leader yesterday, as a former market regulator - I recently gave evidence to the Treasury Select Committee in relation to oil market regulation - I naturally advocate a market solution.
But to borrow language from Dr Yunus of Grameen Bank, I advocate a market which operates "Not for Loss", rather than "For Profit".
The UK bit the bullet and chose the "Public" solution of nationalisation : the US twists and turns to find a "Private" or "For Profit" solution, albeit a genetically modified one.
I propose a "Not for Loss" synthesis in the form of a "Capital Partnership" within the framework of a UK LLP or US LLC.
A Bradford & Bingley Partnership would operate as follows:
Step One: B & B assets are put into the hands of a "Custodian".
Step Two: existing B & B Equity is exchanged for proportional "Units" in B & B gross revenues eg billionths.
Step Three: the B & B "rump" now stripped of finance capital remains as "human capital" which receives an agreed proportional allocation of Units as a "Managing Partner",
Step Four: the Treasury introduces Public investment as necessary and in exchange receives Units from the Investor allocation, thereby diluting existing Investors.
Such a "Capital Partnership" is a simple, but radical "hybrid" solution, but transcends the "Principal/Agency" conflict between the interests of owners and management which both the UK and US leave intact in different ways.
The interests of B & B management and B & B investors - whether public or private - are now aligned in a simple, radical, and, believe it or not, Islamically sound, way.
It's not Rocket Science.
The "Glasgow Herald" published today a slight variant of my FT LTE
Introducing a new market solution for banking crisis
Probably too radical for the FT!