Dealing with 'Boss Hogg'

In modern times it has become customary to use inflated language and hyperbole. Thus every difficulty is described as a 'crisis' and every organisational inadequacy is portrayed as 'chaos'. This becomes a problem when we have a genuine need to use these terms to describe a very serious situation and it can be dangerous because of the sense of ennui evoked by the exaggerated and cavalier use of these terms. Let us make no mistake about the present economic crisis. It is a genuine crisis and President-elect Obama's decision to confront this immediately and treat it as his most important priority is undoubtedly the right one for America and the world.

In the broadest sense there are two obvious components to, as Obama puts its, 'digging ourselves out of the hole we are in'. A rescue plan for the economy and for those in imminent financial danger is clearly the immediate and most difficult task. But a strategy to minimise, if not prevent, such a situation reoccurring is also vital. This means tackling head-on the question of the irresponsibility of those who put America and the world in this dire situation. Again, let us make no mistake about causes. This crisis is not a natural event beyond the control of humanity. It was caused by the combination of a lax system, the self-interest of many of those responsible for regulating this system, and exacerbated by greed and incompetence. It is always incredibly difficult to control, or better, shut down a lucrative 'gravy-train' when so many of those carrying this responsibility are also aboard for the ride.

There are many carriages to this particular 'train' but one of the most important, if perhaps not the very engine itself, is the hedge-fund phenomenon. The German attitude has proved to be the right one - hedge-fund financiers are indeed the parasites of the world economy, not merely feeding on financial carrion (as some have tried to defend them) but actually infecting healthy financial institutions, bleeding them dry, and walking away from the corporate corpse many millions richer. Of course, as this scavenging involves a degree of gambling and risk there are many hedge-funders who have themselves miscalculated the financial situation and are suffering as a result. But equally, there are many other hedge-funders who have lost few of their multi-millions or billions, and some have even profited by the crisis, and continue to live 'high on the hog'.

And in this context, amongst this group of modern 'carpet-baggers' are, I am informed, the Bacon brothers who originally hail from North Carolina and who, as one economic adviser described it, 'are the representatives par excellence of this noxious breed of financial exploiters'. Chief amongst them or as one might put it, the 'Boss Hogg of the family', is Louis Bacon whose wealth was recently assessed as being in excess of one billion US dollars. Needless to say, this wealth is almost entirely built on hedge-fund gambling. And equally needless to say, much of Bacon's time is devoted to the avoidance of tax, an activity in which he has demonstrated considerable skill.

Although a US citizen, and one who has contributed lavishly to the Republican cause, he ostensibly dwells in his London mansion but actually spends much of time in his many other properties around the globe, particularly that located in Lyford Cay, one of the world's wealthiest enclaves found in the notorious tax Bahamas haven, a home to many Russian billionaires and financiers of dubious repute. These include the American expatriate billionaire Michael Dingman and his neighbour and business partner Viktor Kozeny, both of whom are subject to legal proceedings brought against them for serious financial malpractice.

Like so many other hedge-funders Bacon is invariably described as 'obsessively secretive' and very adverse to media scrutiny. From the information we have acquired regarding his financial activities and the considerable disparity between his private life and public persona we can understand this reticence. It is our intention in subsequent posts to throw a spot-light on some of the activities on which Bacon and other hedge-funders would evidently prefer to remain sub rosa, beginning with the curious reports of his acquisition of Austrian citizenship and his secret purchase of expensive works of art. As to suggestions that these might be related to the avoidance of tax we could not of course possibly comment. More to come.