Afternoon:
10°c
If you consider all the things going on in the stock market that you don't know about - the secret stakebuilding, the contracts for difference, the announced buybacks that never happen, the fan clubs and so on - the undisclosed use of shares in Carphone Warehouse by founder David Ross as collateral for a loan seems to be of very little consequence.
Given that the market frowns on founders who sell their shares, it is common practice for entrepreneurs to get liquidity by raising loans against their large holdings in businesses they founded. Given that the disclosure obligation is or was only to notify Carphone's chairman, not to disclose the arrangement to the market, there seems nothing too serious there, either.
Carphone's chairman could legitimately have told no one else, so there is no issue of concealing information from the market. Had Ross been more opaque, or devious, by securing his loan against a contract for difference, which in turn could have been hedged against his shareholding, presumably he would not have had to tell anyone - because they had not been thought of when the rules were framed.
The witch-hunt against Ross - forcing him out of other public-company board positions and off the Olympic Delivery Authority - seems to be political correctness gone mad.
Of course, he may be in such personal financial difficulty that he wants to cut back on outside appointments and rapidly lower his profile. But that is another issue.
In terms of being pressured to quit, many company directors can take appalling decisions which almost destroy the businesses they are supposed to be running, and generate fewer demands for resignation than have been faced by Ross. No one is even claiming that he has screwed up a public company.
The problem has arisen because Carphone's shares have fallen with the market, and may not cover the value of loan, while the loan itself appears to have been invested in property which, inevitably in the current market, will also have fallen in value.
That may be annoying for Carphone shareholders, and it is reasonable for his co-founder Charles Dunstone to be annoyed as he worries where Ross's shares may end up, but this remains a personal tragedy for Ross, not a business scandal.
On a wider note, it is interesting in a macabre way to see just how many seriously rich people have come unstuck since the markets crashed. One loses count of the Russian oligarchs who are now worth massively less than they were because they had taken on huge gearing to buy or influence assets that have plunged in value. And what about the German billionaire who got so badly burned going short of Volkswagen that he applied for a state bailout?
Or the mystery surrounding the whereabouts of Huang Guangyu, who at 39 was China's youngest billionaire and arguably the richest man in the country and who was said to be assisting the authorities with a share-manipulation probe - presumably one that they suspect has happened, rather than one the authorities were planning?
So many of those who made huge fortunes on the way up appear to have failed completely to anticipate the downturn. Back in Victorian times, they used to talk about clogs to clogs in three generations. Everything is so much faster these days.
Painful price of shops shutdown
The British Retail Consortium this week produced figures that didn't seem too bad to me - sales dropped 0.4% in November from a year earlier. Given the economic woe, it was a surprise anyone at all had dared venture out to the shops.
This was a minority view, though, and most economists thought the fall was disastrous.
Even if Christmas trading is good, there will be a raft of retail casualties early next year - on top of Woolworths and MFI, which have already sunk, and Land of Leather, which is fighting to stay afloat. The huge Westfield Centre in Shepherd's Bush may be crowded - but nearby older locations look thin on customers as a result. There is also ever more spending on the internet, also of little comfort to shops with bricks and mortar to support.
This surely is where the pain will be acutely felt. PricewaterhouseCoopers partner Barry Gilbertson told a recent conference that the number of shops being closed in retail restructurings was growing significantly as the surgery becomes more drastic.
PwC jettisoned 2000 stores in seven restructurings in 2007. By May this year, it had ditched 3000 stores from 20 insolvencies. He thinks it entirely possible that in the next 12 months 3600 stores could come on the market, together with - and this is the painful part - a further 34 million sq ft of newly built space.
In this economic climate, where are they going to find the tenants?
