The Hoodoo Man strikes again
But I hold up my hand, I’m just trying make you understand, Lord, you know, everybody tells Lil’ Junior “Somebody hoodooed the hoodoo man.” – Junior Wells, “The Hoodoo Man Blues”
The Hoodoo-Man comes from African-American blues folklore, a man or woman who could cast spells and hypnotize unfortunate victims to do bad things. Lex Greensill, the founder of Greensill Capital, would have been a great guy to write a Hoodoo-Man song about. The story is unfortunately a familiar one, take a mundane blocking and tackling business that has existed for decades -if not centuries- and add a little razzle-dazzle to it and turn it into something “new and exciting.” Somehow, the “new” model for an “old and boring” business excites fund gatherers like investment firms who make their money in the form of fees paid by investors to put them in the exciting new business. Eventually it all ends in tears for investors, as the reason a centuries-old business magically became a high-yielding asset class was a combination of fraud and greed. However, to make the eventual collapse and damage from these schemes spectacular you need an exceptional Hoodoo-Man like Lex Greensill.
Supply Chain Financing (SCF) may have been around during the time of Marco Polo, and definitely was around when Ebenezer Scrooge and Jacob Marley were running their financing business in mid-19th century London. Here is how it works,
- A company delivers its product to a buyer and the buyer promises to pay in a few months’ time, creating an accounts receivable.
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