Who says there’s a credit crunch?

by on December 1, 2009 at 8:24 pm in Economics | Permalink

Somali pirates are raising money through a local equity offering:

In Somalia's main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate.

Here is one internal account:

"Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking," Mohammed said.

"The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we've made piracy a community activity."

For the pointers I thank Pin-Quan Ng and Eric Crampton.

1 Dave December 1, 2009 at 9:21 pm

Sorry to quibble, but that sounds like an equity market, not a credit market.

2 anon December 1, 2009 at 9:49 pm

We’re the pirates
Who don’t do anything
We just stay at home
And lie around.

And we’ve never been to Boston in the fall.

I think you look like Captain Crunch…. You’re making me hungry.


3 Rahul December 1, 2009 at 10:43 pm

Now how do we design a dis-incentive?

4 Yancey Ward December 1, 2009 at 11:42 pm

Jeez, last year we were making jokes about SPBS over at Calculated Risk. You can decode the acronym if you are clever.

5 nelsonal December 2, 2009 at 2:15 am

When it’s worth preventing to insurance companies, they’ll offer rewards for pirates. Then there will be a profit incentive for pirate hunters.

6 Diversity December 2, 2009 at 7:33 am

When pirates get official and organised, the governments of those they prey upon start trying to suppress them. Just occasionally it does not work, the Spanish Armada was largely an attempt to suppress English (not British) official piracy. Sometimes some or all of the pirates get co-opted into the service of the Government that can no longer tolerate them (e.g., Sir Henry Morgan in Jamaica). More usually, the pirates lose out to overwhelming force (e.g., both Pompey and Caesar made their early reputations by suppressing pirates, bloodily, on behalf of Rome).

In these humane days, the pirates who have foolishly shown that they are getting organised can expect to end up on trial. The options seem to be to widen the remit of the International Court at the Hague a trifle, revive the custom of leaving piracy in international waters to the British Admiralty Courts, or sorting out a relevant US jurisdiction. The Administration is likely to be very wary of the last, post Guatanamo.

7 mark December 2, 2009 at 12:37 pm

Thank you very much for the remarkable post.

8 Tom T. December 2, 2009 at 6:13 pm

I’m guessing that the bid/ask spread is gigantic.

9 john December 3, 2009 at 3:31 pm

Would recommend ‘A Pirate Of Exquisite Mind”, about William Dampier, a naturalist and pirate, often a sanctioned English pirate, in the 1500’s. A real swashbuckling story. Amazingly, he was a best selling author in England. Apparently, letters marque made a cutthroat’s writings palatable to the reading public

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