Thread by @NewtonMark

I've never seen a photo of Lex Greensill until now, and my god he looks the part. @trashfuturepod abc.net.au/news/2021-03-0…

For those who've never heard of him before: Lex Greensill specializes in "supply chain finance."

What does that mean? /2

Put yourself into the position of a company that buys a bunch of inputs, and receives and pays invoices for them.
Depending on who and how the invoices are presented, that can lead to "lumpiness" in cashflow, which never looks good on the books. /3

So: You can go to someone like ol'mate Lex, and say, "I'm going to pay you to smooth this out. All my suppliers will send their invoices to you on standardized payment terms, and you'll reimburse them on my behalf out of a constant monthly fee that you charge me." /4

Greensill has been selling this as a service to all kinds of companies, including Vodafone and Telstra. /5

The next bit of innovation -- the "twist," as it were -- comes from Greensill observing that those companies now owe him debt. Debt can be securitized! So that's what he does: Turns the income stream into a tradeable financial instrument! /6

After the twist, you get the prestige, and this is the truly amazing part: With all this debt now being offered for sale on financial markets, anyone can buy it ... INCLUDING GREENSILL'S CUSTOMERS! /7

So you end up with companies investing in their own debt, which has been securitized, which they can now carry on their books AS AN ASSET. Amazing. /8

Meanwhile, by packaging and selling the debt, Greensill creates money out of thin air. Assets which didn't previously exist are magicked into existence then sold on financial markets. Greensill is essentially doing the same thing the RBA does with Govt debt, but unregulated. /9

Anyway, Greensill has made so much money by selling corporate debt that he owns his own investment bank, Greensill Investments; Which is nice, 'cos he gets to be both a party and a counter-party on some of these transactions. /10

Round and round it goes, where it stops, nobody knows...

So that's what Lex Greensill does. A part of Malcolm Turnbull's "Ideas Boom." Aussie start-up made good.

How does that relate to the regional South Australian city of Whyalla? /11

Greensill Investments provided a large chunk of the capital Sanjeev Gupta used to revive the Whyalla steel works. /12

After the German banking regulator recently froze the operations of Greensill Bank over concerns it was too exposed to Gupta, it launched legal action against Gupta to take security over his Whyalla assets. /13

Gupta has retaliated by suspending payments to Greensill Bank, which could cause the entire thing to start crashing down; and quite possibly take the town of Whyalla with it. /14

Whyalla was apparently going to be wiped off the map due to the "carbon tax" according to Tony Abbott. After he repealed it, Arrium collapsed in 2016 shortly before the Federal election, and the Govt bent over backwards to lure saviour Gupta. /15

Whether Whyalla is now wiped off the map without any carbon tax at all continues to be an issue for the current Federal Government; The plight of Whyalla's ongoing existence is ENTIRELY a consequence of the Govt's climate change policy panic.

They broke it, they own it. /fin