When you dilute water, it's still just water.

The London Times is reporting that the British government is going to have a problem bailing out Barclays. Why? Because when the Abu Dhabi Royal Family invested in Barclays back in October, they negotiated a clause that would give them even more control if further dilution were to happen down the road:

... the small print in the deal, in which Barclays raised £7.3 billion from Abu Dhabi and Qatar, means that if the bank raises fresh capital before the end of June, the Middle Eastern investors would receive a greater number of shares for their original investment without paying more. If Barclays were to raise fresh capital at last night’s closing price, for example, it would automatically hand almost 50 per cent of the bank to the Middle Eastern investors.

That’s gangsta.

The person who thought of this? Amanda Staveley, chief executive of PCP Capital, the firm which advised the royals on their deal. Heads up, Amanda, you might get a lot of hateration in the British press in the near future. But the smart money knows that these financial companies, almost all of them, are pretty much worthless. And if capitalism is worth saving at all, you’ve got to let the smart money make more of it.

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