I went into stockbroking at the time of the privatizations thinking that I would raise the money to promote more bands more compilation tapes and more singles.
I was very much against privatizations as I saw them as a handout of assets We, the UK already owned. I think when you look at the state of the asset stripping over the last 40 years from these nationalized and industries you can draw two conclusions.
The private sector are not always very good at running things. Like the banks like the railways, buses, like the water companies the reason behind nationalisation is that the government needs to ensure workers can travel, have clean water to drink while smelly water is processed safely.
In Scotland our water is still nationalised. It makes money for the state without the middlemen cyphoning off anything. If you take a pint of Scottish water you'll find every penny paid in wages, on pipes, machinery it's still our asset. We pay for it and we still own it.
If it were to be privatised there is not efficiency gains that can't be achieved in public ownership.
The second conclusion takes me back to a 1st year economics tutorial in st Andrews. I suggested in November 1980 as kids are supposed to that Thatcher had a plan to go from 1m unemployed to 3m and it was quite simply to batter the Unions. Some of my Tory peers suggested I was talking nonsense but the tutor said don't you think that is quite a legitimate strategy. I replied it was a strategy but not a responsible one considering the communities and the economic impact it would have. To my mind it seemed a crass way of throwing out all we had achieved just because we want to win a fight. Years later I would look at the Norwegian model for health and safety on the rigs. I would sigh in disbelief that their unions were in charge of health and safety which resulted in proper progress being made to keep the working people on and off those rigs safe. I believe the UK safety record does not stand up against the Norwegian safety record, it proves we were shit at organising ourselves because we spent too long having a fight.
1980 was a pivotal moment in the view of Stiglitz. It's when the old economic theory started to get fully tested. As soon as the asset strippers of the 80's saw the potential we very much moved to a dual economy. Some firms were building investing their profits for future growth while others were spying companies with hugely undervalued assets.
Rental income was squeezing it's way into economic theory. If it didn't generate enough on one company then it was called an underperforming asset, like having Messi play in the reserves in front of no crowd.
Whatever the asset class it had to be assessed, which means more fund managers counting and less people creating.
I watched this with my own company where we took our profits and invested them and as a result were the first company to fully automate trading, something we all know about but on 1998 to deliver an online trade from someone's house through the market with settlement taking place sounded a very expensive build. Expressions about the bleeding edge of technology were being bandied around but I digress. This company has changed hands so many times recently but not for the ingenious people and the creativity. Nowadays it's a bunch of clients with assets and a few people who service them. In the industry it's called a cash cow. It's viewed quite simply as what's the return on £100m, £20bn or whatever worth of funds.
Investment trusts are consolidating at the moment. Many managers under pressure because the net asset value is at a discount to the share price. The shareholders want more returns.
The obvious way is to wind up the investment trust and sell all the assets over a reasonable period but that could create a fire sale and destable the market, oh, and put the managers out of work.
The second way is to buy back their own shares in the market. This is a popular route as it keeps the money inhouse all the commissions that can be collected will be and the managers keep their jobs as the discount in the trust's price narrows to the NAV.
The third way is to move to a mega fund. Consolidate with a rival and lose half the overheads. This can be a hostile or a friendly merger but again it should result in a narrowing of the discount between the net asset value and the price in the market of the investment trust.
I could talk about the fourth way but really all we are talking about is how counting money has become such a lucrative occupation. A fund manager is going to earn shed loads more than a consultant at a hospital, or many of the professions from engineering to a professor in a university.
Herbal fix your cancer, who will make the casket that buries you, who will smell the coffee.
So in conclusion I believe that we are at a very critical stage which is reminiscent of a time 100 years ago when Roosevelt introduced the antitrust laws in the United States of America. Probably the most recent time when people got seriously stinking rich and left the gap between the net asset value of the population and the price Carnegie, Rockefeller ford to name but a few extracted from the population.
There was the wall Street crash in 1929 and I doubt we will get another in 2029 but I do look at COVID comparisons with the Spanish flu epidemic but discount it against the banking crisis. I do know we have learned nothing and greasy fat pigs still have their noses in the troughs in plain sight. In Scotland our nearly former baroness Mone is keeping schtum but it surely is inevitable that when Labour get in they will hound some of the illegal actions taken place during the Pandemic.
Does this mean in conclusion we will just muddle along with lots of distractions while the money keeps getting cyphoned off. Yes of course.
The art of moving money and taxing it when it moves is something the Tories in the city are well familiar with. They tax their pals quite happily providing dubious investment value. Search the monkey with the darts versus top fund managers and you'll find it's hysterical. The.monkey gets a banana the top fund managers screw £1bn.
When you take only 0.5% off the table nobody notices. The fees these managers take all add up. The monkey receives nothing. Every time you look at your pension statement have a think about that monkey and ask is it a privatised monkey or a nationalised one, because it does the same job. It beats the top fund managers regularly.
If Labour win the next election it should renationalise through stealth. It should regulate the water companies into the ground and if they go bust there is no.bail out. The same for all the facets of the travel infrastructure. The land the companies had may well have been long sold off to pay huge bonuses, or reward asset stripping boardroom to shareholder strategies so as a country we don't need to buy them back or bail them out, we need to regulate then assume control.
It's a different war from 40 years ago but we can't just buy ourselves into them like we did the banks. We never prosecuted anyone over the asset stripping by the banks. We even rewarded, post banking crisis, the asset strippers appointments time and again. Over the past 15 years buildings that were valuable have been flogged to cover the incompetence. Now we have an online banking industry with the odd shop to sell products. It's obsolete and will soon be taken over by the Google and apple pay banks that will be formed very soon.
If the UK has any eye on the future it should start the legislative process today.
