Sunday, April 15, 2012

…and we are still being fleeced

How City ruined the British industry

It quotes from a new Alex Brummer book: "Britain For Sale: British Companies In Foreign Hands" how the City ruins the British economy. It is time to stop this parasitical arrangement.

Posted by ant @ 10:38 AM (1386 views)
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3 thoughts on “…and we are still being fleeced

  • The City has always been like this. Many English industrial revolution innovators had to raise their own funds. Before 1920 many were pointing to Germany and France, where their banks had for over 50 years provided long-term equity funding to industry, and contrasting this with the City, which provided only short-term, collateral-backed finance and was far more concerned with dividends. British industry therefore had to be more concerned with liquidity and cashflow than with long-term investment strategy, so German steel, capital equipment, automobiles etc. were better equipped than their British equivalents.

    And the stockmarket wasn’t much different. Utilities with predictable income streams were favoured over industrial investment. And after stockbrokers had earned their commisions on one issue that was quoted at a premium, allowing their underwriters to unload at a profit, they moved on to the next issue. A successful flotation was more important than a sound business. There were some differences in the US but there too banking and stockmarkets were more concerned with rent extraction than with industrial production, at least until an industrial company became sufficiently large and blue-chip to interest the financiers (and even then that company often bypassed the banking system and financed capital investment out of its own retained earnings and met its liquidity needs by issuing its own commercial paper).

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  • Couldn’t have put it better myself, one look at the Monopoly board game exactly backs up what icarus has just said!

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  • …but the scale of it has become much larger in the last 30 – 35 years

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