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Money v Making Stuff-Should Britain bid farewell to the golden egg of banking.
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Jeremy Bosk
Posted: 02 August 2011 16:50:15(UTC)
#271

Joined: 09/06/2010(UTC)
Posts: 1,316
MrFiat

I am as baffled as you why we are not better the incentives game. Perhaps because we cannot leave well alone. The recent abolition of the regional development agencies, most of which were doing a good job is a case in point. Their strategic land banks are sold off, their carefully collected expert teams of planners, sales and marketing people, statistical research are all scattered to the winds and replaced by a complete balkanisation of effort with each tiny area of the country trying to market to the whole world. Politically driven insanity is the explanation.

Until recently this country actually did relatively well in attracting overseas investors. The previous economic system of stop-go has been replaced by stop and rapidly reverse. All in the name of, in this country, a fictional credit crisis. Government borrowing at 56 per cent of GDP is quite low by international standards. The crisis is being made real only because of a government bent on destroying jobs and economic growth. Which cuts tax revenues and drives up government expenditure on welfare payments. This is 1930s style madness.
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Anonymous Post
Posted: 02 August 2011 22:27:40(UTC)
#272
Anonymous 1 needed this 'Off the Record'

Timothy Burton
Please have a smooth move, and return to our discussion soon.
Your valued comments are appreciated.
Please give our regards to your wife, and ask her for forgiveness if we have imposed on your time at a not most convenient time.

Kind regards
Prof Eman
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Jeremy Bosk
Posted: 03 August 2011 07:09:49(UTC)
#273

Joined: 09/06/2010(UTC)
Posts: 1,316
Interesting story in today's FT on Northumbrian Water. The locals welcome the takeover by a Singaporean tycoon as being likely to provide job stability. Li Ka Shing's company, CKI, already owns Northern Gas Networks.
http://www.ft.com/cms/s/...bdc0.html#axzz1TnAoABPp

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engineertony
Posted: 03 August 2011 11:42:39(UTC)
#274

Joined: 24/05/2011(UTC)
Posts: 71
Jeremy,
Busy at the moment but aroused by this one.

The old colonies learnt from the British and are now coming to buy us up, and locals welcome it! This guy traces his roots back to 19th century Hong Kong British traders. What happened to the Hutchison family? Who are these guys who are selling off UK Ltd?

Rather like you can't grow vegetables in your garden, although your grandfather did, so I rent your garden and grow them at a profit.

What does it take to run a water company successfully, there's not even a shortage of water in Northumbria.
I worked on the Ogston reservoir near Chesterfield, dam, water purification, storage and pumping. I recall a figure of 60 million litres per day of purified water. We were commisioning the control system for Balfour Beaty. Really low tech, all automated, just read the amount of litres per day, and send out the bills.

I would guess the same accountants & bankers who got into water at privatisation for a fast buck, milked it for everything , didn't know how to find and fix leaks until they found half the water was escaping, these are the guys who are selling off UK Ltd.
I know Malaysia, Singapore & parts of Indonesia quite well from my oil & gas days, and these tycoons are not super human, I used to like working with Chinese businessmen, very hard negotiators and hard working, very determined to succeed, and largely very honest. We're losing it and if we don't get it back soon we won't be choosing between services or making things.
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Jeremy Bosk
Posted: 03 August 2011 15:09:50(UTC)
#275

Joined: 09/06/2010(UTC)
Posts: 1,316
engineertony

Li Ka-Shing took over in 1979
http://www.hutchison-wha...no_scroll_menu.htm#1971

Shareholder Type Amount % Holding
Ontario Teachers' Pension Plan Board - 138,776,864 26.76
Pictet Asset Management UK Ltd - 38,456,382 7.42
JPMorgan Asset Management - 21,748,427 4.19
Deutsche Bank AG - 20,302,180 3.91
http://tools.morningstar...ecurityToken=0P00007OOK]3]0]E0WWE$$ALL&Id=0P00007OOK&ClientFund=0&CurrencyId=GBP

I think it is all about having access to cheap money. If the company pays a dividend of 3 per cent and the buyer can borrow at 2 per cent then the buyer is quids in. On a £2.4 billion deal that one percentage point margin would come out at £240 million a year until the debt is paid off and then £720 million a year which is 33 per cent. I do not know the actual funding costs for Li Ka-Shing but they will be pretty low because of his good record. Other People's Money is a powerful tool.
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engineertony
Posted: 04 August 2011 11:19:37(UTC)
#276

Joined: 24/05/2011(UTC)
Posts: 71
Jeremy
Lots of figures and statistics, but the bottom line is that outsiders can come here and run our businesses successfully where we can't. Didn't British Leyland get some cheap money from the government? And didn't those crooks just pocket it and run?

Looks like Northumbrian Water can't borrow at a good rate because their record is not as good as L K Shing. Is it their record or their competence which is in question?

Tell you a secret. On that reservoir job, I spoke to the Severn Trent guys and it came out that the job was a repeat of an earlier project. "So you've learned from the mistakes" I said. " Err no... we are making all the same mistakes again!"
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Jeremy Bosk
Posted: 04 August 2011 11:54:14(UTC)
#277

Joined: 09/06/2010(UTC)
Posts: 1,316
engineertony

Re. your first paragraph, I don't think anyone went to prison for the British Leyland scandal. So crooks is perhaps not a technically correct term, but a scandal it was.

Re. Northumbrian, I think that many foreigners benefit from borrowing in their own strong currency to buy assets in weak currency countries like ours. It is the general state of the economy and the parlous state of our banks which put British buyers at a disadvantage. Having said which, the Ontario Teachers Pension Plan is from a strong currency country and is probably just happy to take a profit.

Re utilities in general, I think it is a shame for utilities to be run by financial investors rather than engineers because the engineers tend to think longer term. They also tend to think that their job is to provide water or power etcetera rather than a new Rolls Royce for the boss.
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Dr Jimbo
Posted: 04 August 2011 13:52:43(UTC)
#278

Joined: 10/06/2010(UTC)
Posts: 21
Is there anyone out there that has noticed the beginnings of a stock market crash? A bit more important than making stuff...
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Jeremy Bosk
Posted: 04 August 2011 15:45:31(UTC)
#279

Joined: 09/06/2010(UTC)
Posts: 1,316
Dr Jimbo

I am down about 5 per cent in the last few days. So what? Markets do the hokey cokey but in the less excitable real world the dividends keep rolling in.
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Anonymous Post
Posted: 04 August 2011 16:36:18(UTC)
#280
Anonymous 1 needed this 'Off the Record'

Dr Jimbo
You might be right.
Instead of feeling great about recent surprising services growth, we could be heading for a further crash.
The surprising services growth could be associated with more debt collectors and similar.
Has anyone seen an analysis where this latest growth in services has come from?

Prof Eman
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