Trying to make sense of the economics
Economics and investment
Royal Mail Group
This week Royal Mail Group started trading on the stock market and the share value increased to 496p from 330p, giving small investors a profit, at least on paper. It also added value to an asset for the government.
The share issue was over subscribed and investors wanting over £10,000 worth got nothing. This seems to show that private investors have a lot of money to invest, but not enough investment opportunities.
Thames water was prevented from increasing water bills by 8% by regulator OFWAT. It wanted the ‘investment’ to pay for a ‘super’ sewer in London. Now where could it possibly raise the investment for that?
Lloyds Banking Group
The government meanwhile, seem to have realised that the wealthier members of the public have money to invest and are considering doing another sell off, this time Lloyd’s Banking Group. Lloyds in turn have separated off the TSB banking part of the business. Lloyds also owns the Halifax and Bank of Scotland. They have a lot of assets and the public have a lot of cash to invest. Will the government manage to get the share price right this time?
Meanwhile, George Osborne and Boris Johnson are in Beijing trying to get the Chinese to invest in Britain, in nuclear power to be exact. Maybe the Bullingdon Boys should have looked at bit closer to home for investment before going on a lad’s jaunt all the way to China?
Maybe the lads should ask a Chinese wealth fund to invest a bit more in Thames water so they don’t have to put up bills? They already own over 8% of Thames Water according to the BBC.
British Gas needs investment too and so they are putting their prices up. It’s not to fund the 2 million quid bonuses of the boss of their parent company of course…
Bankers were greedy and once the spotlight was on the industry, their bonuses came under scrutiny and then the banking practices like mis-selling, the culture of greed, rigging LIBOR and the latest one this week, fixing exchange rates. Maybe we need to put the energy industry under the spotlight next and see what fiddles they get up to?
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