Tag Archives: Equity

Is wealth $$$?

An article threw me yesterday. It was given by the Dutch News agency NOS, it was not merely the title, it was the entire setting that threw me. So as we are considering the translated title ‘Dutch in 4th place richest citizens worldwide’ (at https://nos.nl/artikel/2401433-nederlanders-wereldwijd-op-4de-plek-rijkste-burgers) we should consider the list that Allianz seemingly gives the viewers. In that list we see: 

  1. USA (218.000 euro) 
  2. Switzerland (212.000 euro)
  3. Denmark (149.000 euro)
  4. Netherlands (129.000 euro)

Now, that would be fine were it not that there is a place in Europe called Monaco where the average wealth is 1,824,177 Euros, it might be all those billionaires and multi millionaires in that place. Then there is Luxembourg with the average 663,661 euro’s and that took seconds to check, so what does Allianz think it is doing? They give us “The report ranks the assets and debts of nearly 60 countries” I see this as a report that heralds filtered information bringing. Some call it lying but I think they are bonkers. It seems that news, the media, and politicians are all about filtering the information. It reminds me of someone. Ah yes, was that not a premise in George Orwells 1984 as well? 

And when we reconsider “nearly 60 countries” what are the chances that none of the zero tax nations are part of that? And when we consider “Switzerland ranks well on the list because the country attracts a lot of wealthy people, due to its low taxes.” Might this all be a ruse? I have no idea where they are going with all that, but they have a plan. A place like Allianz has the German grundlichkeit, so something is up. Now if that report had a separate section for Zero tax nations I might have had some peace with it. Yet when we search further we see “According to BMO, the average Canadian household now has more than $1 million in total assets, even after accounting for debt”, we got that last July, as such is seems that the average Canadian is twice as wealthy as an American, so what is Allianz doing this and more important, what the fuck is the Dutch NOS doing publishing an article without proper vetting? 

And that leaves us to think, is wealth really about ‘$$$’, ‘£££’, or ‘€€€’? Me and many others (especially as we do not have it) believe it to be so, but I will accept that money gives less complications and as such we would be happier. And there we have the rub, do we really have less complications as we are being lied to? 

In this is filtering the information we get a new form of lying? That took me back to 1984 (not the year). I remember when I read it and a few parts never made sense. One of those were “But if thought corrupts language, language can also corrupt thought”, I had an issue because if we (me claiming to be me) are of pure thought (not some paedophilic clergy edition) how can we be corrupted? I learned that over the years. I was lied to from basic school onwards. The christian invasion in the middle east was not to protect any land, not even a fictive holy one, so as we go on we were lied to more and more and it was not a point of view, the Crusades gave us that part. It would be a few more years as I got a hold of one sided information and later on filtered information the circle was nearly complete and now we see a larger stage, the last bastions of actual news reporting are now falling. The pointing powers behind the screens are now afraid of everything that comes and they will force new slogans like ‘tax the rich’ onto the people setting us up for some small version of civic war, but they will call it something else. Some form of social war. 

Yet there is more, The Global Wealth Report 2021 (at https://www.eulerhermes.com/content/dam/onemarketing/ehndbx/eulerhermes_com/en_gl/erd/publications/pdf/2021_10_07_Global-Wealth-Report.pdf) gives us more. Allianz gave that report to the world and even as the NOS bongs it, it does not mean that I need to do the same, does it? And on page 38 I see the first part, the part that shows grundlichkeit. There we see “Debt in the US represents 81.5% of output, while in Canada household liabilities are 114.7% of GDP. The ratio increased substantially from 2019 (US: 76.6%; CAN: 105.3%), not so much because of the increase in liabilities, which was also at highs not seen since 2007 (EUR522bn), but rather because of the sharp economic contraction of 2020”, as well as “There are still 2mn borrowers in debt forbearance who are vulnerable to financial distress once the forbearance programs come to an end. As of today, debt delinquency is not a problem. But going forward, when the pandemic protections expire, the historical debt burden in the US, not just among households, but also related to the government, might become a risk factor in the road to recovery.” OK, so that sounds better, well not that much better but at least there is a large solid pedestal it is all build on. On page 19 we see some graphs that explain the list (even as Switzerland was number one) and the other charts show that there is a larger story and we also see that none of the Zero Tax places are included. 

So as a non-economist I do grasp decent parts of the report, but what boggles the mind is how the NOS set the stage to what it published. Especially when we consider page 38 giving us “the historical debt burden in the US, not just among households, but also related to the government, might become a risk factor in the road to recovery.” When we read this with a debt of $28,000,000,000,000 How are they the richest player? When that debt goes south, they will be worse off than Mexico ever was (my speculated view). And when we see the list on page 52, we see where the NOS got its list, yet when we consider ‘by net financial assets per capita’ or to the right of that where the Swiss are number one and USA is number two giving us ‘by gross financial assets per capita’, I feel there is a lot missing (mainly that I am not seeing it all), but the report does show a whole range of issues. It also gave me the surprising view that Germany is way behind nations like Belgium, New Zealand, Italy, France and Israel. A stage I never expected, but that happens when you have a partial view, I personally believe that this is report is a partial view but that is not a bad thing. It is not some filtered view, it is a partial view of the elements that set the assets and equities (a stage that I feel happy I never understood). And that is not on Allianz, but the flaky article that the NOS is giving its Dutch citizens is on the NOS. For the life of me I have no idea where they expected to go, a 55 page report created by a dozen economists reduced to a 5 bullet-point article by someone who could never have been an economist. That’s today’s media for you. 

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Double Standards

You might have heard of this new tech company in China, it makes all kinds of telecom stuff and they are known as Huawei. What is interesting is that we got a lecture by Alex Younger (fearless leader MI-6), he was all about the fact that at no time a national infrastructure should be done by a foreign nation, now as reasons go, this is a decent one, there is no need for evidence, it is about national interest. I was not in favour, but I do not set British policy (apparently) and as such I believe that it is an acceptable view.

In that light I have a hard time looking (at https://www.bbc.com/news/uk-50879809), where we are treated to ‘Cobham takeover: Boris Johnson defends £4bn sale to US equity firm‘, so we see a stage where British national security concerns are now going through an equity firm putting Wall Street in charge of a large chunk of British Defense. Can anyone explain that to me?

The US has one directive, serve the needs for the US and the US only, then we get Wall Street where profit is the run of the coast, so at what point was selling Cobham to any other nation a good idea?

Even as we see the statement from Boris Johnson “A lot of checks have been gone through to make sure that in that particular case all the security issues that might be raised can be satisfied and the UK will continue to be a very, very creative and dynamic contributor to that section of industry and all others“, I wonder if proper checks have been made from situations that are in opposition, the entire Yemeni war and the position of the US Congress is an apt description. Admiral Lord West was concerned and not without reason.

Issues like:

The risk of “unauthorised persons” obtaining information about the MoD’s capabilities and activity is a big one, keeping secrets in the US and on Wall Street is a challenge at the best of times and this will bite the UK before 2030, optionally before 2022. 

The threat to existing MoD programmes (due to funding cuts or moving capabilities “off-shore”), more important, whatever is done to keep the invoices low will be an affront to Wall Street an equity managers, so they will oppose whatever options the MoD finds to lower invoices. Then there is the other issue, do you think that ANY equity firm will pay £4,000,000,000 unless they can get at least double out of it? So where is that marging coming from? There is no way that this was merely for the nicety, it is an equity firm and I get that, yet what business are we in when governments hand over control of defense contractors and the power that they have within the MoD to a foreign nation? It does not rhyme and we see an absence from MI-6 setting that stage correctly (and optionally openly). 

I also believe that the moment things do go South, the people in the UK will dress up like angry villagers and quarrel their settlement with pikes and pitchforks with Business Secretary Andrea Leadsom who was kind enough to validate “she was satisfied the risks that had been identified had been mitigated “to an acceptable level”” you see an acceptable level is a subjective term and of course it will bite and probably whilst she is still in office. I am also interested in the fact that a Business Secretary sets the stage for national defence, was that her job? And I am completely with Admiral Lord West on this one, which issues had been mitigated? How were they mitigated and why was mitigation a point of discussion in the first place. 

There is another side, the side of the equity firm (advent) and in this case Shonnel Malani who states “We are confident the transaction and undertakings being given on national security, jobs and future investment, provide important long-term assurances for both Cobham’s employees and customers, particularly in the UK and also globally“, these words when you look deeper take no consideration of stock and change of stock, this is a statement of people, data and hardware are not considered in this, and perhaps the government looked at it, but I wonder to what degree. Consider the complete data branch of Cobham Airborne Surveillance not having one storage location, but now also is handed to the US data farms for intel grinding. That would be worth a pretty penny, would it not? And lets not forget, Cobham is a global player, so advent will get doors open all over the alphabet group (as well as alphabet). There is a lot of intelligence in Cobham and the deciding factor of where it goes is now in the hands of a Wall Street pleaser. 

I checked (at https://www.gov.uk/government/news/government-update-on-the-proposed-acquisition-of-cobham-plc-by-advent-international) and I was right, again we see “After meetings with the parties, advice from the Defence Secretary and carefully considering the consultation responses, Ms Leadsom has made the decision that the undertakings offered by the parties mitigate the national security risks identified to an acceptable level. She has therefore accepted the undertakings that were consulted on“, yet there is no protection of data as far as I can tell, the owners can get access to it to the largest degree. Even after Brexit, Advent can sell it to Strasbourg, leaving the UK with less options in the long run, a shortsighted response and I do personally hope that  Andrea Leadsom gets to personally deal with the cloud of angry villagers when failures come out (she is likely to be on the next plane to the US for granting this merger).

I also liked the idea that Mrs Leadsom had added “meticulously thought over” in several places. The consideration of it tends to lead towards parts no one thought off. You see, the fact that an equity firm agrees to a £4,000,000,000 caper indicates that there is a 20%-30% to be gained annually, which in the end in the long lasting set would not have made sense so sell at all, so we go towards other venues that Cobham allows for, data is one (yet not the only one), available stock is the other one. It is called vulturing, yet when we realise that there could be up to £ 6,000,000,000 in valued hardware the 30% is easily reached and over three years Cobham would be in a worse state, that last one is speculation, yet is it far fetched? Consider WHO is buying and the government as well as the stockholders are OK with it does not sit well with me. There is a truckload of value that we underestimate in any firm. We might accept “provide important long-term assurances for both Cobham’s employees and customers, particularly in the UK and also globally“, it sounds nice, but what happens when their workload doubles because Cobham ends up doing service for another player who becomes part of Cobham? Selling off was checked, yet adding inferior players to cobham seemingly was not. I look at it because the buyer is an equity firm and I tend to not trust them, I merely trust their need for greed and when they decide, they have a larger play to make profits, yet in that game there is always a victim, it is close to a given, I merely want to make sure that British defense is not that victim. 

I believe that Cobham grew well beyond the vision of Sir Alan Cobham and that is fine, but I reckon that in this case the UK government did not really “meticulously thought over” several factors and it worries me, whenever greedy firms get into a defense branch defense, the defense group tends to lose and that is never good.

 

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