Saturday, February 19, 2011

On the TSX-LSE Affair: A Modest Proposal

London: Canadians have received countless assurances that the deal to conjoin the TSX with the London Stock Exchange in a 45-55 deal will bestow only positive results on Toronto and the Canadian financial sector. “This is great news,” declared Xavier Rolet, the London Stock Exchange Group CEO, “Great news for Canada and all its provinces.”

Fierce believers in free enterprise always claim that letting the market have its way can only be good---it’s right up there with the immaculate conception in the pantheon of religious truths.

I’m in this city for a while---a city that has lived off the labour of others for centuries, conjuring profits out of finance and insurance. The wealthy in London have bounced back beautifully from the crash. Bankers are flush with bonuses. Those who perform daily chores for the privileged commute in and out of this city because they can’t afford to live here.

The U.K. government, made up of Thatcherites in a hurry, is slashing public sector jobs and throwing people off welfare---David Cameron thinks it would be better if welfare recipients had jobs---but there aren’t any.

Prince Harry and other young royals are hanging out in Chelsea clubs that charge a thousand pounds for a plate of caviar and beans, washed down with a strip show. The Cameron government believes the Royal Wedding will revive the ailing British economy. Royal blood admits its carriers to a system of welfare much approved by public school boys such as Cameron.

Bay Street has also made a long career out of sweating profits out of Canadians. That’s why few people outside Ontario care much about the prospect of the TSX being acquired by the high hats of the City.

Here’s my modest proposal: if market takeovers are benign and only the foolish worry about the effects of someone else calling the shots in your economy, then why not reverse the proposed stock exchanges deal? Let the TSX ante up for 55 per cent of the new entity and the LSE for 45 per cent. Does control really matter? Surely the Brits would not get fussed over the idea of control of their leading exchange resting across the sea in a former colony. Or would they, and if so, why?

8 comments:

Bill Bell said...

I'm all for it.

But wouldn't the ultimate problem in having Canadians do foreign takeovers be that we lack sufficient capital? I'd be happy if we could just put more of our own stuff in the hands of more of our own people.

My Cat Knows Better said...

The takeovers of Inco, Falconbridge, and Stelco only brought economic benefits to Canada... in the form of protacted strikes, layoffs and lockouts. Yeah, go for I say, they can't be wrong all the time.

Anonymous said...

Prof. James:
When you join a poorly regulated stock market with an even more laxly regulated one, you get a dream-come-true for the worshippers of the free market, the folks who brought us the Great Recession, and a nightmare for the rest of us. And by the way, isn't this another good reason for a national stock exchange regulator? Where does the NDP stand on that?

Walk a Kb or Two in my cassins said...

Finallystop the acquisition of the TSX, the world's finest system for mine development - from exploration & venture financing to capitalization to distribution - from being gobbled by a aging older brother (who's not really British anymore) based in London. If we're going to lead a sound fiscal and financial world that is based on natural resources we'll need our industry-leading skill set here at home (never mind the impact on restaurants, embassies, hotels, entertainment, residential real estate, commercial real estate etc etc due to the flight-to-Head-Office of the top players from Bay St that would occur if the merger succeeded).

http://www.blogger.com/comment.g?blogID=30617754&postID=3409465762777603641

Walk a Kb or Two in my cassins said...

Finallystop the acquisition of the TSX, the world's finest system for mine development - from exploration & venture financing to capitalization to distribution - from being gobbled by a aging older brother (who's not really British anymore) based in London. If we're going to lead a sound fiscal and financial world that is based on natural resources we'll need our industry-leading skill set here at home (never mind the impact on restaurants, embassies, hotels, entertainment, residential real estate, commercial real estate etc etc due to the flight-to-Head-Office of the top players from Bay St that would occur if the merger succeeded).


http://www.blogger.com/comment.g?blogID=30617754&postID=3409465762777603641

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binary option said...

I believe in free enterprise as well, because it is what launched the US to the top of the world and how other capitalistic nations can follow suit.

Dallas Property Management said...

But wouldn't the biggest concern in having Canadians do offshore takeovers be that we shortage acceptable capital? I'd be excited if we could just put more of our own items in the hands of more of our own people.