M&A

M&A

The UK Government is reviewing its Mergers and Acquisitions ( M&A ) policy. This is to try and ensure that companies that are strategically necessary to the countries defence are no bought by companies or countries that that we may find ourselves in conflict with.

KPHM Leeds Offices sign
KPMG their Leeds offices, a company well versed in M&A

There is a simpler way to ensure this is unlikely to happen, get the balance of trade into the black on a permanent basis. Japan is, and there are few Japanese companies owned by foreign firms. The track record for Japanese M&A is one of Japanese companies acquiring other Japanese companies, or Japanese Corporations, acquiring foreign assets. Like the recent Softbank takeover of ARM plc. Arm is UKs leading chip designer, it is now owned by the Japanese. This M&A came about because the UKs balance of payments is still well in the red.

It has been for the best part of 25 years. The much maligned Norman Lamont was the person who in 1992 floated the pound for the last time and it has been allowed to find its own level ever since. However it was Nigel Lawson who really ensured the topic of the Balance of payments disappeared from the Political agenda. He allowed the pound to find its own level for much of the time, and would then peg it, by adjusting the interest rates.

Whilst a low pound can lead to inflation, this inflation only lasts just over a year, in fact the actual inflationary effects happen over a short three to six months period.

ARM Holdings Logo
ARM originally stood for Acorn RISC Machine. RISC being Reduced Instruction Set Computer, and referred to the fact that as the number of bits increased, the number of instructions rose exponentially. By reducing the instruction set, the chips worked faster. Many phones run on ARM chips

What happens is this, let’s say Sterling drops 2% in a single month, this means anything being purchased from overseas by UK people, is now 2% more expensive. However this only happens the once, if say it is September and company A is just in the process of buying goods from a foreign company, those goods are now 2% more expensive, any adjustment in price will come into effect in October when the goods are received. However any further goods bought in the following months are already, being sold at the higher price, so there will be no further rises. The Government when it compiles its inflation rates, will note the 2% increase in October and these will stay there, but in the following October will drop out, because the inflation is only measured each month, and the comparison is with the previous year.

Back to the balance of payments, and M&A activity in the UK. Basically any country has to balance the value of its imports with the value of its exports, The UK has been importing a higher value of goods and services than it has been exporting, and this has been happening since the beginning of the 1960s. When Harold Wilson got on his hind legs back in November 1967, and declared that Britain was devaluing the Pound, he also added the disingenuous, this doesn’t mean the pound in your pocket or purse will be worth less. Well actually Harold as you knew full well, it did with regards to any imported goods.

The trouble was in 1967, the Unions were just getting up to full steam in helping to destroy British Industry. In fact it was largely due to the actions and stance of the Unions that Britain was not selling more goods abroad. Any company that wished to be efficient, and make a good fat profit, was vilified by idiot Union leaders with no understanding of where profits actually came from and why they happened. Namely efficiency, or in other words productivity.

The waters in the UK are muddied with respects to profits, because there is not a culture of savings and investment in efficiency and productivity. In Japan, they automatically save, it’s part of there culture built into their language. If one wishes to buy something today, you must first save, because any purchase tomorrow will be for the day after. IN UK (and US for that matter) we look for immediate returns. This can be all well and good. However the Japanese model obviously works even better than the UK/USA model, because it doesn’t just give quick returns, it also gives long term returns. This is why when it comes to M&A the Japanese are the ones doing the acquiring.

Honda logo
Honda has a car plant in Swindon and has been a long term investor in UK

The Japanese have just been through over twenty years of stagnation with regards to their economy. And over the last six years have seen their efficiency decimated by the earthquake in 2011 which registered 9 on the Richter scale. And yet Japan still exports more than it imports, and is still being involved in M&A. The personal wealth of most Japanese is higher than the average in UK or USA. Quite simply put, they save more so can invest in better equipment, namely Robots. Because they employ so many robots, they actually employ more people, one goes hand in hand with the other.

UK needs to increase its savings ratio this in turn would increase investment in Industry. More robots would be used, creating more jobs to supply the less expensive goods, built to a higher quality. With higher productivity, there would be more robots and machinery employed, increasing the productivity. This in turn would reduce the balance of payments deficit, where at some point it should go back into surplus. Then UK would start the M&A of foreign companies, not the other way around.

Cheap energy

CHEAP ENERGY

So Theresa May is proposing to cap energy prices, why not provide cheap energy instead?

Drax power station turbine hall
Drax power station near Selby in Yorkshire uses bio mass fuel.

Oh of course we can’t upset the liars in the Green Lobby, and actually improve the world. We must kow tow to the fiction that CO2 levels rising, is bad for the Planet and for Humanity, no it isn’t. CO2 levels are historically low, and an increase would result in higher crop yields. The result of higher crop yields is more food, so the world would be able to feed more people.

Currently the CO2 levels are 404 Parts Per Million or ppm. Now the lying Green lobby argument is that rising CO2 levels are man made, and apparently anything man made is bad. Why any dead head cretin should think this, merely reflects their stupidity. Nature is random, so any good or bad, is also random, why random cooling of the Earth is good and controlled cooling or warming by humans is bad, is left unanswered. It is left unanswered because the stupid half wits who thought this all up are? Oops I am repeating myself, they are stupid half wits? According to these people allowing people to have cheap energy, is bad for the Planet?

This is their argument, since the Industrial Revolution, humans have been burning fossil fuels, and these fossil fuels have released excess Carbon Dioxide (CO2) into the atmosphere. This in turn has increased the greenhouse effect within Earth’s Atmosphere, artificially pushing up global temperatures. This general view is very possibly correct, we don’t know for certain, but it may well be true. The ‘Greens’ follow on argument from this is, that if we keep putting CO2 into the atmosphere then in the not too distant future it will have a runaway effect, and the temperatures will be out of control and zoom up killing all life on the planet. Meanwhile in this scenario, the Greens maintain that Gandalf won’t be there to help, James Bond won’t come to the rescue, and a pink fluffy haired androgynous new race won’t be born.

Harvest time
Increasing CO2 levels means increased crop yields. In other words, the same amount of land can feed more people?

Never fear, because the ‘Greens’ have their heads firmly where the sun doesn’t shine, the whole scenario of runaway greenhouse gasses is all hot air and fantasy.

Back in the real world, the current CO2 levels at 404ppm are too low. The argument that if they increase by 10% or 20% in too short a time this will cause a runaway effect is against the Scientific evidence.

The problem with all this noise from the Greens is, that we now have records of the levels of CO2 in the atmosphere, in previous times, and they don’t make good reading for the Greens. Let’s start with the Little Ice Age or lia, CO2 levels were about 330ppm html Source Nature Now historically this is low, but prior to that had been the Medieval Warm Period or mwp, this is pre industrial, so there are not a few million humans burning coal at an excessive rate, so no increase in CO2 levels, indeed they are similar to the lia. And here is a big problem, the temperatures were much warmer, than the lia and warmer even than today? Medieval Warm Period analysis During King John’s reign (1199-1216) we know there were extensive vineyards all around England. So here we have one problem, CO2 levels are not directly attributable to the temperature. If you check out the graph from a student at Oslo in the replies section of this article, it shows no correlation between temperatures and CO2 levels? Skeptical Science

It gets worse, from an historical perspective, CO2 levels are way below what they were in previous eras. Live Science Indeed during the Triassic period they reached 3,000ppm seven and a half times their current levels, or put another way a 750% rise, and some numpties predict runaway effect with a rise of just 20% to 50%, scientifically how does that work?

Plateosaurus
Plateosaurus, they were around in the late Triassic period when CO2 levels reached their highest, pic courtesy Natural History Museum

The current high energy prices in UK has more than one cause, but they can all be taken directly back to the nasty idea perpetrated by the Greens that anything manmade is bad. So they wish to keep the CO2 levels at their current unnaturally low levels, despite the fact that higher CO2 levels, give higher crop yields, that allow a higher population to be fed properly. Are these people inherently odious, no they are just deluded into thinking that human activity is somehow harmful to nature. It is part of the problem of modern living, that many of the so called greens are totally out of touch with the natural world, hence people going vegan, a more un-natural, immoral idea one is unlikely to find. Humans are natural omnivores, yet these people are so out of touch with nature, they see eating a natural product as bad? Meanwhile as these Vegans chat away on their Apple iPhones, many of their fellow humans are going cold, because they are struggling with high energy prices. This could easily be solved by building more power stations, scrapping all those stupid subsidised eyesores that are wind farms, and producing cheap coal, oil fired AND Bio-mass electricity. There is a shortage of cheap energy in Britain, purely because none scientists, haven’t take the time to look at what science has to say on the subject of the climate.

So Theresa May will look at putting a price cap on energy, because previous Governments of all colours, have cowered away from the onslaught of lies, peddled by some fantasy half wits who thin the world is going to end? No it isn’t, well not by increased CO2 levels, which would be a good thing. A price cap on energy won’t help the less well off, it will just mean May’s Government has given out some kind of virtue signal, that they think will appease the cretins in the Green movement. It won’t appease them because they are cretins, and they will then move onto their next item on their agenda.

Yes Britain needs cheap energy, but it won’t get it with price caps. It would get cheaper electricity if there were more energy companies with spare capacity wanting to lure you to their product, and away from the rival companies.