Saturday, September 30, 2006

Target Euro Regulators But Leave Smith Out of It

Problems in markets that are put down to regulators with political agendas owe much to mercantile policies much criticised by Adam Smith.

An article illustrates this point in ‘The Motley Fool at Fool.com’, called: “Free Markets? In Europe?” by Rich Smith (TMFDitty) at:

http://www.fool.com/news/commentary/2006/commentary06092726.htm:

Right No. 2: Shareholders win when regulators step out of the way and permit free markets to work as good old Adam Smith intended, shareholders win. I have little doubt that the CNE imposed stricter conditions on E.ON's bid than on Gas Natural's, in hopes that the former would bow out and allow the latter to proceed with acquiring Endesa. If that had occurred, then Endesa shareholders would have involuntarily paid $7 billion for the "privilege" of keeping Endesa Spanish.

National pride may warm the heart, but it does little to fill the wallet. In contrast, now that the Competition Commission has forced Spain to swallow its pride, E.ON has already upped its bid to $47 billion -- raising the "national pride premium" to a cool $20 billion. Hey, call me a Tory if you want, but if Prince Charles ever offers us $20 billion to buy the Liberty Bell, I'd vote we take the money and run.”


“The more so because the Competition Commission has rudely failed to shake Adam Smith's Invisible Hand in recent years. It
incessantly hounded Microsoft (Nasdaq: MSFT) for competing too effectively, attempted to turn eBay(Nasdaq: EBAY) into a unpaid tax collector, and quashed the merger of two U.S. companies, GE(NYSE: GE) and Honeywell(NYSE: HON), in 2004 (in order to protect Europe's own aerospace industry). Under Ms. Kroes's hegemony, this so-called "Competition" Commission has proven itself no friend to competition from outside the borders of the European Union.”

Comment
Why Rich Smith thinks Adam Smith would endorse such a silly ‘sell everything and anything for money’ policy I do not know.

I have no feelings about the ‘Liberty Bell’ one way or another but it seems Smith’s response to such a suggestion would have been to which other use of $20 billion would add the most to annual net revenue. I also suggest you might want to wonder where Prince Charles would get $20 billion from, whether his cheque would bounce and whether he was good for the money! (Historians might wonder for what reason would he want the Liberty Bell?)

As for “has rudely failed to shake Adam Smith's Invisible Hand in recent years”, apart from 9 out of 10 for clichés associated with Adam Smith’s name, although his use of the metaphor had nothing to do with markets, it is a really silly use of it anyway.

Rich Smith is on the right track about the regulators in Europe, but why he needs to bring Smith into the quarrel (as well as the luckless Prince Charles) is beyond me.

Rich Smith is on the right track about the regulators in Europe, but why he needs to bring Smith into the quarrel (as well as the luckless Prince Charles) is beyond understanding.

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