Money Talks

The market capitalisation of the USA equities market is circa $38 trillion and the closest largest market cap to that is China at $10 trillion. Great Britain is a minnow to both at $2.8 trillion.

The Public Markets and Listing capabilities allows the USA to create a unique currency with complete favour. It allows capital raising and gives freedom to those listed. China’s position at nearly 4 times smaller is not an accurate comparison as so many of the China Companies are owned off balance sheet by the Government and therefore not capitalised.

Add to the point that both China and American are young industrialists say 60 and 200 years respectively makes Britain the seasoned 400 year old trader as truly a minor in the world of big business. My own yardstick with 70% of all lawyers that have ever lived, alive today in America a more accurate indicator of size. Add to the fact that America is a Fiat economy where it can print its own money has via deficit placed America in a unique standing. A large chunk of that $14 trillion debt is owned by China which then considered balances who’s who.

Is the lender or borrower in the strongest position ? Is the lender holding toilet paper or borrower laughing all the way to his bank that prints the stuff ? With interest rates at 400 year lows , Joe Public still has to borrow at high margin and if he can access debt he or she can be lucky.

The reality is that notwithstanding Pandemic the Stock markets trade off highs as if they are oblivious to any reality. Surely there comes a point of rectification ? Surely someone wakes up one morning or does it all thunder on ? As long as people believe in selling stocks at 30 to 50 times earnings the party is never ending and those darlings that never make a profit defy gravity.

Hut Plc is a recent beneficiary of the Public markets in London raising £1.88b with market cap now £6plus billion. Lipsticks produced for £1 valued at £30 on a stock market. All makes sense right ? This is the wonder of Commerce and the mystery of Public markets. Meantime Joe Public on Main Street can’t access that institutional cash that needs a home and relies on those strictly not lending banks to facilitate their business.

The rules of the game are not equal but in the Public arena the company gets valued constantly and someone shouts a price at you all the time with immediate exit capability. That’s why people rush to get on to it and those abroad from Russia and China want part of the party. Private Companies maintain privacy at a price , control at a coupon and accountability an asset. Money still makes the world go around and without the flow there is no go.

The trade war to come this century will not be tariffs but the nation that creates a new standard, perhaps a digital currency or a move away from the dollar. A new system that calls the shots and dictates the direction. The people’s currency the renminbi of China is increasing its status though uncle sam’s dollar still dictates as major commodities remain priced in it. As for sterling Britain we are stubbornly on our own and our fall in sterling value will continue to attract the invaders of the lost art of Britain whose asset raids on the nation has been more successful than any Luftwaffe raid and protected by our Rule of Law has made the country a haven of happiness in the free for all London markets.

This will need to continue, the gates were open 30 years ago and the invaders came already from the Middle East and Far East from the Wild West and the North. Without it we would be in dire trouble but with it the nation changed entirely and there’s no going back. So when we debate if we should allow any nation access, it’s too late for that argument and Huawei and the like can continue. If we have no secrets left to protect why bother but embrace the facts and let the nation rise. Allow 40,000 from Hong Kong to enter , put them say in Liverpool and then watch the North rise and create an airport there, revive the Merseyside and make Liverpool great again. This is the free flow economy we need not the restrictive rant of old bulldog barking in days of old when knights were bold. Rule Britannia not fool Britannia.

America chooses its President next month and never before has this choice been so vital as it takes a new turn inevitably away from its Master of the Universe status and if Joe gets in then expect that market cap to decline but for some that doesn’t matter. It’s a price worth paying some might say though I prefer Trump for 4 more years as the world just can’t handle more change at a time we sit so fragile and vulnerable on the Planet. There’s much more at stake and with economic instability we will see changes brought on enforced and unwelcome uglier than anything we know. Only the new technologies will be the change. Money talks.