Has Brown's reverse Midas touch upset the British Energy takeover deal?
Fraser Nelson 11:18am
I, for one, am weeping no tears about the collapse of the British Energy takeover deal. Invesco and Prudential - the institutional shareholders understood to have led the backout - are right to say that if energy prices are likely to be high for the foreseeable future then a greater premium should be attached to the price. They’re especially right to be nervous if the matchmaker was one Gordon Brown, who has a reverse Midas touch when making investment decisions. First came his disastrous foray into asset management, selling the nation’s gold at a fraction of today’s price (actually, it’s worth being specific: he sold our gold for $275 an ounce, against today’s $918). Last year, he sold 450m British Energy shares when the price was 490p. They are one of the few stocks in the world to be worth about a third more now than then, so the premature sale deprived the taxpayer of about £900 million – appalling, even by Brown’s standards. Even after today’s slump they’re worth 692p. No wonder Invesco and the Pru are wary about taking Brown’s advice about the right time to sell.
Plan B is that the new nuclear sites are sold, or new sites agreed, one by one – is that really such a big problem? Sure, maybe EDF will not get such a good price for the job lot. This may strain Anglo-French government relations (not to mention tensions in the Brown family – Gordon’s brother Andrew is an EDF director). But I think Invesco and the Pru are right to hold out – demanding a better deal for the pensioners whose money they are guarding. And there is new a golden rule in investing – if Brown says “sell” then the smart money lies in doing the precise opposite.
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Chuck Unsworth
August 1st, 2008 11:52am Report this comment"Gordon’s brother Andrew is an EDF director"
Well known. But the question is:
Talent or influence?
Simon Leonard
August 1st, 2008 12:00pm Report this commentHiya Fraser,
Can you let me know what price gold will be this time next year and which shares will be up say about 15% or so. Thanks muchly
David H
August 1st, 2008 12:16pm Report this commentAgainst all expert advice that the value of gold was going up, Brown ignored it and made it even worse by telling everyone about it beforehand thus lowering the price even more.
Financial genius.........not
Fraser Nelson
August 1st, 2008 12:31pm Report this commentSimon, not a clue. But I don't purport to be a economic mastermind equipped to lead Britain through the world downturn. Chuck, how dare you suggest EDF had any ulterior motive in employing the Prime Minister's brother. There is nothing to suggest it was anything other than pure coincidence that they EDF then sought to buy British nuclear power stations.
Simon Leonard
August 1st, 2008 12:54pm Report this commentFair enough Fraser, could you ask George Osborne for me next time you see him seeing as he thinks he's up to being chancellor, let's see how he does without 20/20 hindsight.
Fraser Nelson
August 1st, 2008 1:15pm Report this commentSimon, I'd like to think Osborne has the modesty to say "the best I can do is take government's hand out of your pockets, stand back and let this great country determine the road ahead itself, as it did in the 1980s and as it did with gloablisation in the 1990s". No one can forsee the future - and this is sign of humanity, not stupidity. Brown didnt forsee the effects of gloablisation, Bill Gates (and even Murdoch) didnt forsee the internet.
My motto to this is an old one: wise is he who knows he knows not. We'll succeed best a country when we have a government honest enough to admit the limitation of its power and foresight. Britain doesnt need a Great Helsman of any political hue - least of all one who has a track record of steering the wrong way like Brown.
Travis Bickle
August 1st, 2008 1:37pm Report this commentThe man who, according to Ms Harman, great leaders across the world phone up for economic advice.
One wonders how we could possibly ended up in a global crisis.
Tiberius
August 1st, 2008 1:47pm Report this commentSimon L: Brown preannounced his gold sale which further depressed the price. He was warned (by Blair amongst others) that his pension fund taxation policy would be ruinous.
Try to equate his limitations with the rest of us if you wish, but there is no doubt the man has destroyed much of the financial and social fabric of the country.
Faceless Bureaucrat
August 1st, 2008 2:39pm Report this comment"And there is [a] new a golden rule in investing – if Brown says “sell” then the smart money lies in doing the precise opposite.". Amen to that...
Peter
August 1st, 2008 5:05pm Report this commentI was idly pondering, and it struck me the reverse of 'Midas' reads 'Sad, 'im'. Seemed appropriate.
TGF UKIP
August 1st, 2008 8:36pm Report this commentQuite apart from the fact that EDF is majority French State owned, there are huge strategic implications.
While nuclear currently supplies 20% of UK electricity France is 80% reliant on nuclear and given the headbanging green tendencies of what looks likely to be the next Tory government, it is very easy to foresee the pressure for the UK to also head in that direction in the interests of "climate change."
Indeed, the main rationale for the EDF takeover is likely to be in a position to be able to press a "green" government for a huge expansion in UK nuclear capacity.
To understand the full folly of this, all one has to do is imagine a serious nuclear accident anywhere in the world and the outcry this would lead to for a full shutdown of all nuclear plants.
Strategically, energy gewneration should be kept national - a huge fault of previous Tory governments was to sell, or allow to be sold, so much energy generation and distribution to foreigners especially the French and Germans both of whom vigorously protect their own domestic energy industries.
Meanwhile, Fraser, perhaps you can tell us what the Tories enegy policy is. Or is this another tough choice your best mate Dave hasn't quite got to yet?
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