Scoop Column: Musings On Merger Mania

Opinion By John Howard

The global urge to merge terrifies the living bejeezus out of me. I fear that in the next generation our kids and grandkids will be buying their cornflakes, sneakers, their cars and making telephone calls all from the same global company. Maybe Telecom will also be able to cure athlete's foot.

That's why the urge to merge terrifies me and it should do the same for you. I fear the global mergers in oil, food, telecommunications, pharmaceutical, chemicals, aluminium, copper, energy, and water utilities will mean giants making love in a financial connubial bed. And me getting to sleep on the wet-spot.

I don't want to see the world's population being used as tools of brutal geniuses.

How big is big? Right now, about as big as it wants to be. Capitalism favours competition, I want that. Control tells me about communism. My old man didn't like that.

How can the control of big global companies be considered the equivalent with communism? Simple, are we going to end up with three companies in the world? - one Russian, one Chinese and one American.

They will all speak the same language. Actually, they already speak the same language when it comes to mergers. And it's called control. That's not capitalism. Capitalism is competition - not control.

Free market? What free market? It doesn't exist. The markets are largely the creation of an international financial oligarchy, which uses them as a battering-ram against the nation state, and a way to pick peoples pockets.

The oligarches routinely organise raids on nations as a way of bailing-out their banks - the European currency crisis of 1992 pumped billions of dollars of revenue into US banks. The Asian crisis of 1997 was another bankers' manipulation as was the central bank intervention of 1998, and the intervention underway today. Free? Only in the sense that oligarches are free to plunder.

Investors? What investors? Virtually all of what is called investing today is speculation - bets on the movements of stocks, bonds and currencies. Investors are people who put money into an enterprise in order to increase its usefulness to society. But the markets today are a giant casino, where gamblers place bets that some things will rise and others will fall. You can call them suckers, but not investors.

The yuppie fantasy of the day, on-line investing, has been widely explained as being due to the proliferation of electronic and printed financial information. The individual now knows as much about what is going on in the markets as the professional in Wall Street. Thanks to the Internet, cell phones and pagers, the average individual can follow the markets as closely as the traders at a Wall Street investment bank. Everyone is now an insider. And if you believe that, I have a bridge for sale.

When the Wall Street investment banks and the Securities Exchange Commission (SEC) attack Internet day-trading as gambling, you'd better have plenty of salt on hand.

"Some argue day-trading is really nothing more than speculation," SEC Chairman Athur Levitt noted in a speech to the National Press Club in Washington DC, on May 4. " Personally, I don't think day-traders are speculating because traditional speculation requires some market knowledge. They are instead gambling, which doesn't," he said.

Think about that: "traditional speculation" George Orwell would love that one.

Afterall, day trading and on-line investing are merely the extension to the individual, of the practices of Wall Street. Today, everybody's getting in to the act, from Grandma to the kids. There are even special summer camps in the US where kids are taught how to play the markets. Suckers may not be born every minute, but they're certainly being trained.

In a properly functioning economy, the most valuable industries would be those which make things, which transform less valuable inputs into more valuable outputs, thereby creating wealth and increased productivity of society as a whole. That's not exactly how it works today.

The most valuable corporation in the world today, in terms of market capitalisation, is Microsoft. It is worth more than the top five US banks combined which gives us a clue why it is under attack by the US Justice Department. The banks are terrified that, should their dream of on-line banking ever take off, Microsoft would take over. Bill Gates is personally worth more than Chase Manhattan and JP Morgan combined.

America Online is now one of the largest companies in the US, in terms of market value, bigger than Ford and General Motors combined. Why? In part because of the foolish belief that the Information Society has taken over the Industrial Society, and in part because the manufacturing base is collapsing and many people cannot afford new cars. Fortunately, those who can't afford a new car to do their shopping, can always get their groceries over the Internet.

So what are you giants who keep mating in the global financial bed going to do? Ignore us? Don't think so, pally. Take us for granted and we'll take you to the cleaners. For the future I don't want to get my cornflakes from the same people who bill me for my telephone.

Call me crazy, but don't call me stupid and don't try to rule my life - or I'll simply hang up.

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