Wednesday, February 16, 2011
The Merger of the Toronto and London Stock Exchanges
I find it interesting how the politicians were against the Potash take over, as was the electorate, at large. The same government was in favour of competition in the mobile telephone sector despite uncertain foreign investment rules (as was the electorate). Now, I doubt the merger of the TSX and the LSE will happen because there are few, if any, votes to be won by making it happen. How's that for consistency (especially the vote getting part)?
So why should we, as investors care?
Let me start by pointing out the aversion business has to government interference and tax grabs. We have a unique opportunity in the post financial crisis period to create a stable environment in which to attract foreign capital and business. The result would be more growth, more jobs, perhaps even a more diversified Canadian economy. Governments that focus on vote-getting and tax grabs do little to inspire businesses to make large capital investments.
Are we really in such denial that we think Canada is such a great place to work and play (which it is) that businesses will just ignore how difficult it is to navigate all the red tape and, in the end, be subject to the whims of politicians at the local, provincial, and federal levels? I laughed out loud when everyone was quick to point out how protectionist our fellow Americans were, when it was our own provincial trade barriers which were the real reasons they didn't want to relax their constraints. We wanted to be able to play in their back yard as long as they weren't allowed to play in ours!
As for me, I am tired of all the fighting between different levels of government, and self-serving agencies, especially the all-talk and no-action part. I am even more fed up (pun intended!) with governments which rely on the absence of clear regulation to twist events into situations for vote-getting. While it guarantees them a job and furthers their pension, it is costing you and I real money, money which comes out of our own investment funds, and pension funds.
How do you feel? Are you in favour of the merger between the TSX and LSE? What about having a national regulator?