It’s also nonsense to claim that they would pay £80 to £90 billion for the water industry because, quite simply, the water industry is not worth £80 to £90 billion.
Even if you take into consideration the fact that it has significant debts owing within the companies that would be acquired, they are not worth the face value at which they are recorded on their balance sheets because a fair value commission would make it clear that in practice the water industry is very largely bankrupt.
The water companies are worth nothing. Therefore shareholders will get nothing and all bond holders a haircut.
So, the only cost of nationalizing water is the interest charge on the bond that is issued, and let’s be clear that to date the water companies have been able to pay all the interest owing on the borrowings on their own balance sheets. They are not technically insolvent in that sense. In fact, they have always been able to settle their liabilities as they fell due. And therefore, replacing those debts that they now have with new bonds, which will be issued at a lower rate than the rate at which the water company’s borrowed because the government is now guaranteeing that debt, therefore meaning that the interest charge will be lower, is something that the water industry can already afford to pay.
In other words, the nationalisation will pay for itself out of the water revenues that we all provide to the water industry already by paying our water bills as they fall due. There is therefore no net cost to nationalising water or to nationalising other industries which are already borrowing heavily and which are settling their bills as they fall due.
The water companies are financially strong enough to finance a debt based takeover.
Other than in SpudWorld it’s difficult to support both contentions.
Depends on which water company you are talking about.
Severn Trent is listed on the LSE. Out of the past 24 years, it only made a loss in two of those years.
The current and quick ratios are a bit more mixed with these ratios being above 1 in a quarter of the past 24 year time period. For this year, both are above 2 indicating that the company is pretty solvent and could cover its liabilities.
OT: what is a genocide? Would you recognise it when you see it?
Assisted dying now accounts for one in 20 Canada deaths
Those are rookie numbers, Aktion T4 is coming after psychiatric patients next:
Around 15,300 people underwent assisted dying last year, accounting for 4.7% of deaths in the country. Canada lawmakers are currently seeking to expand access to euthanasia to cover people with mental illnesses by 2027.
It’s not a slippery slope, it’s a cliff edge:
The figures released on Wednesday by Health Canada show that the rate of assisted dying in Canada increased by nearly 16% in 2023. This number is a sharp drop from the average increase of 31% in previous years.
Wonder why politicians are so keen on murdering their citizens?
Around 96% of recipients identified as white people, who account for about 70% of Canada’s population. It is unclear what caused this disparity.
Hmm.
So you nationalise the water companies. Not impossible, but it doesn’t solve the problem of who pays for the “improvements” that people desire. Do bills rise so everyone pays or is the taxpayer lumberer with the cost, so everyone pays? Alternatively the Government borrows the money so everyone pays both the bill and the interest forever?
There is a video version on Spuds YouTube channel.
Spud is talking about financial repression. He is talking about forcing shareholders and creditors to take government bonds. He is not talking about issuing bonds to raise cash and then pay the shareholders and creditors. He is also talking about making a “fair” value of the companies and paying that rather than the current market value of the companies. He does at least acknowledge that the shareholders and creditors would have to take a haircut on their holdings.
The bonds he would issue would be for 30 years and have a low coupon (interest rate). I am assuming this is because he would inflate away the value of the bonds over the 30 years. After 30 years, he would simply issue more bonds to cover the “payment” of the original bonds (not that he would still be alive).
It is a good job that he is not in charge. Financial repression is one of the causes of deindustrialisation in the aftermath of the second world war.
Salamander
True point – my only quibble a minor one:
It is a good job that he is not in charge
That is the understatement of all time. His evil is without end and his crime without number.
OFWAT determination on water cos is .. drum roll.. Dec 18th when the market is basically asleep as very one is on holiday or hungover.
Brilliant timing. Just brilliant. Just before the end of the year as well ruining Christmas for loads of people if it’s bad news.
Umm, 19th?
If the water companies are a going concern (which it looks like they are) then a forced nationalization is just confiscation.
Which Murphy is all about. He’s trying to persuade himself that it’s something that would bring government more money than it costs, so that extra can be spent on his programs.
Never mind the history, which is that the government likely sold them off in the hope that it wouldn’t cost the government any more (and they could blame the private owners for any messes instead of being blamed).