Leaving London?

Real or threatened regulations or taxes in London have become sufficiently onerous that many in the financial community there are threatening to leave. Since "Galt's Gulch" is a fictitious place, the first destination of which they speak when they talk of leaving is Switzerland, which is European by geography but not by law.

Bloomberg has put out a story on some of the problems with the proposed flight to Switzerland, especially Geneva. There are all those quotidian non-novelistic details with which to deal, like a housing shortage there for example. There is also the question of office space. The Bloomberg report quotes Tim Dawson, who works in Geneva himself, saying: "There is more office space in Canary Wharf than in the whole of Switzerland."

Canary Wharf, BTW, is a large office/shopping development largely constructed in the 1990s, in East London, in an area of idled docks. At an early stage of development, in 1993, Canary Wharf's working population was only 7,000. By January 2000, that working population figure was 27,000. So although financial business can and did in that interval leave central London's famous "Square Mile" for a place about 3 miles as a crow flies to the east and south, to continue all the way to Geneva presents graver problems.

Clearly the Bloomberg reporter and Mr Dawson are right to make this point, it does not follow though that the government in London can continue to increase the burden of doing business there with impunity. People who work in the financial district of London (either the Square Mile or Canary Wharf!) come from a lot of places around the world. The financial centrality of London is preserved by these ex-pats. And where will most of them go if the burdens become too great? To no single place. Simply: home.

Just a quick link

Schulte Roth & Zabel, a law firm with offices in New York, Washington, and London, recently posted on its firm website an intriguing report on current trends in activist investing.

You can read the report for yourself here.

I'll say something about why I find it intriguing tomorrow.

Asian markets not impressed

One theme of the news coverage this last weekend of the frenetic negotiations in Washington over the details of a Wall Street bail-out plan was this: they had to get a deal n place before the Asian markets opened, Monday morning in Hong Kong and Tokyo, or Sunday evening in Washington. It was crucial to send a message to the investors in those markets.

Upon waking this morning, we can check -- those investors weren't impressed.

The bottom line of today's HK trading, as measured by the Hang Seng index, is a drop of 669.13 points to 18,012.96. In Tokyo, the Nikkei closed 149.55 down at 11,743.61. In Singapore shares fell 32.45 to 2,379.01.

If there had been no deal, the administration and do-something-quick allies would have cited these numbers as proof of how disastrous waiting is.

But there is a deal, so these numbers will of course be spun as proof that the markets need immediate follow-through.

Follow the sun. What's the story with the Euro markets? In Germany, the DAX is down. In France, the CAC-40 is down. In London, the FTSE is down. Gee, this deal doesn't seemed to have worked any market magic after all, has it?

I'm not saying nuttin'....