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John Moulton – entrepreneur of private equity

I use the term advisedly.  Having worked with many entrepreneurs who have had to leave the businesses they have created over the years, “succession anxiety” is a disease that can have some unpleasant outcomes.  In the middle of a sale process, it often leads to what looks like a narcissistic desire to prolong the process beyond all reasonable limits by tactical manoeuvring, walk outs and so on.  This is often put down to the entrepreneur’s need to use his negotiating skills to obtain the best deal possible on the sale of his creation.  But there’s often something else going on: these wonderfully talented people often have controlling personalities and dislike the idea that their creation can continue without them.

Is this the case with Moulton?  He is certainly an extraordinarily successful financier with a remarkable ability to analyse business and finance with extreme clarity and relentless honesty, even when looking at his own track record.  Having visited Alchemy’s old offices many times (on the stairs outside which Moulton famously personally served the hacks coffee during his flirtation with Rover), I always found it remarkable that the “honours boards” of new and exited investments included the deals that, inevitably in this industry, had gone wrong and ended up in insolvency.  Private equity guys just don’t do that – their failures “never happened”.

The press coverage has focused on the Moulton letter which is unemotional, even if it is brutally critical of both of himself and his firm.  Someone who knows him well who I talked to last week views it slightly differently.  According to this version of events, Martin Bolland, his talented and successful long term number two, felt he had to leave because of the preference given to the current CEO Dominic Slade.  Moulton then clearly lost confidence in Slade.  My friend’s explanation was that Moulton couldn’t believe that anyone could carry the torch he had lit and in the end preferred that no-one should.

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The Mole: Gordon Brown ‘on drugs to control depression’

The Mole: Gordon Brown ‘on drugs to control depression’ | News | The First Post.

Poor old Gordon. The problem with being such a poor and weak leader is that you open yourself up to this sort of bollocks:

The civil servant who told Ward of the banned list apparently wrote it off as quackery and “nonsense”, unaware of its potential significance.

Ward readily admits that, without a doctor’s note to absolutely prove the PM’s state of health, his hypothesis is an easy one for Downing Street to refute – or frame as yet another anti-Brown smear campaign. But Ward makes the point that, if he’s right, it won’t be long before he gets his proof. “If it’s true,” says Ward, “Brown’s entourage must be sending out strict dietary requirements ahead of his regularly catered public engagements; one could even monitor what he eats on such occasions.”

There have been rumours about Brown’s health and mental state for several years, of course.

So although we don’t have medical evidence “absolutely” to prove the PM’s state of health, “there have been rumours” that he’s unstable “for several years”. Must be true then…..

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Roubini: “U-shaped” recovery is possible – Yahoo! Finance

Roubini: “U-shaped” recovery is possible – Yahoo! Finance.

The most cheerful thing I’ve seen in ages – if he thinks a U-shaped recovery is possible (and not a “W”) then we gotta chance……!

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A libertarian and the US healthcare debate

Having just discovered her, I can’t work out whether I like Megan McArdle or not.  I’m  attracted to her description of herself as a libertarian and her obvious fluency in philosophical debate on economic issues, but astonished at just how alien some of the stances she takes seem to be.  This is her “last word” on the healthcare debate.  One key para says:

I’m actually happy to be at the impasse, which I knew was coming.  All I wanted to do was get some liberals to admit that there might be some reason that someone with basically progressive ethical priorities might be worried.  I don’t think we’ll go beyond that, because progressives also have a lot of priors about the market that I don’t share, to wit that it rarely produces anything really useful.

I suppose my main objections are first, is to her (what seems to me to be) rather fundamentalist set of views about the superiority of  the market in the provision of healthcare, and second, her sniffiness about “liberal” or “progessive” attitudes to the superiority of market mechanisms.  Without going into the reasons why healthcare might be different from other markets (though Paul Krugman is very interesting on this), what appalls about the US system is its amazing cost (15% of GDP in a country with nearly 30% higher GDP per capita than the big western european countries) and limited coverage across the population (40m people without insurance and therefore excluded from proper primary care). Contrast this with the systems in other high income countries where comprehensive coverage is usual and where without exception costs are much lower.  We’ve all seen the comparisons between systems (and the usually misleading American comparisons with the NHS), but basically all other advanced systems have greater government intervention than the US.  Outcomes across populations seem by and large to about be the same as or better than the US system but with the whole population receiving care.  Most offer lower consumer choice and service to those who have sufficient income to demand it, although none of the high income countries outlaw private healthcare and even the UK has a vibrant private health insurance sector which allows higher income groups to opt out of the NHS if they want to.  The US system clearly is excellent for consumers who can afford it, but overall at staggering cost.

In the UK we have very good reason to be thankful for the revolution of the 1980s with its focus on the role of the market, and the impact of this on economic dynamism.  But it is hardly difficult to believe in the efficiency of markets in the provision of goods and services while having a keen awareness of the potential for market failure and therefore the need for regulation or some other government intervention.  Before the 1980s, we would have set the bar rather lower – and at some point in the 1990s I once had a very prominent (and I think Thatcherite – he’d certainly benefited personally from privatisation) executive in a former nationalised industry bemoan to me how ridiculous water privatisation was, a view few would bother with now.  But climate change and the banking crisis are good examples of market failure where there is a clear role for government, and healthcare clearly is a market where a substantial role for government, even including provision of healthcare as in the UK, provides a superior outcome.  You don’t have to be from the left to believe this.

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