Happy Friday, everyone.
Two items dominated the airwaves this week: Carillion’s outright demise, and a stormy time for cryptocurrencies. Meanwhile, a man in Minehead made a hoax bomb call to stop his wife having a night out and Emmanuel Macron suggested the British could borrow the Bayeux Tapestry.
Have a great weekend when you get there,
1. Construction giant Carillion went into liquidation. What does that mean for shareholders, and is it high time someone got to the bottom of where taxpayers’ money actually goes?
Everyone has been asking the same question this week: why was the government still doling out contracts to floundering firm Carillion? Did no-one bother to check the accounts? Nobody?
Carillion was £1.6bn in debt. This means that shareholders will have lost all money they had invested in the firm. And let’s spare a thought for all employees and SME suppliers who have lost jobs and won’t be paid.
Government outsourcing is not the same as privatisation. Indeed, there’s nothing wrong with outsourcing something to a private company who can do the job more efficiently while producing a better result for consumers. But taxpayers are not consumers. We do not get to choose to pay tax. And the contract system is not a market, it’s a cosy club. That means politicians can make lazy decisions without the burden of responsibility. And it is the taxpayer who shoulders the risk, both in terms of money and because the projects impacted (many of which we’re not even that keen on) affect us enormously.
I for one would like to know exactly where money goes in government supply chains. Most people have some vicarious anecdote: £300 light bulb changes in hospitals, £500 to get a new keyboard. Cuts are not the same as cost-saving.
This good FT piece suggests that curbing the “curse of bigness” is a political priority. But those that know markets are the best way of generating wealth are difficult to come by in the current Cabinet, and large firms are, ironically, only so big because of state privilege.
Carillion is a stark reminder of the problem with crony capitalism.
2. Bitcoin lost half its value, and all cryptocurrencies are plunging. Why, and what does it mean for investors?
A lot happened in the world of crypto over the last few days, so apologies if I end up being behind from the time of writing.
In the week that Vladimir Putin weighed in and opined that cryptocurrencies need to be regulated, and research revealed that bitcoins jump from $150 to $1,000 was likely caused by one person, all major cryptocurrencies saw drops in value. Bitcoin fell below $10,000 (it has been nearing $20,000 in December), and the cryptocurrency market has lost around $340bn since the start of the month, according to data from CoinMarketCap.
Most analysts are putting the sell-off down to fears of a regulatory crackdown, particularly in Asia, which is where the lion’s share of crypto-trading goes on. South Korea and China are tightening already stringent regulations. Meanwhile, a director at Germany’s central bank has said it’s not possible to regulate cryptocurrencies on a regional or national scale – regulation would have to be global.
Closer to home, UK mortgage lenders and brokers are rejecting applications from crypto investors, on the grounds that they can’t trace the source of the money. There are also claims being made that some banks (and this isn’t in the UK but is in the West) are blocking transactions related to digital currencies.
If a currency is banned, you can’t use it. You also can’t use it if regulation, or the threat of regulation, wipes out its value. States have the power to make stores of value valueless. It’s important that sensible conversations around regulation progress to a level of clarity and certainty, otherwise this toppy market will never be more than a speculator’s heaven.
And expect the banks to become increasingly draconian; cryptocurrencies pose an existential threat.
CAUGHT OUR EYE
A Premier League football club launched a startup innovation lab
Arsenal opened its doors to a first cohort of startups which will be incubated in a ten-week programme run by the club. The lab is designed to help the firms identify ground-breaking new fan experiences, from improved retail experiences to new digital content. After the ten weeks, a decision will be made on investment to take the ideas further.
Within large corporates, tangential R&D initiatives, like small in-house incubators, can be quite fickle – funding can at times be shifted to core parts of the business as soon as it is needed. It’ll be interesting to see how a football club gets on, and what the entrepreneurs come up with!
OFF3R spoke exclusively to Hywel Sloman who stated “Innovation has always been at the heart of the club since its formation in 1886. Our aim is to create better experiences for our supporters all around the world, from retail experiences to digital content. We are looking forward to taking this next step in the Arsenal Innovation Lab and developing these pioneering ideas to take the club forward.”
A founder whose company has over $6 trillion at its disposal has written to the world’s biggest firms telling them to do more for society
This week, Laurence D Fink, the founder and CEO of BlackRock, the world’s largest asset manager, sent a letter to the world’s largest public companies telling them they need to do more than just make profits. If they want BlackRock’s continued support, they need to contribute to society.
According to Bloomberg, he wrote: “society is demanding that companies, both public and private, serve a social purpose”. Fink went on to suggest that government failure to prepare for the future on things like retirement and infrastructure means society is having to turn to the private sector for responses.
Perhaps this signals a change at the top. But the fundamental issue here, as we’ve learnt in the UK this week with Carillion, is that corporatism and big business lie far closer to the state than to the individuals who make up society. And those individuals frequently, and increasingly, find themselves powerless against today’s leviathans.
Have you met Amy Ingram? The polite PA who turns out to be something entirely different
I was going back and forth on emails before Christmas with an acquaintance who works in the City. We agreed to meet up, and he handed over to his assistant, Amy Ingram, to tie up a time and place. Amy and I emailed a few times ironing out changes because of illness. I asked her about her weekend; she was always very polite.
It took me over five exchanges to read Amy’s sign-off and realise she is an AI: Amy Ingram = A.I. I had been well and truly Turinged. I started telling a friend about it and he casually responded “oh yeah, I know her brother, Andrew.”
Turns out that AI Amy can, like your sat nav, be switched to an Andrew.
Anyway, the pair are a fantastic piece of kit, pretty cheap and will save you a lot of time if you’ve got a busy diary and are always saying an assistant would be helpful: https://x.ai/
WHAT DO YOU THINK?
Does it matter if children are glued to their phones?
A consultant friend found his teenage son snapchatting himself hammering a nail into a wall. (Mercifully, he ended up failing to complete the task because he hadn’t enough hands.)
Denmark has just charged over 1,000 young people with distributing sexually explicit material. They are accused of using Facebook Messenger to share indecent video clips which showed two 15 year-olds having sex.
Should we be worried about very high usage of mobile devices among children? Or, indeed, among adults? Here’s a nice Memo piece arguing that protracted smartphone use won’t turn your child into a dimwit. But is it a shame to miss out on what’s going on around you? And what about the children who are used as scapegoats as lawmakers map out uncharted territory?