Ah, the haute bourgeoisie – I know the old Scotsman warned us against letting them talk to each other. This is wise counsel but I have found that they can be amazingly open, almost innocent in their discussions. Take the Merrill Lynch Survey of Fund Managers July: never mind the amusing language – ‘overweight cash’, ‘underweight equities’, ‘low-risk appetite’ (do they cull these terms from the Atkins Diet?). The bottom line is that people ain’t investing because they are expecting more ‘earnings downgrades’, losses to you and me.
What caught my eye for two reasons was this little nugget from Karen Olney, Chief European Equities Strategist at Merrill Lynch:
“What investors are looking for right now is immunity from the ills of the market place and the healthcare sector provides that. Healthcare companies might have their own industry risks, but they do offer immunity from the three horrors that are bugging investors: a rising oil price, the slowing economic cycle and the credit crisis.”
Ah, the poor things. Put a blanket around them before they catch a cold or and up with them at night to see them through their nightmares. Well, I have some sympathy – sure don’t we all from time to time want a bit of immunity from the ‘ills of the marketplace’. Like when we get laid off or see our job outsourced or watch our paychecks get eaten away by inflation.
But what a day for this sage advice to come out – after the Supreme Court blew a hole through risk equalisaiton. I’ll leave it to others to assess the legal implications, but it does appear that without corrective action Merrill Lynch’s ‘risk-averse’ investors might have some safe bets to lay in the Irish health market (either that or the Government just proceeds with providing universal health care and pigs will fly and I will play centre-forward for Man United next season).
But there is something more instructive about all this. Sean O’Rian looked at investment in Irish high-tech companies in the late 1990s. He found that, true to form, private investors waited until the ground was safe:
‘ . . . (private) investors largely followed rather than led the growth of the high tech industries . . . Although these investors began to provide the large amounts of funding required by the most prominent companies, they only did so once the growth potential of the software industry and other high tech sectors had been clearly demonstrated. Ironically, the risk taker here is the state, which was the primary source of funding throughout the important period of initial growth and consolidation.’
Why should we be surprised? Michael Hennigan is forever going on about how €50 billion has been invested in property, mostly overseas, since 2001 compared to a mere €1 billion in invested in venture capital for Irish business. The fact is that most investors play the short-odds and indigenous business in start-up or developmental phase are definitely not odds-on.
What’s the lesson here? If you want substantial investment in our enterprise base, it will have to be public sector led and it will have to be part of a new social bargain (collective bargaining, state equity, decent wages and conditions, the environment, etc). And if private investors want to come in after, okay – but they don’t get a blanket.
And, yes, a free universal health service would be okay, too.
Notes on the Front 
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