IPOs made of sand

Merchant banks do apparently gamble vast sums on hunches.

Watching the Facebook IPO launch on Friday struck me as a typical example of Emperors New Clothes syndrome. Mainly because I’ve lived through it before.

In March 1999 my agency picked up the global ad account for a new dotcom that was going to revolutionise the world of clothes retailing. It was called boo.com. Started by three twenty something Swedish entrepreneurs operating out of glamorous offices on Carnaby Street (which were soon replaced by bigger and even more glamorous offices on Regent Street), we stood on the sidelines and watched as investors in the company were swept along on a tidal wave of enthusiasm, lavish spending and unbridled and unquenchable ambition.

Throughout the process we kept asking ourselves questions about the company. Why was all this funding, delivered from the some of the world’s wealthiest individuals and large merchant banks, arriving in a seemingly never ending supply, when there seemed so many flaws in the business model. There was no clear positioning for the company, indeed no clearly definition of what the company was going to sell, the technological ambitions for the site far outstripped what was apparently feasible back then, systems seemed flawed and everything appeared very hand to mouth.

Yet, we reasoned, these big merchant banks weren’t stupid. No one would pile all this money into a start up without a clear vision for how they were going to get their money back. Would they? We concluded over and over again, that it must be us – we simply didn’t understand the machinations of high finance.

Well, we quickly found out differently (as has been well documented) and a valuable lesson was learnt. Things can be too good to be true, merchant banks do apparently gamble vast sums on hunches, and our Finance Director, who said from the word go that it was all built on sand and would end in tears, really did know what she was talking about (hats off, Shirley).

And of course, what was true of the dotcom bubble was true for many other areas which the merchant banks were, ahem, investing in - with no one brave enough to shout ‘look, they’ve got no clothes on’.

Which is why I shudder when, despite all that has happened in the last 5 years, with the worlds wealth apparently built upon a mountain of doubt like some giant ponzi scheme, the banks – yes, the banks again – can decide that an 8 year old company with negligible assets is worth 200 times its annual profits, in a sector that saw its predecessor collapse from market leader to junk in a matter of months. And while there a few people shouting ‘Emperors New Clothes’, the banks carry on propping up their investment – because they can’t be seen to be gambling again…..

But until we all start acknowledging that perhaps investments should be based on things like assets, guaranteed income, historical precedent and sensible(rather than high risk) growth, then nothing in the global economy is going to sort itself out.

Meantime, if you run into a banker today who has invested in Facebook, just say one thing to them. Boo.

Photograph: Getty Images

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

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In the 1980s, I went to a rally where Labour Party speakers shared the stage with men in balaclavas

The links between the Labour left and Irish republicanism are worth investigating.

A spat between Jeremy Corbyn’s henchfolk and Conor McGinn, the MP for St Helens North, caught my ear the other evening. McGinn was a guest on BBC Radio 4’s Westminster Hour, and he obligingly revisited the brouhaha for the listeners at home. Apparently, following an interview in May, in which McGinn called for Corbyn to “reach out beyond his comfort zone”, he was first threatened obliquely with the sack, then asked for a retraction (which he refused to give) and finally learned – from someone in the whips’ office – that his party leader was considering phoning up McGinn’s father to whip the errant whipper-in into line. On the programme, McGinn said: “The modus operandi that he [Corbyn] and the people around him were trying to do [sic], involving my family, was to isolate and ostracise me from them and from the community I am very proud to come from – which is an Irish nationalist community in south Armagh.”

Needless to say, the Labour leader’s office has continued to deny any such thing, but while we may nurture some suspicions about his behaviour, McGinn was also indulging in a little airbrushing when he described south Armagh as an “Irish ­nationalist community”. In the most recent elections, Newry and Armagh returned three Sinn Fein members to the Northern Ireland Assembly (as against one Social Democratic and Labour Party member) and one Sinn Fein MP to Westminster. When I last looked, Sinn Fein was still a republican, rather than a nationalist, party – something that McGinn should only be too well aware of, as the paternal hand that was putatively to have been lain on him belongs to Pat McGinn, the former Sinn Fein mayor of Newry and Armagh.

According to the Irish News, a “close friend” of the McGinns poured this cold water on the mini-conflagration: “Anybody who knows the McGinn family knows that Pat is very proud of Conor and that they remain very close.” The friend went on to opine: “He [Pat McGinn] found the whole notion of Corbyn phoning him totally ridiculous – as if Pat is going to criticise his son to save Jeremy Corbyn’s face. They would laugh about it were it not so sinister.”

“Sinister” does seem the mot juste. McGinn, Jr grew up in Bessbrook during the Troubles. I visited the village in the early 1990s on assignment. The skies were full of the chattering of British army Chinooks, and there were fake road signs in the hedgerows bearing pictograms of rifles and captioned: “Sniper at work”. South Armagh had been known for years as “bandit country”. There were army watchtowers standing sentinel in the dinky, green fields and checkpoints everywhere, manned by some of the thousands of the troops who had been deployed to fight what was, in effect, a low-level counter-insurgency war. Nationalist community, my foot.

What lies beneath the Corbyn-McGinn spat is the queered problematics of the ­relationship between the far left wing of the Labour Party and physical-force Irish republicanism. I also recall, during the hunger strikes of the early 1980s, going to a “Smash the H-Blocks” rally in Kilburn, north London, at which Labour Party speakers shared the stage with representatives from Sinn Fein, some of whom wore balaclavas and dark glasses to evade the telephoto lenses of the Met’s anti-terrorist squad.

The shape-shifting relationship between the “political wing” of the IRA and the men with sniper rifles in the south Armagh bocage was always of the essence of the conflict, allowing both sides a convenient fiction around which to posture publicly and privately negotiate. In choosing to appear on platforms with people who might or might not be terrorists, Labour leftists also sprinkled a little of their stardust on themselves: the “stardust” being the implication that they, too, under the right circumstances, might be capable of violence in pursuit of their political ends.

On the far right of British politics, Her Majesty’s Government and its apparatus are referred to derisively as “state”. There were various attempts in the 1970s and 1980s by far-right groupuscules to link up with the Ulster Freedom Fighters and other loyalist paramilitary organisations in their battle against “state”. All foundered on the obvious incompetence of the fascists. The situation on the far left was different. The socialist credentials of Sinn Fein/IRA were too threadbare for genuine expressions of solidarity, but there was a sort of tacit confidence-and-supply arrangement between these factions. The Labour far left provided the republicans with the confidence that, should an appropriately radical government be elected to Westminster, “state” would withdraw from Northern Ireland. What the republicans did for the mainland militants was to cloak them in their penumbra of darkness: without needing to call down on themselves the armed might of “state”, they could imply that they were willing to take it on, should the opportunity arise.

I don’t for a second believe that Corbyn was summoning up these ghosts of the insurrectionary dead when he either did or did not threaten to phone McGinn, Sr. But his supporters need to ask themselves what they’re getting into. Their leader, if he was to have remained true to the positions that he has espoused over many years, should have refused to sit as privy counsellor upon assuming his party office, and refused all the other mummery associated with the monarchical “state”. That he didn’t do so was surely a strategic decision. Such a position would make him utterly unelectable.

The snipers may not be at work in south Armagh just now – but there are rifles out there that could yet be dug up. I wouldn’t be surprised if some in Sinn Fein knew where they are, but one thing’s for certain: Corbyn hasn’t got a clue, bloody or otherwise. 

Will Self is an author and journalist. His books include Umbrella, Shark, The Book of Dave and The Butt. He writes the Madness of Crowds and Real Meals columns for the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser