Politics Thread!

[pogo]

Things have moved right, that doesn't mean they can't move back to the left.

Possibly. But by far the easiest way to do that is when in power. The country moved right under Thatcher. She introduced what were seen as quite radical policies at the time, but in doing so moved the argument. No no-one think we should go back to the industrial relationships of the 1970s, re-nationalise the phone and airline industry, or undo the big bang. This ended, and Thatcher was driven out, because the Tories lost the argument over the Poll Tax.

Labour were a lot less effective at this. They were most radical in the growth of the size of the state, hiring a million more civil servants and paying them a lot more. But they did not actual make an argument for this; in fact they did a lot of it by stealth, hiding the spending and borrowing in government figures.

This meant the Tories could easily undo much of Labour’s spending; Labour had not made the case for it. Even worse it made it easy for the Tories to make the argument that Labour could not be trusted with the finances: look how much spending had gotten out of control under them.

But the easiest way, possibly the only way, for Labour to move the country left is as a government. Get elected first, stick to your manifesto. Then slowly introduce more radical policies, making the case for them, winning the argument, so your opponents don’t rip them apart at the first opportunity.

[Absolute_Zero]

This thread delivers.

Roll up, roll up... watch Darwin at work as the turkeys vote for Christmas, internecine warfare and impotence.

[gravy]

Can you defend all of that please.

<tumbleweed.gif>

It'll be along soon! Keep the faith

[phattslagg]

This thread delivers.

Roll up, roll up... watch Darwin at work as the turkeys vote for Christmas, internecine warfare and impotence.

Typically blinkered thinking from a climate-change denying Tory.

A better metaphor would be turkeys voting for someone pushing for a vegetarian Christmas. You morons would have the turkeys believe that it is in their interest to vote for someone who suggests we should all be buying smaller turkeys.

[pogo]

You need me to explain this to you? Oh well.

You know the shares were sold below the market price? Like other state hold share sales there's a discount. It's not a massive % but it's a shit load of cash.

What's rhe argument for selling below the market price?

As when selling a large holding (anyone, not just the government) you can’t just sell at market price. If you try by putting your shares on the market you will quickly run out of buyers and have to drop the price. As you keep selling the price will keep going down. If you are unlucky you might even spark a panic, and prices plummet. But even in a well behaved market your eventual average sale price is a lot less than the market price when you started.

And you also know that the sale was over subscribed by a factor of two?

Demand hugely outstripped supply by a factor of two. What does that tell you about the price that was set?

So you in advance choose a price for all your shares and offer them at that price. You pick a price below the market price to attract enough buyers. Problem is you will never get 100% subscription, or at least the chance of that happening is zero. You get either oversubscription or undersubscription. And the former is far preferable. Undersubscription would look bad and force you to return to the market again with a lower price. Or it would force the underwriters to take up the shares, adding to that cost. Essentially you want to avoid that at all costs, so set the price so it will be oversubscribed, but you do not know how much by. 200% does not sound excessive in such circumstances, at the low end of a typical large share sale.

And you also know that there was a load of stock shorting the Friday before the annoncement that drove the RBS share price down? Even ignoring the discount, the asymettry between supply and demand, it's not unreasonable to suspect some serious market manipulation when the sale went through,

Can you defend all of that please. The first two are facts, the last one reasonable speculation IMHO.

As for people short selling in advance as I understand the volume was tiny. Maybe there was something dodgy going on such as insider dealing, or maybe it is just very hard to keep something as big as this secret and some people got wind of it and decided to make a bet on it. I’m sure if anything underhand happened we will find out about it soon.

[VNVObit]

As for people short selling in advance as I understand the volume was tiny. Maybe there was something dodgy going on such as insider dealing, or maybe it is just very hard to keep something as big as this secret and some people got wind of it and decided to make a bet on it. I’m sure if anything underhand happened we will find out about it soon.

Volume doesn't need to be large as closing price is the price of the last transaction not some weighted average.
As for deciding to make a bet on it - I'd suggest the ones making a bet are the hedge funds buying it at a discount to offload quickly

[pogo]

It was not significantly discounted though; more priced to sell. The share price dropped to 332p after the sale, suggesting the price was pretty much spot on. A couple of pence higher than the 330p the offer was at and they might not have sold the full allocation. The price has risen since, so anyone holding on to RBS shares has made a small profit. But they did not need to buy them off the government to do that.

[VNVObit]

It was not significantly discounted though; more priced to sell. The share price dropped to 332p after the sale, suggesting the price was pretty much spot on. A couple of pence higher than the 330p the offer was at and they might not have sold the full allocation. The price has risen since, so anyone holding on to RBS shares has made a small profit. But they did not need to buy them off the government to do that.

slim margin therefore they need volume to make it worth their while so yeah they needed someone to be selling at volume and the government did just that.

[tufty]

The share price dropped to 332p after the sale, suggesting the price was pretty much spot on

The government were dumping a significant percentage of tradeable shares in RBS, in one job lot, and at a fixed price. Due to the volume they were dumping, their decided price *became* the value of RBS shares.

This is basic market behaviour.

Now, as we all know, the traded price of a stock represents, in some form, the market's interpretation of the value of a company, right? So the government have just artificially depressed the value of RBS shares, but as nothing about the company apart from ownership of 5% of the total shares has changed, we can expect that price to tend towards where it was before the sale. So those who snapped up shares at a discount are extremely likely to make a very tidy profit. Making 2.7% might not sound very much, but when it's 2.7% of (say) a million quid, in a week or two, it's massive. Gigantic.

As an idea of *how* massive it is, when I was working for <redacted>, the highest earner was the head of Euro Arbitrage. He was trading on differences of a tenth or a hundredth of a percent.

So, although you claim it wasn't "heavily discounted", it's basically a gift of around 60 million to institutional investors, and that's ignoring the bath the government deliberately took on the share price.

[pogo]

How else could the government have done it? If they had set the price much higher, than e.g. the 332p the market price fell to after their announcement, then the government might have struggled to sell all of them. That would have meant the embarrassment of coming back soon after to sell the rest, probably at a yet lower price so maybe losing even more. Worse though it might have had a negative effect on sentiment, either making people think the bank was unsellable or that the government asset sale programme was flawed. Given that the government still has most of the shares to sell the last thing they want is traders wary of buying RBS off the government.

[tufty]

The price fell to 332p *because* the government's price was set at 330p. In fact, it fell to something asymptotically close to 330p, and rose back to 338.2p at the end of trading that day. The price now back around its 2015 average of ~350p.

What looks odd to me, looking at history, is that the price has been averaging 350p or so for the whole of the year - sometimes lower, sometimes higher, but around that mark. Towards the end of July, around the 21st / 22nd, the price started to drop, on a relatively straight line, until the government sold their 5.4% at a discount of 2.7% against the previous close of day market price. A cynical fuck like myself who's worked in market monitoring might suggest that insiders might be able to, and would be highly incentivised to, artificially depress the price to further increase their profits, were they to know that a discounted sale was upcoming.

Somebody who bought on Monday morning and sold on Wednesday morning made 12p a share, by Wednesday midday 18p a share.

How do you do it without looking shady? Trickle the shares out onto the open market in normal trading, rather than dumping them exclusively into tory funders institutional investors' pockets at a discount, after the close of market.

[gravy]

How else could the government have done it? If they had set the price much higher, than e.g. the 332p the market price fell to after their announcement, then the government might have struggled to sell all of them. That would have meant the embarrassment of coming back soon after to sell the rest, probably at a yet lower price so maybe losing even more. Worse though it might have had a negative effect on sentiment, either making people think the bank was unsellable or that the government asset sale programme was flawed. Given that the government still has most of the shares to sell the last thing they want is traders wary of buying RBS off the government.

Open the sale to the public and not just his stockbroker pals at knock down prices.

Sell the shares at a premium and have the offer only 150% over subscribed.

I don't care if the shares don't sell and embarrasses the government, I mean so fucking what. What's their pride worth to anyone other than them?

You do realise they can always lower the price if he demand isn't there?

[pogo]

Again, if they had significantly underpriced the offer, making it essentially free money for those who took it up, it would have been much more oversubscribed, like some previous share sales by the govt. As it was, sure it looked cheap relative to the price leading up to it but buyers knew that dumping such a large tranche of shares onto the market might depress the price, even below 330p. There was a risk, as there is buying and selling any shares.

As for drip feeding them onto the market the problem with that is the government still owns most of RBS. No matter how slowly they do it their sales would end up dominating the market, meaning for years there was far more supply than demand, pushing the price down.

[gravy]

It was only open to a limited amount of takers

And that small group wanted to buy double the amount the government was offering at that price.

What do you look at when demand outstrips supply?

Why I do I have to explain 101 capitalism to it's number one fan?

[VNVObit]

Again, if they had significantly underpriced the offer, making it essentially free money for those who took it up,

as there were purchase and subsequent sales in the same week and therefore settled simultaneously it was, for a number of funds, "essentially free money"

albeit small margin on a large number of shares.