In my previous post, we briefly discussed the separation of ownership from control in the sense that the controllers (managers) of a company are not its owners. However, what if a nation sells off it public and private assets to overseas companies? This has been happening at an alarming rate in the UK according to Will Hutton in this Guardian op-ed. One of the problems for Hutton is that British companies cannot compete with their global rivals because "the enemy of enterprise is the unowned, purposeless British company in thrall to myriad uncommitted, myopic shareholders". According to Hutton, Tata and BMW are successful "because they are family-controlled with long-term, committed owners who have a clear vision and purpose".
As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of