Repeat offendersLoyal readers will be aware that I often see signs that regulators would like to simulate the laws of thermodynamics in capital markets (or shall we just say in business endeavors of any kind). You know the laws: 1. "In any process the total energy pf the universe stays constant." 2. "There is no process that, operating in a circle, produces no other effect than the subtraction of a positive amount of heat from a reservoir and the production of an equal amount of work." 3. "As temperature approaches absolute zero, the entropy of a system approaches a constant." Or, in my version (read: the version I stole from Allen Ginsberg): "You can't win, you can't break even, and you can't get out of the game."
The similarities have become so common, and I estimate they will now become even more frequent given the emerging political bias in the United States and the United Kingdom, that I have started a new category "Thermodynamics," here on Going Private, to discuss the propensity of regulators to penalize profitable businesses by shoving them towards the tugging gravity wells and, by extension, closer and closer to the event horizons of the many supermassive bureaucratic institutions that make up the governmental universe.
Little surprise, therefore, to find the increasingly massive orbital body of the United Kingdom's City minister, appropriately named Ed Balls (I couldn't make this stuff up if I doubled the rate on my morphine drip), working to drag private equity into the ravages of the third law of capitaldynamics, at least if the quote proffered by the Financial Times (subscription required) is to be believed.
My message to private equity is that coming forward with proposals for greater transparency in the way they operate would be in the interests of their industry and the UK economy more generally.
I suppose this could more clearly be translated to: "Yes, we know we've made disclosure oppressively burdensome and imposed legal and criminal liability that rivals the sorts of incarceration that one might earn for high treason. And yes, we understand that you've fled the public markets in droves as a consequence, since these operational requirements have made it high inefficient to continue to exist as a public firm, but we have decided to cut off that escape route now too since you seem to be getting quite a bit too much work done quite a bit too well. Oh, and just wait until you try to move your business out of the jurisdiction to escape. Quite sorry, really, old chap. Oh, and there is a fellow from inland revenue here to see you. Shall I show him in?"