December 29, 2003

WE COULD MAKE THEM DRIVE ON THE RIGHT SIDE OF THE ROAD ANYWAY:

For a cool 8.8 trillion dollars, all Britain can be yours... (AFP, 12/29/03)

Want to buy a largish island off France? Slightly used, with annex. Rains a bit. Trains often late. Nice gardens. Food dubious, but lots of places to drink.

Yours for under five trillion pounds. Or 7.1 trillion euros. Or 8.8 trillion dollars.

If the 58,789,194 occupants ever care to sell, that is.

The Office for National Statistics (ONS) whipped up a price tag for the United Kingdom -- that's Britain, comprising England, Wales, Scotland, plus Northern Ireland -- in a year-end tally of the nation's capital assets.


In other words, we could buy the second greatest nation on Earth for about 80% of one year's GDP.

Posted by Orrin Judd at December 29, 2003 11:06 AM
Comments

Nice little LBO potential. Buy it, spin off Wales, Scotland and Northern Ireland, milk it for a few years then IPO it.

Posted by: David Cohen at December 29, 2003 11:25 AM

You would think the value would have depreciated because of the neighborhood....

Posted by: R.W. at December 29, 2003 11:33 AM

"In other words, we could buy the second greatest nation on Earth for about 80% of one year's GDP."

We're still paying off the Mexican mortage and you want remodel *again*?!?

How about we settle for Canada?No castles,but it's cheaper.


Posted by: M. at December 29, 2003 11:43 AM

Actually, this is not quite doable. 30 year mortgages are running at around 5.375%, so our monthly payment (assuming 100% debt financing) is around $50 billion a month. The UK budget is around 456 billion pounds, or 7700 pounds per capita, which is around $13,500 at current exchange rates. US government spending per capita is around $9000 per capita. If we could reduce the UK budget to US levels, we would free up $4500 per year per capita, or only about $22 billion a month, which doesn't cover even half the mortgage.

Posted by: David Cohen at December 29, 2003 12:34 PM

The only really good reason to buy Britain, aside from obtaining the rights to those fish 'n chip recipes, is to prevent the Saudis from doing so.

Though if we do buy it, we'll have one less ally....

Posted by: Barry Meislin at December 29, 2003 1:03 PM

But with Britain comes the only Navy that could do ours any real damage... that alone makes it worth considering. Tony Blair won't be PM forever, and we can't really risk Britain going the way of Germany and France.

Posted by: MarkD at December 29, 2003 10:33 PM

Our cruise missiles would make short work of any navy.

Posted by: oj at December 29, 2003 10:57 PM

David:

Clever analysis, but, if we offered an adjustable rate of 2% plus inflation, at the current rate of inflation, combined with the cuts you suggest, the current inhabitants would be able to make the US' mortgage payments.

Posted by: Michael Herdegen at December 30, 2003 10:19 AM

The purchase price would not be the assessed value but the capitalized value of the expected income. Britain is a going concern, not a cemetery.

So the price would be way over $8T. Say 30 times annual income or in the neighborhood of $200T.

Posted by: Harry Eagar at December 30, 2003 4:11 PM

Harry:

For some public companies, sure, 30 times earnings.

Don't private companies tend to get sold at around three times earnings ?

Posted by: Michael Herdegen at December 30, 2003 11:51 PM

Small private companiess are hard to sell at any price, a lament I hear often from small business owners who want to retire or sell out.

I'd call Britain a large public corporation; that's why I picked 30.

Posted by: Harry Eagar at December 31, 2003 12:03 AM

Where do people in Hawaii retire to? Las Vegas?

I think that the $8 trillion is not the book value but the asking price.

Posted by: David Cohen at December 31, 2003 2:13 PM

Yes. Las Vegas or Florida.

Living costs are so high here that a lot of retirees have to move to get expenses and lower retirement income in balance.

Posted by: Harry Eagar at December 31, 2003 5:36 PM
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