For Sale

by Steve on February 10, 2011

The New York Stock Exchange? When I heard the headline on the morning news I thought there must be some kind of mistake. Surely we wouldn’t let a foreign company control the engine that either drives or crashes the entire US economy. Apparently I was wrong on both counts.

After 219 years as the citadel of American capitalism, the New York Stock Exchange was near an agreement to be acquired by Deutsche Börse AG in a deal that would create the world’s largest financial exchange.

I’m no economic scholar so I won’t pretend to understand the financial mechanics behind such a deal but at face value on the street this seems like a very bad idea.

The exchanges, which are presenting the deal as a merger of equals, said the combination would leave 60% of the company in the hands of Deutsche Börse shareholders, with NYSE Euronext shareholders holding the remaining 40%. The combined company, with a putative market capitalization of some $25 billion as of Wednesday, would be incorporated in the Netherlands and split its headquarters between Frankfurt and New York.

After what we’ve been through for the last few years I’m leery of the bigger is better theory of financial management. Kind of rhymes with “I’m from the government and I’m here to help.” I for one, am not buying it. The financial monster that this could create just might be big enough to gobble us all up.

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