Our Willy Hutton keeps telling us that we’re screwed because the banks just won’t lend money to business for investment in long term projects.
And as I keep trying to point out that’s because we have a different system of financing investment. The markets.
But, we are told, markets only seem to be willing to finance short term profit seeking adventures. They’ll not back anyone trying to do something that will take years to come through.
The Falklands explorer’s shareholders have had a nail-biting year, after Desire claimed to have made an oil “discovery” at its Rachel North well earlier this month. Less than two weeks later, the company admitted the well held only water, causing its shares to crash 50pc in one day.
On Wednesday, Desire again found no evidence of oil in the Jacinta well, which analysts had claimed had just a one in 20 chance of success. It will now drill down further to a depth of 1,670 metres in the hope of finding oil deeper under the sea.
Desire has been funded for the last 12 years purely by the proceeds of share issues on AIM.
It may be a good investment, it may be a bad one, that’s an irrelevance to the point here. You can fund long term, risky, business ideas through the public markets.
And can you imagine Willy’s fury if he’d heard that a bank had financed a company which, as it looks like it might, manages to piss away £100 million?