Jeremy Warner's Outlook: What next for the US economy as Greenspan finally eases himself into retirement?

The non-scandal of Quinetiq's flotation; Reinventing United Business Media
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The Independent Online

For those of a nervous or superstitious disposition, 31 January is an auspicious date. So many tributes and appreciations have already been penned on the subject of Alan Greenspan, the chairman of the US Federal Reserve, that you would be forgiven for thinking he's already gone. In fact he doesn't retire until the end of the month, but it will be an event steeped in symbolic significance none the less.

Mr Greenspan has presided over a period of unparalleled growth in the American economy, and although only an idiot would attribute this entirely to the guiding hand of the Fed, Mr Greenspan is powerfully identified in the American psyche with this golden age of prosperity. His successor, Ben Bernanke is a respected and influential figure, but can he ever be a substitute for the God-like Mr Greenspan?

America has felt economically safe, almost invincible, while Mr Greenspan has been at the wheel. Whenever there was a crisis, the Fed would come riding like the seventh cavalry to the rescue, and somehow or other the crisis would be magicked away. His departure will be like the death of a parent, leaving the bereaved lonely and vulnerable.

As every chief executive knows, success in business is as much about timing as anything else. Getting out at the top is a large part of the game. The fear must be that Mr Greenspan is doing precisely this, though given his age, nobody could accuse him of retiring early. For the time being, the US economy continues to grow strongly, but will it still be doing so by the end of the year?

There is a growing weight of opinion that it will not, that this is the year when the structural imbalances of the world economy finally come home to roost. Record levels of debt among US consumers leave the economy looking peculiarly vulnerable to a nasty road crash. The disappearance of Mr Greenspan will only heigh-ten the sense of unease. Mr Bernanke will need nerves of steel as he negotiates the dangers of the road ahead.

The non-scandal of Quinetiq's flotation

The shame of it. The scandal even - the Square Mile's equivalent of George Galloway's disgraceful absence from the House of Commons so that he can appear in the house known otherwise known as Big Brother. No, not the Bank of England's failure to cut interest rates. I'm referring, of course, to retail investors being shut out from the flotation of Qinetiq, the Government-owned defence technology group. Cue howls of righteous indignation from certain quarters of the financial press.

Why, the Government's critics demand to know, are small shareholders being barred from the action, so that only overfed institutions are allowed to get their snouts in the trough? This is a company which is owned by you and me, for goodness sake, and we should therefore all have the inalienable right to take a punt on the float.

What a load of nonsense. Retail investors can of course buy shares in Qinetiq once it begins trading. Ordering stock is not that hard. Millions of small shareholders do it every week, through their bank, or on the internet. But that is not the point.

The subtext behind all the sniping is the assumption that Qinetiq is going to be sold off on the cheap and, therefore, all investors big and small should have the opportunity to make a fast buck. Ergo, it is perfectly acceptable to rip off the taxpayer in general provided those taxpayers who also happen to be stock-market investors can share in the spoils. Is this what the critics of the flotation are really saying?

There are plenty of grounds on which the Government's handling of the Qinetiq privatisation can be criticised. The decision to sell a 31 per cent stake in the business to the private-equity firm Carlyle for just £42.4m four years ago is but the most obvious. That shareholding is now worth more than £300m. But to fulminate about the way in which the flotation is being handled seems to miss the point.

This is not another BT or British Gas, the cut-price flotations of which amounted to little more than a bribe to the voters. Do we really want to go back to those days anyway? The method of pricing issues today is to book-build among institutions. True, the process excludes the retail investor, but at least it gets closer to achieving a proper valuation by matching price against demand.

Anyone who wants a piece of the action can always buy in the market afterwards. They may have to pay a little bit more, but quite a lot of the time they get the opportunity to buy for less. The nearest equivalent to Qinetiq is AEA Technology, another government-owned research agency which was spun off into the private sector with a great fanfare in 1996. Its shares were priced at 310p. Today, they trade at 117p. Old Sid must be wetting himself with delight at that one.

Reinventing United Business Media

In a little-noticed deal this week, United Business Media, the remnants of Lord Hollick's once sprawling media empire, quietly acquired a conferencing business called MediaLive for $65m.

The deal is significant because up until now David Levin's brief as UBM's still newish chief executive was to dispose of assets, not to acquire them. In the year he's been in the job he's sold non-core assets ranging from Exchange & Mart, to NOP and a big stake in Five. That bit of the job is now complete. With the balance sheet overflowing with cash, Mr Levin is gently returning to the acquisition trail.

Having cut the company down to size, what sort of a beast does he now want to create? The acquisition of MediaLive gives a clue. This is essentially an IT exhibitions concern which manages more than 20 IT and telecoms-related events in the US, Japan and Europe. Yet it is almost more interesting for the conferences it no longer organises than those it does.

One of the events thrown into the package of assets sold to UBM was rights to Comdex, which back in the heady days of the bubble was the biggest event of the year in the IT calender.

Comdex was a quite extraordinary conference, not least because it used to share dates in the Las Vegas conference circuit with the Adult Entertainment Expo, allowing attendees to drift between the two.

In the madness of the technology gold rush it eventually became so big and popular that the internet financier Masayoshi Son was persuaded to pay a jaw-dropping $2bn for the event. Chaotic and unmanageable, it was by then fast losing its cache. The bust finished it off.

The last entry on its website notes glumly that Comdex 2004 had to be "postponed" because of lack of interest. Urgent action was being taken to determine how the event might best meet the industry's future needs.

So does Mr Levin plan to revive it? Not immediately, seems to be the answer, yet the fact that he's managed to buy for just $65m, and as an adjunct to a package of other assets, rights to a conference once thought to be worth $2bn must say something about his nose for potential value.

Years ago, I stumbled on a publication called Tufted Carpets Monthly, presumably long since deceased. No disrespect to those who earned their livings from this august publication, but it is hard to imagine a more obscure object of journalistic endeavour.

Well, UBM beats it hands down with a range of titles and conferences so specialised that they lend a whole new meaning to the term "trade press". For outsiders, they may seem dull, but for their sponsors, this sort of business to business publishing and event organising can be extraordinarily lucrative.

This is the industry where Mr Levin has chosen to focus UBM's capital and time. It's not glamourous compared to the triumphs of bygone years - national newspapers and TV - yet it's fast growing and brimming with opportunity. His progress is well worth following.