There Won't Be War

News is coming in of a bloody attack on Wall Street. As trading opened in New York at 13:00 G.M.T. the ailing infotech giant IBM (US) launched a hostile takeover bid for Mercury Telecom PLC in London. Fund transfers to Europe so far total over ten billion dollars, believed to be close to IBM’s entire liquid assets. Mercury is the main PSTN and ISDN operator for the London Stock Exchange and handles the Stock Exchange Automated Quotation system, SEAQ. The Monopolies and Mergers Commission have been notified, but no immediate action is possible because inspectors are working at saturation levels elsewhere in the City.

It appears that IBM has been controlled in large measure by shell corporations registered in Colombia and Peru for the past three months. CEO Debbie Beagle has refused to comment on allegations that her corporation is cooperating with the Soviet offensive in an attempt to dismember Western Europe’s high-technology industries.

Closer to home, EuroBank has launched a counter-offensive before the close of trading in Moscow, with a bid for shares in the state airline Aeroflot and a back-up investment of ECU 500m in BSF. Amstrad and News International’s Sky Channel have announced a consortium bid for BSB in an attempt to consolidate the satellite TV market under one umbrella. Glaxo, Ciba-Geigy, and the NHS Pharmatech division are reported to be entering the fray with a bid for several small Russian pharmaceutical manufacturing units; and the smell of money may drag British Power and even NHS(PLC) into the trade war.

The government remains silent on the issue so far, but a spokesman for Number Ten Downing Street has reaffirmed the Prime Minister’s commitment to the free market. “The share issue for British Monarchy PLC will not be jeopardized,” he emphasized. “There is no alternative!”

The Queen was unavailable for comment.

In Europe there has generally been a measured response to the carnage. Fiat, Dassault-Renault, and Airbus Industrie are conducting intensive merger negotiations in conjunction with BMW, Porsche-SEAT and Arianespace, apparently in an attempt to inflate their group capital beyond any credible takeover attempt. The fact that this would automatically be viewed as monopolistic is irrelevant because the move is purely intended as a short-term defensive measure—safety in numbers, and the more zeros on the balance sheet the better.

NewsBurst: 15:45 G.M.T.

In a move that has shocked industry bystanders, IBM (US) has dismissed the entire board of Mercury Telecom and moved a special Emergency Task Group into the boardroom. MT apparently held out for a full twenty-seven minutes under the intensive IBM bidding which raised the price of shares from 198 to 323 in less than half an hour. The price of shares has suddenly slumped into the red, with a post-takeover quotation of 121 delivered five minutes ago by human messenger. The SEAQ service appears to have been overloaded by the rapidity of events, with priority going to financial transactions; many smaller desks are apparently “flying blind” on expert systems alone and praying that their software has no hidden bugs in it.

Judith Richmond, a broker with Copperhouse-Gerbil, had this to say:

“Things are just going crazy today. It’s not a classic meltdown because some shares are going through the roof in real-time, but it’s like a shooting war’s broken out. Nothing is stable any more, and all we small brokers can do is keep our heads down when the big countercurrent exchange laundries go into action. We’re spilling a million ECU’s a second right now, draining into the Soviet economy; it’s sheer havoc. I’m not going to predict what’s going to happen tomorrow, but the day after tomorrow I expect to see a lot of dealers throwing themselves under BMWs ... or Ladas.”

Rumours of a second wave of software bombs tomorrow morning have prompted many dealer rooms to call in the security analysts overnight. There’re going to be many sleepless engineers earning their overtime checksumming the operating system files for signs of retrovirus infection.

In Tokyo, the Ministry of Finance announced a suspension of all trading for the next three days, an unprecedented move that echoes Meltdown Monday, October 19th 1987, when Wall Street lost more than a thousand points by closing time as a result of computerized panic-selling. People’s Hong Kong and Manila are expected to follow suit.

Barclays Bank, the Midland Bank, and all the leading Merchant Banks announced a rise in interest rates of two percent in one day, to be reviewed as soon as the current crisis is defused. The Chancellor of the Exchequer refused to comment, but an official statement from Downing Street is expected imminently, as is a statement from Brussels.

NewsBurst: 17:03 G.M.T.

In the past ninety-two minutes this service has been overwhelmed by the pace of developments. But first the general market report: