Abird in the hand is worth two in the bush. But East London canaries, it seems, breed rather faster.

It was in May 2004, less than three years ago, that a consortium led by Morgan Stanley bought Canary Wharf, the company that owned the Docklands high-rise office development. The price paid was £2.95 a share. Financial results published yesterday by Songbird, the company that now owns a majority stake in the Canary Wharf assets, indicated that the current value, calculated on an equivalent basis, is £5.20.

This 76 per cent increase in value does the new owners of the properties great credit. Tenants do not grow on trees and it takes skill and determination to secure customers who can, and will, pay top dollar for space. Development has also continued over the past three years, and the addition of extra space has created additional value.

Admittedly, the market for commercial property has been welcomingly buoyant recently. Strong underlying economic conditions in Britain, coupled with the emerging popularity of London as a place to base financial services businesses, have led to a widespread increase in the value of all types of property. Shifts in investor perception about the value of rental yields have helped: rental incomes had been significantly undervalued compared with government securities and other bonds and equities. As the value of the rental incomes was reassesed, and deemed more reliable than previouly thought, the capital value of properties such as Canary Wharf rose.

Yet those flighty investors in Canary Wharf who sold out to the Morgan Stanley-led consortium in 2004 should still be feeling sick as parrots.

Hindsight is a wonderful thing, of course, but it is not just with clear historical vision that investors can see the potential in the Wharf. Anyone with an ounce of common commercial sense could have forecast that the development would continue to thrive. They may not have dared to guess, three years ago, that the Wharf would rise in value by 76 per cent. They would not have been so foolish as to assume growth was guaranteed, either. But here was, and is, an attractive office location with strong customer interest and development potential. Value increases were likely enough.

Two important lessons should be learnt. Shareholders in Alliance Boots, J Sainsbury, Cadbury and the host of other firms being courted by private equity should learn that they can wave goodbye to huge wads of wealth by surrendering to buyout merchants. Short-termist hedge funds controlled much of the stock bought by the Morgan Stanley consortium in 2004. But long-term value seekers sold to them, and are not exonerated.

The second lesson is that owners of companies targeted by buyout firms should demand that they retain at least some continuing exposure. Songbird, the stub equity vehicle born of old Canary Wharf, has sung sweetly, and may well continue so to do.

Amsterdam makes deal hazy

Most of the debate thus far about the Barclays/ABN Amro merger talks is over whether both sets of shareholders can be satisfied. Perhaps a more pertinent question is whether three sets of regulators can be kept content.

The UK, Dutch and US bank regulators all have an interest in ensuring that whatever beast is ultimately created, it is properly supervised. Depositors in the three countries require nothing less.

By setting the proposed head office in Amsterdam, Barclays and ABN hope to ensure that the Dutch central bank, the DNB, becomes lead regulator, with supervisors in other countries taking a subsidiary role.

But after the merger, 36 per cent of the combined group’s profits would be earned in the UK. The Netherlands would account for just 10 per cent. Moreover, most of the spicier investment banking business, the kind of activity supervisors like to keep especially close tabs on, would continue to take place in London.

The Financial Services Authority and the DNB will have to be satisfied that such an organisation can be properly monitored out of Amsterdam. That means the Amsterdam office cannot just be a brass plate. The senior decision-makers will have to work out of the Netherlands and the central support functions, such as risk management, will have to be there too. But the more the centre of gravity shifts from Britain to Holland, the harder it becomes to make this merger work, given that Barclays management is supposed to be in the driving seat.

US regulators could cause even more of a problem: they haven’t forgotten ABN’s questionable role in improperly disguising payments for Iran and Libya.

The US would probably prefer the FSA to be in charge.

It is not just sceptical shareholders who could derail a deal. Keeping the regulators onside is a major obstacle.

No cycling

Not content with doing away with boom and bust, Gordon Brown has surreptitiously abolished business cycles altogether. Uncharacteristically, the departing Chancellor did not mention this historic achievement. It is revealed only in his Budget Red Book.

Thanks to revisions of GDP figures, the Treasury now reckons that the economy started growing above its long-term trend 18 months ago, marking the end of one cycle and the start of the next.

Those seemingly prosperous years when Mr Brown still explained that his current spending deficit was really not as big as it looked if you adjust for the cycle are over. In future, we would expect the cyclically adjusted deficit to be bigger than the nominal one and any eventual surpluses smaller than they seem.

Unfortunately, according to Treasury economists, we have reached what should be the start of the boom phase with no spare capacity at all. So, according to official projections, there will be no boom, no above-average growth. Instead, output will grow exactly at its trend rate from now through 2012 and presumably for ever. No more cycles so, naturally, there need be no more cyclical adjustments. Don’t believe it.

—Borders directors do not need two brains to decide they would sooner not own Books etc, the UK chain. But for this wish to be fulfilled there has to be a buyer. Rival HMV is suffering from the same problems. Yet if serial bookseller Tim Waterstone sells his Early Learning Centre to Mothercare, might he be tempted?

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts