Follow the Money to the Issue

Follow the money: whose it is, who is waiting for it, and the road in between. 1. The capital market is the place where saving meets investment. Its whole job is to stand between the savers and the bodies that need the money. 2. The savers that matter are not individuals but funds: pension funds, provident funds and managers' insurance - money employees set aside every month, which piles up into enormous sums that have to earn a return. 3. Those are long-term: redeemable only at retirement. An advanced study fund is medium-term, redeemable after six years. Savings plans at banks and insurers run three or four years and can be withdrawn at any time, and deposits are shorter still. 4. Start setting money aside at 30 and draw it at 67 and the money has been working for 37 years - the 30-to-40-year horizon he describes. 5. All these bodies together are the institutional investors - and note that they sit on the SAVERS' side of the market, holding our savings for us. 6. Who needs the money? First and foremost the government: it employs workers and builds infrastructure, its expenses are large, the taxes it collects do not always cover them, and the deficit that opens every year is financed by borrowing from the savers. It is the single largest destination for their money. 7. Then the large business companies - electricity, telecoms, chemicals - always needing cash to invest, to hire and to buy other firms. 8. Then the mortgage banks, which borrow from the funds, lend to home buyers, and keep the gap between the two rates. And the commercial banks, which take deposits and lend them on. 9. The route itself: cash travels from the savers to the firms, and a written commitment to return it travels back as a security. That passage is called an issue. 10. And the market where all of it happens is the primary market - the issuance market, where the paper is created rather than changing hands. English narration and presentation.