Happy New Year!
It’s January the 1st 2019 and the start of a new
year. Usually a time for optimism and good wishes. I have no problem with the
good wishes but I am struggling with the optimism. I hope I’m wrong but for
some months now I have been feeling that we are going to be having a hard time
economically; it’s ten years since the great financial crisis, the British have
voted for Brexit, Trump is US president and les Gilets Jaunes have set back
Macron’s reforms in France.
A design for the Brexit 50p coin |
At the end of 2018, US stock exchanges fell significantly
for the first time in 10 years, in part spooked by Trump’s China trade policies
and the latest government shutdown over the border wall with Mexico. Overall in 2018 the main global exchanges were down as follows over the 12 months:
This is not a pretty picture for investors. More prudent / more risk averse cash investors will not have seen falls, but with the very low interest rates on offer currently, their money will almost certainly be worth a little less in real terms now.
In the UK, by the end of March we will have left the UK
unless the government gets an extension to the long period of uncertainty and
negotiation – all of which is bad for the economy. We still don’t know what
deal will be struck or even if a deal will be struck and we are only 90 days
away. If the deadline is extended, business will continue to prepare for a bad
outcome which means moving more key assets overseas. In my view we may as well get on with it now as so much damage (reputational, commercial and influential) has already been done and is worsening by the day, that there's no going back to where we were two years ago. Let's get it done and move into the next years of uncertainty working on the detail of Mrs May's Deal.
“The real tragedy of Brexit is the thousands of man years and woman years lost trying to do Brexit when they could have been doing something useful for the people.” Adam Sidbury.
“The real tragedy of Brexit is the thousands of man years and woman years lost trying to do Brexit when they could have been doing something useful for the people.” Adam Sidbury.
I have just spent a fortnight in France and the disruption
and damage caused by the Gilets Jaunes has reached even the most remote areas
and will have had a significant impact on trade. I expect more retailers to go
bust in the next weeks than would otherwise have done.
What started off as, I believe, a genuine cry for help from the forgotten more rural communities who rely on their cars and the fuel they use to run their lives, has been hijacked by fascists, anarchists, communists and other undesirables just out destroy democracy or simply have a good fight. Calls for the removal of President Macron and for 'people's' referendums seem ill thought through and frankly absurd when no serious solutions are being proposed.
The damage being done to the economy in a country that relies heavily on tourism is hard to quantify at this stage but will be enormous. Shame. There will be even less money available to help those who most need it.
Fortunately the New Year celebrations on the Champs-Elysées seem to have passed peacefully. A sign of better times for the New Year I hope.
The decline of the
West and the rise of the East
The Four Great Inventions: papermaking, printing, the
compass and gunpowder were all invented by one nation.
Your inclination may be to say that Great Britain or some
other European country made these early inventions but in fact they were all
invented in China prior to 900 AD. Long before, the Han Dynasty (207 – 220 BCE)
developed the Silk Road to help sell Chinese silk further afield and they extended
the Great Wall to offer further protection to it. This was a major factor in
the development of civilizations in the region. For many centuries, China was a
world leader in scientific and technological advancement.
It was not until the 17th century that Europe and
the Western world surpassed China in scientific and technological advancement.
The Industrial Revolution started in the UK
Shanghai |
This dominance is being reversed once again. As the western
world looks inward, questions international alliances and struggles to please
its ageing populations who have become used to high levels of state expenditure,
the balance of power is moving very fast in an easterly direction.
China’s growth rate has been in double figures for decades
as it has started to catch up with the West and even now in a slowing and uncertain
global economy, its growth rate is 2 or 3 times as high as the US and most
European economies.
China spent $452bn on research and development in 2016. The
UK and France combined spent $105bn. Many eastern economies will continue to race ahead in the coming years as the West struggles and tries to restore a bygone era to its dissatisfied masses.
Let's hope I am being overly pessimistic for the New Year and that actually things are going to sort themselves out nicely.
"There are no facts only interpretations" Nietzsche
Let's hope I am being overly pessimistic for the New Year and that actually things are going to sort themselves out nicely.
"There are no facts only interpretations" Nietzsche
No comments:
Post a Comment