The sharp falls  of the domestic Chinese Stock exchange and the oil price in the first full week of the new year have caused some to raise the alarm about world economic prospects. Some fear another banking crash, some fear a commodities led collapse, some think this time the worst of the crisis will be amongst the emerging markets.
The economic establishment takes a different view. The main forecasters expect the world economy to continue growing at around 3% this year, led by India and China amongst the emerging economies, and by the USA and UK amongst the advanced economies, much as 2015 saw.  The consensus sees interest rates staying low in Japan and the Euro area, and edging up a little if at all in the USA and UK. Euro area and Japanese monetary policy will remain very accommodating, whilst credit will advance a bit in the USA and UK.
It is true that the establishment view is usually wrong when a crisis looms. They did not forecast the crash of 2008, though it was the erratic monetary policies of the USA, the Eurozone and UK which brought it on in a very predictable way. I do not see the same mistakes being made this time by advanced country central banks, so I do not expect a western 2008 style crisis in 2016.
The three problem areas that do cause concern in 2016 are commodity based activities, some emerging market countries, and the continuing political and economic stresses in some Euro area countries.
We still have not reached bottom in commodity markets. We are awaiting the closures of mines and oil wells on a sufficient scale to remove the excess production. Then prices can rise and commodity backed companies and countries start to earn better money. Whilst we wait there will be further harsh cuts in energy and commodity investment with knock on effects for manufacturing. The main advanced countries gain benefit from lower prices of raw materials and energy and from the disinflationary effects allowing continuing loose money policies.
The worst placed emerging market economies are in Latin America. Brazil, Venezuela and Argentina in their different ways are all struggling to run more prudent policies that will escape inflation and recession. They are not big enough to bring down the world economy, but are painful for their citizens and unhelpful to world business activity and banking credits.
There remain difficulties in getting governments in Greece, Portugal and Spain that will deliver the austerity policies of the Euro. Given the willingness of governments and citizens of a wide range of opinions to wish to stay in the Euro, I  do not expect a Euro break up this year, but there could be another phase to the rolling crisis.
And what of China? China with $3.3 trillion on the reserves has options. I expect the Chinese authorities to cut rates more, loosen credit, and seek to reflate the economy. The economy there may be past the worst, though the domestic stock market remains unhappy with reluctant holders still owning shares.
January 12, 2016
Forecasting is difficult, especially about the future – Nils Bohr.
Almost all forecasts are based on an extrapolation of current trends. They are either wrong or lucky. That being said we do seem to have entered a new and different economic environment triggered by the drop in Chinese demand, the Fed interest rate rise, and the changed dynamic of the oil markets.
The easy stock market returns of the post crash recovery are finished. The Bank of England is reducing the salary multiples that mortgage lenders can lend new house buyers which despite the insane Help To Sell scheme from Mr Osborne must tend to put a lid on house price growth.
So the days of generating high gains in assets through borrowing cheap money have come to a rapid end.
January 12, 2016
Forecasting is indeed a tricky business, If 2016 does bring recession we will be told that this was obvious, that George Osborne should have seen this coming and that he should have been more prudent in the Autumn Statement. If there is no recession, some other event will turn out to have been equally obvious. The Office for Budget Responsibility, as an independent body, will of course escape any censure whatever happens.
Let’s face it, even major events are forecast poorly by the pundits. I am trying to think back 40 years to 1975 and recall all those articles about the imminent fall of the Soviet Union, the rise of Islamic Fundamentalism and the coming meteoric growth in the Chinese economy. Were there that many?
January 12, 2016
All good points. I remember reading accounts of British meetings with the Russians where the British minutes poked fun at what they viewed as President Putin’s continuing and ridiculous obsession with the danger presented by Islamic Fundamentalism.
We are pretty good at ignoring the warnings we don’t want to hear.
January 13, 2016
I fear the Ponzi scheme of shovelling borrowed money into the economy and pretending this is ‘growth’ is going to end badly.
The economy has incentivised risk taking. Why bother with the effort and risk of investing and innovating when, with the full encouragement of the government, you could make money effortlessly just by making leveraged bets on property and other asset markets?.
We like to pretend we are a rich country because of our ‘assets’..but these are only of notional value as we cannot sell our own homes to ourselves.
George Osborne says he is ‘mending the roof while the sun shines’ but in reality he is running a pyramid scheme.
January 13, 2016
The voluntary closure of the historically successful hedge fund,Nevsky Capital,is very interesting;I suspect they believe that the people who have rigged the markets in their favour are losing control and outcomes therefore becoming too unpredictable for comfort.
January 12, 2016
Price earnings ratio on the Chinese stock market are double anywhere else.
The ban on short selling has just been lifted so investors are getting out of China.
There is no such thing as an economic miracle only suppression of workers wages using fix manipulation.
The Chinese have wasted trillions on infrastructure projects.
Growth is still at 6%.
The Chinese can deflate out of their bubble.
Bad news is that we all have to get used to lower growth rates and compete more for jobs and profit.
January 12, 2016
Growth is still at 6%. On the official figures. Most foreign investors also look at alternative measures of economic activity such as electricity usage which is reported to be below the level of a year ago.
I am with those who say the movements of the Shanghai stock exchange / casino are not that important to the real Chinese economy but the rapid changes in approach to regulation do not give an impression that senior officials are confident in the underlying economic position.
January 12, 2016
Javelin,
China has been buying gold like it’s going out of fashion (perhaps not the best metaphor as I personally doubt if it ever will). That in itself tells us much about Chinese intent and possibly their long-term strategy, so I don’t think they are quite the fools some people in the UK media take them for.
I believe it was Voltaire who said, “Paper money eventually returns to its intrinsic value – zero.” Fiat currencies are based on little more than confidence. A lack of confidence can come about quite easily and often through circumstances beyond an individual country’s control.
I read that:
‘According to an interesting study of the 775 fiat currencies that have existed, 599 are no longer in circulation. The median life expectancy for the defunct currencies? Fifteen years. Perhaps the author was being unfair by focusing solely on the failures. Sadly no, the average life expectancy of all fiat currency is running at a truly underwhelming 27 years. Only a select few have managed anything approaching old age. The British pound sterling is one such example at over 300 years and counting. Before we get too excited by this apparent example of longevity, at inception the pound was defined as 12 ounces of silver. The pound is now worth less than 0.5% of this original value and of course there is no silver involved anywhere. In other words, the most successful currency in existence in terms of life-span has lost more than 99% of its value.
The study also found that 1 in 5 fiat currencies have failed outright through hyper-inflation.’
It was Nixon who took the US off the old gold standard. As I understand it, the US gold reserves haven’t been audited for over 50 years. It would be interesting to know how much they really have, and why they were not in a position to supply Germany when they requested that theirs be returned.
Tad Davison
Cambridge
January 12, 2016
……………………..and let’s not forget that a British Labour Prime Minister sold part of this nation’s gold reserves at bargain-basement prices to get an American bank out of the crap, thus making the UK tax-payer foot the bill for someone else’s mismanagement.
Tad
January 12, 2016
Dear Tad–As I remember, he said that there had been nothing to be concerned about because “We received value for the Gold”, which statement, given that the “value” which he referred to was about as low one could imagine (being at or close to the bottom of the market), was a disgracefully mendacious thing to say. I repeat what I said the other day, viz we need to find a way for the more egregious utterings of especially Prime Ministers to be forbidden or very publicly countermanded (Something along the lines of, “We find that the Prime Minister lied through his teeth…..) and of course, Yes, that does include Cameron. I cannot understand why several Cabinet Ministers don’t put Country before career and tell Cameron where to go on Brexit, and right now. Would have thought that would have helped get the EU’s attention.
January 12, 2016
As I understand it he was given no choice in the matter .
It would be nice to know where the pressure came from ; U.S. politicians , Central bankers or other .
January 12, 2016
The above post was an appendix to a longer item. Shame that one didn’t make it through the net. So how’s this for another interesting little snippet from RT:
‘Senate Shoots Down ‘audit the Fed’ proposal.
A proposal to audit the Federal reserve failed to pass in the US Senate. The bill, proposed by Kentucky Republican Rand Paul, was opposed by the Democrats, the White House, and the business lobby.
”Both Republicans and Democrats agree that it is absurd we do not know where hundreds of billions worth of our money is going” Paul said ahead of the vote…..’
I ask you, is it any wonder economies are in such a mess when such people are running them?
Capitalism could work for the many, not just the few who have their snouts in the trough, but the vested interests of the greedy constantly stop it being a force for good, and turn it into something else entirely.
Tad Davison
Cambridge
January 12, 2016
the emerging markets are certainly getting crushed. It’s a flight to safety as well as selling risk due to margin calls as the big markets sink. On the other hand , the west still hasn’t deleveraged since 2008, on the contrary are now in bigger debt. The western welfare states are facing a funding problem due to unfavourable demographics. Possibly one reason why they are importing third world labour. The velocity of money has collapsed, causing stress on servicing of debt and consumer activity. I don’t think we’ve seen the worst yet. Until all the excess debt and resulting malinvestment is cleaned out, and that is of historical dimension, we will limp along in deflation.
January 12, 2016
Quite. The effects of the last recession were not allowed to fully manifest in order to save the banks. Zero interest rates maintained ridiculous house and other asset prices and allowed many zombie companies to continue trading.
A recession is a means for the market to flush out the weak and correct prices. This has yet to happen and debt levels remained above pre – crash levels.
We need to introduce sound money and reduce the multipliers of loans to equities that banks are permitted to extend.
Short term pain for long term gain. Unfortunately doing this will put a government out of power so it is too tempting to print money and maintain interest rates.
January 12, 2016
Ben Kelly ,
Quote “Zero interest rates maintained ridiculous house and other asset prices and allowed many zombie companies to continue trading. ”
This is something which I suspect the economists overlooked and in many cases still have not grasped – that easy money can cause deflation instead of inflation .
On a global level easy money has stimulated supply (by keeping zombie suppliers on life support) more than it has stimulated demand .
The UK is a special case as anyone who exports their services will be only too aware . The very high (bubble?) value of sterling is likely masking inflation which will reappear when sterling corrects relative to other currencies .
I suppose the pound is going to have to be devalued anyway to deal with our sterling denominated debt .
January 12, 2016
The Times yesterday reports that institutions are starting to put cash back into emerging market bonds (which is comforting as,in a small way, I have done just that over the Christmas period!).Liam Halligan,in his weekly column in the Sunday Telegraph,takes the view,as I do,that the main difficulties lying ahead are the unresolved problems,like indebtedness,in the west.
January 12, 2016
Gary ,
The UK is a net importer of food and energy .
Essentially , everyone who migrates to the UK requires 100% of their food and energy imported .
Far from being a fallacy as we have repeatedly been told by the political class , the “lump of labour” hypothesis has been shown to be correct . Automation and computerisation march on and less and less humans are needed .
85% of the population uses more in services during it’s lifetime than it will contribute in taxes yet we do not have a points based immigration system .
Of all the damage the political class has inflicted on the UK , importing an electorate which is more to it’s own taste has been the most heinous and irreversible .
January 12, 2016
More importantly here the fantasy levels of housing prices remain a massive problem and largely a result of state manipulation.
The ppe common room running the country are a disaster.
January 12, 2016
I tend to see it pretty much the same way. What is clearly needed in the UK is lower taxes, far fewer regulations, easy hire and fire, cheaper (non green crap) energy, simpler taxes, more controls of over paid rogue directors by shareholders and a proper Tory chancellor with real vision. This rather than the current tax borrow and waste, tax increasing, IHT ratting, landlord robbing, pension thief, at heart a socialist George Osborne.
It would also help if the auditing profession could do its job properly for a change and stamp out the sort of “accounting” we saw at Tesco, Equitable life and many others. Predictions about the future are indeed difficult, what is quite clear is that Cameron’s green crap religion has been a total waste of money and with fossil fuels now so much cheaper it is even more insane. Zak Goldsmith will struggle in London because no one sensible believes in his absurd green agenda any more. We say after all how unpopular the Libdims were with their silly green loon agenda.
Get on with a proper hub airport now and some real Tory policies of leaving the money with the people who actually make it.
January 12, 2016
I saw “Nicky” Morgan, Secretary of State for Education and Minister for Women and Equalities, on the daily politics they other day brandishing a prominent cross and trying to defend state parenting classes. When asked what they would cover in these classes she failed to come up with anything at all. Is there nothing this dreadful, bloated lefty government will not waste tax payers money on?
Anyway how on earth can you be a Minister for both Women and Equalities? There is rather a large conflict of interests between the two?
January 12, 2016
With low commodity prices we should be bullish about the UK. Rather a shame we have such a dire, over taxed, over borrowed, endless waste and over regulated, pro EU, IHT ratting chancellor strangling it every day.
January 16, 2016
Again and again you cite hire and fire being a problem as it is too difficult. Yet you are never able to produce any evidence of what is stopping easy hire and fire. Well What are the reasons? Agency workers self employment, short term contracts, Zero hour contracts, the list goes on. What you mean is to be able to fire for race, pregnancy, complaining in general as well as more serious health and safety concerns. Stop writing the same nonsense and then telling us about logic and sense.
January 16, 2016
Who are the landlord robbing lielogic with their ever increasing rents for more shoddy homes subsidised by the taxpayer to the tune of billions.
January 12, 2016
The economic establishment’s view of the world does not appear to have changed much from the Cold War right into the beginnings of the era of David Bowie.
Students began marching through world streets with much better and healthier cases for their revolt than today’s junior doctors who are more junior it seems than their academic qualifications and professional positions indicate.
The students of David Bowie’s youth spotted western capitalism’s egoistic error. The Establishment then as now had bifocal lenses. It spoke of the Free West where capitalism brought us sliced bread, Green Shield stamps, and tiny plastic toys in cornflake packets.
The error, well-spotted by students, was that Western capitalism’s apparent success required extra-ordinary and weird partial blindness: unable to to see capitalism was failing hand over fist in most parts of the world. The western world, Free World, could not see or add to its “success”- figures the 300 million people of South America, many impoverished, nor the 750 million people of Africa, many on the breadline or literally starving to death. Charity workers would knock on ones door with those tiny envelopes for a few of ones coins for “The Starving in India” ( population one billion )
So students saw a gigantic lie. Some thought a Soviet Red Army, despite establishment propaganda, hardly a major threat as they were also told that that same Red Army was suffering from malnutrition and falling like flies.
So here we are today, nothing to worry about. We still have sliced bread, though no Green Shield stamps, but we do have the Lotto …which we all win regularly unlike the daft football pools. What suckers we were.
January 12, 2016
I have no spare cash to invest and I really do not understand any of these kinds of things much. So thank you for explaining it to me so very clearly and concisely.
January 12, 2016
“The economic establishment takes a different view.”
You mean like they did in early 2007?!
Of course the problems now don’t not just involved the “economic establishment” and their control over the City or Wall Street etc. but also those their taking non economic establishment and geopolitical positions to the market, such as what China wants and the middle east were the oil price has become a weapon of choice between states. I hear that RBS are forecasting this morning that a barrel of oil could fall to $16, half what it is today, how much was it a barrel 12 to 18 months ago?…
January 12, 2016
In July 2014 , Brent and WTI were about $120/bbl .
At that time Goldman Sachs were forecasting $200/bbl near term .
Now Goldman are forecasting $20 .
I think only insecure people who cannot make an investment decision themselves listen to commentators like G.S.
January 13, 2016
Simon. Like ex- GS, M.Draghi of the European Central, Malcolm Turnbull, PM of Oz and the Governor of the B of E. We are safe in their hands.
January 13, 2016
And our very own Mark Carnage .
We aren’t going to get any legislation to subordinate the shadow banking industry to society whilst it anoints and appoints our political leaders .
January 12, 2016
Asset bubbles are deflating which is understandable if it is accepted that QE caused the bubbles in the first place. Printing money has to cause inflation somewhere. Low interest rates are causing malinvestment which eventually when interest rates rise will cause the next bust. Some economists are of the opinion that bust will happen around about 2020. Many countries have piled on debt because of the last financial crisis so are more vulnerable and will be less able to cope when the next one comes along.
The emerging markets have not all been as robust as we have been lead to believe and have inherent flaws because of the forms of government employed and the high level of corruption in those countries. South American countries have tended toward left wing policies the most notable Venezuela is in serious difficulties. Argentina and Brasil not far behind but unlikely to suffer the same fate. China has embraced capitalism but not the other mechanisms that should go with it such as democracy and sound laws that are rigorously and fairly applied but in the end will pull through. India’s development is hampered because of the chaotic way it deals with everything but will muddle through. Thanks to it’s colonial past it has the institutions and knowledge if still not as advanced as developed nations to keep growing apace.
Despite the woeful situation the world(when has that not always been the case) is progressing countries especially developing ones are becoming wealthier lifting more out of poverty. Conflicts and disputes are still many but better mechanisms are being employed to deal with them though on occasions that does not appear to be the case. There will always be accomplishments but there will also be set backs which we can now deal with better than we did in the past. This is despite our politicians not because of them because in the end it is the people who are the real decision makers even if they do not live in a democracy, As proof we have seen they can be pushed so far but when it comes to the point they do not wish to be pushed any further they rebel.
The world is becoming a better place thanks to trade, globalisation and international cooperation (making the EU redundant as regional trading blocks are not the future) but it has a lot further to go. More tariff free trade, international cooperation and less government interference would be the ideal in speeding up the process.
The greatest threats to world progress are socialism and religious fundamentalists but I believe in the end both will be rejected. Not before they have done even more damage which however exposes them their policies and actions so that they can be seen to be very damaging and dangerous. As if the rational and objective did not know that already.
January 12, 2016
Nothing their about Osborne keeping the plates spinning by encouraging people to take out even more debt if they want to maintain their “middle class lifestyle”. Nor about their kids being conned into taking out a student in the belief it will get them a middle class job, while in reality only half of them will ever do so.
You know something is wrong when you agree with John McDonnell that Osborne is also deliberately keeping the FCA “rudderless”. ” I do not expect a western 2008 style crisis in 2016.” thats a great hostage to fortune, as you have overlooked the banks ever increasing involvement with derivatives. Warren Buffet’s “financial weapons of mass destruction”.
January 12, 2016
@DRW; “I do not expect a western 2008 style crisis in 2016.”
But is that opinion based on an educated guess or wishful thoughts? Far to many unknown unknowns for my liking!
January 12, 2016
The economic slowdown highlights the stupidity of the current (non) energy policy, fossil fuels are at their cheapest and we continue to close viable power stations a continue to build windmills.
Whilst the rest of the world may enjoy a bonus from cheaper energy we are wedded to bankrupting people paying subsidies to foreign governments.
With a recession looming it will be interesting to see the welfare bill spiral out of control as the culturally diverse labour force lose their jobs and sign up for jobseekers allowance.
Then again maybe companies will keep the foreigners on at lower pay and sack the Brits.
Good innit.
January 12, 2016
Or – as you know Ian, give a lot of foreigners a free life for coming here and contributing zilch, but give those who were born, bred, worked and paid in for 45 yrs – -absolutely NOTHING for their contribution.
( for those who are wondering – yes we know each other, worked at same place 40yr ago).
January 12, 2016
@bigniel; I wonder what the numerous British ex-pat communities around the world, receiving a “free life”, well at least (early) retirement, think of your comment, I wonder if many will return to old blighty feeling as guilty as you want to make immigrants to the UK feel.
We never hear people like you ever mention the flip side of the same coin, so what are your opinions with regards emigration from the UK, should those ex-pats whose adopted countries consider them a national burden return. Oh and what impact fop you think that might have here in old blighty, will both socail and health services be able to cope, and cope they would have to as the people I’m talking to are fully paid up just as you think you (and Ian Wragg) are.
January 12, 2016
What an awful comment Jerry
If you live an ex pat life way from the UK you have little free treatments in terms of health or welfare or pensions.
Having worked here for decades and been a contributor to the UK we should welcome our people back here to their mother country should they wish to return.
January 13, 2016
@Edward2; Another comment based on no or very little understanding, especially of those who are living ex-pat in the EU.
Oh and yes, what an awful comment @bigniel made…
January 13, 2016
Those living ex pat in the EU are of very little burden on their adopted country.
They are entitled to return to the UK, the country of their birth.
Where they have paid tax and NI for the majority of their working lives.
If you have proof this is wrong then let’s hear it.
January 13, 2016
@Edward2; “Those living ex pat in the EU are of very little burden on their adopted country.”
Are they, you know that, just as you know that all those EU (im)migrants to the UK are a burden.
“Where they have paid tax and NI for the majority of their working lives.”
You mean like those EU migrants pay whilst working in ther UK, not forgetting the taxes they pay whilst living here,. taxers that ex-pats probably no longer pay due to no longer living in the UK, whilst NI is a tax that pays for current health and welfare spending, it has never been an insurance policy as such – hence why many believe that NI should be called a tax and not an “insurance”.
“If you have proof this is wrong then let’s hear it.”
Well I do have both friends and relations living as ex-pats in the EU, some of working age, some retired. I have also spent extended times with them. Thus my knowledge and understanding doesn’t just come from listening to UKIP or watching old episodes of Eldorado.
No one is saying that there are no problems either way but all anyone hears from the likes of you, @Ian Wragg and @bigniel etc. are very lopsided comments.
January 13, 2016
I did not say immigrants are a burden at all Jerry.
That is a slur on me and it is very poor of you to state that.
I can put up with your pedantic odd arguing but not making up things.
No evidence I note.
There are nearly 900,000 ex pats living in Spain alone.
Mostly well off retired people causing little or no costs on the Spanish welfare systems.
Spending a large amount of money into the economy.
January 14, 2016
@Edward2; “I did not say immigrants are a burden at all Jerry.”
Once again you read into my comment, and thus are replying to, something I did not say. If anything I implied that retuning ex-pats would be the actual burden upon the UK state.
“I can put up with your pedantic odd arguing but not making up things.”
A bit rich coming from you Edward, considering how often you accuse me of saying things that I have clearly not, as anyone can judge for themselves by simply reading what I actually did said. So no slur, and thus no apology required, at least on my part…
“There are nearly 900,000 ex pats living in Spain alone. Mostly well off retired people causing little or no costs on the Spanish welfare systems.”
Exactly (although far from all are retired, and many are relatively well off due to the GBP-EUR FX rate, not because they won the Lotto or what ever! Now how do you think the UK’s socail services/welfare, housing, health, employment -not all ex-pats are retried, transport even education etc, would cope if (even a majority of) those people were to return to the UK – or had never left “Old Blighty”, perhaps with their arthritis and other aliments that are a lot more manageable in a dryer, warmer climate that would otherwise be the case (hence why they became ex-pats in the first place) and would need NHS intervention or even full time care back in the UK. Then what of those who who have school age children, if such families were back in the UK then it is likely the state school system would be under even more strain, and so on.
“Spending a large amount of money into the economy.”
As are economic migrants to the UK, probably more so because by on large they are also paying income tax and NI. So your point was what Edward?
January 18, 2016
Still droning on and on Jerry
I don’t even see what point you are trying to make bearing in mind the original topic of this thread.
But do carry on if it keeps you busy.
January 12, 2016
@ian wragg; “Then again maybe companies will keep the foreigners on at lower pay and sack the Brits.”
There is nothing to stop the “Brits” from working for less of course, and after all the minimum can only be that of the statutory NMW, if any employer is paying less then they need to be prosecuted who ever they are employing…
January 12, 2016
Jerry, you really should get out more, many of the immigrants have accommodation and food provided by the employer at inflated prices. They may in fact be only receiving half the minimum wage.
I suppose you believe no immigrants were amongst the female harassment squads in Europe over the new Year. Typical lefty rubbish you spout.
January 13, 2016
@Ian Wragg; There is nothing to stop down on their luck Brits from living in tied accommodation etc, if that is the difference between a job and no job – even for those men with families, after all there are many eastern Europeans living away from their families, and not just by a few hundred miles either, no quick weekend visits for them…
Anyway, by providing accommodation the employers are taking the strain off local housing, I would have though you would be pleased!
Sorry if the truth hurts people like you but the truth is not “lefty rubbish” as you seem to think,if it is then you are a lot further to the right than you might wish to admit.
January 13, 2016
@Ian Wragg; “Jerry, you really should get out more”
I could not get out more if I wanted to, I live in an area with a very high level of EU migrant labour (agriculture, but also the service sector mostly), so much so that we must have four or five mini-supermarkets catering for the eastern European diet, heck I’ve even seen eastern EU (fast) food take-away’s!
Clue, these migrants are taking jobs that would otherwise be unfilled, but this area also has unemployed youth and men under the age of 30, but they simply do not want to do the sort of work that those coming from eastern EU member countries willingly undertake – work that our grandfathers generation and before would have done without compliant.
January 12, 2016
Totally agree Ian. See extract from one of today’s papers in Scotland. This is in answer to a letter published yesterday from a religious believer in ‘green’ energy.
Please sign The Green Electricity Pledge” as follows: “I foreswear the use of any
electricity generated by foul fossil or nuclear means and hereby pledge to
install a Green Smart Meter in my home which will only deliver that
proportion of electricity generated by approved Green generators in real
time. I will campaign for similar restrictions to be applied to my workplace.”
Perhaps he will be good enough to let us know how he gets on.
It’s high time all future developments of wind farms were stopped and this country got serious about energy production and the costs entailed.
January 12, 2016
Interesting if we all signed up for this.
Last month when it was frosty only 0.7% of peak demand was from renewables.
Does it come down a different wire than conventionally generated power??
January 12, 2016
I would advise him to keep lots of candles in stock for light and plenty of logs in stock for heat.
January 13, 2016
Most electricity suppliers offer Green deals. It just means that someone else takes the non ‘Green’ deal, as the total is fixed. Customers actually believe they are’saving the planet’ and pay a bit more. And the less dumb pay a bit less.
January 12, 2016
Off Topic:
The Junior Doctors Dispute:
Someone stated: Junior Doctors only get a minimum of ÂŁ23,000 ( overtime payments not mentioned ) and rhetorically asked if this is appropriate given their intelligence and qualifications ( future much higher salaries not mentioned ). Yes.
Believe it or not, many people in my part of the world: Northern England, have never, ever, even with overtime and bonus payments… ever… managed to get a ÂŁ23,000 salary.
Well God, or perhaps some Junior Doctors overdosing on Evolutionary Theory replacing that God with the God of Mother Nature cannot help but agree that God as Auberon Waugh famously noted: deals us a hand of cards at birth. We may play them well. But if we are dealt a poor hand there is not much we can do about it ( I have expanded on what he said for he had been dealt a cards allowing him to be more succinct )
The point: it is no more difficult or arduous, for the most lowly worker…perhaps a street cleaner…or bar supervisor….or road labourer to acquire his or her qualifications, training, education attainments than it is for a doctor or any other professional. They, the lowly paid are stuck in their position for all of their lives for the cards dealt to them are what they are.
I am not suggesting Junior doctors should count their blessings. But Mother Nature, they may agree is all about “Survival of the Fittest.” The lowly workers work very long hours, weekends if they are LUCKY enough to be offered the overtime ). Here, in a country which some Junior doctors threaten to leave, lowly workers nevertheless have a vote (an ace up their sleeves. (Words left out ed) And junior doctors are outnumbered and outflanked here, in Australia, Canada, USA. and everywhere. So go back to work lest you get into a war you will have to lose.
January 12, 2016
I am not qualified to speak on the substance of your submission today. I have always operated in the world left after the economic experts have pontificated and invariably got it devastatingly wrong. Like most of us I have had to survive their expertise.
Much more important, I read that the duplicitous Cameron is at it again trying to play the head prefect. In a letter to his cabinet ministers he in effect says that if you are pro EU you can make speeches to that effect both in and out of Parliament using the services of the civil service if you so desire. If however you are against the EU then you cannot publicly say so before the re-negotiation is ended. Even then you cannot speak against the EU in Parliament nor can you solicit help from our civil service. This is nothing less than a gag on democracy and freedom of speech. The longer this man is around the more he disgusts me.
Should the UK electorate have the wisdom to vote to leave the EU after all this intimidation by one man, and that at the end of the day is all he is, then he must not be let loose anywhere near the process of disengagement from the EU. Those who have led the out campaign are those who should control the process.
An excellent candidate as such would be Daniel Hannan who spoke on U-Tube on the 9th January to an audience in Kent. He has an excellent grasp of the subject and with help from yourself and a number of others could free us from this noxious organisation.
January 12, 2016
No qualifications are needed to comment. As with most subjects, common sense is the only skill necessary…..a skill not usually possessed by the experts, and certainly not by Osborne.
January 12, 2016
There was an excellent head to head on EU membership last night on television, organised by the Institute of Welsh Affairs, between Nigel Farage and Carwyn Jones. Link to debate on UKIP website, and also reported in Express. It was fascinating to see what the Europhile Jones used as his arguments, and equally fascinating and pleasing to see how Farage dealt with them. Poll show 79% win for Farage. This result (Welsh Assembly elections coming up later this year) just cannot be swept under the carpet and ignored by the media. Farage is a key player, and a consummate orator and debater, and he represents a very large and significant number of people. The Leavers will have to work together and acknowledge each other’s contributions. Glad to see Peter Bone doing something constructive.
January 12, 2016
Chris, I have been sent the link to this debate between Farage and Carwyn Jones but have yet to watch it. After your remarks I will take the time to do so. I have always found Farage to be great at arguing the cause as he gets his facts straight and knows so much about the goings on in the EU first hand.
Link here for anyone else that would like to see it.
http://digital-ukip.nationbuilder.com/debate
January 12, 2016
Likeable though Carwyn was, he came over as a bit of a blatherskite in the Kinnock mould. Nigel saw him of with style and conviction.
January 12, 2016
It’s mildly interesting to compare and contrast Cameron’s conduct now with that of Wilson in 1975. The latter made a statement in the Commons on January 23rd 1975 setting out the terms of an “agreement to differ”:
http://hansard.millbanksystems.com/commons/1975/jan/23/european-economic-community-british
January 12, 2016
Cameron does not want free speech. he wants the EU dictatorship – and HE wants to be one of the dictators in Brussels.
January 12, 2016
I, like a good few others I’ll bet, find myself unable to settle on a view as to who should best be in charge of the Leave campaign (This is of course a major part of the problem) but I absolutely agree that Hannan is superbly effective, and often original which helps, in that cause in whatever he says or writes. That said, if I had to choose right now it would be Boris because with his undeniable charisma he can cut through the baloney and the dreaded inertia in the middle ground.
January 12, 2016
Much as I like Boris, he is part of the baloney. He has yet to commit himself one way or the other. If he does, he is by no means the buffoon that many commentators would have us believe. Should he commit to out then his talents would be welcomed, having similar qualities to Nigel.
January 12, 2016
I agree that Cameron must resign if the referendum vote goes against him. The majority of his MP’s oppose staying in the EU so it should be simple to vote him out.
But Daniel Hannan isn’t actually an MP, he’s an MEP.
January 12, 2016
Being or not an MP is irrelevant. He is a motivated Englishman with a vast experience of the workings of the EU and a sense of the historical perspective within which this debate should be conducted. As I have already said, perhaps we only need a conductor who can bring out the best from a multi talented orchestra.
January 13, 2016
I’ve no idea how you’ve come to the conclusion that the majority of Tory MPs want to leave the EU, when the reverse is very obviously true.
January 16, 2016
The majority of members want out but only perhaps 100 or so Tory MPs I suspect. I do not think they will come our even if the vote goes for out they will renegotiate and try again.
January 12, 2016
I agree. Daniel Hannan.
Why didn’t I think of that ?
He is far more presentable than Nigel Farage.
January 12, 2016
Daniel Hannan comes across as a spoiled child and his immature sixth form debating society style and squeaky voice is even worse than Osborne’s .
For this reason , Daniel Hannan is a real turn off to many ordinary people .
Farage on the other hand has the common touch .
January 13, 2016
He also thinks Red Ed is an intelligent fellow metropoltan.
January 12, 2016
Do not loose sight of the objective by getting carried away with the debate.
Our host has surgical analytical precision on aspects of the EU debate. I certainly do not see Nigel as lacking anything in presentability. He has a talent for being able to demonstrate the issues in a way that relates to the man in the street based on years of experience in the real business world and in the convoluted machinations of the EU. Daniel is a very articulate politician who bridges the talents of the two with a knack of highlighting otherwise unnoticed aspects of our relationship with the EU.
Maybe we should not be looking for one leader, perhaps rather a conductor who can bring together all part of the orchestra to produce a work that impacts on us all.
January 13, 2016
Dear Agricola–Very much agree that John’s “analytical precision” is second to none but unfortunately analytical precision is not the man in the street’s strong point. I can only go on my own everyday experience but a cheap bottle of wine says that 90% of the population could not tell you what the deficit is nor its difference from the debt blah blah, leave alone how much does or doesn’t relate to the Europe. It is just as they say about books: put a formula in and Sales plummet. Hence my leaning towards Boris who does have more of a direct line to the frogs who are to be asked if they want the pond drained The EUphiles just love incessantly talking up how absolutely essential our exports to Europe are and the wonders of the larger market blah blah but we never ever hear a peep from them about imports.
January 12, 2016
and how do emerging markets service that $11 trillion debt when their currencies are collapsing vs the dollar. ? That scale makes it a problem for the NY bankers and not for the emerging markets. Imbalances are unraveling in a less than controlled manner, as they always eventually do.
January 12, 2016
It would be interesting to know how often Gideon Powerhouse pops around to look at the latest forecasts coming out of the Treasury and Budget Responsibility computers. The chief operators are married and the forecasts should be coordinated somehow. There must be many inputs and, as chaos theory explains, even a small change in one of them can affect the whole.The many inputs can operate together to form patterns of behaviour, which can suddenly change. If there are two changes of parameters the forecast may be predicted with some accuracy, but if there are more the maths does not allow computations with any accuracy.
There was a sudden change in the policy between the spring and autumn budgets and Gideon suddenly found enough surplus to cancel the imminent tax credit cuts, but within weeks he must have found the latest forecast had flipped. Anyway, he thinks Dame Homer of HMRC is a competent civil servant and has done a great job screwing anyone having to file a return, so he must be optimistic.
January 12, 2016
A very good overview in the economic blog today ; I am not an economic forecaster but I do concur with the judgements made . I think the reaction to the blip in China has been out of all proportion to its present economic state and , particularly , its surplus . On the one hand the growth there is still positive – although much lower to where it has been , on the other it has the means – and certainly the motive , to rejuvenate itself ; outside investment in China is still very low ( I believe 3% ) so there are bags of opportunity for investors.
The commodity sector has created a very bumpy ride for the markets ; it failed to readjust early enough . Once the levelling out has been completed , prices will stabilise and the markets will come back . This process is not helped by the tensions in the Middle East or by the the role of the ECB who ought to create more confidence within the EU .
January 12, 2016
Me thinks the smoke and mirrors of the last few years are beginning to clear, and reality is beginning to appear.
Most Governments did not fix anything, short term pain was ruled out in favour of attempted manipulation, and the hope of growth, to disguise the truth and keep those who had power in power.
Once again an opportunity to at least patch up the roof by erecting the scaffolding, has been lost.
Now the debt is even larger than before, and we have nothing in place to help reduce it.
If our economy does slow down due to external and some internal problems, will all of the imported Labour go back from where they came, or will they claim taxpayer help in the form of the many Benefits available to all.
Can only hope it will not be as bad as some so called experts are suggesting.
January 12, 2016
Claim taxpayer help, of course. I would too.
January 12, 2016
IIRC the “economic establishment” did not predict the sharp fall in energy prices either. Certainly the Department for Energy and Climate Change did not because, in ther last Parliament, they were pushing so-called green solutions (wind power and solar energy) in the belief that oil (and gas) prices would continue to rise beyond the then prevailing $110-120 a barrel level.
It is unfortunate that Mr Osborne has not followed his own advice and “fixed the roof while the sun was shining”. Instead we were treated to the spectacle, last autumn, of him miraculously finding the many ÂŁmillions for his climb down on tax credits as though all our problems were solved. Instead he has continued to pile on the debt. Now, a couple of months later we are told everything is about to go pear shaped overseas. Well that was equally true at the time of his Autumn Statement. Nothing has changed in the fundamentals in that short period.
January 12, 2016
Something which concerns me about the future economy is the apparent shrinking competition between multi-national or large national firms and the lack of will of regulators to do anything about it. Recently, the largest brewers in the EU and USA have been allowed to merge. Worse still, one of them has swallowed one of my highest rated small breweries in Greenwich. Taking out the small boys with lucrative deals, then ruining the quality of their product is an old game.
No new banks worth changing to have emerged and did I read that Shell and another energy giant are merging? In the US it used to be a principle of anti-trust that a single company should not be able to control production and supply. What happened to this? Foreign energy companies own generation and sales. Then other energy companies are handed monopolies to service the gas and electricity distribution. How is it that the Commission and our national regulators are doing nothing about it?
If the next crunch arrives, the big internationals will be too big to fail and together with the banks, they will wipe out many SMEs.
Perhaps you could let us know your thoughts on the matter?
January 12, 2016
“I do not expect a western 2008 style crisis in 2016.”
“The three problem areas that do cause concern in 2016 are commodity based activities, some emerging market countries, and the continuing political and economic stresses in some Euro area countries.”
As someone who lost one of his companies due to the banking-led fiasco of 2008, it’s good to hear you don’t expect another such crisis. Thank goodness I didn’t lose them all, no thanks to the banks. As you rightly point out, none of us really know what will happen this year.
In today’s news we hear that RBS, bless their little taxpayer-rescued cotton socks, have informed their clients (and the World) that “RBS cries ‘sell everything’ as deflationary crisis nears”
Then today we have “Pound plunges to five-year low as manufacturing performance is worse than expected”.
Thanks RBS, my holdings of sterling were doing badly enough already.
Finally I’ll pick up on the last of the triumvirate of risk factors you mentioned: ” the continuing political and economic stresses in some Euro area countries”.
Does anyone remember Greece? ‘Slightly’ sidelined by our wonderful media who only seem to be able to focus on one major story at a time, but Greece is still an economic basket case and is now having actually to implement more of the troika’s imposed policies from its bailout agreements last year. Cutting pensions in half isn’t going down terribly well in the land of Zorba and his friends, not surprisingly. Let’s see how long it is before Greece implodes.
The thing which took Greece off the UK’s front pages last year was the summer migrant crisis, which gave so many socialists the opportunity to show how caring they were.
You remember that crisis, it’s the one where Hungary was the devil incarnate according to German and other EU politicians for trying to protect itself and then four months later literally half of the Schengen area had closed its borders, in many cases putting up fences. Even Germany is now sending 300 ‘refugees’ per day back across the border to Austria. Refugees nicht so wilkom, it seems.
I agree with you JR that the economic stresses in the Eurozone will have an impact this year. Not only Greece, but other small EU countries are close to real difficulties. Naturally it might take longer for the global markets to start to attack the inherent weaknesses of the larger EU economies like the Italian and French, but attack them they will in the end.
Thank goodness we ignored all the doom-mongers who told us we’d be finished if we didn’t join the Euro – the very same doom-mongers who are now telling the public that we’ll be dead as a country if we leave the EU.
January 12, 2016
The forward looking indicators are flashing warning signs for the US, the Atlanta Fed GDP Now cast as one example. Will be interesting to see how the continuing US slowdown effects the British economy. If the European economy can pickup a bit more, and there are suggestions China is through the worst, then we should muddle through. Our finances will be highly problematic should growth slow, a lost decade is approaching for us.
January 12, 2016
Off Topic
I see reported on local media.
Mill Lane flooded again
Embrook under the railway bridge flooded again
Mole Road flooded again.
More accidents on A329M after silly Junction modifications.
More congestion on A329M due to Junction 10 modification.
Another great day for the Wokingham Infrastructure.
January 12, 2016
What on earth possessed them to alter the A329M in that way. As a frequent user of that route, I cannot understand how anyone with an iota of common sense could have designed such a “solution” to the traffic flow on the A329M. It took months for the construction and implementation of the redesigned junctions and road in that area, with very considerable disruption and delays, and all to apparently no purpose. What a waste of taxpayer’s money. A question that should be asked is about the calibre of the so-called “experts” who were employed, presumably at considerable expense, to come up with this “solution”.
January 12, 2016
Nearly all the junction “improvements” that I have seen recently have made things worse and have increased congestion. Either this is the governments aim (for some perverse reason or other as I rather suspect) or their experts are just totally incompetent.
January 13, 2016
Chris
“…..experts…..”
I can only suppose it worked in their minds !.
As I understand it they have actually driven the route slowly and filmed it, but perhaps that was when the road was closed, and no other traffic was on it, so of course it would seem to work to them.
Did they try it at real speed at rush hour, I doubt it !
As you correctly say ÂŁ Millions wasted, much disruption caused, and now far more dangerous, because we now have one 70mph high speed lane only, but lorries limited to 58 mph on this single lane, instead of the original two lanes where the inside lane could be used by slower moving traffic..
The joke is the original tarmac still exists, but has white cross hatched lines all over it, so designated as a no go area !!!!
January 12, 2016
An excellent analysis of the global economic prospects for 2016. Thank you.
January 12, 2016
From the Telegraph today:
“RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel. The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note. Andrew Roberts, the bank’s research chief for European economics and rates, said that global trade and loans are contracting, a nasty cocktail for corporate balance sheets and equity earnings. This is particularly ominous given that global debt ratios have reached record highs.”
So, based on RBS’s forecasting record I expect everything will be just fine.
“China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the ‘Goldlocks love-in’ of the last two years,” he said.
Mr Roberts expects Wall Street and European stocks to fall by 10pc to 20pc, with even an deeper slide for the FTSE 100 given its high weighting of energy and commodities companies
January 12, 2016
Funny John how the establishment commentators bemoan Chinese growth of “only” 6-7% or maybe a bit less. After many years of double digit growth what more do these people want, an exponential curve followed by a huge crash ?
January 12, 2016
I find this terribly confusing, G Sachs talks of a blip on China’s stocks which will be corrected by deceleration in growth and give the opportunity for India to enjoy better growth. They also talk of a continuing 1.6% growth in the EU area due to low oil prices being advantageous to manufacturing. Apparently the crisis in the China stock markets which the USA was so concerned about is over? Poor Rolls Royce I read has had a 54% reduction in sales in China. To me it is reaction after reaction according to the way the wind blows , but that is why I am here; to try an understand more.
January 12, 2016
One thing I find odd is that the same doom mongers who said high oil prices would bring down the economy are now saying low oil prices will bring down the economy.
In the last 20 years half the world’s very poor have been lifted out of real poverty. ..Oxfam quote.
That is some achievement.
Well done capitalism.
January 12, 2016
Following The Great Depression , laws were passed to restrict the activities of the the financial sector to protect the real economy .
Since the early 1970’s , they have been lifted with one of the final steps being in 1999 when Bill Clinton repealed the Glass-Steagall act .
The result has been that Financial institutions are now literally 10X , i.e. an order of a magnitude greater in size than they were 25 years ago .
However , simultaneously , main street has shrunk .
Households and mainstreet no longer have much wealth . Most of it has been transferred to the financial sector .
Much of the demand over the past 5 years has surely been down to expanding sub prime credit . How quickly the lessens of the credit crunch were lost .
Isn’t it time to admit that the relaxation of rules which were intended to keep the finance sector under control has been a disaster and that the only answer is to wind back the clock and reinstate them ?
January 13, 2016
It appears that countries dependent on commodity prices for much of their State revenue will suffer in the next few years and be less able to import as a result. There is likely to be a time lag before net importers of commodities are confident enough to start buying more.
Saudi Arabia is running a deficit of 20% of GDP per annum and will run out of forex reserves by about 2018 (Source: Telegraph newspapers), so some time before then it will have to start to raise its oil price again. In the medium term, the oil price is likely to be determined by the US fracking industry, most of which can make a profit if the oil price is between US$ 70 and 80. This industry operates on free market principles and combines innovation to reduce extraction costs with temporary shut downs of unprofitable sites. So as a best guess we should expect the oil price to recover to about US$ 80 by 2018, but the glory days of US$ 110 per barrel have gone.