Eighteen months ago in this column, I wrote about a sense of ‘our ping-pong recovery’. At that point too, I harked back three years to 2011 when I was advised that ‘being on the brink was the new normal’. Round about that time in 2011, there was an Internet meme in popular circulation that took its cue from Charles Dickens’ novel, ‘A Tale of Two Cities’ in representing the world view according to the author as a Venn diagram. The left set read ‘The Best of Times’ and the words in the right saw ‘The Worst of Times’. In the intersection was one word: ‘It’.
Perhaps we always inhabit the inbetween space. Yet sometimes our awareness of occupying the ‘It’ space is more acute than others - especially if we put individual company achievements andthis region’s business success in the same pot as those on the national and international economic scene before divvying them out in either set of the Venn diagram.
May be there are more than two sets required if a Venn diagram is to potray the confusion of the most current voices of economic comment.
We had the International Monetary Fund (IMF) who, while acknowleding that oil prices are rising again, is warning of the implications of oil’s long term decline and the diastrous effect on Middle Eastern economies.
Then a couple of days later, those members of the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC - but still oil producing – countries met in Qatar and, while indicating the majority’s willingness to impose an oil production cap, could not agree on a freeze given the frosty relations between two key players. This gave a shock to world stock markets the day after but a lower - but steadily so- oil price is something with which the markets are coming to terms. They certainly appear to be more tranquil at the start of the second quarter of 2016 than they were at its first.
China’s latest quarterly growth figures were, fortuitously, within its government’s range at bang on 6.7 per cent as many commentators predicted and welcomed. However, this was down on the equivalent period last year and the lowest figure since Q1 2009.
Talking of 2009 and back to the latest IMF world finance health check, it has concerns that some of the ‘legacy issues’ which caused the 2008/2009 banking crises have not been addressed. In particular, the substantial loans still languishing in the books of some Eurozone banks and which are unlikely ever to be repaid.
In another back to the future leap, economic commentators referenced the eminent economist, Milton Friedman who, in 1969, spoke of a monetary policy theory called ‘helicopter money’. Boiled down in essence for us lay people, this theory sees central governments, through their treasuries’ instructions to their central banks, printing money enabling the governments to drop it directly on their populace of spenders – through tax cuts or increased public spending– rather than channelling it through the banks.
Helicopter money bypasses the banks to stimulate economies in the way quantitative easing (QE) doesn’t. While some commentators see the case for helicopter money gaining ground, particularly with political advisers to central governments, others would prefer to see it remain within the covers of economic text books. In any case, it is pointed out that the Eurozone countries do not have one central treasury to issue an instruction about Euro-printing.
On the domestic front, there appears to be consensus that the ‘self-inflicted wound’ of the EU referendum is unhelpful, at best, to the UK economy until it is resolved. More on that story later, as the saying goes.
Perhaps we always inhabit the inbetween space. Yet sometimes our awareness of occupying the ‘It’ space is more acute than others - especially if we put individual company achievements andthis region’s business success in the same pot as those on the national and international economic scene before divvying them out in either set of the Venn diagram.
May be there are more than two sets required if a Venn diagram is to potray the confusion of the most current voices of economic comment.
We had the International Monetary Fund (IMF) who, while acknowleding that oil prices are rising again, is warning of the implications of oil’s long term decline and the diastrous effect on Middle Eastern economies.
Then a couple of days later, those members of the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC - but still oil producing – countries met in Qatar and, while indicating the majority’s willingness to impose an oil production cap, could not agree on a freeze given the frosty relations between two key players. This gave a shock to world stock markets the day after but a lower - but steadily so- oil price is something with which the markets are coming to terms. They certainly appear to be more tranquil at the start of the second quarter of 2016 than they were at its first.
China’s latest quarterly growth figures were, fortuitously, within its government’s range at bang on 6.7 per cent as many commentators predicted and welcomed. However, this was down on the equivalent period last year and the lowest figure since Q1 2009.
Talking of 2009 and back to the latest IMF world finance health check, it has concerns that some of the ‘legacy issues’ which caused the 2008/2009 banking crises have not been addressed. In particular, the substantial loans still languishing in the books of some Eurozone banks and which are unlikely ever to be repaid.
In another back to the future leap, economic commentators referenced the eminent economist, Milton Friedman who, in 1969, spoke of a monetary policy theory called ‘helicopter money’. Boiled down in essence for us lay people, this theory sees central governments, through their treasuries’ instructions to their central banks, printing money enabling the governments to drop it directly on their populace of spenders – through tax cuts or increased public spending– rather than channelling it through the banks.
Helicopter money bypasses the banks to stimulate economies in the way quantitative easing (QE) doesn’t. While some commentators see the case for helicopter money gaining ground, particularly with political advisers to central governments, others would prefer to see it remain within the covers of economic text books. In any case, it is pointed out that the Eurozone countries do not have one central treasury to issue an instruction about Euro-printing.
On the domestic front, there appears to be consensus that the ‘self-inflicted wound’ of the EU referendum is unhelpful, at best, to the UK economy until it is resolved. More on that story later, as the saying goes.
Will Mooney MRICS
Partner
Commercial, Cambridge
