Is this it?
Is the recent stock market correction the stock market crash that those of us with the wherewithal to care have been dreading? Is this going to be a global economic meltdown, which even those with no wherewithal ought to be dreading? In short, is the world economy up the creek without a paddle?
The traditional warning signs abound. Wall Street drops five per cent in a single week. The ‘Footsie’ and other markets likewise sink like stones. Oil falls to $30 a barrel, and may, some say, go as low as $10. Panicky investors sell paper and pile into gold.
Time, then, to worry. Or simply to hunker down; play safe – postpone the kitchen extension, cancel that planned two-week holiday in the Maldives.
One British bank is clear on the point. “Sell everything,” its analyst is telling its clients, a rather stark piece of advice that will either demonstrate the man’s prescience and launch his career as a pundit, or make him look foolish and perhaps cost him his job. (To be fair, he said sell everything except high-quality bonds, but that does not a headline make.)
The blame for all this upheaval is not, as has usually been the case of the last years, irresponsible financial market trading, or out-of-control computers. Nor is it that absurdly idealistic and probably unsustainable construct, the European Single Currency. It is not even what Alan Greenspan, as chairman of the United States Federal Reserve, once described as “irrational exuberance”. Most of us, if guilty of anything, right now probably view the economy with a sense of irrational pessimism.
But we need not bother to round up any of the usual suspects because there is a new one: China – or, if you are so minded, the bloody Chinese.
The powers-that-be in that vast country have stoked up its economy to such an extent that the fire was bound to blaze out of control until there was little left but embers. It still burns, but no longer as a conflagration. And there is the dilemma faced by the inscrutable people we have long assumed were much smarter than us; they seem unable to decide what to do, whether to chuck more fuel on the fire or let it smoulder for a while.
How ironic, in the broader context, that the culprit in a market meltdown could well prove to be the last surviving communist power. But of course we are all capitalists now, even if we call ourselves the Peoples Republic of something, all in the same leaky boat bobbing about on a vast ocean of debt and delusion.
To answer my own question: I have no idea where the markets are heading. How feeble, I hear you muttering, but tell me who does know and – as New Yorkers of a certain age used to say – I’ll kiss his ass in Macy’s window. The Chinese government doesn’t know, evidently, or the Fed, or the Saudis. Nor, even more shamefully, does our very own Bank of England.
Perhaps Jeremy Corbyn knows.
Or maybe, if you want to drive yourself completely insane without taking drugs, Donald Trump.
To set minds to rest, here is my own bold prediction: we are going to have a turbulent year. Stock markets will fall out of bed in the first half – probably soon – but will climb back in by the end of the year, finishing more or less where they are now, or not much lower.
There are three assumptions behind this forecast, each falling into the category of highly improbable. American voters do not take complete leave of their senses; China does not have to put down a revolution; North Korea does not lob a nuclear bomb into Seoul.
And one caution: one can never be sure of anything. As British Prime Minister Harold MacMillan said, when asked to name the biggest potential threats to his administration, “Events, dear boy, events”.
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