What’s Happening?
I’m sorry to keep bringing it in, but
the Daily Telegraph Business for 6th November 2017 ran two
front-page stories side-by-side which I find perplexing.
In one, we find warnings being raised
by leading financial think tanks that stocks are rising so high (the FTSE
closed on Friday 3rd November at 7,560.35 – a record high) that they are looking very much as they looked on the
eve of the Dot.Com crash of 2000, and –
even more ominously – on the eve of Black Tuesday 1929.
Anything could happen to destabilise
the lot at any time: high interest rates could trigger a crash, while ‘unreasonably’
low rates could create a bubble followed by a bust. A crunch in China’s debt
markets is only one of any number of things that could also ‘set off shock
waves across the world and into US stocks’. (A Donald Trump-tweeted declaration
of world war is not mentioned.)
Time to stuff your mattress?
Meanwhile, side-by-side with this: ‘Theresa
May will today urge business to look to the next decade with “rational optimism”
as part of a new chapter for Britain’s economy.’ Apparently Britain is going
for ‘a stronger, fairer, better balanced economy…which builds on its strengths
and can compete in the world.’ Never mind that the Tories have already had
seven years of power presumably to do just this. The response of Mrs May’s CBI
audience was lukewarm. Perhaps she reminded one or two there of Herbert Hoover –
the US President who kept saying ‘the business of the country is basically
sound’ and ‘prosperity is just around the corner’ in response to a Crash which
had indeed already taken place. Is
Theresa May the new Hoover? It is her sunny, optimistically vague outlook that
gives me the willies more than any dire warnings from the NIESR and BNP
Paribas. And with Jeremy Corbyn waiting in the wings as the UK version of the
next Roosevelt. (The New Deal wasn’t that
bad for business, under the circumstances.)
When, oh when, will we go for the true
‘rational optimism’ of socialism? The present stock markets suggest more ‘irrational
optimism’ than anything else. If only the ‘hidden hand’ of the market had been
possessed of a brain.
On the one hand if you prognosticate
disaster you help it along by creating a self-fulfilling prophecy. If, on the
other, you stamp out pessimism disaster happens anyhow behind your back. Better
to be complicit, or a fool? Thus are financial experts caught in this bind.
Meanwhile they are finally earning their money by the sweat of their brows (Mrs
May, by contrast, only ‘perspires’), coming up with such formulations as that
the economy is looking great but is heading for a crash of monstrous proportions,
or that the figures are ambiguous showing that while we are heading for a fall
off the cliff, the global economy has never looked better. A Great Depression to
come with greater prosperity for all. The best they seem to be able to do these
days by way of ideologically preserving the system (which is their job) is to
send out ‘mixed messages’. It would be better for them to throw down some bones
for a more intellectually-rigorous look into the future: as we know,
astrologers and medicine-men are never wrong.
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