Just as a footnote to the year 2013 now fast disappearing over the horizon, I started thinking this morning about the year and some issues in and around our markets that caused me some angst over that time. I am sure that everyone has their own list, and for me there were many contenders, so let me give you my top 6, in no particular order:
- TAPER – I don`t think I have EVER, known a single subject that has attracted so much interest/speculation/comment for so long; not just on this site but in all financial mediums. If the actual outcome (whatever and whenever it may be!) was going to be earth shattering, I could half excuse it, but it won`t! The US, is only going to reduce its market support/stimulus programme, and that will happen at some stage soon. When it happens, we will assess and adjust our views according to the contents of the plan; until they actually give us some news – enough already!!
- US GOVERNMENT SHUTDOWN – I honestly don`t know how all the people concerned, could have deliberately not seen that there was a collective much bigger picture, and negotiated their way, in an adult fashion away from this. The US did not, at this time of global power re-shuffling, need to be humiliated like this. I can only conclude that there was a massive fault in leadership, but just where along the line that fault lay, our friends stateside may have a better idea than me.
- RECOVERY v REALITY – fortunately for all of us, the global financial meltdown of 2008, is fast becoming an economic text book entry rather than a memory. My gripe, is the contrast between measuring this global recovery in terms such as GDP, and the increasing plight of so many families who have seen their living standards decrease sharply, just as politicians (and Central Bankers!) proclaim a new Jerusalem has been spotted just over the hill. Unless we change focus, our social structures will be increasingly under pressure, and that will not benefit anyone!
- REPETITION – this refers to the number of times that prominent central bankers are required to make speeches. Seemingly every week, we have details of an address by at least two of `the gang of three`, and I feel desperately sorry for them. Very little changes – in strategy terms – on a weekly basis (particularly if you have a `forward plan`!), so to have to say, yet again that UK interest rates are not going up in the near term, or that euroland is just fine and dandy. It must be annoying for them to have to juggle the words – and for us.
- BUREAUCRACY – despite various government`s stated commitment to reducing the levels of form filling and red tape in the private sector, and the often inappropriate and time consuming nature of performance measurement in the public sector, we seem to make little progress. Unemployment is a huge issue across Europe, and taking away some of the painful obstacles to hiring people would be a real help! Similarly, tax systems are depressingly complicated and bureaucratic. I am painfully aware that often, politicians just lazily layer new rules on top of an already unwieldy structure leaving one hell of a mess for anyone sensible who tries to come in and re-jig the whole sorry system.
- COMPETITIVE DEVALUATION – been going on with greater or lesser intensity and focus the whole of the year. The orthodox reason being that in emergence from a recession, a lower exchange rate is a way to export more and therefore stimulate domestic industry and employment. The UK did it in the 90`s, but that`s really before anyone noticed, and we had our own personal recession! Now, of course with most of the world (apart from the UK) looking for a competitive devaluation, it all looks a bit tawdry – especially when denial takes place! We have all agreed that exchange rate management as a central policy doesn`t work, so let`s stop trying to `beggar thy neighbour` in the hope that no one will notice!!
Maybe tomorrow I`ll be a bit more positive, and try to isolate the things that I liked about 2013!!
