Russell Bruce considers the prospects for 2016
So it is 2016. If the year is to go on as it started we are in for a year of uncertainties, certainly at a global level.
The year, just two weeks old, has started with a number of significant events, which may or may not provide additional clues to the remaining 340 odd days.
First up, at UK level, is Corbyn’s ‘days of the long spoon’. A much heralded and protracted reshuffle that has left us none the wiser about a likely resurgence in the fortunes of a beleaguered Labour party. In truth it was pretty mild and within the range of the achievable.
MacMillan’s night of the long knives in 1962 was decisive and brutal, he culled a third of his cabinet and followed up by removing nine junior ministers three days later. The speed of action was due to Rab Butler, MacMillan’s Home Secretary, leaking details in a briefing to Daily Mail owner, Lord Rothermere. Butler held on to his job but he forced MacMillan’s hand.
The Conservatives were returned with a thumping majority of 107 over Labour at the 1959 election but by 1962 the MacMillan government’s economic policies were becoming increasingly unpopular. Plus ça change. Faced with declining electoral support, having lost by-elections to the Liberals, Tory back benchers were getting restless. Plus ça change. (Note for younger readers – the Liberals were a minor political party at the time, having held on to their 6 seats at the 59 election.)
Despite his decisiveness, the Conservatives were rocked by scandals in the following months and MacMillan retsigned in October 1963.
Having merely engaged in a bit of mild spoon stirring, will Jeremy Corbyn hold on for 15 months as MacMillan did? Odds look 50/50 which might be generous to Jeremy.
Still to come – Chinese New Year
Further away in China, the New Year, ours not theirs, opened with a stock market crash. Ten or 20 years ago nobody would have paid any attention. Now China is the world’s second largest economy. So that matters.
Exchanges around the world reacted with some concern and stock prices fell heavily. The Chinese government likes to control such matters and closed markets when falls breached five per cent on two separate days. Pressure built as a consequence, and China abandoned their five per cent market drop signal to trigger their ‘circuit breaker’ policy. Markets are now allowed to trade ‘relatively’ freely. The spoons are short in China. Corporate, private and shadow banking debt is high. Property values are falling and the bonds that financed an unprecedented building spree are junk.
Chinese national debt for 2014, on the other hand was 41.06% of GDP compared to that of Japan 230 per cent, USA 102.98 per cent, Euro Area 92.10 per cent and UK 89.4 per cent. Of the major economies only Germany and Canada reduced national debt as a percentage of GDP in 2014, down to 74.7 per cent and 86.51 per cent respectively.
The Chinese government, thanks to the build up of massive trade surpluses this century, has an almighty war chest in the level of its reserves. If you thought the USA was the richest country in the world then the rise in Chinese total reserves (gold and currency) paints a fascinating picture. Chinese total reserves are 9.2 times greater than those of the US.
The commentariat has enjoyed pointing out this is the Chinese Year of the Monkey. Accuracy not a concern. The Year of the Monkey does not start until February 7, when Chinese New Year festivities get under way. A lot may have happened by then given the opening days of 2016.
Odds on global stock markets recovering to end of 2015 levels by end of 2016 do not look promising. Stuff any spare cash under the mattress.
Middle East perpetual tension
The Middle East is still firmly off the tourist map as tensions, never actually below the surface, boil with the Saudi executions of dissidents and a respected, in other quarters, Shia cleric. The Saudis are bombing Yemen, still pumping out the black stuff to keep oil prices down, are digging into their sovereign wealth fund to finance their massive budget deficit and plan to sell some part of Aramco, the Saudi state oil company to shore up finances.
The West, plus Russia are bombing Syria without a clear plan for what follows. Daesh is being pushed back in Iraq. Western airstrikes in Iraq at least have the support of an elected government.
Predictions. Daesh will be pushed back and Iraq will see some stabilisation. Daesh is a brutal organisation that will never win the support of local populations, prioritising, as they do, incoming fighters over locals. In Syria chances of the country returning to some degree of stability are non-existent. Tensions throughout the region present more dangerous flash points than we have seen in years and the probability is to increasing instability.
What about Scotland?
The big non-event was the failure of the Forth Road Bridge to open on 1st January, as promised. A sneaky SNP government reopened it before Christmas. Said SNP government were caught out in their failure to control rainfall. These are devastating events for homeowners and businesses affected. The prompt availability of £1500 to families, businesses and organisations affected, three times more than those in Cumbria will receive, restored faith in First Minister Sturgeon after a bruising battle with the rainmakers.
Some councils are playing silly games, delaying the much needed cash to help people get back on their feet. South of Scotland MSP, Joan McAlpine wasted no time in getting stuck in to the Labour/Conservative coalition that runs Dumfries and Galloway Council.
The media, tired of pictures and coverage of the plight of ordinary people, turned its attention to a fortified tower house on the banks of the River Dee that lacked fortification from the rising, raging waters gouging out a strip of land between it and the river.
Baron Abergeldie may need to dig into his wee ‘geldie’ purse to deal with imminent fortification works. Still, as an A listed building Abergeldie may well qualify for grants to deal with the new fortifications.
A neighbour, The Duke of Rothesay, who has been staying at Birkhall on the surrounding Balmoral Estate, has sprung into action. According to The Press and Journal, “One of Prince Charles’s charities is appealing to the public to create a relief fund for those whose homes and possessions have been destroyed.” The Daily Record reports that Scottish Business in the Community, of which the Prince is President, has awarded £100,000 for emergency work to pour hundreds of tons of granite along the banks of the Dee to protect Abergeldie. (I have, so far, not been able to verify the Record story.)
But enough of the Baron and his foundations! When it comes to spoons he clearly knows who to sup with. There will be a lot more important issues for the rest of us to concern ourselves in 2016.