Wednesday 26th June
You must know by now that I am never the harbinger of bad news. Ever optimistic, ever hopeful and never one to predict doom and gloom. Hahaha. But almost unseen, hidden away in small print have been the first slight shivers. Strange that this should coincide with an equally silent and inexorable rise on London property prices, but maybe the two are linked. Bricks and mortar is always a safe bet for the longer term.
So, what on earth is the boy talking about you may be asking. Well we may indeed be standing on the edge of a precipice, the steepness of which is as yet unknown; it could be an ever-widening chasm or just a crack to be papered over, much like many before.
China, that unknowable and slumbering giant is the worry. Or maybe just the hare-trigger that might fire the gun. There have been increasing signs and rumours that the much lauded Chinese industrial revolution may be in a spot of trouble. Those magnificent growth rates of 10% plus which have so astounded the world appear to have slowed to about 7%. But even this would be the envy of anywhere in the West. But just think for a moment. How can an economy grow at such a rate, doubling in size every seven years, cities mushrooming and dwarfing any in Europe, hundreds of power stations being built every year, a third of the worlds skyscrapers being built in one country. The mechanisms of the Chinese state are still shrouded in mystery, but at the end of the day it has been printing money, and much faster than here and in America. And suddenly there are troubles looming. In exactly the same way as the last financial crisis started with a crisis in inter-bank lending the Chinese banking system appears to be in trouble.
Stock markets have reacted, as usual and mostly computer driven as they are with quick falls. Gold and oil prices are falling too. This may all be another false fear, and the hiccup swallowed and normal service is resumed. But I am not sure. The combination of easy money through QE and very low interest rates has only encouraged even riskier behaviour from the greedy financial institutions, and most crucially lessons have not been learnt. Rather than real reform banks have been propped up and supported; maybe because the alternative was too awful to contemplate. But we may have simply bought a little time, not a long term solution.
Who knows? But I must say that the view standing here on the edge of the precipice is truly stunning.