By Doug Tisdale
Greetings from London, where I’m spending January on international business. Writing about the economic future of the U.S. and Colorado in 2016 seemed daunting … until I had the opportunity to discuss and examine the economies of the United Kingdom and the European Union “up close and personal,” including a consideration of British reaction to the U.S. president’s final State of the Union Address.
Simply put, Britain has a much more somber view of the global economy’s prospects than our president. That said, with their proverbial “stiff upper lip,” they appear sanguine about weathering any turbulence in the marketplace, a sangfroid born of a greater, or at least longer, sense of history than Americans enjoy.
For example, last night, BBC One had a story on the excavation of a Bronze Age site in Cambridgeshire containing the “best preserved Bronze Age dwellings ever found,” with 2,500-year-old homes and uneaten meals preserved in clay pots. That same night, media mourned the sudden death of British rock legend David Bowie, exploring his career from his London birth to his reinvention as Starman to his death-preface album Blackstar. And all this in the shadow of a nationwide one-day strike staged by 38,000 “Junior Doctors” providing health services in the world’s (“take your pick”) most successful/most-distressed socialized medicine system.
Kinda gives you a different sense of perspective.
A number of UK commentators said the SOTU by POTUS was exceptionally optimistic. It was in stark contrast to news stories that the worst start to a week for European stocks since 2011, and the worst beginning to a year in history for the S&P 500, augurs ill for 2016.
“As goes January, so goes the year.”
Commentators made dark references to 2001 and 2008. Experts in the City of London (the financial heart of the country), including the Royal Bank of Scotland, urged investors, as reported in The Guardian, to “sell everything” ahead of a threatened imminent stock market crash. A London investment conference criticized the U.S. Federal Reserve for not realizing that the U.S. economy is, in fact, in far worse shape than has been acknowledged, with massive credit expansion in the U.S. “not for real economic activity; [but] borrowing to finance share buybacks.”
Bearish remarks weren’t confined to the British tabloids. The staid Financial Times published a similar opinion, comparing it to “the disastrous bubbles that burst in 1999 and 2000” and calling the Fed’s tighter monetary policy “an important blunder.”
Then there’s “Brexit” – the threatened exit of Great Britain from the European Union, with Prime Minister David Cameron promising a referendum this summer. Although any Brexit would take years to be fully implemented, that’s years of turmoil and uncertainty, and angst in the run-up to the election, especially now that Brent crude is below $30 a barrel, a 12 year low, most of which occurred in the past 18 months, with serious job cuts at BP and Petrobras.
Somber, indeed, but the British have endured this and more for thousands of years. Somehow they have endured. An old line comes to mind: In Berlin, things are serious but not hopeless; in Vienna, things are hopeless but not serious. Britain is like Vienna.
Are things serious, hopeless, fine, strong? The truth no doubt lies somewhere in the middle of these predictions and projections. And it’s only by being made aware of them all that you will be able to add to your Bottom Line.