London 1 January 2012: This blog has been dark for a while. After I set it up, Space, Time and Money quickly became a foster home for writing that was meant to go on blogs being developed for Flightglobal and Flight International, where in my 9-to-5 existence (and other hours as needed!) I’m the business editor.
Thus Space, Time and Money has featured a lot of stuff about money and aviation. To add to the confusion, that includes European spaceflight, which is one of my beats at Flight (and good fun, too, not to mention rich pickings; there’s lots of very ambitious stuff going on over this side of the pond – see Flightglobal or our spaceflight blog, Hyperbola).
But as the title hopefully implies, ST&M is supposed to be a broad-ranging vehicle for news, views and comment on the events and issues shaping our soci0-economic lives. That’s a rather broad remit, of course, and could certainly include topics like aviation – a capability which for sure has had a profound impact on society and economies all over the world. But the idea is to stay outside the sphere of my regular job, as I believe journalists need to be comprehensively curious, and need to communicate as widely as possible. I’ll leave it to others to determine whether or not I deserve to be called a journalist.
So, in the way of “relaunching” this blog and kicking off 2012, here’s a few observations:
1 – The euro won’t survive the year. It’s probably possible to devise a plan that could just save the currency, but to do that would have the European Central Bank printing more money than any of the major players could stomach, and would demand such austerity that, to most voters, the cure would look far worse than the disease, in both the short and long term. More problematic, though, is that voters across Europe won’t tolerate the sort of fiscal union their leaders are proposing. The tide of history is running to local autonomy, not to a federal superstate, and be they Greeks, Germans or Finns, they won’t accept rule by a distant Eurocracy. This frame of mind is most audible in the United Kingdom, but the UK is not, in fact, so far out of line with people on the ground across the EU.
The crunch could come as early as April and the first round of the French presidential election. Since nobody has a plausible solution to the euro crisis, one candidate or another is going to propose that France take control of its destiny and get out. The first major-country defection-threat could also come from Italy, of course – watch Berlusconi.
2 – The fallout of a eurozone disintegration won’t be as bad as the pessimists fear. Free trade and free movement of people in the EU will survive, and commerce and banking are sophisticated enough to make adjustments to keep business moving. Politicians may fret now, but when it comes to it business people won’t just roll over and die.
In any case, the value of the euro is overstated. Exchange rate stability comes at the price of regional inflation and unemployment rate variations (just as in that other currency union, the USA), and nowadays banking is sophisticated enough to cope with variable exchange rates. When going from France to the Netherlands, say, just pay with plastic. We all do that anyway – who cares about cash?
3 – Eurozone trouble may swing the US presidential election, but it’s not clear which way. The vote will be determined by the economy, and that makes it an election for the Republicans to lose, unless perhaps the US has a good euro crisis, with capital flowing in as investors seek refuge from the euro. The risk to Obama is mostly on the downside, though, as all forecasts point to 2012 being a tougher year than 2011. The president is also at risk from any number of external shocks, from another Iranian crisis or a gas price spike on the outbreak of war in the Middle East, or a slump in China.
For what it’s worth, your correspondent expects the next president to be Mitt Romney, by the narrowest of margins.
4 – China will survive 2012 without a serious economic slowdown. Internal trouble in the form of political unrest, inflation and unemployment will force the government to play rough, though. And, 2012 will be the year that foreign investors start to fall out of love with a country that looks increasingly at risk of instability. For Americans and Europeans, investment opportunities at home will start to look attractive, and businesses will finally start to heed anti-China calls to keep jobs at home; consumers, finally, will be more worried about whether they’ll keep their job than where their next cheap TV is coming from.
5 – Russia will end 2012 on the brink of regime change. The protests against vote-rigging were just the beginning.
6 – The best business to be in this year will be tourism. American and European consumers will pay down debt by not buying stuff, but treat themselves to holidays. Hotels, restaurants and airlines will be full, but full owing to cheap deals they package up to keep customers coming.
7 – Retailers will not be happy in 2012. The world is awash with consumer goods that nobody needs, and those goods they do need can be bought cheaper online. Liquidation sales, anybody?
8 – Having said that, home improvement stores will do well. In between a few short holidays, people are going to stay home and fix up the house.
And, in the way of far more interesting and important things:
9 – Roger Federer is arguably the greatest tennis player ever, even at his advanced age. Watch as he lines out “arguably” by winning a calendar Grand Slam.
10 – The Green Bay Packers will win the Super Bowl (but anybody could forecast that).
Filed under: debt crisis, economics, geopolitics, Uncategorized
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