Economist is always right

The best editorials in The Economist are timeless. Traditionally they germinate in a Monday morning editorial conference run on the lines of an Oxbridge tutorial; Tuesday for a sometimes leisurely write up; Wednesday for editing; last minute tweaks on Thursday; giving a quality product with a life span longer than yesterday’s fish.

The latest on the global energy shock fits the bill.  Structured on the classical editorial tripos of “ … three problems loom[ing] large”.  Magisterial, incisive, combining sound economics with a global sweep of history.

But perhaps ten years too late.

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David Seymour and Judith Collins meet Daniel Hannan

Daniel Hannan is a British politician whose joy in clear thinking probably exceeds his ambition for high office (although he played an influential and honourable hand in the Brexit ruckus).  

And his thinking on the future of Britain’s Conservative party has resonance for right-of-centre politicians around the world.

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The IMF is still optimistic.  Someone needs to be

Britain’s latest irritation is a shortage of drivers.  What could it be: foreign truckers repatriating to Bulgaria post-Brexit; a shortage of motorway lavatories?  

The Daily Telegraph thinks it might also have something to do with the backlog of 56,144 licence applications that built up during Covid.

Which persists because staff at the licensing agency don’t want to go to the office.  And management can’t let them handle personal data at home.  An upsurge of strikes certainly isn’t helping either.

Not everyone responded with due gravity.  When the government issued a friendly reminder to existing licence holders, one German-qualified holder let it be known: 

I’m sure pay and conditions for HGV drivers have improved, but ultimately I have decided to carry on in my role at an investment bank”

Welcome to the post-Covid world.  Not just in Britain – supply disruption, rising inflation and interest rates creaking upwards are global phenomena.

The IMF has issued a double adverb warning for central banks to be “very, very vigilant” over inflation risks.

The job of markets is to adjust.  This is how economic growth happens.  

And after a global disruption of supply and demand on the scale of the 1970s oil price shocks, or the exit from controls after the second world war, it looks like there is lots of adjustment to be done.  

Which is perhaps one reason the IMF is a little less optimistic in its latest World Economic Outlook:

“The global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022, 0.1 percentage point lower for 2021 than in the July forecast.”

It says:

“The downward revision for 2021 reflects a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics.”


“The fault lines opened up by COVID-19 are looking more persistent—near-term divergences are expected to leave lasting imprints on medium-term performance.”

No wonder it feels:

“Policy choices have become more difficult, with limited room to maneuver.” 

Which is worth some reflection.

Politicians everywhere might feel that their policy choices have always been more difficult, particularly after the global financial crisis.  But for the last ten years, they have had the benefits of low interest rates, rising house prices and easy debt increases.

Now they are reliant on the workers and businesses in the private sector to deliver the necessary productivity growth, while also absorbing the costs of more regulation (that’s you climate change) and higher taxes.

While keeping the workers (when they are working) at Britain’s licensing agency happy.

The IMF is optimistic. Policy choices may be getting more difficult yet.

Perhaps most difficult in those countries where government policy has so far been most successful in cushioning voters against change.

Boris the shape shifter – yeh that sounds right – but is there substance to the shape?

It takes a lot to grind down the hard-working ideologues at the Guardian but Boris Johnson will stop at nothing.  There was a whiff of admiration amidst the self-loathing in the opinion columns “The Tories have become the party of optimists” and “Shapeshifting Tories have mastered playing to the crowd”

You might have thought the burdens of the premiership and near-death during Covid would dampen his natural ebullience.  But at this week’s Conservative party conference his autodidactic illumination of classical reference, historical allusion and ribaldry was undimmed.  Who else, a fortnight after – again – Guardian headlines “Boris admits he has six children”, would say that Britain has only 0.8% of the world’s population, despite our best efforts.

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Covid is now one problem among many 

Yesterday’s announcement that Australia will re-open its international border in November marked another step in the walk-away from zero Covid.

It’s harder in NZ to appreciate the extent to which this is happening.  In England and Wales, the most recent weekly statistics showed 850 deaths with a Covid linkage (although the fact that deaths were 2,000 above the seasonal average is perhaps of more concern).  But there seemed to be more interest in the latest slimming of Covid-bureaucracy to make it easier for Brits to travel.

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Correction: Britain’s gas crisis means Europe’s gas crisis

Remember the 1970s?  We were going to run out of oil and everything revolved around energy prices.

America got into wars because of it and built an enormous strategic stockpile; NZ had carless days and the hydrocarbon developments of Think Big, the last of the great state-directed development projects (well … until the renewables project, national fibre broadband and the distortions of the Resource Management Act that is).

Europe’s natural gas crisis has the potential to head in a similarly dominating direction.

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China’s problems in property are a difficulty for everyone

As China’s most indebted property developer Evergrande hovers on the brink, the question is where the government will draw the line on support for the firm – and for the financial system.

Markets are nervous but the consensus seems to be that while an example may be made of Evergrande, the damage should be contained there.

But the Financial Times’s Gillian Tett (an insightful chronicler of the 2008 global financial crisis) sees the issue as more fundamental:

“… what is the pillar of faith on which asset values rest? Is it government support? Or is it the independent scrutiny of accounts by investors? Does either pillar work?”

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New Zealand’s absence from AUKUS is very much part of the debate

The immediate reaction in the UK to the AUKUS announcement was focused less on the UK’s new commitment and more on the lamentations of French politicians at the loss of a $90 billion Australian submarine deal.  It was left to former PM Theresa May to probe unsuccessfully the extent of Britain’s obligation to defend Taiwan.

Chuckles aside, you might think that anything which outrages France and China has something going for it.  

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