My old (158 at the last count) colleague from t1ps Robert Sutherland Smith is working out his last weeks at the place that should not be named. As of now he is full time back where he belongs with Steve and myself. As such he continues his monthly reflections from the ponds at Hampstead Heath. RSS has done a cracking piece on bonds and equity markets - why he is bullish - today on shareprophets (here) but for me writes:
It’s that ‘gather ye rosebuds while ye may’ season of August in high summer at the pond. Blackberries (still an unripened green) are forming in the undergrowth of shrubs and bushes at the edge of the water, reminding us that nothing lasts for ever - particularly northern summers. Soon, there will be fireworks over Edinburgh Castle to mark the end of the Festival and massed bands and pipers will be marching to the old tunes - the ‘Black Bear’ and the barren Rocks of Aden, swaying - down the Royal Mile and into Autumn.
Shortly after, in London, they will be closing the doors of the Royal Albert Hall on the Proms and another summer season will have come and gone as cleaners sweep up the paper festoons and indoor fireworks left behind after the last notes of Rule Britannia, Jerusalem and Auld Lang Syne have faded away into late summer, early autumn air. One trusts that no Union Jack will be found abandoned. We British do sad parting, melancholy and decline very well!
Even the turgid state of the British economy has not lasted; there seem to be green shoots of economic recovery even if they are modest - as green shoots are by definition - but unaccompanied by any cogent explanation as to why they should suddenly be sprouting. Is it a change in the insubstantial spirit they call ‘confidence?’. May be we have just got fed up with being fed up! Perhaps it was the Royal birth of a new Prince of Cambridge; the sudden African sunshine and heat after the cool and rainy spring and early summer
Probably, the astonishing string of British international sporting successes including Wimbledon, the Tour de France bicycle race, the triumph of the British and Irish Lions down under and the Ashes victory over the men of OZ. (I had always thought that Australians would go down a notch or two when ‘Chips’ Rafferty left the scene!) Things to send confidence sky high after the long fatalistic, downbeat sermonising and cutting of Chancellor George Osborne as the man with the reputation of turning Blighty into modern Greece, without it even being locked into that black hole marked ‘Euroland.’ Could it be that we were talked into near recession?
So the question is, will greater confidence keep rising into Autumn and winter. Part of the mystery, as I see it, is the statistically reported fact of a significant decline in real income since 2010. How is it possible to have a sustained economic recovery in an economy where consumption accounts for two thirds of economic activity and the consumers are so hard up? Have we merely seen an unsustainable fling brought on my good mood? Similarly, other green shoots of economic growth have popped through the hard earth of the economically frigid lands of the Euro continent. The same question arises; is it just a flash in the pan?
The other potential barrier ahead is the forecast prospect of a Republican party victory in both houses of congress in the Autumn. Would that mean economic gridlock? The Grand Old Party is now given over to seemingly pointless dogmatic opposition for the sake of opposition. Will they attempt to put the Administration into bankruptcy once more, hitting economic recovery and thus, ironically, prolonging the quantitative easing that many of them profess to abhor? Parody, is a characteristic of modern US politics!
Elsewhere, economists have been explaining for some time the difficulty of changing China’s economic model from capital intensive growth into market and consumer lead growth of greater domestic consumption. An average economic growth of 7.5% has been attained despite such concerns, with consumption recently growing at 13% p.a. So much, so far, for the theorising; China seems to be pulling it off. I stop to watch a heron circling the pond. My mood is optimistic.