Wednesday, 31 December 2008
A happy,prosperous,peaceful and above all healthy New Year to one and all when it comes.
Tuesday, 30 December 2008
Digby and Wilf: Exhausted Polish Lowland Sheepdog brothers after a thirty minute walk in the olive groves
Monday, 29 December 2008
Sunday, 28 December 2008
So Japanese output of automobiles is down 40% in four months.These are levels of manufacturing contraction not seen since the late 1920's. Production will probably stabilize and then bounce back by mid next year but the impact on industrial investment plans in 2009 and the first half of 2010 will be dire. Replicate Japan's economic woes in the automotive and consumer sectors in Europe and the US and it becomes clear that 2009 will be a humdinger of a contraction.
There seems to be one overridingly positive piece of news as we enter the New Year. Governments have saved the banking system. That isn't to say there won't be more pain to come in the next two years as credit card, mortgage and consumer loan defaults sky rocket - but the system has survived. What has emerged is that the landscape of banking has changed as a result of the government involvement, perhaps for ever. Nor is the process over. As the severe economic cycle works its destructive way through consumers balance sheets the British government and others in Europe and Asia will probably have to fully nationalize some of the banks they have taken a stake in this year. We may be entering a new era of 'socapism' where social concerns and capitalist practice are wedded together through directed lending to deserving industrial and consumer causes. The thinking of society at large seems to be moving in this direction - Deutsche Banks Chairman found himself embroiled in a public dispute with a German Bishop this week over excessive greed in the banking system. The problem is that the scope for corruption in a politically managed finance system is huge - too many party donors may find access to capital easy while political opponents of the government find it impossible. For a good example of this process in action look to Russia.
It is the larger economy that remains troubled. Very low interest rates and a fall in the price of gas at the pump are putting money back into consumers pockets in the short term. This may make the initial recessionary fall shorter and less severe than it might have been. At the same time it's easy for governments to print money to revitalize economic activity. It's more than likely that markets will breath a huge collective sigh of relief when President Obama unveils his $1 trillion stimulus package , but then what? When it comes time to take this vast amount of fresh cash out of the market interest rates will have to rise,sharply,otherwise we may face hyper-inflationary forces within two or three years. In the US and the UK the huge budget deficits that have been run up will soon drive borrowing costs higher bringing a close to the refinancing boom and driving housing markets lower again. Commodity prices will likely surge again as emerging markets gear up for what seems set to be a brief recovery. As rates rise the companies that have been kept afloat by low borrowing costs are going to find that the lean times have returned.This is when the second, and more painful leg of the downturn kicks in as part of a W shaped recession.
Saturday, 27 December 2008
Friday, 26 December 2008
Thursday, 25 December 2008
Wednesday, 24 December 2008
Tuesday, 23 December 2008
After a restless, owl serenaded night, woke to a bright pink sky flooding into the house. Fog had settled with the top of the clouds twenty or thirty feet above us. By breakfast time the rising sun was colouring the fog the most stunning crimson.I had always thought that Scottish light with its clarity and softness was without comparison but the hill light here with its Mediterranean tones is equally compelling.
Hope to go to Assisi today but we are still waiting for Fortnums to deliver the Christmas cake and pudding. A terribly nice man from their packing department phoned to say they had tracked down the parcel and it would definitely be delivered today. We shall see. Better late than never.