Scotland's Economy

China scaremongering and restoring BBC neutrality

Screen Shot 2015-08-31 at 11.15.40This last week has seen some over the top scaremongering on the Chinese stock falls and Nick Robinson’s observations on the campaign to restore BBC neutrality were frankly doolally.

When China catches cold we all catch cold, such is the importance of China to world stock markets right now. The finance system, and with it the form of capitalism called consumerism and globalisation, pretty much died a few years ago and was put on life support. If the banking bail out was emergency surgery, then the growth in China and the other emerging BRIC super economies (Brazil, Russia, India and China) was the life support machine.  So long as the BRICs boomed there was hope, so seeing China stutter has sent stock markets and some media commentators into a panic.

Former Labour advisor Damian McBride took to Twitter to suggest the stock market dip could lead to civil disorder. He advised keeping hard cash at home, stocking up on bottled water and tinned goods and to agree rally points for family and loved ones in case all communications get cut off. For a second I wondered if maybe he knew something I didn’t, then I saw that he was a special adviser to Gordon Brown and a former head of communications at the Treasury and I knew I could leave all the tinned soup in the trolley.  Well, didn’t McBride and Brown tell us they had put an end to boom and bust? The BBC joined the silly season claiming that market volatility was partly caused by many senior fund managers being on holiday, and so were not there to steady the ship. Maybe the government should bring in legislation limiting the holidays of hedge fund managers. “Keep your million pound bonuses just don’t go on holiday, it will cause a run on tinned soup”. Give me a break! I think what actually happened is that the guys that take the city economics editors to lunch and feed them lines to make them look clever on TV went on holiday, leaving reporters to make up their own stuff.

What is happening in China is worrying and, given my previous description of banking bailouts being akin to adding extra bullets to a game of Russian roulette, you might think I would welcome the apocalyptic scenarios, but I don’t think the end is nigh – not yet anyway.

China’s growth has been way too high to be sustainable and now needs adjusting. China now has more private investors than Communist party members.  The 90 million individual investors (80% of all investors) who are less expert and have more personal skin in the game than the corporate investment behemoths that dominate exchanges in the West; they are also more jumpy.  As a result, China’s comedown will likely be bumpy for some time to come. The real weakness of the world financial market is not China moving to a more sustainable 5% growth but the fact that western market values are artificially high.  Whilst the real economy has struggled to recover from the crash, markets have boomed, driven higher by the steroid like effects of QE and the bank bail outs. The reason markets are panicking is because they know deep down that Western equities are overpriced versus the real economy and an adjustment is due.

However the “haver of the week” award goes to BBC’s Nick  Robinson, who instigated a totally misguided rant at a spontaneous, peaceful, grass roots movement demonstrating for the BBC to be politically neutral on constitutional issues. Hardly a contentious issue to demonstrate about, so it’s telling how upset the BBC big guns seem to be.  That so many ordinary BBC customers sense a bias in every broadcast that adds up to an assault on democracy, is something they should investigate, not slander.

Screen Shot 2015-08-31 at 11.18.11Robinson wants publicity as he has a book to sell but claiming, as he did, that the BBC demonstrations were SNP (state) organised was foolish, dead wrong and ironically proof of a biased viewpoint in itself. Most BBC Scotland staff fought against such bias but the London-centric culture of the organisation weighed heavily on its coverage. The UK news programs in particular were one-sided in their approach, often accepting unionist points without challenge and a sage nod of the head whilst sounding incredulous as they then accusingly threw those scare stories across the studio at Yes spokespeople.  To me it felt like I was playing a game of tennis where only my opponent was allowed to serve – even if you win every point you always appear to be on the back foot.

That sort of bias is more easily visible to one side of the argument, it is often unintentional but always unacceptable.  We need a devolved and steadfastly neutral Scottish Broadcasting Company and a single, informed, international and Scottish-focused news program, not a regional follow on.  Ironically the fact that so many London based media commentators believe that calls to devolve the BBC are based on a wish to install a pro independence bias rather than establish neutrality and relevance to a post devolution Scottish audience is a precise demonstration of how misguided and completely out of touch some London-based reporters are with the political, social and democratic realities of Scotland.

 

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About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland he ran a small social media and sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

4 Comments

  • I welcome your balanced, and informed comments on the China situation, because for me, not having any great knowledge of such matters, and unwilling to trust any outpouring from the M.S.M, I can now more readily understand the situation.
    As for broadcasting, the opportunity,for the moment, has passed when we could have created a Scottish Broadcasting Service, and since I believe that the B.B.C is beyond redemption, we will have to become an independent nation before that objective can be realised.

  • It’s been interesting to see that although when China sneezes, Australia gets pneumonia and pleurisy, the ASX seems to have been more in denial about what’s been going on there recently than just about any other Western market.

    • Australia has indeed a major connection to the Chinese economy and especially in aggregates sales to China as well as as a source of inward investment. So Australia’s growth will slow but as long as it is a slow down and not crash then there are still positive signs within the Australian economy. If china devalues them Australia must do so as well and that can drive inflation on european imports. Housing prices in Sydney in particular are crazy high and could do with some normalising and on my last trip I was amazed at the speed of development in Sydney, Brisbane and Gold Coast in particular – looked suspiciously bubble like – so a managed slow down could be beneficial in the longer term.

      • (Editor) I have changed the typo Derek refers to, thanks Derek actually laughed out loud.

        Start Comment>
        You know, I read that several times, wondering what biblical reference you were making, and I’ve just spent the last few minutes laughing at myself for failing to realise it was obviously a typo. Bubble! Yes, it most certainly is. Property markets, Sydney in particular, and to a lesser extent Melbourne, have become vastly over-inflated, fuelled by Australia’s generous negative gearing arrangements and speculative investment. Quite a bit of the money is Chinese. First time buyers are finding it incredibly difficult to get into the property market. Everyone knows it’s happening, but nobody seems capable of action. The opposition gently suggests it might be a good idea to have a look at the negative gearing, and the treasurer says, “They want to reduce the value of YOUR homes!” Petty politics, no vision. They may call themselves Liberals, but be under no illusion – they are Tories through and through.

        The other major issue causing concern is the double whammy of falling commodity prices, particularly iron ore, coupled with a decrease in demand from China. The Reserve Bank has been doing its best, with some success, to talk down the value of the AU$ and a couple of interest rate cuts this year have been mainly for that reason, but the devaluation would have had to have been precipitous to balance the drastic fall in commodity prices (it’s interesting to note, given the scare campaign I witnessed last year over Scotland’s supposed over-dependence on oil, that Australia’s economy is far more resource-heavy than Scotland’s, a fact that has never worried the Australians in the slightest).

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