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.
Robinson 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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