FTSE closes just above 5000, Dow falls to 10,600
China bubble looking ever more fragile
Six world leaders tear into EU
Next stop: more G20 puffery
‘The truth is, astonishingly, that expectations in US markets are very high indeed’, The Slog wrote eight days ago while opining that, in reality, Uncle Ben’s Mice had nothing up their sleeves. So it proved yesterday: the much predicted ‘Twist’ slumped in a flaccid manner onto the investors’ table, and those around the table blew it an enormous raspberry. There is something about Ben Bernanke that makes him absolutely the wrong man for a crisis: when nobody in authority has anything useful to say, they should either shut up, or whip up some confidence. Poor old Ben has a talent only for shutting down confidence. He is the anti-matter version of Ken Dodd.
I still look back on the unfolding of Crash 2, and conclude that the most important thing missing has been inspiration. The sort of inspiration that comes up with a good idea, as opposed to endless bromides (Trichet, King and Geithner), or glib assurances followed by panic-stricken warnings (Lagarde and Obama). And the sort of inspirational speech mapping out a real action plan that gets everyone up for it. Kennedy could do this, as could Churchill and FDR. There is nobody anywhere on the world stage now with the same genius. Party machines and diluted cultures do this: nobody with any talent wants the job, so we wind up with pinheads like Cameron, Sarkozy and Gillard.
Such pinheads have been exchanging billets doux over the last 24 hours. A six-nation G20 group called for ‘foresight and concerted action’ – a bit rich coming from David Cameron, the man who has failed to foresee anything since coming to power…and Julia Gillard, a woman whose economy is even more dependent on one industry and one export customer than the UK’s reliance on banking services and the EU. Sarkozy replied on behalf of his re-election campaign to say that the G20 is now charged with ‘getting the world back on track. Oh. My. God.
Now the markets have finally got the message (about six months on average after the credit sector did) things will speed up. As I always say, there will be rallies and false dawns and all the rest of the bollocks. But pretty much every actor is now on stage in this tragedy. Playing Britain’s hopelessly narrow economy stands Osborne, a short Extra in the role of A Member of the Crowd. Up front is Obama the overleveraged Moor, looking for a Desdemona to strangle. Flitting around the stage is Lagarde, warning the EU Desdemona about what she now knows. Off stage, a Belgian is reciting Japanese poetry, while behind Obama we can hear the studied operatics of Wen Jaibao. The set is completed by Ange and Nico, star-crossed lovers asking wherefore art thou, why, and what for. There is no plot: it is an entirely new form of drama. The more the audience yells for them to gerroff, the more the Players shout “Whaddya think of it so far?”
In brief, the Chinese property bubble needs but one random pin to burst it…and with it, the last hope for the global economy. New figures out this afternoon show that the EU’s economy is at Dead Stop – a fact any mainland European could’ve told you back in May. BNP Paribas is swanning about looking for emergency cash, but beneath the surface its legs are moving so frantically, it can only be a matter of time before the sharks start to take major bites out of it. Today’s data batch from the United States was all awful. And thanks to an entirely predictable manufacturing slump, the UK has a flatlining economy alongside a variously torpedoed austerity programme.
So it’s on to the G20, and more flim-flam press releases. Meanwhile, it’s not Friday just yet: we still have to get through tomorrow. As I write, the Dow is still drifting downwards.
Welcome to Crash 2, Act Three. One more Act to go.
The Slog 