Herewith my letter. There is much more I could have added but letters have to be brief. Of the UK bank lending to business, over 80% is for construction with over 80% of that construction being in London and over [...]
2016: Goodbye to All That Nonsense and Hello to 2017
I’m looking forward to seeing the back of 2016.
However it’s not particularly as an investor that I’ll be glad to see the start of 2017 but as a voter. I have voted 5 times since 2014 in elections for EU, UK and Scottish parliaments, 1 Scottish referendum and in June 2016 the Brexit referendum. It has been the latter that has seemed to matter the most and it has caused all the political upset although markets have been benign about the result so far except with currency markets against Sterling. Unfortunately that does matter as prices are rising and inflation will creep back in to the UK RPI figures as 2017 progresses.
Come November 2016 the US election produced Brexit plus plus. When “The Donald” triumphed over the establishment front runner Hilary Clinton, world experienced Secretary of State and former First Lady of the USA-how could she possibly lose against Trump. Well loose she did and just like Brexit in the UK. Every café latte sipping, yoga loving, right thinking metropolitan immigration loving elite from billionaire to university boffin had yet another freak-out about how those who don’t know better than us could possibly vote like that (yes, I’m including myself in that list of irked how dare they vote like that types- to my credit I saw the anti-democratic bias early if I may defend myself).
Well as writer H.L Mencken said,” Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
Those who voted for Trump will find their wall across the Mexican border isn’t going to get built after all and those steel and coal jobs aren’t coming back either. However I do think some infrastructure will get built and not before time- let’s hope his administration can raise the money if not the taxes to pay for it all. It’s going to be interesting. How about those Japanese car manufacturers in areas of the UK that voted for Brexit- will they stay put come the eventual day? The UK chancellor hopes so and has made some supportive noises to them and to lots of financial companies in the City of London too- again we’ll see in time although I have my doubts.
In Europe the slide towards nationalism and nativism continues with Italy refusing to face up to economic reform after its referendum and Marie Le Pen of the French National Front having a decent chance of becoming President. Even Angela Merkel is having a harder time and will face questions for coming elections over her immigration stance after the Berlin attacks in December.
The answer isn’t 2nd referendums or election recounts and most certainly not terrorist attacks either but engaging in the democratic process more than just voting at elections. It’s time for some democratic deliberation or even some form of sortition to get people active and engaged. People power does not come from voter apathy or partisan grid-locked politicians but from people seeking to make changes themselves.
So for both investors and voters the lesson from 2016 is that eventually, politics do matter, and as a society if you don’t deal with your problems or find a compromise, eventually, you can become a state like Syria or Libya as tragic as a civilised state can get. It was called the Dark Ages the last time.
There are of course opportunities and reasons to be cheerful – some pundits are tipping banks for 2017. I’m holding mainly and adding to beaten up Engineers who should in time and with some decent management make a comeback along with some inflation and a weak currency plus a predator or two- E2V Technologies another example has been gobbled up this month.
I wish all a Happy Christmas and a Happy New Year for 2017.
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