Looking on the bright side
The great virus crisis is miserable in many ways. But there are glimmers of positivity, says Merryn Somerset Webb.
It’s not all bad. It really isn’t. The great virus crisis is utterly miserable in far too many obvious ways for far too many people. But there is perhaps a glimmer of positivity to be found in the way it is also helping us cut through a lot of the world’s waffle and look at some of our core problems a little more clearly. We cover a good few of these things in this issue (our fifth done entirely from home!).
First and probably most importantly it looks like increasing numbers of us will begin to understand that inflation is the only even vaguely kind answer to our long-term economic problems – and that as soon as we get on with creating it the better. We may even start to think that a fairly comprehensive debt jubilee would be the most painless way of achieving just that. Listen to my podcast with the expert on jubilees, Steve Keen, this week and see John’s thoughts on the matter. (Key point: it is possible for jubilees to be fair even to those who do not have debt.)
A few other things. We might now learn to protect ourselves from China a little better, or at least think about how we are not protecting ourselves. We might all be forced to be a little more honest on the monumental failings of the European Union – and its viability. Worrying about this is not illiberal or immoral – it’s entirely rational. We may begin to appreciate the bureaucracy-free philanthropy of the world’s super rich and even the idea that work (or at least purpose) is intrinsic to our happiness. Perhaps we will even start to think a bit more about the value of our universities (some are invaluable, some are of no value).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
I can offer one other glimmer of hope for you. In our cover story, John explains just how awful the shutdown-driven recession might be. But there is a chance that our forecasters are being a bit too downbeat. Not all the numbers coming out are as horrific as expected. Chinese exports fell only 6.6% in March and retail sales in the US were down only 8.7%, despite lockdowns being put in place in the middle of the month. April could well be much worse of course. But it’s worth wondering (as ever) if the models being used to suggest total economic carnage are getting their inputs right.
As Intertemporal Economics’ Brian Pellegrini points out, most of the modelling for the impact of pandemics was done after the SARS outbreak in 2003. The culmination of all that work came in a 2006 study by the US Congressional Budget Office – which is now much relied upon. The thing is, it’s a tad out of date. Technology has moved on massively – as has the ability of millions to be fully economically active even from home. Sure, a huge part of the economy is frozen. But exactly how much? On my street, everyone who was working is still working – at home, but more or less as productively as before. Are we underestimating the number of people who can do that in a modern economy?
Time will tell. But the point is that while the risks to the downside for economies and markets are more than obvious, there might be risks to the upside too (if things aren’t as apocalyptic as some think, is it possible that fiscal and monetary authorities have done too much?). With that in mind, this week Cris Sholto Heaton wonders if it’s time to buy into Asia and, of course, John’s cover story – where we also update on the performance of our portfolio of investment trusts.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
-
Bitcoin price one of the most-asked questions on Alexa - here's how to buy the cryptocurrency
According to figures from Amazon, which cover September 2023 to November 2024, pop star Taylor Swift and Bitcoin were named among the most popular Alexa queries of 2024
By Chris Newlands Published
-
Investing for children this Christmas – five ideas
It might not come with a shiny ribbon, but an investment fund could be the gift that keeps on giving. We share five ideas if you are investing for children this Christmas.
By Katie Williams Published
-
UK wages grow at a record pace
The latest UK wages data will add pressure on the BoE to push interest rates even higher.
By Nicole García Mérida Published
-
Trapped in a time of zombie government
It’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
By Max King Published
-
America is in deep denial over debt
The downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
By Alex Rankine Published
-
UK economy avoids stagnation with surprise growth
Gross domestic product increased by 0.2% in the second quarter and by 0.5% in June
By Pedro Gonçalves Published
-
Bank of England raises interest rates to 5.25%
The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
By Ruth Emery Published
-
UK wage growth hits a record high
Stubborn inflation fuels wage growth, hitting a 20-year record high. But unemployment jumps
By Vaishali Varu Published
-
UK inflation remains at 8.7% ‒ what it means for your money
Inflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
By John Fitzsimons Published
-
VICE bankruptcy: how did it happen?
Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
By Jane Lewis Published