Shocks & Stares » US http://blogs.hillandknowlton.com/shocksandstares H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 Politicians and the global economy – when will they learn? http://blogs.hillandknowlton.com/shocksandstares/2011/11/politicians-and-the-global-economy-when-will-they-learn/ http://blogs.hillandknowlton.com/shocksandstares/2011/11/politicians-and-the-global-economy-when-will-they-learn/#comments Thu, 24 Nov 2011 13:13:31 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=430 BY ROSS GILLAM

Once again politicians seem hell-bent on short term political wins even if this has a direct negative impact on the global economy. This time however, it is back to America rather than the inept Europeans.

Following a political debacle in the summer when Republicans refused to agree to increase the US’s debt ceiling, the US lost its AAA credit rating from Standard & Poor’s. After this, a Joint Select Committee on Deficit Reduction, or super-committee as it is colloquially known, made up of six Republicans and six Democrats was tasked with the objective of finding $1.2 trillion (£767 billion) in cuts over the next ten years.  This was an opportunity for the US’s politicians to right their wrongs and show they can act responsibly and start putting the economic mess back in order.

Lots of talk, but sadly little action from the JSDRC in America (Image:Epoch Times)

With the announcement this week that the super-committee had officially failed to agree on these cuts, once again politicians have shown a miraculous ability to do more harm than good to the economy. Following the news global stock markets fell illustrating the direct impact politicians have on the markets.

In case we needed reminding, this is largely due to the fact there is a US election next year. Both Republicans and Democrats are determined not to budge on economic principles in order to enhance their 2012 election prospects, although this is questionable after many Americans were fed up with both sets of politicians over the debt ceiling shambles in July. The news this week continues a worrying trend of politicians favouring short term political point scoring to the detriment of long term economic stability.

Politicians need to stop treating their electorate as stupid and try to dupe them with short term fixes. It is time politicians spoke to their electorate like adults and outline the long term strategy needed to sort out the global economy – even if this requires some painful truths. On this point it will be interesting to see how our own Chancellor talks to us when he delivers his Autumn Statement next Tuesday.

For further comment on US politics and its ability to stifle sound economic policy, the wise Francis Fukuyama’s article in yesterday’s FT is well worth a read.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps-friday-fiver-5/ http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps-friday-fiver-5/#comments Fri, 27 May 2011 19:49:23 +0000 Edward Jones http://blogs.hillandknowlton.com/shocksandstares/?p=145 In case you missed it, President Obama was in the UK this week to talk essential relationships, cyber crime and have a barbeque in the Number 10 Rose Garden. In honour, of his visit this weeks’ fiver looks at the visit and the UK’s special essential relationship with the US.  Thanks to Dave, Clare, Rachel and Melanie for contributions.

Essentially …

Whilst Foreign Policy and the six point plan, were the main items on the agenda, surely the most interesting aspect of Obama’s visit was the upgrading of the UK’s ‘Special Relationship’ with America to an ‘Essential Relationship.’ Essential. Never mind our credit rating, we have an essential relationship with America! As Matthew D’Ancona pointed out earlier this week, it has a certain ring of indispensability to it. I’m less sure Obama’s deficit reduction plan can be described as Osbornian, as D’Ancona suggested, but you have to hand it to Cameron he pulled the rabbit out of the hat with that one.

Deficit indifference

Governments should “live within their means” but also sustain growth by investing in education, and the pace of deficit reduction “may end up being different”. Uncritical certainly from the President, but hardly the ringing endorsement David Cameron and George Osborne were hoping for with regards to their economic strategy.

They were probably also hoping for better revised Q1 GDP figures from the ONS than the ones that materialised this week at roughly the same time as the meat was cooking on the barbie. Traditionally, the revised figures show an increase in GDP for the quarter over the first, partial set of figures released. That didn’t happen this time, with growth remaining at 0.5%. More worryingly, household spending contracted 0.6% and business investment practically hid in the corner shivering, as it shrank 7.1%.

The Government remains committed to cutting hard and fast in order to shrink the deficit and get the country back on track without a large credit card bill hanging over it. Judging by the economic data and reaction to it, the jury is still out on whether this will work or not – which is perhaps why the President hedged his words to such effect.

Inspiring relationships

Michelle Obama re-affirmed her own ‘essential relationship’ with old friends during the visit when she was re-acquainted with girls from Elizabeth Garrett Anderson School. The EGA girls were visiting Oxford University as part of a programme to encourage them to aim high. Mrs Obama, herself a graduate of Princeton and Harvard, encouraged them to not “be afraid to take risks, ask questions, ask stupid questions, don’t be afraid to trip, fall and don’t be afraid to get back up.”

Wise words indeed from the First Lady and something all of us can take heart from. Media coverage of the meeting praised her as an inspiring role model for these young girls. But do our young people need to wait for a visit from a foreign leader’s wife to feel inspired? It strikes me that inspiration comes in all sorts of guises from dignitaries to teachers, to a school system and society that encourages successes achieved on merit. I cannot help thinking that more of our young girls would be inspired if the education system were fairer and society willed them on.

However, today’s announcement that under radical changes to admissions, some secondary schools will be able to select pupils on the basis of family income fills me with dread. If we want to inspire our young people, there has to be a better way than judging them on their parents’ finances.

Right all along?

Photo: Jacob Whittaker

There was a time when being British was all about keeping a stiff upper lip through adversity.  We were a bit stuffy, grumpy, and proud of it (with the exception of Ken Dodd). But if this week’s stats from the OECD are to be believed the old stereotype has been blown out of the water – we’re actually much happier than most of our European neighbours, including those where the weather is supposedly much nicer.

Of course our BFFs across the pond are way ahead, with the ‘pursuit of happiness’ in their constitution, but recent events have given them a run for their money (Will & Kate, less than a year to go to the Olympics, plus some cracking Aviva (client) sponsored ITV dramas on the telly).  Even Obama seemed to be using his visit to the UK to give a PR boost to the start of his election campaign, after all the yanks did seem to love the Royal Wedding more than we did.

Cheeriness is starting to look like part of a new national character, even a driver of government policy with the government launch of a new way of measuring it earlier this year.  Yet whilst the OECD’s figures do seem to suggest that money doesn’t necessarily make you happy, it will be interesting to see whether the next GDP figures show it can work the other way around.

Obama and the ostrich generation

When all the fanfare and noise from the military 41 gun salute to welcome Obama’s visit abates, we hope that the two leading western premiers might spare a thought for the lot of their respective domestic pensioners. They don’t need to look hard or delve deeply to find incontrovertible evidence of the pensions malaise and bleak future that faces many prospective pensioners in the UK and US and indeed across most Western economies.

The worrying statistics roll in on an almost daily basis. According to an international survey released by HSBC this week six in ten Britons have no financial plan for their retirement – due to a “cycle of dependency” and suffer from an equally self-deluded belief that they will enjoy a comfortable retirement.

Across the Atlantic, prospects are equally stark in the US. New findings from the American Association of Retired Persons (AARP) latest public policy institute report reveals that many older Americans, employed and unemployed, may never recover financially from this latest recession, although here, half of them do actually realise that they won’t have enough money to live on in retirement.

This dearth of planning contrasts with upcoming economies in the East, where a class of “prosperous pensioners” is merging. The respective expectations on annual growth showing  further downward revision for the UK economy (now a paltry 1.4%, with the US at only 2.6), is in stark contrast to buoyant growth rates in Asia’s flagship economies – China 9.2%, India 8.5%.

Worrying indeed.

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