Drinking with Dickens

Gin Cup?

An important and iconic book for this time of year is Charles Dickens’ ‘A Christmas Carol’. It is important in that it was written at a time (1843) when the celebration of Christmas was being revived, and where German (Christmas tree), pagan Celtic (feasting) and Christian (Mass) elements of the celebration were fusing together.

Dicken’s book also reinforces the morality tale around Christmas, and partly because of the many film versions of it, I suspect many people associate it with year-end reflections on our society. Like Dickens they vow to ‘honour Christmas in my heart and try to keep it all the year’.

A different and arguably from another point of view, more enjoyable take on Dickens’ work is ‘Drinking with Dickens’, a book written in 1980 by Charles Dickens’ grandson Cedric Dickens. It is essentially a book of cocktail recipes for drinks with exotic names like ‘Smoking Bishop’, ‘Barclays Best’ but in reality is much more than that because it draws on the warmth and conviviality of many scenes in Dickens’ works, and through the recipes it gives a very real sense of the atmosphere of mid 19th century England.

Having come across ‘Drinking with Dickens’ a few years ago I can attest that our drinks trolley is stocked with various gins and angostura bitters. So, confined to home and fortified with more than a few cups of gin punch I sat down to think about some of the potential surprises of 2021.

  • Norway joins the UN Security Council for the next two years and elevates the Arctic to a major geopolitical issue. A titanium Russian flag stuck 14,000ft on the ocean floor beneath the Arctic pole in 2007, goes missing, mischievously stolen by a ‘sub-drone’. Fishing and mineral rights around the Arctic become a topic of hot debate.
  • The electric car boom gives way to a new ‘market craze’, capital begins to flow to genetics and genomics, with a flood of special acquisition vehicles being launched in order to buy into cutting edge startups in areas like genetic editing.
  • As part of its policy of ‘national strategic autonomy’ France opts to favour two French made vaccines for its citizens, but adverse reactions lead to a health and political crisis. Emmanuel Macron’s standing drops in the opinion polls, and the French establishment search for a centre right candidate for 2022.
  • A wave of consumer spending, the side-effects on agriculture of climate change and speculation in lumber prices all conspire to drive up inflation. The US bond market crashes, a pensions crisis ensues, and the Economist magazine proclaims China as ‘the new safe haven’
  • Expectations are high that the Biden administration will focus its foreign policy on China, but it pivots dramatically to Latin America, launching a digital dollar as a way of binding South America to the American financial eco-system, and of reducing corruption and the drug trade.
  • In Asia, Japan, Taiwan and South Korea are forced into daily jet fighter scrambles in order to counter airspace incursions by Chinese fighters. In April a squadron of Chinese Chengdu J-20 fighters is hacked mid-air (in fact the pilots’ head display units are hacked) and the squadron is forced to land in Japan. A major diplomatic incident results.
  • With diplomatic and trade ties with Israel now well established, Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, looks to deepen economies ties with India and in so doing, build out an independent geo-political ‘pole’ spanning India and the Middle East.
  • The ‘rule of crowds’ takes hold of policy. The stay at home culture has spawned a new form of policy making where laws, regional budgets and local referenda are driven by ‘crowd voting’ and ‘crowd rating’.
  • Brexit, finally accomplished at the end of 2020 leaves Westminster flat. Without the excitement and urgency of a crisis British politics becomes moribund. Boris Johnson resigns as prime minister and moves to America to become a leading chat show host on Donald Trump’s new television station ‘Patriot TV’.
  • By February, an end to the coronavirus crisis is in sight. Though still proscribed by the authorities, people start to party and revel. ‘Drinking with Dickens’ rises to best seller status and the price of angostura and select gins rockets.

Enjoy the rest of the holidays,

With best wishes


Brexit means Brexit

Boris means Brexit

In a speech at West Point the NATO affairs adviser to the US President declared that Britain had ‘lost an empire and had not found a role’, he also said that ‘Britain’s attempt to play a separate power role – that is, a role apart from Europe, a role based on a ‘special relationship’ with the United States is about played out’. The President in question was Jack Kennedy, the adviser was former Secretary of State Dean Acheson and the year 1962. While it is reassuring to see that some ‘traditions’ do not change, it is surely time for Britain to move on.

That time may now be upon us.

Brexit has proven the most vexacious political project of recent time. It is, to quote Churchill (his view on Russian foreign policy) a riddle, wrapped in a mystery, inside an enigma. We have never known what Brexit really was or where it was going, and the most confused of all were its promotors. The tortuous path to a deal of sorts is now close to an end, for better or worse.

I don’t want to go into the detail of any deal that may soon materialize or whether it will hold (it will become law!) but I do want to stress that Brexit is highly significant to our age because it is both the faultline and crucible of so many issues of our time. With the year ahead upon us, it is time to take stock of these.

Brexit was the first significant fracture in the globalized world order. Britain led globalization in the 19th century and London was arguably its epicentre in the 20th and early 21st centuries. That this phase of Brexit is now closing suggests that the process towards a new world order is underway (as per my TED Talk), but equally the fact that Brexit has taken so long suggest that the process towards ‘something else’ will take a long time.

There are many other fractures in the globalized world order to come and to speculate, I can think of Turkey’s exit from NATO, China’s scramble for Africa, the Emirates and India becoming a new ‘power’, the growing impact on geopolitics of climate damage, and the even deeper irrelevance of bodies like the WTO (World Trade Organisation).

Brexit has also fractured history closer to home. On hearing that the vote in the north east of England had turned for Brexit in the early hours of that fateful vote, my first thought was that the long history of the United Kingdom and Ireland had been smashed.

Scotland will most likely become independent, and the lesson of Brexit is that this process should happen in such a way that bolsters Scotland’s economy, and preserves close and open ties to England, Wales and in particular Northern Ireland. In turn, there is now much talk about a united Ireland, though if referenda on this question are to take place, then at very least this needs to be preceded by much greater interlinking infrastructure between Ireland and the North, and most importantly a Marshall style plan for Northern Ireland’s economy and society.

One of the errors in the immediate aftermath of Brexit was the failure of European leaders to grasp the import of Britain’s vote and the possibility that the factors that motivated Brexit might

ripple across Europe. The past five years saw the rise of radical politics across Europe, though this has largely been contained by the centre.

With cyber wars being waged above, below or around us, Europe is still behind the US and China in terms of what Emmanuel Macron calls ‘strategic autonomy’ (effectively the need to be self sufficient in AI, cyber capabilities, 5G and so on), but the Brexit process has shown and burnished its strengths in two respects. One is the formidable heft and expertise of European technocracy as exemplified by Michel Barnier (who surely deserves a knighthood) and more importantly by the rise of the concept of solidarity, where the EU has at nearly all times spoken with one voice on Brexit. Like the crisis management lessons learned during the euro-zone crisis, the lesson of solidarity is something that needs to be diffused across EU foreign policy.

On a somewhat related note, Brexit could have been cast as a struggle between populists and technocrats, both in the sense of the struggle between Whitehall and Westminster, and London and Brussels. It recalls Yeats’ line in ‘The Second Coming’ that ‘the best lack all conviction while the worst are full of passionate intensity’. This has been a major theme of our times – laws, science and democracy under attack from morally free wheeling populists. The failure of Donald Trump to be re-elected and the many failures of Brexit, suggest that the ‘brave’ are regaining their conviction, and that the ‘worst’ need more than intensity.

In this context, my final thought is what happens to the Brexit Dream? There is some comfort to be had in the fact that Britain is good at reinventing itself, especially it seems after wars with the French! It is likely however, that the task of filling out the template of Global Britain will fall to a new generation of politicians, and potentially activists from outside politics. It is telling that one of the most socially impactful public figures in the UK this year is the footballer Marcus Rashford whose literacy and school meals program have repaired the shortfalls in government spending. Professional politicians should take notice.

Theresa May often stated ‘Brexit means Brexit’. At first, it appears a meaningless comment, but the longer Brexit has gone on and become its own (il)logical universe, the wiser ‘Brexit means Brexit’ sounds. It is however, time to move on.  

Have a great week ahead,


Globalization is over – what’s next?

Around about this time last year I was lucky to get a call from TED – as in TED Talks. It was somewhat unexpected and flattering as I enjoy watching TED Talks. The topic I was proposed to speak on was the impending end of globalization and a sense of what might possibly come after it.

Globalization ends

Little did I know at the time that globalization would be dealt a fatal blow by the coronavirus. Not only has it begun to produce severe self-limiting side effects such as indebtedness and climate damage, but trade, travel and the flow of ideas have been decisively changed in the last year. Furthermore, what is worrying is that in past international crises – most of them economic or geopolitical, there has usually, ultimately been a sense of a committee to save the world – that leaders and leading nations would come together. This time, uniquely, there has been little collaboration.

TED Talk…2021

In the end, the chaos and tragedy wrought by the coronavirus meant that my Talk changed several times, but in the end the thesis that globalization is dead and is giving away to a multipolar world is still clear, in my view.

Emerging world

One element of the debate on the new world order, and what happens after COVID-19 that worries me is that we spend far too much time talking about the US, Europe and China – especially when there is a huge amount of exciting things going on in fast growing emerging economies – Nigeria, Ethiopia, Bangladesh, Indonesia, Mexico and Brazil for example. Economically and socially they are also stressed by what has happened through 2020, and in most cases do not have large, powerful central banks to cushion the financial blow.

With 2021 in mind, the question for them in the new world order is what model do they follow and what alliances do they build?Most of these countries – during the age of globalization – were used to being told what to do, by the likes of the IMF – but the age of condescension is over now.

 Age of condesension is over

The tangible opportunity in a less uniform, more values driven world is that countries have a greater choice in the path to follow. Arguably, they also face greater pressure to get it right.

 So, should Belarus and Lebanon follow Ireland’s model, that of Dubai? Does Nigeria still feel it has some shared values with the Commonwealth or is it better allying its large, growing population to China and its model…and think of one of the few female leaders in Africa Sahle-Work Zewde, President of Ethiopia, how she might inspired by Jacinda Arden and Nicola Sturgeon of Scotland’s approach and how tangibly, she might implement their approach in Ethiopia.

 It may also be that in the post globalized world, countries like Kenya, Indonesia and Egypt decide to go their own way, and build out their own value systems and economic infrastructure.

2021 challenge

In this way, the arrangements, institutions of the future won’t be crafted in Washington or Beijing, but rather by countries like Tunisia, Cambodia and Brazil swapping notes on how to curb corruption, build healthcare and education systems for exploding demographics and ensure that their voices are represented on the world stage.

 As globalization ends, and chaos seems to reign, these countries and their young populations, the scope they have to grow and shape their societies, are the future and the promise of the next world order. That’s the great challenge for 2021 and beyond!

What can possibly go wrong?

All uphill in 2021?

JK Galbraith was a wise man. To anyone looking for relevant, timeless texts on economics to read over the holidays I can recommend ‘The Great Crash’ and ‘The Affluent Society’. One quote from Galbraith that sticks in my mind at this time of year is that ‘the only function of economic forecasting is to make astrology look respectable’.

To a large extent, the events and ruptures of the past few years have made forecasting redundant. Forecasting is supposed to identify incremental changes or potential turning points, but as either an art or science is not well equipped to encapsulate the ripping apart of the order of things (history is a better guide). The coronavirus crisis has stretched reference points (for GDP, policy action, market stress and tragedy).

A further complication is that forecasting the direction of economies and markets is contradictory in the sense that there is no correlation between them. The best example I can find is that on Thursday the death rate across US hospitals sadly hit 3,000 per day, whilst the Nasdaq reached an all-time high. Morally, this is increasingly problematic.

Now, into this vast analytical chasm are thrown bundles of year ahead prognostics by banks, consultancies and journalists, at I am sure huge expense. There are at least two follies here One is the expectation that end of the calendar year wipes the slate clean in terms of the trends that have driven 2020, and that the world will change in January 2021.  The other is that economic size of the forecasting body is inversely proportional to the skew of the forecast.

Large banks for example, who want to try to preserve an air of respectability and who have armies of editors, compliance officers and marketing teams to denude documents of any intellectual colour, tend to produce very safe and slick year ahead document. Note that Galbraith also said that ‘It is far, far safer to be wrong with the majority than to be right alone’. Smaller outfits, and struggling writers, often adopt the opposite approach – the radical and improbable view might succeed by generating notoriety. I am glad I am not in the forecasting game.

Looking ahead and, certainly not forecasting the next four months will be dominated by the deepening of the coronavirus crisis into and through Christmas, followed by efforts to launch vaccines and then the unleashing of pent up demand for consumption, travel and business, the noise of which will produce an uptick in inflation. From there on, the outlook is unclear.

One approach I want to emphasise is to draw together the strands of new trends and events that have occurred this year, and that have already been mentioned in this missive – such as the notion of a ‘Quid Pro Quo’ (https://thelevelling.blog/2020/03/22/quid-pro-quo/) where stimulus measures from governments and central banks are balanced by changes in economic models (this has not happened), or the Biden Restoration (https://thelevelling.blog/2020/11/29/they-speak-french/) , and the prospect of the Roaring 20’s (https://thelevelling.blog/2020/10/17/the-roaring-20s/) .

They and other forces point to a range of new themes, four of which I want to quickly highlight here.

The first is what I call ‘empire builders’. In the aftermath of the Black Death in 14th century England, over 40% of the land changed ownership, a phenomenon that reminds us that after great economic dislocations and pandemics, the bankruptcy and asset cycle intensifies. Those with cash and access to capital (spectacularly so with SPACS (special acquisition vehicles) can build new ‘empires’ in the sense that they can put together new constellations of businesses and private asset portfolios, often cheaply.

The second theme is the rise of new financial eco-systems and assets. It is speculative to say so, but when at times 40% of US stock market trading is driven by retail investors, the real excitement in markets will centre around new, rising eco-systems – the crypto currency ecosystem, cyber security ecosystem (e.g. Palantir), the e-commerce ecosystem (e.g. PayPal) and the ESG ecosystem. As these eco-systems grow and thrive, the sectors they once inhabited such as the large banks, will continue to shrink.  

Then thirdly is what I call the Sisyphean economy. Sisyphus was a figure of Greek mythology, whose audacity was punished by the Gods through Sisyphus being condemned to push a boulder up a hill, only to have it roll down again. The (much overused) image of Sisyphus in economics is still apt in the sense that it describes the self-correcting tendencies of the many imbalances in our world such as the rivalry between the US and China, the over presence of central banks in markets and the huge load of debt in economies.

Consider for example if inflation rose, and some central banks started to debate monetary tightening – the high sensitivity of debt prices to this would produce a spike in market volatility, and potential halt in investment. This is how the financial system is supposed to work, but today it is spring loaded.

The last trend I wanted to mention, with the prospect of a post COVID ‘fresh start’ in mind, is the evolving new world order, but you will have to wait for next week for that.

Have a great week ahead,