Blog 2023 Malcolm Blair-Robinson

It is right that the authorities have grounded the Hawker Hunters of the type which crashed at Shoreham. It is also right that they have imposed strict limitations on high stress manoeuvres by old jets at air displays. Everyone loves to see vintage planes (and cars) but this should involve only minimal risk. Since the terrible accident when the DH110 broke up over Farnborough in the fifties, air shows have achieved an enviable safety record. Indeed the latest tragedy is the worst since then.

Nevertheless accidents do occur, one quite recently at an event organised by Chris Evans. Sadly the pilot lost his life, but no spectators were hurt. At Shoreham spectators once again escaped but the terrible death toll was from innocent passers by on an adjacent main road. This makes the whole thing many times more shocking. Spectators at flying display acknowledge a degree of risk by being there, however theoretical. Innocent motorists going about their business are another matter, making this disaster all the more poignant. They were not part of the risk and they lost their lives because the risk which did exist was badly misjudged. A re-think is certainly called for. It is owed to the many families left grieving for loved ones.

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The problems in China which are causing so much anxiety in the markets are on the face of it about an economic slowdown in the world’s fastest growing economy which has powered global expansion since not long after the end of the Cold War. It is indeed the case that China has built its strength on becoming the workshop to the world, pouring out vast amounts of  goods dirt cheap for consumption by the developed economies. China has been the engine which has driven global expansion and could be said to be the engine of what has become known as globalisation. It had been expected that China would start to evolve the next stage of its economic development, home consumption, to alleviate local poverty, expand the middle class and increase living standards for its vast multitudes. Here lay rich opportunities for Western business. Suddenly all that is on hold.

Equally suddenly the global outlook becomes uncertain. Markets take fright. The situation is made much worse by the fact that the Chinese authorities escaped the effects of 2007 by funding first a property boom and then a share boom with debt. That has caused assets to inflate way above their true worth and they now have to fall back to whatever that level is. It will be less than the money borrowed to inflate them. That means losses to the lenders and a chain reaction we all know so well. What is not clear to anyone is just now is how much this is a problem for China and how much will spill across the world. Emerging markets are already slowing.

There is a deeper problem. Too much of globalisation has been powered by debt and too little by real money measuring real wealth. Put in a nutshell the world economy has too much debt and too little money. Watch this space.