Facing the harsh truth of reality is never pleasant. Ask any child who suddenly realises that they aren’t getting away with what they thought was possible. Or an investor who sees that ’sure thing’ investment disappear beneath the waves.
The beginning of the year is often the same. The twinkly holiday lights finally get switched off, the heating gets turned up and everyone hunkers down for the miserable dark months in the depths of winter. (Well in the northern hemisphere at least. To those of you lucky enough to be in the southern hemisphere, you get your reality later in the year.)
So with this in mind, I decided to put off reality until the last possible moment. I decided to head to get some winter sun in Egypt where the temperatures are delightful in January. Of course travelling during the worst winter weather for 30 years meant delays (32 hours at London Gatwick airport – a place not recommended for a vacation!) This is being written in my cabin on board a Nile cruise heading up (or is it down) river back to Luxor. It is the perfect environment to consider the state of play as we face the new decade.
Perhaps being on vacation has left me feeling a bit more reflective than normal. There is one particular bit of economic news that I have been thinking about: Iceland and the referendum on repaying the British and Dutch governments’ money who bailed out their savers when Icelandic banks went bust. President Ólafur Grímsson decided to veto the compensation bill after a quarter of the Icelandic population petitioned against it. Now a full referendum in March will determine if the Brits and Dutch will get their pound of flesh.
I have been struck by the meanness of spirit coming from the British and Dutch in demanding the repayment from a country that has gone bankrupt. The sums being sought (less than $5bn) are small beer when you think that Britain alone will borrow more than $500bn over the next two years. The effect on Iceland and its people will be far stricter than a generous gesture from a richer nation (apparently generous gestures are only given to bankers and then only when they are about to go bust.)
Threatening Iceland that its EU membership application would be looked upon less favourably if it doesn’t sign on the dotted line and hand over the cash is just bullying by another name. Coming from governments that allowed half the miscreant deeds in the first place it smacks of two-wrongs suddenly making a right – all the more so since Iceland has agreed to pay, just not on the terms demanded. It is easy to bully a smaller, poorer country that is just about out of the game. And there is nothing like a schoolyard bully when the game is over.
No doubt if the Icelandic people do vote NO in the referendum the British and Dutch governments advice will be the standard European Union answer – don’t worry, just do what we do when we get voted down …just keep asking the question till you get the right answer.
Why am I being so sympathetic since friends don’t often describe me as warm and cuddly? Perhaps because we have suffered such dreadful weather in the Europe with the coldest winter for 30 years. And we only suffer like this once every three decades. Imagine if this was the norm every 12 months? Seriously, Iceland.
Finally, many of you will have read the old canards about how the first five days of the trading year go, so goes the month of January. And how goes the month of January goes the year as a whole. To this needs to be added a load of nonsense about whether this rule changes when the year is the first of the decade (apparently it does make a difference) and the reliability depends on whether it was a gain or a loss – one is more dependable than the other.
If your investment strategy relies on this, face the reality it is a poor barometer upon which to bet your cash. But then I am like all children who refuse to recognise reality. So. I think I just saw a black cat cross the street. The toast fell butter side up. There were lots of tea leaves left in the cup. Oh yes. It is going to be a very good year. Good Luck! You’ll need it.
If there is something you would like me to address in my article please write to me at quest@cnn.com.
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Richard Quest is a CNN correspondent based in London,
host of the weekday one-hour program “Quest Means Business”.
For program highlights and more, go to www.cnn.com/qmb
