It promises to be an interesting one. On the tax front, the Henry Review has been delivered to the Treasurer. It will be made public sometime in the early part of the year. Don’t expect anything too exciting, though: there may be some recommendations for changes to the way tax is collected, but the overall tax take will not be decreased. The geese are not yet hissing (to borrow from Jean Baptiste Colbert).
The drums of Dubai will continue to beat. The enormous debt burden of this monument to excess sent a minor shudder through the financial world late last year, as Dubai World announced that they needed more time to refinance. Greece is feeling the heat – and in fact much of the Eurozone is struggling with its load of debt. It is showing up in some unexpected places. Manchester United, the greatest football team in the world (Leeds result notwithstanding) are struggling to refinance their debt. At the other end of the English Premier League, Portsmouth can’t even find enough cash to pay their players. Expect to see the GFC continue its work around the world.
Which brings us to the “G” word. Melburnians refer to the Melbourne Cricket Ground affectionately as “the G.” It is local, and it is loved. But the G part of the GFC stands for global, not local. Everything is global now. We live, apparently, in a global village. So the village leaders met for a global conference to draw up the battle plans for the worldwide war on weather. No sooner had that ended in chaos, than Russian scientists began drawing up plans to defeat an enemy the whole world can unite against: an asteroid that is going to slam into Earth in the year 2036. Now that is long-term planning! As the head of the project announced “Better to spend a few hundred million dollars to create a system for preventing a collision than to wait until it happens and hundreds of thousands of people are killed”. Well, yes... grant a man his premise and he can have his conclusion. But the motive is clear enough: give me a few hundred million dollars now, and prove me wrong in 26 years time! Expect to see big government get bigger and bigger.
Governments don’t get any bigger than in China. China has now become the world’s second largest economy (depending on what measure you use to determine the size of an economy – this claim is based on official figures). It is climbing the charts with a bullet. Production rose in the last quarter of last year at the highest rate in five years, putting annual growth at more than 10%. Strong production, a high savings rate, and an artificially low currency, pegged to the US dollar, means that China’s overseas reserves are growing rapidly. Too much so, argues Paul Krugman (Nobel prize-winner in economics), describing it as a beggar-thy-neighbour policy. There is a bull in the china shop down in the global village. Expect to see the China-effect continuing to impact world economies.
Personally? We have had a roller-coaster few days as a family. Anna and Ross were delighted with the birth of their son and daughter last week. The little ones each developed an infection, however, requiring special care, and in the case of their son, transfer to the Royal Children’s Hospital. The news this morning (5 January) is encouraging for both of them, as they seem to be winning the fight. We are grateful for the thoughts and prayers of many friends.
It is, of course, for the sake of family and friends that we are in business. Our aim is that, by providing a helpful service to many, we can provide what is needful for those who are dearest to us. Which is what an economy is all about. So we will keep on working, and serving, and trusting in the wise and merciful purposes of Almighty God.
May you have a truly happy new year!
