Finance with Don Fraser Fraser Farm Finance

I was inspired to write this column after reading The Economist’s Special section on 2020 visions, given to me by my daughter who recognises my desire to understand and predict world and New Zealand economics.

Some of the key points I gleaned follow. Technology is an unstoppable force that can be harnessed for good and is here to stay. Which basically means technology is part of our future and to embrace it we must so dust off those techno toys and start using them.

Banks will grapple with negative interest rates especially in Europe. America will flirt with recession and fears of a new arms race is real. America, Europe and China are all trying to get to Mars.

YOLDS – that is us! It means ‘Young-Olds’, as the Japanese call people between 65 and 75.  We continue to work and play. Health worsens, but we YOLDS resist it better than most.  YOLDS are busier. We work longer and have slightly above average productivity. Not surprising really that our cognitive capacity holds.

Trump

‘Trump will bump’. The last thing Trump wants is a recession when he is going to the polls.  Given the States is slowing and could well go into recession, it is a big ask. It will be a filthy campaign.

China is putting on a brave face but will slow further with declining growth. China is likely to fudge its figures to make it look palatable.

Anglosphere versus Sinosphere. America, Britain, Canada, Australia and New Zealand, as Anglospheres, need to get on better with Sinosphere which largely is the Peoples Republic of China. Pressures are rising as China flexes its muscles and tried to control the Pacific.

The world economy could be in for a very unusual downturn started by the trade barriers between China and the US. It is worrying the central bankers. The world is teetering on the brink of an unfamiliar type downturn never seen before.

Drinking alcohol is going out of fashion. Teenagers in Western countries start drinking later!  Alcohol is carcinogenic even in small amounts, but most people don’t know that. China is bucking the trend with increasing alcohol consumption.

China will come under increasing pressure with its ‘one country – two systems’ policy that they are talking about in Hong Kong.

Pressure

Australia will increase Liquefied Natural Gas from Queensland and Western Australia to an ‘eye watering’ AUS$54 billion. Exports of LNG go to China, Japan and South Korea. Pity about no more exploration in New Zealand for LNG!

In summary, I could go on, but the world economy is slowing, there is pressure everywhere. Trump seems to have a huge influence on world affairs, there is pushback on democracy not working fairly and revolutions are starting, and we are going into an unusual downturn and the share market has got the wobbles.

So hang-on to your hat because it is going to be a wild ride and it will not be for the faint-hearted.

Disclaimer – these are the opinions of Don Fraser of Fraser Farm Finance. Any decisions made should not be based on this article alone and appropriate professional assistance should be sought. Don Fraser is the principal of Fraser Farm Finance and a consultant to the farming industry. Contact him on 021 777 675.