By John Richardson
MOST politicians, central bank governors, economists and business leaders told everyone that there was no way that the US housing market could drag the world into a global financial crisis.
Then we were told that China’s economy could not possibly slow down, and that its vast investment in manufacturing capacity during 2009-2013 did not represent a threat to jobs overseas.
This helps to explain, why, despite, all the expert advice about why it made sense for Britain to stay in the EU, Britain has voted to leave the EU.
And even if at this late stage, the vote swings back in favour of Remain, the strength of the Leave vote is one more example of a global phenomenon: A huge lack of trust in political and economic elites everywhere.
To some extent,has happened in Britain reflects deep regional economic, social and political divisions going back to the 1980s. But, as I said, I strongly believe that the inability of the Remain programme to win the debate also substantially reflects these more recent global economic difficulties. In my view, the underlying problem is the failure to recognise what is driving the rise of Populist politics everywhere: The end of the Economic Supercycle.
So, what happens next in global chemicals markets? Most obviously, oil prices could fall substantially more than their 6% initial decline in reaction to the Leave victory. This would disrupt seasonal pricing patterns in the key China market. I now see far greater volatility and weakness in Asian chemicals prices on both cheaper crude and weaker global economic confidence.
And this lack of global economic confidence, if it persists long enough, will threaten what has always been a very fragile, patch and unsustainable recovery following the Global Financial Crisis – because of the end of Economic Supercycle.