Monday, 3 August 2009
The trouble with Cynics - they are often right.
Well who would believe it? Last week Goldman - Sachs, this week Barclays and HSBC. Both banks have today reported £3bn profit for the last half year - in Barclay's case mostly from its investment banking arm. On Friday we get the RBS results. Eighteen months ago, this blog is where you would have seen the prediction that this year the banks would be back into healthy profit and demanding their bonuses again. These are my predictions: RBS will not produce such good results as it recovers from the self inflicted wound of ABN Amro. But by this time next year it will be in rude health. The share price will have realised a big profit for HMG who will start to unload their equity stakes transforming, in a trice, the public finances. The economy will be picking up smartly as a lot of foot-loose cash tries to find a home and low interest rates coupled with high government spending have their effect. The FTSE 100 will be well above 5000 and the Government will be claiming the credit for defeating the credit crunch. The opposition will have a tough time explaining how their hair-shirt policies would have achieved as much. This is the sunrise scenario which sees GB, against the odds, still Prime Minister and David Cameron contemplating a speedy exit from political life. It may not be fair, it may not be nice but the reality is that the economy could rebound as fast as it collapsed and just in time to prove Clinton's phrase that in winning elections - 'it's the economy, stupid!'.