Douglas McWilliams

JLA Client Comments

Q&A

JLA: What troubles are looming for the Eurozone?
DM: There will be a crisis when Spain and Italy have to refinance €400bn of bonds. If the Euro doesn't break up, it could weaken substantially towards dollar parity. We give it only a one in five chance of surviving in its present form for ten years.

JLA: What about Germany?
DM: German performance will continue to be stunning, subsidised by the euro which has the same effect as the cheap renminbi has for the Chinese. One element of their success has been the role of immigrants (primarily Turks) who seem to be boosting the economy just as ours has been for the past 20 years.

JLA: And Japan?
DM: I see a serious economic crisis in Japan, where debt is now 200% of GDP. If it grows they'll need foreign financing - which may be difficult - and they'll have to embark on fiscal retrenchment. Meanwhile, the aging population means the retirement age will rise again, to 75!

JLA: Closer to home, are the banks returning to 'business as usual'
DM: UK banks have restored their capital bases, and I expect them to lend more competitively - either because they can afford to or because the government gets fed up with their monopolistic attitudes and adopts more aggressive policies.

January 2011