Current Affairs

Welcome to the final newsletter of 2024 from WorldThoughts.UK

This year has been extraordinary, from a continuation of the war in Ukraine to the war in Gaza and finally the collapse of the Assad regime in Syria. The argument that has been at the forefront of most conversations has been who will be the next president of the United States. Of course there have been other arguments in this momentous year, but the concern that the world has with a Trump presidency has been at the top of the list of most nations concerns. Trump won the presidency and since the win he and his entourage have been dictating arguments to not only the US but also threatened democracies round the world.

The arguments coming from Mar-a-Largo, the home of Trump is undermining the White House. The enfeebled Biden has not argued one way or another since forgiving his son’s crimes and the White House press office has been secondary to the dictats that Trump and his entourage are making. Congress has been forced into three votes to stop a shutdown after the interference of Trump and Musk. But the failure of the White House is also a realisation that Biden does not have Congress on his side and cannot dictate any arguments that could re-balance the presidency.

Musk is proving to be a handful, his interference in arguments right across the globe is evidence of the type of man he really is. It is the failure of Musk to manage himself that has led to reasons to be  wary of him. His support of the far right, Nigel Farage in the UK and the AfD in Germany is proving to be signatory to his brand. The concept that Musk is a racist proves that you can take apartheid out of the country but you cannot take apartheid out of the man, his racist rant that the German Chancellor should resign after the Christmas ramming of a car into pedestrians in Magdeberg, was not only incorrect but also encouraged the far right to riot. But it is his flagship car brand that Musk needs to be wary of, there have not been any new models and the Chinese and Europeans have caught up technically if not surpassing the Tesla brand. Tesla is in trouble and is also being surpassed technically in model range by manufacturers who have caught up and are selling a superior brand both technically and at cost.

Biden’s continuation of the tariffs on Chinese products has proven to be successful. The US is on a bull run on the stock exchange, which highlights how well the Biden administration have managed the US economy. But it is Trump’s push for tax cuts that has really got the US markets excited and the NYSE has come off a run that has guaranteed bonus’ for the bankers. But the US economy is coming into an uncertain period and it is Trump making dictats before he gets into office which is challenging the markets. The idea of tariffs on the world economy seems to be at the top of Trump’s agenda. His idea to manage the US economy through tax cuts, tariffs and a strong US dollar has been met with some scepticism and it is yet to be seen how well the US market will do.

Certain banks are predicting that the NASDAQ will climb by ten percent in the next year, this is good news for the investors in tech stock, but it is questionable whether AI is turning into a bubble that in time will explode. The questions relating to the value of AI are whether AI will come to fruition and manage to fulfil its promise is still at the forefront of the questions that need to be asked. Other tech stocks will be dependent on the tariffs that Trump puts on China and whether the promise of the markets will manage these expectations.

Europe has had a tough year, the economies of France and Germany are in a period of re-configuration and both countries have seen their ruling parties crash and burn. The German economy is in an uncertain period and the need to modernise and re-invest in Green technologies and the military was at the forefront of the arguments that destroyed the coalition. It was a question of whether Germany should increase borrowing that led to the break-up of the government and though the state is going into an election in February, the question remains at the forefront of the CDU, Greens and Liberals argument.

France is facing a different type of problem and the problem has been home grown by Macron. After forcing the state into elections his party lost its majority in the senate through a catastrophic decision by the president. The short comings of Macron caused a re-evaluation of parliaments arguments in a bid to stop the RN getting power. The problems are compounded by the inability of the government to get a budget through the Senate, has led to the resignation of two prime ministers after the RN and socialists voted against the budget, before the election and afterwards. Where France goes from here is tricky, but Macron still has another two years before elections and the failure of his government is that he cannot get a budget approved.

 Europe is expecting growth this year with analyst arguing that it will hit one percent even with tariffs. But it is Europe’s move to the right with the re-election of Von de Leyen as the EU leader that has led to calls of ditching green policies and moving Europe towards a re-appraisal of its values. The centrist and technocrat who led Italy through the economic crisis, Mario Draghi, put together a proposal on the industrial outlook and future of European industry. His argument is that Europe is not centralised enough economically and needs to concentrate industry in blocks so producers are more competitive is very much part of his plan to make Europe more competitive. Draghi was especially critical of the armaments industry, which he argued needed to be more concentrated and nations building military equipment specifically for Europe rather than nationally. Whether Europe can centralise its military industrial output will be dependent on consensus. But it was Trump’s call for Europe to invest five percent of GDP in the military infrastructure that most stung Europe as most members have made it to two and a half percent with very few exceptions.

China has had a technically difficult year with the property industry stagnating with high levels of debt and few customers. The investors that had led the boom years have left the industry and though the government has put in place massive parachutes of cash to support the industry, the industry is pulling down the rest of the economy. According to the Financial Times, China is facing an uncertain few years with an ageing population and fewer workers to develop the economy and take up the slack in the property sector. Though the government posted growth of between four and five percent, which in any other economy would signify boom years, there are a number of issues that are affecting the Chinese markets, such as low productivity, birth rates and an ageing population.

The Belt and Road initiative has run its course with high levels of debt in countries that projects took place in. Countries are already defaulting on the levels of debt of the initial development cost and are having to go to the IMF and renegotiate. The few Belt and Road projects that are taking place are in the Gulf countries, which can afford to pay and will not be shackled by international organisations demanding repayment. Chinese companies are investing heavily abroad, either to break through into nations with tariffs, such as Europe, or countries with a more viable workforce that can manage industrial output. But it is  the threat of tariffs from the United States, which Trump has threatened at sixty percent. There is a certain amount of bravado coming from China’s leadership, but there are concerns among Chinese companies whether they can compete. The likelihood is that China will dump excess production on markets such as Africa and Europe, but Europe is already talking about increasing tariffs of its own on Chinese products and Africa cannot afford the levels of debt China would be demanding.   Already on EV’s China is taking a hit of one hundred percent tariffs in the US and if Trump places a further sixty percent tariff, there will be problems competing in any shape or form.  

Though there have been wars in Asia, Africa, the Middle East and Europe. The hope is that the West will be in a better shape in the coming year. But with talk of tariffs, a stronger dollar and the unpredictability of the US presidency, 2025 is likely to be a bumpy year. The war in Sudan is at a standstill with neither the RSF or the government able to take advantage and the country is hopelessly split between these warring factions. The war in Myanmar is also at a standstill with the students, rebels and factions struggling to find a way into the governments heartlands. The continued support of Russia and China for the Junta has led to a stalemate that is damaging the country significantly. But 2025 promises some changes in Myanmar and whether that is the military returning to their barracks or the rebels push into the heartlands, means that this war may come to a conclusion.

Whether 2025 is the year that Russia will negotiate with the Ukrainians is up in the air. Trump’s promise to end the conflict within days of entering office are feasible, there is a realisation in Russia that its economy cannot continue to haemorrhage its wealth on this war, there needs to be a realisation that Russia does not have the financial ability to fight on for two more years. The war in the Middle East is coming to an end, there is just Gaza that needs an answer, but the geopolitical balance has changed in favour of Israel as the battle with Hezbollah has ended, Syria has got rid of Assad and Iran has retreated east. The likelihood is that 2025 will be about rebuilding economies and arguments. But Israel has some soul searching to do and work out whether they will come to peace with their neighbours and find a solution for the Palestinians and Israelis to live in peace and co-exist.

Merry Christmas for 2024…… or happy holidays 2024