Liam Dann: Yippee-ki-yay, it’s a Die Hard Christmas


This is my last column for 2021. It’s a Christmas column.

Unfortunately, it’s not the usual silly season collection of whimsical reflections on the year that was.

It’s a Christmas column packed full of unrelenting action.

It’s a Christmas column in the way Die Hard is a Christmas movie.

The tree is trimmed, there are lights and tinsel and Santa hats. There are carols playing in the background.

But the news keeps exploding all around us.

Omicron?!Omigawd …

Sorry, don’t get me started. Anyone hoping for an epidemiology-free Christmas dinner is going to be sorely disappointed by the news of the past few days.

At least we’re not in the UK, where the rapid rise in case numbers suggests they might get some certainty on the veracity of this new variant just in time for December 25.

So far, Omicron is mercifully looking like it will be less severe than previous Covid variants.

But it could yet prove “just bad enough” to force further lockdowns and restrictions on us in 2022.

As Dr Ashley Bloomfield pointed out on Thursday, if higher transmissibility means much greater case numbers then it may still drive an unacceptable surge in hospitalisations and deaths.

Even the best-case scenarios threaten to delay and slow the global recovery.

What that means for the economic outlook is anybody’s guess.

If it dampens demand then it might actually mean less inflation – a good thing.

Or it might heighten supply chain issues and add to inflation – a bad thing.

More than anything, 2022 is shaping up as a year of inflation.

It has fast become my go-to topic when I need some light relief from painfully circular pandemic debates.

News that the annual rate of inflation has topped 6 per cent in the US (the highest since 1982) is worrying.

But there was also some good news last week.

The central bank cavalry is finally riding to the rescue.

Both the US Federal Reserve and Bank of England (BOE) looked through the Omicron risk and made big moves to head inflation off at the pass.

The Fed shifted its outlook sharply, outlining plans to scale back quantitative easing and forecasting that it may deliver three interest rate rises next year.

On Friday, BOE surprised on the hawkish side with a hike – taking the official cash rate in the UK from zero to 0.25 per cent.

Wall Street, which often melts down at the first sniff of rate rises, seemed to cope fine.

In fact, investors seemed relieved, stocks rose.

It was a mature response and a significant step on the road to monetary policy recovery … a road we’ve been stuck on since the GFC in 2008.

I still worry about markets crashing.

Even if investors shrug off inflation and pandemic woes, there are still some very unsettling signs out there.

There are asset price bubbles everywhere.

Property in China, cryptocurrencies, NFTs … sneakers!

Apparently, (according to Bloomberg) sneakers are now a proper financial asset class with traders and analysts and a $100 million market.

Kids who can’t afford houses are trading up a storm. The internet is allowing anyone to trade anything on a scale the world has never really seen.

Too much money is pouring into non-productive assets with no fundamental value underpinning them

I’m all for entrepreneurial spirit but this smells like 17th-century tulip-bubble stuff.

At least a pair of sneakers are worth $150 if put them on your feet.

NFTs (non-fungible tokens) are literally just cartoons made of computer code that offer nothing of value but their own scarcity and a digital guarantee that you are the official owner.

I think the same could be said of cryptocurrency – now a $3 trillion market – but I’m no tech guru.

Twitter founder Jack Dorsey quit the social media giant last month to focus on his cryptocurrency business – and presumably he is smart.

It’s hard to pick what will cause the next global financial meltdown, but if we think of asset bubbles and high debt levels as a tinder-dry forest then it doesn’t necessarily take much of a spark.

And history tells us that, sooner or later, it all comes crashing down.

I vote for later.

The world is too fragile right now. We need to draw a line under this pandemic and collectively take a deep breath before we face the next crisis.

One of the biggest risks to our world right now is the crumbling of social cohesion.

That’s probably what I like least about Omicron.

A booster shot and a couple more months of restriction shouldn’t be insurmountable.

But it creates more fuel for the anti-vax, anti-science, anti-everything crowd.

It will send more people down ‘do your own Facebook research’rabbit-holes of fear, anger and hatred. That would be a terrible thing.

Meanwhile, there’s no shortage of big geo-political stuff going on.

In Russia, the Covid-induced breakdown of social cohesion is threatening Vladimir Putin’s grip on control.

His response may be to whip up some nationalist fervour by invading the Ukraine.

Closer to home we’ve got US (and Australian) tension building with China in the Pacific.

Perhaps these are longer-term worries, though.

Let’s park them for the holidays. History doesn’t take a break but we can … hopefully somewhere with patchy Wi-Fi and relaxing views.

Enjoy the break, like Die Hard’s John McClane, we’ve walked across broken glass to get here.

Merry Christmas and yippee-ki-yay market watchers.

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