Best may be behind us as risk rears its head
Published 05/01/2016 | 02:30
Forget every electoral promise made so far and ignore anything heard from candidates and parties between now and the General Election.
If yesterday's global markets meltdown is anything to go by, plans drawn up in the good days of 2015 look set to perish on the financial rocks of the New Year.
Ultra cheap oil and the export Viagra of a weak euro helped Ireland to clock up rapid growth last year - the basis of the increasingly frantic electoral auction being bid up by all of the main political parties here.
But based on yesterday's events both of those key factors could disappear, and potentially at speed.
Oil prices shot up 2pc on yesterday morning as Saudi Arabia and Iran squared off against each other in their intensifying battle for regional dominance in the Middle East.
Oil is still cheap but the opposing Sunni and Shia powers have backed opposing sides in civil wars in Syria and Yemen with Iraq the big regional prize.
Fears that supply could be hit if the crisis escalates further sent oil prices higher - and helped Africa-focused oil explorer Tullow buck the global plunge in shares.
However, the immediate cause of the chaos on the stock markets - described as "a stampede" of selling by one trader - was weak factory output data from China.
In reality it was just the crack in a rickety dam holding back a tide of concerns that the global economy, barely out of the doldrums, could be in trouble again.
China's 7pc plunge was the biggest, but it set off a chain reaction of price falls in other big exporting economies. Stock markets in Germany, the UK and US also took unmerciful batterings.
In China's case, investor concerns are not new. The 40pc plunge on China's mainland stock markets last summer reflected fears that growth there was slowing rapidly and was only reversed by massive government interventions - including a flood of financial support and laws that in some cases blocked shareholders from ditching unwanted stocks.
Selling bans introduced by China last summer are due to expire around now, so the big falls clocked up before trading was abandoned in the small hours of Monday may well be part of a delayed response to the events of last summer.
Unfortunately, propping up markets with cheap government funds is not unique to China. Closer to home the euro area is barely being staying afloat even with the European Central Bank's quantitative easing (QE) programme. That involves pumping euros into the financial markets in a desperate effort to prop-up bond and share prices and weaken the euro.
For Ireland the weak euro has delivered massively, but it's not a given.
If spooked investors now fly to safety - by buying German bonds for example - and China continues its policy of devaluing to maintain exports, the ECB's capacity, and willingness, to keep driving down the currency will quickly be tested, with huge implications for us in Ireland.