Market tremors

welease woger

Is it fear of a hung parliament or fear of another Labour government?

The possibility of a hung parliament has been around for weeks but the reaction has come when a poll suggests the possibility of a Brown minority government.

Tiberius

"The (Sunday Times) opinion poll has given us the prospect of maintaining this Government for another few years," said Hans-Guenter Redeker, head currency strategist at BNP Paribas. "The markets have reacted and are giving a vote of no confidence in Gordon Brown."

Pete: it's important to emphasize it is not the prospect of a hung parliament causing the tremor, but Brown continuing to be in charge.

Natasha

Let me see if I have understood this correctly. You are saying that the voters should elect a Tory Government because that is what the markets want? That doesn't sound very democratic to me, and I suspect it will alienate lots of other voters too if the Tories make too much of it. Surely a better argument would be that the electorate should vote Tory because they have better economic policies?

Nick

Didn't George Osborne make a number of speeches/statements a year or so ago warning that sterling was extremely vulnerable to any market fears over the UK not getting to grips with the deficit.

He was also "right" on the need to have a viable plan to tackle the deficit. Despite Brown maintaining that no cuts were necessary. Labour has since then come round to Osborne's view.

So on two major aspects of the recovery from the recession Osborne has been absolutely correct. Will the BBC point this out ?

Richard

The exchange rate is sad news. Those Tories who like to fly south for the weekend will have to pay a bit more for their gin and tonic.
It will of course help our exports which is a good thing and help with the order books of small manufacturing companies.
Not so good if you have a mortgage on a Florida condominium paid in dollars.....thats sad!

Carroll Barry-Walsh

There was someone, names escapes me for the moment, who talked about a weak currency being the result of a weak economy and a weak government. Oh, yes, now I remember. It was one Gordon Brown, when Shadow Chancellor in 1992.

So, no need for the Tories to talk down the economy. They need only quote Gordon's words back at him.

Gawain

How far does the pound have to fall before the Bank of England has to put up interest rates to stem imported inflation and secure our borrowing ? Until that happens the boneheads who are going soft on Brown/Labour just won't get it ! The BBC and the rest of the broadcast media certainly won't.

TrevorsDen

Natasha - the markets effect us all and the markets do not 'want' anything - they merely reflect the prevailing conditions.

The voters should elect a tory govt because it is in the voters best interest; that is democracy.

Tiberius

Natasha: the markets do what they do because the Tories DO have better policies! Not many people will or want to admit it, but George Osborne has become a credible Chancellor in waiting to the money men.

Richard

Just thought....eeek
If interest rates go up then we will have to pay more for Dave and George's mortgages on expenses......not so good!

Publius

@Natascha
"That doesn't sound very democratic to me" etc.

No, Natascha, but unfortunately for some the nature of reality is not established by popular vote.

Notman Dee

yes Natasha, because the markets reflect what the voters should see, that their opinion controls our future. We can see the damage being done to the pound simply by the threat of 5 more years of Brown, imagine the damage created by him actually getting back in!!

Short the UK

Natasha,

I am surpirsed by one who knows the markets so well that you don't understand the markets are voting.

Vulture

@Natasha:

Demonstrating your usual economic brilliance you get it precisely wrong.

It's because the markets know what a pigs' ear Liebour have made of the economy that they are withdrawing their confidence - and their cash - in sheer terror at the prospect of Bruin keeping his fumbling hands on the controls.

They have a perfect right to do that: its a free market. And if the British electorate, in their infinite wisdom, re-elect Liebour they have a perfect right to queue quietly in the lines at the soup kitchens - that's if anyone is kind enough to give us any soup. Liebour, you see Nat, have bankrupted Britain. That means we haven't any money left.

John Bracewell

Natasha @3.34 pm.

strapworld

Natasha, What are you going to do when Labour LOSE? Your job in the Broon kindergarten will be over! You are so nieve!

John Bracewell

The argument is that the Conservatives have better economic policies than Brown and therefore will avoid the market problems which are becoming evident if Brown is to form another government. The better policies are that the Conservatives will do something about the debt which Brown is trying to avoid talking about until he has conned the electorate into voting Labour (he hopes).

Dirty Euro

So the market elites decide who we vote for.
Lets get rid of democracy and have the bankers decide who we elect.

General Zod

Vulture, it's worse than having no money - we owe more than we can afford to pay back, unless spending is cut.

Roy Simpson

Natasha. How about...

"A weak currency is the sign of a weak economy,which is the sign of a weak government"
Gordon Brown, 1995

Roberto

Natasha,

It is entirely democratic that the electorate should suffer the consequences of a bad decision, or failure to make a decision.

Government overspending and mispending will always bring suffering and those who live in cloud-cuckoo-land, the people who believe that others will subsidize them with cheap credit indefinitely (i.e. the markets - which is to say you me and everybody else holding sterling currency and investments) will have harsh awakening from their dreams.

If the public will not face up to the need for a change of government it will have to face the consequences - high interest rates, rising unemployment and a curtailment of recruitment in all sectors.

Brown, howevever, is lying - or evading the truth - for he would cut spending and increase taxes, while protecting his own client state.

Is that democratic?

emil

"the better policies are that the Conservatives will do something about the debt which Brown is trying to avoid talking about until he has conned the electorate into voting Labour (he hopes)."

He's giving PMQs a swerve again this week I see..

Right On

Won't make any difference as there is no way that this message will make it through to the general public.

The news tonight will lead on Ashcroft, with little mention of the Labour non-doms. They'll then have Alan Johnson's quotes -"a bombshell" has to verge on the side of madness.

We can then all wait on the chaos of a hung parliament and some major economic rumblings.

lloyd J

This gives GB the perfect excuse to call the election, thereby avoiding the accusation of speculation from the polls.

THX1138

The Markets are worried about a hung parliament I doubt they care too much which party wins as long as somebody does.. It's not as if bankers have had a bad time under Lab is it?

TomTom

The funding needs of Lloyds and RBS are additional to UK Treasury borrowing. It is not simply a matter of which party is in government but the huge volume of European borrowing including the enormous sovereign debt held by German and French banks in PIGS.

Britain has a huge trade deficit and energy import bills and a depreciating currency. It is not as if Labour has not cut public spending before, Healey was very savage in 1976.

Liz Brown

........and the lead item on Broon's Biased Crap News 24 is Lord Ashcroft - and nothing so far on the dire state of the economy. Watching the news these days, I fear that anyone coming from Mars would wonder about the concentration on such stuff as football, domestic murders, sex and Lor Ashcroft (whose case, apparently is TOTALLY different from that of Lords Paul, Mittal and Noon). thank goodness for bloggers and the internet which is where I now go for my sources of information

John

Once upon a time, socialists had to build big walls to stop people fleeing the country. Now they just destroy the currency, so no-one can afford to leave.

Rob C

@Natasha - Looking at UK plc from a lenders perspective must be like a bank reviewing a 200% mortgage. The client's bank balance is in the red and yet he continues to have lavish holidays, eat out at posh venues, buy luxury cars and generally live beyond his means. On top of this his salary has been slashed and he has a gambling habit. Now with all this in mind, a) how credit worthy is he and b) do you continue to extend the overdraft/mortgage? Brown is that spendaholic, reckless gambler and up until now his overdraft has been extended. However, having worked in a business that did similar in the early 90's, it is unsustainable and cuts have to be made in order not to go under. The markets currently believe that the situation can be salvaged - but not with Brown in charge. If he was capable then he would understand the problem and in that event would have already taken action to arrest the crisis. Thus as the prospect of his stay at number 10 being prolonged increases so the probability of total collapse increases. The UK is still credit-worthy, just not with Brown as it's leader. It clearly isn't the market 'selecting' a government, but a simple issue of common sense and inevitability. Take Alistair Darling out of the equation as would certainly happen in the event of a Brown victory and it looks even bleaker!

roger

All of the media are suggesting that the market is worrying about a possible hung parliament. I think they are worrying about not only that possibility but more importantly another Labour government.
If the Conservatives have to choose their words carefully, it is vital for the sake of the country's future, that the media stops misinterprating this situation.

TGF UKIP

Tiberius, "George Osborne has become a credible Chancellor in waiting to the money men". I'm afraid old chap this appears to be another of your blind pieces of loyalty to the Cameron cause.

As I recall, it was none other than our very own dear editor who reported just a very few months back that City people were alarmed and surprised at Osborne's ignorance of important market matters and his failure/unwillingness to brief himself. Fraser, who has also intermittently acted as Osborne's very own Max Clifford, will no doubt correct me if I misrepresent him.

As it happens a City contact of my own who is a technical expert on a matter of central importance to any Chancellor had a meeting with Osborne. He found him badly briefed but bored and uninterested and, as so many it seems who encounter Osborne, he also described him as being barely civil.

Perhaps it boils down to being judged crap by the City being entirely compatible with being hailed as brilliant by the high finance men of the Black Country.

Roy Simpson

Natasha...

In 1995 Brown said "A weak currency is the sign of a weak economy, which is the sign of a weak government".

Andy B

Richard

I think you will find the UK is a net importer so another big move down in sterling will risk inflation becoming a problem. We've already seen a 25% sterling devaluation with no real pick up in exports or investment.

The folk you seem to allude to as having "pads" in Tuscany or perhaps I can suggest Barbados are likely to have paid cash, and therefore are laughing all the way to the bank as sterling heads south.

The folk you seem to profess to care about will be left with the legacy of higher interest rates which will push up mortgage defaults and SME bankruptcies.

Tiberius

You're plain wrong on the financiers and Osborne, TGF. On a personal level, they may find him unpleasant - I've no idea, nor do I really care - but successive speeches have made his overall policy one that they accept.

Whay else this pressure on the currency?

As for Fraser; well he's flipped over the Cameroons more times than a burger being barbequed by a nervous Prime Mentalist.

Richard

The good thing about not being in the Euro IS that our currency can fluctuate. The drop in value is not all good or all bad.
When selling our government dept in the form of guilts its cheaper for foriegn investors to buy them thus more attractive especially as most investors who are in for the meduim and long term know the rate is under valued and will return a nice profit when sold. Would your rather buy a house at the top of the market or the bottom.....think about it.

Bartimeus

@Richard

Are you Gordon in disguise ?

The more risky the investment , the MORE it costs. It doesn't cost Gordon a thing to borrow money , it costs us , in every thing that we do. The markets won't lend money to Brown because they don't trust him. Any money they do loan , will cost us more.

Simples

2trueblue

Always follow the money. The bookies odds are on the Tories and the money markets are terrified that Liebore get in again. This is obviously something that the media can't figure out, but them they are all Liebores, full of lies and bloddy boring.

The media didn't see the financial crisis coming, refuse to see anything that is going on unless they are fed it by Liebore. It is really sad that there is no real thinking going on and no sense being put out in the media. There is a plethora of Liebore MPs today on all tv stations, but not one Tory.

Just heard Mandy on the £, does he think the public are stupid? He was waffling on about the £ going up and down, and that the markets should just wait and see. the man is odious. and dishonest. The market is the market and traders will react to events and the event of a Liebore government again would bury the £.

Can you imagine what it would be like if Liebore got in again? We would never get rid of them. Are people really that stupid?

michael

DC's response to the 'talk down' blag :

Once the Government releases the correct figures.
He is the one with the right team the right ideas and consequent policies to sort the same old economic disaster that is inevitably bequeathed by a labour
administration.

Its not he (DC) that investors are running scared of its GB

In light of all this he (DC) has a moral imperative NOT to join Gordon by burying his head in the sand.

denis cooper

Anybody up for either of these helpful suggestions from Willem Buiter?

http://www.ft.com/cms/s/0/d58ada72-256a-11df-9cdb-00144feab49a.html

"A commitment now to a three-party government of national unity could stabilise matters immediately. Failing that, all three parties could agree the size of post-election tightening now, with only the mix of tax rises and spending cuts to be decided after the election."

Richard

@Bartimus
Judging by the over subcription to buy 4 billion of guilts today the investors are not that worried and the intrerest rate is no more than it was last time so whats the problem......oh and no I am not Gordon he has an IQ of 180 not 102 (Mr average) like me...sorry