UK Election:Hudson should be pleased

[llanlad2]

First of all some background. The Conservatives and Liberals are forming a coalition government. This is the first true coalition in the UK since WW2 and highly unusual. This is a major turning point as far as I am concerned and the best possible outcome from the election as it doesn't make the present moderate Conservative leadership beholden to its more extremist elements.

The Liberals are seen as "progressive" but more importantly have not been in Govt since WW1 and were not expected to be. As a result they are not owned by finance (no-one bothered donating to them unlike the other two parties) and their Shadow Chancellor (Vince Cable)has been against big banks from the start of the crisis and before. He recognized the danger of high personal debt and loose monetary policy, unfair taxation and has stated that the UK needs to unilaterally break up its TBTF banks as they are a danger to the UK itself. He is also the only man who truly seems to realise the desperate situation the UK is in financially with regards to the debt. He is going to be Chief Secretary to the Treasury which will give him a great deal of influence.
With this coalition in place the Govt has a strong mandate to start rolling back govt spending,paying down debt and building a sustainable future.

To secure the coalition the Conservatives have made some serious concessions in accepting some Liberal policy ideas an example of which is below.
a. Income tax on first £10 000 earned to be scrapped (previous threshold was approx £5000.) This will cost approx £16billion but will seriously benefit low earners who can be expected to spend this windfall on the local economy anyway.
b. The initial tax loss will be offset by capital gains tax increases on second home sales and sales of shares (ie tax on assets)

I am positive about the UK for the first time in a long time today, I just hope it lasts longer then the Obama factor did in the US!

[chr5648]

Re: UK Election:Hudson should be pleased

As a result they are not owned by finance (no-one bothered donating to them unlike the other two parties) and their Shadow Chancellor (Vince Cable)has been against big banks from the start of the crisis and before.

Yeah, but if they want to get reelected they are gonna have to bow to the banking elites, or else all money and influence will go to other parties. OR over the next few months they get bought off just like all the other politicians. Right now the liberals are pure like virgins in the peoples eyes and the people trust them. If I'm a banker I want to buy off the party the people trust. wink wink;) Sorry to burst your bubble.

[llanlad2]

Re: UK Election:Hudson should be pleased

Yeah, but if they want to get reelected they are gonna have to bow to the banking elites, or else all money and influence will go to other parties. OR over the next few months they get bought off just like all the other politicians. Right now the liberals are pure like virgins in the peoples eyes and the people trust them. If I'm a banker I want to buy off the party the people trust. wink wink;) Sorry to burst your bubble.

I am under no illusions what the finance industry will do. I am sure the first party donation has probably already landed in the Lib Dems post box nevertheless my bubble is still in tact for now. There is a bunch of other stuff particularly relating to civil liberties, compulsory ID cards that the previous govt had planned which is definitely getting chucked out so at least some good is sure to come out. Fixed election dates are definitely in which is another positive.

[Chris]

Re: UK Election:Hudson should be pleased

One of their proposals is the separation of commercial and investment banking - in law. Will a UK Glass-Steagal actually be benefical to the UK financial sector? I think so very muchly!

[*T*]

Re: UK Election:Hudson should be pleased

Fixed election dates are definitely in which is another positive.

as is public cash for political parties.

[Chris]

Re: UK Election:Hudson should be pleased

Fixed election dates are definitely in which is another positive.

I disagree on this point. Do you really want to see a coalition government dragged through a full five year term if they face a no confidence vote after only two years?

[thunderdownunder]

Re: UK Election:Hudson should be pleased

You are confident and so am I but two things should be noted. 1/ they have not been got at yet 2/ will it ever work- Tories in bed with a virgin - me thinks the Torries sweet talk will end up with Late night Anal sex ( sorry I;m usually a gentleman butt facts are Facts)

[DRumsfeld2000]

Re: UK Election:Hudson should be pleased

This sounds like rose tinted glasses to me. For a start the £16bn you talk about due to a rise in taxation base at the low end to a base of £10,000. This sounds good but it blows a huge hole in the public finances. Most of the money will either be leveraged to form new debt or those tens of thousands already in or soon to be declared insolvent will simply lose it to the banks. Look at the insolvency figures in the UK which are rocketing. Then you have defence and Trident. Then you will have the fight over Europe. Will the UK pay the Greece price tag? Then there is the fact that the Libs want no deficit cuts until 2011. Will the markets wait for this? The list goes on. This all sounds good but I expect this alliance to last at the most 18months. The UK is still a basket case and it will get worse.

Personally I think that this was a brilliant strategy by the Labour Party and they managed to get rid of Brown in the process. They know that the Government finances are shot. They know that there will be huge in-fighting between the Libs, Conservatives and the market. The conclusion will be that the people will blame both parties for the coming mess (memories are short!). The upshot will be a financial crises and Labour will say 'It was getting stable when we were in power, let us back in and we will sort it out.' You will be surprised, but the people faced with massive public sector cuts, higher interest rates, government service unemployment etc may well believe them. Call me a sceptic, but I think by the Labour Party refusing to play with the Libs may turn out to be a masterful chess move. Time will tell.

[thunderdownunder]

Re: UK Election:Hudson should be pleased

and yes what Drummy said is a fact - Good reply - waiting for 'H' to give his opinion as Mega will be way to brief.

[we_are_toast]

Re: UK Election:Hudson should be pleased

This sounds like rose tinted glasses to me. For a start the £16bn you talk about due to a rise in taxation base at the low end to a base of £10,000. This sounds good but it blows a huge hole in the public finances. Most of the money will either be leveraged to form new debt or those tens of thousands already in or soon to be declared insolvent will simply lose it to the banks. Look at the insolvency figures in the UK which are rocketing. Then you have defence and Trident. Then you will have the fight over Europe. Will the UK pay the Greece price tag? Then there is the fact that the Libs want no deficit cuts until 2011. Will the markets wait for this? The list goes on. This all sounds good but I expect this alliance to last at the most 18months. The UK is still a basket case and it will get worse.

Personally I think that this was a brilliant strategy by the Labour Party and they managed to get rid of Brown in the process. They know that the Government finances are shot. They know that there will be huge in-fighting between the Libs, Conservatives and the market. The conclusion will be that the people will blame both parties for the coming mess (memories are short!). The upshot will be a financial crises and Labour will say 'It was getting stable when we were in power, let us back in and we will sort it out.' You will be surprised, but the people faced with massive public sector cuts, higher interest rates, government service unemployment etc may well believe them. Call me a sceptic, but I think by the Labour Party refusing to play with the Libs may turn out to be a masterful chess move. Time will tell.

It never sounded like Labour was all that serious about trying to form a coalition with the Lib-Dems.

I continue to believe this could be a really big deal for the worlds economy. So when will they propose their 1st budget? Does it have to be approved by the Lords and Commons? Will they be serious about the cuts?

Isn't this going to cause a lot of demand destruction from Europe? All the PIIGS and Britain tightening their belts. How does Europe reflate? The central banks can print and bail out their Finance banks, but how does that money get down to people who will actually buy something? Will what Britain does become a blue print for the U.S.? Who is China going to sell to with everyone cutting back? Seems like this is a very big point for the deflation camp.

[Ben]

Re: UK Election:Hudson should be pleased

I thought Brown offered to resign in order to make a deal with them. It was rejection instead of refusing to play.


At the minute, I think the UK might be getting away with it.
1. The pound has already devalued about 30% vs the dollar. This helps our exports.
2. We already have debt-devaluing inflation of 3.5%, but it's not too high, and nor has it forced interest rate hikes.
3. UK Government finances are not shot more than the big Western Europeans or the US e.g. the total govt debt base is less than the US
4. Govt debt avg maturity is 14 years, so rate hikes will not cause a large jump in the cost of servicing the debt.

Don't get me wrong. I'm in 30% gold. But you can see a way out here - a little bit of inflation, a little bit of currency devaluation, a little bit of economic growth. Then the deficit falls. Then a bit more. Then we muddle through...until we get hit by peak oil or china blowing up. The new govt just needs to keep the markets confident so that interest rates don't rise too fast.

[Chris]

Re: UK Election:Hudson should be pleased

next budget is most likely in July (22nd).

[nitroglycol]

Re: UK Election:Hudson should be pleased

I disagree on this point. Do you really want to see a coalition government dragged through a full five year term if they face a no confidence vote after only two years?

That's usually not a problem; most fixed election date laws in Westminster-type systems make an exception if there's a non-confidence vote.

[AC3]

Re: UK Election:Hudson should be pleased

I thought Brown offered to resign in order to make a deal with them. It was rejection instead of refusing to play.


At the minute, I think the UK might be getting away with it.
1. The pound has already devalued about 30% vs the dollar. This helps our exports.
2. We already have debt-devaluing inflation of 3.5%, but it's not too high, and nor has it forced interest rate hikes.
3. UK Government finances are not shot more than the big Western Europeans or the US e.g. the total govt debt base is less than the US
4. Govt debt avg maturity is 14 years, so rate hikes will not cause a large jump in the cost of servicing the debt.

Don't get me wrong. I'm in 30% gold. But you can see a way out here - a little bit of inflation, a little bit of currency devaluation, a little bit of economic growth. Then the deficit falls. Then a bit more. Then we muddle through...until we get hit by peak oil or china blowing up. The new govt just needs to keep the markets confident so that interest rates don't rise too fast.

Agree with this. Big danger is that markets force rate hikes. The Bank of England have all but explicitly stopped looking at actual inflation (even as measured by CPI) and are focussed almost exclusively on inflation expectations. Basically the policy is to tolerate as much inflation as possible until people notice it.

[llanlad2]

Re: UK Election:Hudson should be pleased

Then you have defence and Trident. Then you will have the fight over Europe. Will the UK pay the Greece price tag? Then there is the fact that the Libs want no deficit cuts until 2011. Will the markets wait for this?

The above issues/differences have already been addressed.
The libs have said they won't oppose Trident.
The UK has already backed out of supporting Greece(it's a German/French banking problem)
The libs have agreed to the immediate cuts that will come in the emergency budget already.

With this larger majority that carries more than 50% of the popular vote the cuts that are needed will be politically easier. Only 35% of the population voted conservative which was not exactly a mandate. Now they can say "but this is what you voted for."