Friday, 1 January 2010

Happy New Year 2010

The Noughties are over and we are in 2010, whatever we call this decade.
Happy New Year to all who read this blog and I hope 2010 brings you success and all you hope for.

It's hard to say what the year will bring - many people are finding it difficult to call this year. Cautious, slow recovery perhaps? Certainly, I think this year will mark the ascendancy of China as a dominant economy and currency but what does it hold for the UK?

As we head into the run up for an election there are two things that could really strangle us - 1) a Labour win and 2) a hung Parliament. I think in both cases it will create market chaos particularly with our bonds for National Debt. This may sound anti-Labour but realistically they seem to have no plan, other than vain hope for massive economic growth to be conjured out of nowhere, to cut our debt. They have put off spending reviews, they have not tackled any public sector cuts, they have not targeted any inefficiencies - they have simply ignored the fact that come the end of Quantitative Easing our bonds will have to be bought by investors with real money and they must trust in our plan to repay. There simply is not one.

A hung Parliament is even worse as even I would imagine that Brown and his crew really do have some idea of what cuts they have to make and tax increases beyond the headline grabbing bank windfalls and on higher earners that frankly make no dent in the pile of money we owe and does not go anywhere near the interest payments we have to make. If there is no result at the election, then there will be a period of bargaining, power broking and total inertia as everybody works out how to agree on things and make anything happen. It could be a period of hiatus that literally finishes this country. So with Labour clambering back up the polls, the likelihood of a hung Parliament increases and that's bad news.

Of course, there is a curve ball. The rumoured growing rift between the arch-powerbroker, Peter Mandelson and Gordon Brown has Blairesque overtones. Once again, we see the puerile stance by Brown on the subject and there is a rumour of even a leadership challenge possibly before the next election although you would have to think that Labour would be effectively committing political suicide if that happened. Worse, it could happen after the election and we once again have an unelected leader at the helm. That would be a disastrous blow for democracy and if Labour think Brown is as bad as the rest of us thinks he is, then get him out now and let's see the mettle of the new man - whoever that may be.

Mandelson is apparently aggrieved that, having saved the political skin of Brown, he is being increasingly marginalised on decision-making and his position of 'most powerful man in Britain' is diminishing. Not surprising really, Mandelson has been behind some of the most ineffective of schemes which have talked of big money help and delivered nothing in the economy. Scrappage was an idea nicked from Germany and France while the VAT decrease had nothing to do with him. The grand Enterprise Loan Guarantee scheme and credit top up did have something to do with him and neither have really helped anyone. The £2.3bn car industry boost never materialised with not a penny used since February last year and all Mandelson seems to have done is to travel all over the place, talk and get green custard thrown on him.

So the big question is, 'Will Brown survive?' You know, I have a sneaking suspicion that the man who wrecked our economy, who dithers on foreign policy, who has no idea on how to get us out of the economic mess he put us in seems lucky enough to actually get away with it. Even if the electorate votes him back, I think his own party will ditch him.

How democratic is that? Makes Afghanistan look positively fair.
Happy 2010!

No comments: