All western countries and banks have not recovered from the 2008 credit crunch. Western banks are loaded to the gills with debt and non performing loans, they have fudged write downs to make their "stress tests" look better. Most western governments are loaded with debt and are using a majority of their tax take to make interest payments and of course they are very low at 1.5%, Maggie Thatcher was paying 15%. What most folks don't realize is the proverbial can has reached the end of that road. If the UK debt interest rate went up 2 or 3% its game over, we will become the next Greek Tragedy. There is about 15 trillion US$ out in the emerging markets waiting to go off when the flight to quality starts. Then you will see markets like Canada, Australia & New Zealand's property bubble explode. Even the Saudi's are burning through their saving while wiping out the shale plays in the USA all funded with junk bonds. Now I wonder where this can start to go wrong? Europe is going to learn that "socialism" does not work and never has. You can not keep borrowing money to support a life style you have not earned. The laws of math's are universal. UK citizens, hide your money, your banks are not safe and neither is your pension funds. Hungary, Poland, Spain and Greece have already helped themselves to their citizens pensions. Rome collapsed because of unfunded pensions for their standing army and they taxed their citizens until they simply got up and left. It would seem European politicians don't read their own history. I think they get blinded by their lust for power and back handers.

Now wait for what is to come, 12 billion pounds of welfare cuts, 70 billion pounds of cuts, more foodbanks, more zero hour contracts, more inequality, a lot more failed austerity and a very very brutal time for huge sections of society. The NHS will look very different in 5 years time and the privatisation project will see huge amounts of public money transferred in private hands. England hold your head in shame you have damned us all.

 

• David Cameron is back in No 10, expects 329 seats• Forecast: Tory +22, Labour - 25, SNP +50, LD -49

• Pound in biggest jump in six years on euro
• Cable, Laws, Alexander, Hughes out as Lib Dems capitulate

• SNP take 56/59, Jim Murphy and Douglas Alexander out

• Labour on course for worst result since 1987, Kinnock defeat
• Balls on brink as Miliband says he is “deeply sorry” for result
• Boris Johnson proposes ‘federal offer’ to Scotland
• Ukip surge in northern England but Farage unlikely to win

 

I wouldn't be so quick to feel too disheartened right now.

This is day one of the next 5 years. The Conservative Party are now governing fully on their own and sat on 5 years in power.

By far, their most difficult challenge next time around will be finding someone to blame for the state of the economy when they won't be able to do that. They'll need all the help and more some from their mates in the press and in other media to help them next time, in particualar BBC Tory zealot Laura Kuenssberg.

Even so, there are several things I take with me this morning:

1: Not so much the scale of Labour's defeat but the scale of the Conservative share of the seats won. What does this say about the people of Britain today; their values and their perceptions and particularly since the now ended coalition has been the most pernicious in living memory? This is a stark and uncomfortable feeling, that few people seem to give a damn about anything these days.

2: There will be a lot of pain for a lot of vulnerable people in the next 5 years and today we should perhaps be mourning their loss of social justice and social democracy last night.

3: We can only hope the principles of the SNP will bring the British people around to social democracy again because frankly Labour appear a wholly impotent force right now.

France and Greece have more in common than many might think. They both have left wing governments that like to dole money out without much relation to their income, both refuse to reform within the EU. The major difference is that Greece has much higher debt per capita, and is more left wing.  France failed to reform in accordance with the rules and after a recent review, should have been fined. Did the EU fine them? NO! They gave them another extension.  Seems the rules only really apply to Greece, although at one time they didn't apply to any country. Warning lights are flashing over the Greek and French economies, analysts said on Monday, after a closely-watched manufacturing survey showed both nations remained "mired in contraction" in April.  Turmoil in Greece, and concerns that the country could default on its debt and be forced out of the eurozone pushed Greek activity to a 22-month low, according to Markit's latest manufacturing barometer. The figures also suggested that the European Central Bank's €1.1 trillion bond-buying programme, which has helped to weaken the euro, has so far failed to lift France out of its chronic malaise. French manufacturing activity contracted for the 11th consecutive month in April, with the rate of decline the fastest so far this year. Markit also said employment levels fell for a thirteenth successive month in April. “The French manufacturing sector remains locked in reverse gear," said Jack Kennedy, senior economist at Markit. "Production levels were cut at an accelerated rate amid a steeper decline in new orders. This was despite a further fall in prices charged and the recent weakening of the euro, underlining the competitive challenge facing firms.”  Markit's French manufacturing purchasing managers' index (PMI) fell to 48 in April, from 48.8 in March. This was lower than a flash estimate of 48.4 and well below the 50 level that divides growth from contraction. Greece's PMI contracted to 46.5, from a previous reading of 48.9...Tinkering around with this and that won't help Greece and France defy economic gravity. They simply spend far too much and suppress private commercial endeavour. Bond buying programmes, QE (or whatever it's called this week), ever inventive forms of taxation just won't cut the mustard anymore.

America has marginalized the productive sectors often identified as labor. Most of us are living pay check to pay check because there is no lawful system regulating 'good business'. This in turn allows the top earners to supplement their incomes by building asset islands on the backs of those they hire at ever decreasing rates. Their assets being over valued. provision them with flipping incomes... and increased liquidity outside of taxable income. This game has been played for years.... Banks are left holding the lower income earners limited resources and often failing credit.

So the Banks are now heading for negative interest rates to supplement their portfoolio's (Spelling correct) On the downside.. The Federal Government also insures them for loss and thus they pay trillions in default payments... Putting the taxation system into a spiral.... Now even the Federal Government is looking towards drugs to supplement their losses... at the behest of President Obama and George Soros... To leaders with amoral views and no limits to their own investments for Power and Greed.... Congress is broken in the middle with partisanship leading our Country towards complete failure.  I doubt anyone with a voice will be allowed to speak the truth any longer... The censors will likely veto even this message... But heck it won't be the first one I have written which will never see the light od day.... QE is an inflationary policy. This is not a matter of debate. Lowering interest rates and increasing the monetary supply always, 100% of the time, creates inflationary pressure. Since I'm feeling bored at work;), I'll expand. You observed lower inflation (not deflation) because the inflationary pressure generated by massive QE on the US Dollar was weaker than global fear during the great recession.  The idea is that people and governments worldwide were so fearful that they decided they would rather park their money with the strongest government on earth (US Bonds) for slightly negative real ROI, than invest anywhere else, even though much higher returns were to be had. The EU will probably see some inflation out of QE, but the Euro, like the dollar, is also seen as a global safe haven, so I doubt it will be runaway. No one really knows what will actually happen in the future.

And that's what I'd like to emphasize. No one really knows what will happen in the future, so it's important not to look at the pleasantly surprising low inflationary environment that recently correlated with QE in the USA and extrapolate that QE won't cause inflation in the future.

Two of Germany's biggest think-tanks have warned that Britain faces devastating losses if it leaves the European Union that will cost the UK economy up to £225bn by 2030. The respected Ifo economic research institute and Bertelsmann Foundation calculated that if the UK left the 28-nation bloc and was unable to strike new trade deals quickly, it could trigger a perfect storm of diminished investment and innovation that would knock up to 14pc off UK gross domestic product (GDP) - or €313bn (£225bn) - by the end of the next decade.  This is equivalent to €4,850 (£3,500) per head in a worst-case scenario, the study said.  The think tanks said savings such as "cancelling of EU budget payments that currently total around 0.5pc of UK GDP could not compensate for economic losses, even in the best case scenario", adding that the biggest losses would be in financial services, chemicals, mechanical engineering and automotive industries. ....Is that it, just the one £3,500 per head ?If it were true it would be well worth it, but, why would a German think tank take the trouble and expense to produce this study? What is their agenda? Angela Merkel and her German cohorts have gone to enormous lengths to oppose the UK at every turn. In the words of Margaret Thatcher "They're frit". Germany do not want to be left holding the EU baby. The UK has always been a very successful trading nation, and without the EU single market stranglehold, we will once again be able to compete in the world market place, on our own terms not the EU's. Germany shouldn't worry about us (sarcasm), we'll do just fine, you watch. In actual fact the really big threat to the UK, is if Labour/SNP get into power from next week, that will cost every man, woman and child much more than £3,500.

The EU and the Euro is a joke. All this bickering and name calling I am sure is making international investors very nervous. Plus they look like a joke.  When will the ruling elite in Europe realize it is over. Its like a falling out amongst thieves. When the economy turns down at the end of this year you will see the Euro collapse. Capital flight soon.    Still pretending the 'troika' plan does not work. The plan is fine, Greece simply never implemented it.

Example: There are six times more civil servants per habitant 'working' in Greece than in Germany. That means 5 out of six civil servants could be fired. That cannot be done quickly, so the savings target set by the Troika was just 50%.  The Greek government was unable to fire any significant amount so they cut wages by 50% instead to obtain the same number of savings. Obviously that does not have the same effect, that demotivated all civil servants.  They should have fired at least 50% and give a pay rise to the remaining bunch to motivate them to keep up the level of service....Greece - None of the Troika have simply implemented anything here, least of all Draghi, with his selective Greece to be excluded, QE program. The problems with Varoufakis and Tsipras are: One, Syriza is not prepared to take Greece out of the EZ, and two, they were naive to think that they could exact change by simply stating their grievances. As things stand now, Tsipras will be forced to sell the worst of defeats as victory, and believe me, the Greek people will figure it out quickly. He can only win by doing something monumental here, and he's not prepared to do it. Tsipras appears to be playing at revolutionary. "No, Greece can't leave, it would mean the end of the world..." How nice of Varoufakis to be concerned about the well being of those who chose to destroy Greece. What a guy! "We're all Euro peons", now is it it? No, actually, just the Greeks are being treated like peons. ... If it is your intent to milk a cow, you work the teats gently, lest she kick your head off. This tact works across the political spectrum... cows as you know, don't discriminate...laughs

Europe will remain dependent on Russian gas for years to come, energy giant Centrica has warned, dismissing suggestions the EU can replace it with other sources as "unrealistic". European leaders have scrambled to try to cut reliance on imports from Vladimir Putin's Russia since the Ukraine crisis escalated last year, with Ed Davey, the energy secretary, suggesting loft insulation and wind farms were needed to "take on the Kremlin".  But Rick Haythornthwaite, Centrica chairman, told shareholders on Monday: "Whatever we might want as Europe, we need to be very careful about being pragmatic about the realities of it... I think it's unrealistic to think that Russian gas is going to be replaced in the near-term."  Iain Conn, Centrica chief executive, added: "Russia supplies... about a third of Europe's gas. You can't switch that off easily without huge consequence. There is no way the United States can supply that volume of LNG to replace it."  If sanctions were imposed on Russian gas companies would have to comply, he said, but it would have "a very significant impact on Europe's ability to balance its natural gas sources and uses", particularly in Eastern Europe which was "not plumbed in to many alternatives".   But he added that Russia had been a "a reliable supplier of gas all the way through the Cold War" and that it needed European demand. "Russia realises that plays a very important part in Russia's own future and there's as much value in this co-dependency as there is potential threat," he said...He's got balls - the last European energy guy to suggest Russian sanctions were unwise ended up smeared across the landscape after Langley flew his plane into a snow plough.