Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Jim Rickards: Next Financial Panic Will Be the Biggest of All, with Only One Place to Turn… - 20th Jan 18
Macro Trend Changes for Gold in 2018 and Beyond - Empire Club of Canada - 20th Jan 18
Top 5 Trader Information Sources for Timely, Successful Investing - 20th Jan 18
Bond Market Bear Creating Gold Bull Market - 19th Jan 18
Gold Stocks GDX $25 Breakout on Earnings - 19th Jan 18
SPX is Higher But No Breakout - 19th Jan 18
Game Changer for Bitcoin - 19th Jan 18
Upside Risk for Gold in 2018 - 19th Jan 18
Money Minute - A 60-second snapshot of the UK Economy - 19th Jan 18
Discovery Sport Real MPG Fuel Economy Vs Land Rover 53.3 MPG Sales Pitch - 19th Jan 18
For Americans Buying Gold and Silver: Still a Big U.S. Pricing Advantage - 19th Jan 18
5 Maps And Charts That Predict Geopolitical Trends In 2018 - 19th Jan 18
North Korean Quagmire: Part 2. Bombing, Nuclear Threats, and Resolution - 19th Jan 18
Complete Guide On Forex Trading Market - 19th Jan 18
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

UK Pre-General Election Pre-Budget Report

Politics / UK General Election Dec 10, 2009 - 01:10 AM GMT

By: Nadeem_Walayat

Politics

Best Financial Markets Analysis ArticleThe pre-budget report (PBR) was pretty much inline with my earlier expectations as I highlighted in the article (Alistair Darling's UK Election Give Away Budget Crippled by Debt and Liabilities ) :


  • The poor and working class will be bought off and relieved.
  • The higher rate tax payers will be fuming and thinking of emigrating.
  • The Bankster's will think of new ways to dodge paying their fair share of tax with representatives of the British Bankers Association doing the rounds on TV news channels with hankies out crying poverty.

The PBR in a nutshell has delayed the pain for voters until AFTER the next general election so as to ensure the Labour Party maximises the number of votes. The Chancellor did nothing to cut spending and pay down the huge and unsustainable deficit, it is only after the next general election that we will find out how and to what extent the next government will attempt to cut the horrendous budget deficit that currently stands at 15% of GDP and 13% for next year which remains on target to accumulate an additional £510 billion over the next 5 years as discussed earlier in the earlier in depth analysis Britain's Inflationary Debt Spiral as Bank of England Keeps Expanding Quantitative Easing.

The Labour party intends to carrying on boosting public spending by an additional £31 billion coupled with tax rises which sets the opening scene of the inflationary mega-trend to unfold as the Labour government's actions are the complete opposite to what it should be being implemented i.e. Labour is boosting the size of the unproductive black hole public sector whilst at the same time crippling the private sector with huge tax rises whilst at the same time FAILING to cut the budget deficit.

This now sets the scene for Britain to start entering a stagflationary environment during the second half of 2010, with all of the consequences associated with higher inflation of a weakening economy, higher long term interest rates and eventually short-term interest rates as a consequence of foreign investors dumping sterling assets and hence sending the British Pound lower in relative terms (all fiat currencies are devaluing against hard assets).

Bankster Bonus 50% Tax Election Publicity Stunt

The big headline item in the PBR was the 50% bank bonus tax on bonus payments over £25,000. Unfortunately the tax is only proposed for 1 year and therefore leaves many loopholes for bankster's to once more escape paying their fair share in taxes, as any of the profits generated by the bailed out bankrupt banks is as a consequence of government interventions i.e. money printing and low interest rates for the purpose of bankrupt banks to rebuild their balance sheets and not to pay the artificially engineered profits out as bonuses. Loopholes include bringing forward bonuses or delaying bonus payments until the next tax year, which therefore means very little will be actually raised by this tax.

The bankster's representatives much as expected reacted with anger and were doing the rounds on British TV and write ups for the gullible mainstream press that lapped up their scare mongering of an exodus of thousands of bankster's from the city of London, though they failed to say where to ?

The facts are clear and irrefutable in that the bankster's have saddled tax payers with liabilities of £850 billion according to the National Audit office, which is near double the total tax receipts from the banking sector during the life time of the Labour Government. So in effect for every pound the bankster publically paid in taxes, they have saddled tax payers with twice as much during the bank bust.

The chancellor also raised his budget deficit target for the Financial year from £175 billion to £177.6 billion. Which might not sound like much of an increase, however also slipped in on the quiet during the day was news out of the Debt Management Office that Government would actually borrow £225 billion this financial year thus putting an even greater strain on the Gilts and Interest rate market then the headline budget deficit figure implies.

Alistair Darling Cloud Cuckoo Land Growth Forecasts

Alistair Darling also basically admitted that he is clueless at making forecasts given the contraction of 4.75% for 2009 against his forecast of -3%, though the rest of the mainstream academic economists were similarly way off the mark in terms of making economic forecasts. The growth forecasts for the coming years are equally optimistic as they do not even take into account the sharp drop in tax revenues that followed April 2009. Alistair Darling is forecasting 2010 growth of 1.5%, 2011 of 3.5% and 2012 of 3.5%. Whilst 2010 growth of 1.5% is achievable, however 3.5% for 2011 and 2012 is completely ridiculous which has no fundamental supporting basis as accumulated debt will force the next government to CUT public spending by as much as 10% per annum or more than £60 billion. Especially as the government is going hit companies hard by a series of tax rises over the coming years.

The immediate impact of the pre-election pre-budget will be / is being felt in the financial markets as sterling assets are marked down i.e. the British pound fell followed closely by stocks and government bonds. The key longer-term impact of which will continue to be on sterling and government bonds as the spread is expected to widen further between Gilts and foreign 'safer' bonds such as German Bund's.

Therefore the UK economy remains on target towards drifting towards a double dip economic depression triggered by necessary public sector spending as originally projected in February 2009 (17 Feb 2009 - UK Recession Watch- Britain's Great Depression?) with the key difference this time being that the second leg will be coupled with the inflationary consequences than that at the start of the first leg of the Britians Great Depression during 2008-09 primarily due to the wide gap between government spending and revenues that will trigger much more quantitative easing aka money printing to monetize debt.

You can read the full text of Alistair Darlings Pre-budget report here.

For more on my inflationary mega-trend ensure your subscribed to my always free newsletter, especially as I converge towards including major forecasts for all key markets for 2010. I.e. what will become of the stocks stealth bull market that has soared during 2009 ? What about the debt fuelled UK housing market and economic bounce.

Source:http://www.marketoracle.co.uk/Article15696.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules