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Trading Lessons

UK Government Extends 4% Pensioner Bonds Grey Vote Bribe to Election Day

ElectionOracle / UK General Election Feb 08, 2015 - 03:56 PM GMT

By: Nadeem_Walayat

ElectionOracle

George Osborne today announced that the Collation government is extending the Over 65 4% Pensioner Bonds Tory election bribe for 3 months, all the way to election day. The original tranche was for £10 billion that has all but been consumed by yield starved cash rich pensioners with today's news likely to allow for a further £10-£15 billion of election bribe bonds to be sold over the next 3 months at an additional cost to the Tax payer of a least £700 million bringing the Pensioner bond election bribe total to at least £1.2 billion in terms of free money for pensioners.


This also implies that post election the pensioner bonds may become a permanent bribe as is the winter fuel allowance, free TV licence amongst many other bribes for the growing army of grey voters of approaching 12 million, who are not only twice the number of the 18-24 heavily penalised voting group (low pay, tuition fees, little chance of affording to buy a home, heavy taxation) but more than twice as likely to vote than the young, hence why Labour and Conservative tend to bend over backwards to bribe pensioners for their votes.

George Osborne's announcement on BBC1 - The Andrew Marr Show

“Our 65 plus pensioner bond has been the most successful savings product this country has ever seen. Over 600,000 pensioners have benefited from it.

“What I can confirm today is that we are going to guarantee that it remains on sale for another three months.”

My last article forecast better than 50% chance for the Government to make additional tranche's available for the primary purpose of BUYING votes as excerpted below -

15 Jan 2015 - New 4% Pensioner Bonds Election Bribe - Grab it While You Can

Election Bribe

As a comparison the best 1 year fixed rates average about 1.8% and the best 3 year fixed rates average about 2.4% gross!. So these bonds are paying 60% premium to the market rate, hence why they are an election bribe. Therefore the £10 billion tranche converts into a potential bribe of at least £500 million as the NS&I usually tends to under pay market rates.

Bond Details
  • For 65+ only
  • Invest between £500 to £10k
  • Interest is taxable.
  • 1 year pays 2.8% gross (2.24%net)
  • 3 year pays 4% gross (3.2% net)
  • Fixed rate term bonds

As mentioned earlier, if you miss applying for the current £10 billion offering then there is a better than 50% chance that the Government will make an additional tranche available later on as the purpose of these bonds is literally to BUY VOTES, especially as NS&I rates tend to be at the bottom end of the market i.e. the 5 year Issue 102 fixed rate bond carries a rate of 1.6% gross.

The bottom line is that the rest of the population and especially the young are being squeezed by the weight of the growing grey vote to breaking point, which implies an increasing trend towards a generational conflict as a growing ageing population unfairly skews allocation of economic resources in its favour that could trigger further outbreaks of disorder as we saw with the London riots as the young rebel against effective grey vote imposed slavery as an ever increasing share of the nations wealth is being funneled to the elderly as illustrated by the pensioner bonds with the young left to pay the price in terms of being saddled with debt mountains without any assets i.e. permanent insolvency.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 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 focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 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.


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