Friday, 22 March 2013

By-Election in Havering confirms Eastleigh trend

A by-Election in a Council Ward in Havering confirms the Eastleigh trend. If we were to apply the same percentages to a General Election, we would have a UKIP government. If we could elect Members of Parliament using Proportional Representation there would be about 65 BNP MPs. Sounds farfetched? Well, in the present political environment all options are on the table.

Share of the votes (%)
Lawrence James Webb
39%
Elected
Christine Anne McGeary
27%
Not elected
Marcus Christian Sebastian Llewellyn-Rothschild
13%
Not elected
Darren Christopher Wise
11%
Not elected
Mick Braun
9%
Not elected
Malvin Paul Brown
1%
Not elected



Lawrence Webb
UKIP Local Residents
831
39%
Christine Anne McGeary
Labour Party
569
27%
Marcus Christian Sebastian Llewellyn-Rothschild
Conservative Party
280
13%
Darren Christopher Wise
Harold Wood Hill Park Residents Association
227
11%
Mick Braun
British National Party
202
9%
Malvin Paul Brown
Residents’ Association of London
24
1%


In an environment in which all the so-called mainstream political parties propose as solution is to print more electronic money to continue borrowing to keep the European Union afloat, I have no doubts that more and more people are desperately looking for alternatives.

Lib Dems and Labour are ideologically opposed to a Referendum on Europe and so is the EU Branch of the Conservative Party at a time when an increasing number of voters understand that we cannot put an end to flood immigration and we cannot start saving money unless we put an end to the EU adventure.

I cannot see Britain going cap in hand to Russia to ask for bailout money. What happens in Cyprus could happen here if we continue wasting money for ideological ends. Havering is just a sample but could very well be a representation of a national trend as people realize that there is a link between the European Union and their financial misfortunes. Britain will continue printing money despite the fact that QE is devaluing the British Pound. The readiness to print electronic money is what should be making investors extremely nervous because the money they get as payment for bonds and other loans is devalued money.

There is now another school of thought that is gaining momentum. They say that we should get rid of lower interest rates - this means getting rid of the base interest rate at 0.5% - to reflect what is happening in the real economy.

The natural consequence of putting up interest rates that would directly affect mortgage loans would lead to a drastic fall of property prices. In order to sell a property, owners would have to sell for less thus pushing prices down. Deflation in the housing market because of lack of demand created by higher costs of mortgage loans would create a more balanced housing market and would benefit savers that will get more value for their savings but there will be serious consequences because many will fall into the trap of negative equity having to repay loans at higher interest rates.

Negative equity is a nightmare scenario but a stagnant housing market is also a nightmare scenario. Investment is the answer but as long as we keep draining the British economy of the resources it needs to come back to life we are going to face the very real danger of contraction followed by loss of financial credibility.

When you look at the base interest rate and at commercial rates there is an obvious disconnect. The rate of the Bank of England needs to reconnect with the rates that exist in the real economy. Higher interest rates will help to attract investors thus reducing the need to print electronic money and the government will have some real income to tax. Taxing private incomes is better than creating digital money but this tax money will most certainly come from haves, instead of coming from have nots. 



No comments:

Post a Comment

Post a Comment