A Labour victory would be bad news for sterling – MoneyWeek

SoitsgoodnewsthatyoucanbesureofwhatyoullgetwithGordonBrown。

Utterfiscalincontinence。

Despitethebesteffortsofhisloyal(-ish)chancellor,AlistairDarling,topretendthateverythingisundercontrol,hejustcantstophisbossfromrunningaroundpromisingtheearthtoallandsundry。

Takehislatesteffortstowinthevotesofwimmin…

HowisBrowngoingtopayforhislatestsetofpromises?

GordonBrownwasinterviewedonNetmumsattheweekend。

Goingonasocialwebsiteformumsandmums-to-beseemstobethemodernpoliticalequivalentofrunningaroundpeckinginfantsonthecheek。

Anditsjustaspatheticallytransparent。

Gordonwasingrandgiveawaymode。

Apparently,overthenextfewyears,womenwillgetthelegalrighttochoosewheretheygivebirth,includinghomebirthsforanyonewhowantsone。

Andwewanttoseeserviceschangedsothatnotjustmumsbutdadscanbegivenabediftheyneedtostayinhospitalovernightafterthebirthoftheirbaby。

Wehavealsosetagoaltorecruitanextra4,000midwivesby2012。

Whatifmothersaredeniedthehospital/homebirthoftheirchoice?

Why,theycouldbeallowedtogoprivate,withthecostmetbytheNHS,reportsTheIndependent。

Nopricetagwasannounced,butLaboursaiditwouldimplementtheplanasquicklyaspossibleaftertheelection。

Andtherellbefreejellybeansforall!

Youhavetolaugh。

TheresAlistairDarling,puttinghisseriousfaceon,andtellingusthathesgoingtoreducethedeficitinthenextfouryears,buthecanttellushow。

AndthereshisbossjustdolingoutpromisesthatDarlingssomehowsupposedtoincorporateintohisplans。

Wheresallthemoneyforthisgoingtocomefrom?

Publicspendingneedstofall。

Sowhosgoingtopayforthatextraguestbed?

Fortheextracleanerstocleanthatextrabed?

Whosgoingtopayforthoseextramidwives?

Andisanextrabedreallythatimportanttoanattendantfather?

Aplasticchairoroneofthosebigbeanbagstheyseemtofavourinmaternitywardsthesedaysisprettyadequate,asIrecall。

Ifheneedsabedthatmuch,thenwhynotmakehimpayforit?

Thismightseemlikeapettythingtopickon。

ButitcutstotheheartoftheproblemwithLabour,andwithBrownsapproachspecifically。

Thepublicsector,likeitornot,doesnothaveabottomlesspitofmoneytodrawon。

Thatmeansyouhavetomakechoices,todiscriminate,toprioritise。

ButthatdoesntseemtooccurtoBrown。

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Theproblemwithtrustingpre-electionpromises

Heusedtopretendthatheunderstoodthis。

Hehadhisgoldenruleandhissustainableinvestmentrule。

Thefirstwasaprettymeaninglessruleaboutbalancingthebudgetoverthecourseofaneconomiccycle。

ItwasmeaninglessbecausethelengthofsaidcyclewasuptoMrBrown。

Thelattermeanwhile,saidthatthegovernmentsshareofGDPshouldntriseabove40%。

Itsnowcloserto50%。

Somuchfortherules。

ButtherecessionseemstohavegivenBrownanewpurpose。

Nowhesdecidedthatallspendingisgood,sohewantstodoasmuchofitaspossible。

Andnotethatwewontgetacommitmentonspendingcutsuntilaftertheelection。

AsDavidSmithpointsoutinTheSundayTimes,acomprehensivespendingreviewwillnottakeplaceuntilaftertheelection…asthingsstand,spendingdepartmentshavenobudgetsfromApril2011。

Someofthosebudgets,whentheyaresettled,willcontainbigreal-termcutsinspending。

Fornow,however,theyhavetobetakenontrust。

Itsthatwordtrustthatworriesme。

BecauseDarlingisalsolikelytocomeoutandsaythattheeconomywillgrowby3。

25-3。

75%in2011。

Themorerapidthegrowth,theeasieritistojustifysmallercuts。

Thetroubleis,thoseforecastsareontheoptimisticside–theconsensusexpectationisfor2。

1%growth。

Judgingfromthepastdecade,andfromthewaytheBudgetiscurrentlybeingsoldtous(notaxrises,noproperspendingcuts),IdontthinkthatLabourisseriousaboutdealingwiththedeficit。

AndIsuspectthattherealreasonthatsterlinghastankedsobadlyrecently,isthroughgenuinefearofanoutrightelectionwinforLabour。

Howtoprotectyourselffromaweakerpound

Whatdoesthishavetodowithyourinvestments?

Well,Irealisethatsomereadersdontlikeitwhenwetalkpolitics。

Butpoliticsandeconomicsareofcourse,closelyentwined。

Andnowthatthegovernmentisuptoitsneckinthemarkets,pullingstringshereandthereandfiddlingwithinterestrates,theyveneverbeenmorecloselylinked。

Solikeitornot,theelectionresultmatters。

Andiftheresonethingthemarketswanttosee,itsastrategytotacklethedeficit。

ButBrownhasnocredibilityonthisscore。

Andeverytimeheopenshismouth,heconfirmsthat。

Itsasifhestillbelievesthathereallydidabolishboomandbust。

Votersareindangeroffallingfortheideathat,asAllisterHeathputsitinCityAM,publicspendingandthesizeofthestatearechoicesthatcanbemadebypoliticians,ratherthanconstraintsabouttobeimposedbythefinancialmarketsonahaplessandpowerlessWestminster。

Unlesswegetchangeatthenextelection,oramiracleU-turnattheMarch24thBudget,youcanexpectaweakerpoundandhigherinterestrates。

Itmighthappenanyway。

Sobeprepared。

Ifyouhaveahomeloan,planyourfinancessothatyoucanaffordforyourpaymentstorise。

Ifyoudonthaveanygoldinyourportfolio,getsome–itsthebestcurrencyhedgeandalwaysworthhavingsomeinyourportfolioasinsurance。

Andmakesureyouhaveanemergencysavingsstash–savingupsixmonthsworthoflivingexpensesisalwayswise,butevenmorewhentimesareuncertain。

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Twostepstowardssolvingthehousingcrisis

TheBritishpublicaresodesperatetoowntheirownhomethathousepricesareinflatedbeyondaffordability,saysMerrynSomersetWebb。

Here,shesuggeststwopracticalstepsthatwouldmakehousingmoreaffordabletothoseonaverageincomesandlessofattractivetotheget-rich-quickcrowd。

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