Finance Friday: Finance and politics
Our finances and politics are inextricably linked. The latter keeps changing and so we have to try to keep up and take political policies into account when planning for the future and deciding on investments. Politics in the US took a shift to the right this week, which is good news for rich investors, but bad news for others.
In the UK there is political uncertainty. The referendum in Scotland decided to maintain the status quo and keep the union as it is; but the fallout means a lot of political manoeuvring for power. Labour could lose a lot of it’s members of parliament in Scotland and the Conservatives are in favour of devolving power in England. This idea of more power in English regions is seen as a good thing by some Labour politicians too, but is all as it seems? The power to do what exactly? It would seem the power to cut back services further on the instructions of central government will be the main purpose of these new ‘regional’ power bases. New layers of government will make the system of government even more inefficient, we need to get rid of layers not add more.
Here in the Black Country a councillor for a Smethwick ward, Darren Cooper is championing the cause for the Black Country to become part of a ‘Greater Birmingham’. The people of the Black Country have seen local government reorganisation before, we don’t want to be part of a ‘Greater Birmingham’. I would quote some opinions about Councillor Cooper’s plans, but most of them are only two words and the second one is ‘off’.
The General Election is next May and so these diversions from the real issue of the economy and falling incomes will keep being raised. Politicians are experts at burying the bad news and most of the media are supportive of the privately educated, Oxbridge crowd that now leads all the major political parties. Possibly this is the reason people are supporting UKIP. I would rather support the Monster Raving Loony Party.
Labour should be wiping the floor with the Tories, but Ed Miliband is one of the Oxbridge crowd and every time he speaks, the voice coaching is obvious. Raising the hand in a Nazi style salute is also a trade mark gesture of the Oxbridge crowd, who have been coached in what to say, what to do and how to do it. They are the puppets, their masters hold the purse strings.
I don’t see a big difference in policy after May if Labour form a government. Hopefully, Miliband will come out against the Bedroom Tax by then or he could hand power back to the Tories on a plate. A coalition between the Tories and UKIP has been mentioned. Even a coalition between Labour and what’s left of the Lib Dems has been mentioned. This uncertainty is likely to unsettle the markets in the run up until May.
Can investors make money out of the panic and uncertainty? There was panic and uncertainty about Tesco shares last week and the share priced plunged, but is recovering a little now. I’m about 7% up on my investment in Tesco so far. Solo Oil dropped this week after the Horse Hill drilling failed to find gas, that was a disappointment and caused a little panic. Now the panic is over and investors have had time to think about Solo Oil’s other assets in Tanzania, the share price is recovering a little.
There is money to be made from panic. The market panics because of all sorts of things. Often some pronouncement by the governor of the Bank of England, the regulators or that purveyor of financial doom George Osborne, can send share prices crashing down. The market in some areas tends to be volatile, so the day traders buy low and sell high. Private investors, especially small investors get screwed with outrageous dealing fees on top of stamp duty and have to be twice as smart as the Oxbridge crowd dealing for the institutions. Those institutions include the ones investing your pension pot.
I don’t think austerity and the demonization of benefit claimants is working. I expect a policy of loose money will be used by Labour, if they gain power, to stimulate growth. That will be good for investment.
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