Of our elaborate plans, the end

“Goodbye, Great Britain. It was nice knowing you.”

 

-       Wall Street Journal editorial, 1975.

 

“[Gordon] Brown’s Britain is like an episode of Life on Mars.”

 

-       George Osborne, UK Shadow Chancellor, at the time of the Northern Rock Crisis.

 

 

Does every Labour administration end in economic chaos ? Like Andy Beckett, who has just published ‘When the lights went out: Britain in the Seventies’ (Faber & Faber), this writer was also born in 1969, and it certainly feels like Labour administrations have a greater propensity to disappoint public expectations than even the England football team. Writer and broadcaster Francis Wheen has a nice line in acerbic irony whilst reviewing Beckett’s book for ‘Literary Review’. Politics in the 1970s, claims Beckett, was “rawer, and more honest.”

 

“Thus speaks a man who spent the decade at primary school.”

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Comments

[Tradebot]

Hi Tim,
Thanks for the great post. I think your reasoning is sound about the incoming avalanche of supply and the effect it will have on the bond market. The market is very nervous - the volatility , especially in longer dates, has gone up significantly as market participants weigh the future inflation expectations vs central bank buying via QE. Add to that the "negative convexity" hedging from mortgage players , and the consensus amongst the players is that the central banks are not only the buyers of last resort, but the ONLY buyers around.

[Tradebot]

I still wouldn't go long equities as the earnings expectations are way too optimistic - there can be no recovery until household balance sheets are repaired - however, the systematic risk has been now averted out so I doubt if we will revisit March lows.

However, I like your core long of commodities , especially precious metals. As always with radical central bank policy , you end up with unintended consequences and any investor not buying gold as an insurance is cruising for bruising.

[timprice]

I have to (reluctantly) concede that the low appears to be in for equities. But I don't advocate blanket equity purchases - only highly selective ones. The market for me falls neatly between defensive deep value (always a good bet) and more aggressive mid-cap growth on solid metrics such as Altman Z. But everything outside that can, for me, be completely ignored. Emerging markets, on a pound cost averaging basis, also look great by comparison to western markets.

[Tradebot]

Hi Tim,
re : equities, I agree with your view - next few years will be "a stockpicker's market". I still think the overall indices will trade sideways lower as growth scenarios come under attack from toxic cocktail of increased debt and lack capital.

For emerging markets, I would prefer Asia and LatAM over Eastern Europe inc. Russia.

[runescape money]

I feel like time is going incredibly fast and slow at the same time. The weeks/months seem to be crawling...but at the same time, I turn around on Monday and suddenly it is Sunday again

[Hedge Fund Community]

It is important to keep going. Just keep calm and carry on. And do not forget to laugh, no matter the circumstances.