TODAY’S FAYRE – Thursday, 28th September 2017
“This unimportant morning
Something goes singing where
The capes turn over on their sides
And the warm Adriatic rides
Her blue and sun washing
At the edge of the world and its brilliant cliffs.
Day rings in the higher airs
Pure with cicadas, and slowing
Like a pulse to smoke from farms,
Extinguished in the exhausted earth,
Unclenching like a fist and going.
Trees fume, cool, pour – and overflowing
Unstretch the feathers of birds and shake
Carpets from windows, brush with dew
The up-and-doing: and young lovers now
Their little resurrections make.
And now lightly to kiss all whom sleep
Stitched up – and wake, my darling, wake.
The impatient Boatman has been waiting
Under the house, his long oars folded up
Like wings in waiting on the darkling lake.”
Lawrence Durrell – author, dramatist & poet – 1931-1990
Regardless of anyone’s political persuasion, few can deny that the June General Election campaign run by the Conservatives was an unmitigated disaster and the current Government, without an overall majority, looks very dangerously divided – significantly worse than the one presided over by Harold Wilson in 1964 and John Major in 1992. If the Conservatives don’t get their act together next week and unite, then they are staring defeat fair and square in the face, sometime in the next 4 years.
The Jeremy Corbyn show continues mercilessly on a roll gathering momentum with every revolution on its bandwagon’s wheels! Content and substance are totally irrelevant. Presentation is all that matters and Labour is brilliant at that shallow practice, which is fundamentally important in this modern age. Making people feel good, even though Labour’s leadership, knows in its heart of hearts, that it could well be tossing them off the cliff-edge at Beachy Head in to an economic abyss accompanied by massive unemployment with its lavishly ambitious and totally unaffordable policies.
Apart from the public’s obvious and justifiable outrage at and response to the appalling general election campaign, why have the Corbynistas really caught on? Brexit is only a contributing factor. The Conservatives have not made themselves an attractive proposition to the 18-40 age bracket. The inequality gap is too wide and the Tories do not have the answer as to how to close it. They are unable to reflate the economy and seem incapable of recalibrating it. If they gambled with that idea, the damage it would do in their shire constituencies and to their core vote would be severe.
So here we are with house prices averaging circa £238k, with London clearly dragging the average up. Salaries average £26k. So house purchases in many areas don’t add up, when only 4/5 times salary is available. At this level the Bank of Mum & Dad don’t really come in to play. With student debt a serious noose around the young’s necks (circa £25k) and wages increasing at infinitesimal rates, dismay for the young of their future prospects is very prevalent. So with the Tories hell-bent on cutting the deficits and our borrowing requirements with little in the way of wage increases, and the economy showing a reduced level of growth, what do the ‘young’ have to look forward to? – They think very little.
I have to ‘doff my titfer’ to ‘Momentum’, who have done a first class job of mendaciously galvanising the intellectual left in to a hateful frenzy on social media! Gracious me! ‘momentum’ has been VERY effective and wonderfully successful in promulgating the gospel according to ‘Jeremiah Corbyn’ and John ‘The Baptist’ McDonnell. Populism is truly virulent and is it is far more important these days to have a brilliant PR machine providing great presentational skills to its leader. Jeremy Corbyn is unrecognisable as a leader from what he was 2 years ago. His PR team have been par-excellence. Jeremy Corbyn’s reception from the party faithful in Brighton was a sight to behold.
Logical content which is professionally accounted for is completely irrelevant, when Labour is trying to win over that 5% of floating gullible voters. The country is fed to the back teeth with the political establishment. Millions of disenchanted young people find the prospect of having the greedy buggers in the City trashed, rents being pegged, rail, water and other utilities renationalised with inadequate compensation to shareholders deeply attractive. They salivate at the prospect of higher income tax for the better off, higher corporation tax, visceral inheritance and property taxes to pay for Corbynista profligacy. A few billion on affordable housing, regardless of cost, sounds good to them The fact that the sums don’t add up does not matter a jot! Anything to this new invigorated movement is better than PM May and the Tories. The prospect of going back to the 70s and the despair it created is no threat to them. They are prepared to pay the price to find out!
The stock market at present remains relatively calm as does the Pound and the gilt market. However if in the next 6 months to 4 years the Corbyn manifesto is adopted by the voters, then your tin hat should be close at hand. The Pound will fall sharply, gilt yields will rise steeply, retail activity could fall triggering measurable unemployment. At this juncture one needs to be fair. If the Corbynistas borrow chunks of money from the gilt market for infrastructure spending which will create jobs and economic activity then, as my colleague and friend Panmure’s Chief Economist Simon French, tells me – that is good debt and the government might get away with it. But any profligacy such as hopelessly large pay settlements will be dealt with unmercifully by markets.
Mrs May and the Conservatives have it all to do to stay in power. At the Bank of England Mrs May must attempt to put across her ideals, by defending the capitalist system and free markets and explain that after Labour’s profligacy, which contributed to the credit crisis and recession, is now under better regulation which has seen unemployment fall from 8% to 4.5% in a decade. Next week’s conference must see the Government pull a few rabbits out of the hat, such a massive house building plan that are affordable. If not, that’s it! we are sentenced to a life of zero growth without hope or expectation. Those who don’t believe that Corbyn is in the wings waiting to govern with massive support, wake up and smell the coffee.
In closing I believe we have arrived at this situation with the ‘young’ who are bitterly disappointed with life, partly because our education system is all wrong. Only those with academic prowess should go to University. Most should go technical college to learn a trade – carpenter, plumber, technological operators, engineer, surveyor etc etc. The current level of disappointment would eventually dissipate. Just because a person has a degree, it does not give anyone the divine right to have a GOOD job. Everyone needs to strive for it. My final comment will prove very unpopular in many quarters. I speak as an uneducated man academically, who had to make his own way in life and not from a ‘monied’ background!
Market Commentator – Panmure Gordon & Co
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