UK Prime Minister Andy Burnham: calming the markets....?

 

The Guardian, the London newspaper talks about Prime Minister Andy Burnham trying to calm bond market, as more and more investors are getting rid of bonds of public debt. It must be said that it is not just Britain that might be losing its capacity to borrow billions of US Dollars (althougn bonds might be valued in Pounds) to paid a public debt that amounts to trillions US Dollars.

Any budget must be based on reliable data, but nowadays data has a habit of changing even before any budget is formulated. So by the time the Chancellor of the Exchequer John Healey (former Secretary for Defense) rises in the House of Commons to deliver the so called Autumn Budget all numbers in it might be totally outdated. Without the capacity to borrow more then taxing more and budget cuts could be the only way left to adjust public expenditure. Both options are deeply unpopular because they both go for one word: Austerity.

For a Labour Prime Minister having to start by imposing new taxes and cutting budgets because there is no money to go around is not what was promised during the first short campaign for an election that never happened. When the amount of monies available is significantly reduced, the impact of increasing defense expenditure makes cuts in other areas of the public administration even more painful. As Paul Samuelson, the American Economist stated, it is butter or cannons. You cannot have them both in equal measure. Something has to go. Will it be welfare payments? Whatever the previous Prime Minister did that was considered to be done against Labour values will be nothing compared with the limitations the new Prime Minister will have to impose.

Suddenly, recent electoral successes in Makerfield and Manchester will feel like a pyhrric victory. The joy and celebratons might turn into a funeral. More taxes will certainly means less buying power in the pockets of already suffering taxpayers. Budget cuts will mean more unemployment. But in actual fact both measures can accelerate the rise of unemployment. If you raise taxes, you cut private investment and consumption. Taxes will be higher but the amount of monies collected will be reduced due to less economic activity. Keir Starmer´s exit from Parliament will help him distance himself from then nightmare that is coming and Andy Burnham´s time as Prime Minister could be cut short.

Right after Andy Burnham was appointed, there were rumours that he would go to the country, that he intended to have his own Parliamentary majority, even by losing many of the seats that Labour managed to win in 2024. Going to the country, having a General Election preceded by a whole bunch of bad news does not look, sound and feel like a good idea. Labour MPs that did not want Keir Starmer as Leader and Prime Minister made the choice to remain under Keir Starmer not to risk losing their seats.

When Andy Burnham threw his hat on the right they could have rocket the boat and go for internal elections in the Labour Party. Instead, they chose to have Andy Burnham appointed without any contest. The idea was pure and simple. No contest to challenge Andy Burnham would show the Labour Party as something that the Labour Party is not: a united Party. When the new budget is presented in the House of Commons, factional rivalries will reappear. 

Having a majority in Parliament might look like a blessing, but having too many MPs might be inconvenient. A majority that cannot be controlled becomes a liability.

At a distance, Labour MPs that are no longer Cabinet Members could have been disappointed, hurt because they were no longer at the forefront of the Labour government. Now, many of them like Rachel Reeves might be congratulating themselves because they do not have to face the mess the new government will have to deal with. She was being forced to calculate and recalculate budgets before they were even presented in Parliament. Now the man who complained and even resigned as Secretary for Defense because he was not getting enough money for defense will have to face reality. Now, it is John Healey´s time to face the music.

Sue Gray did not last long as Chief of Staff under Keir Starmer. She said that she felt that she was being spied on, that her private conversations were being recorded and leaked to the mass media. Has the political environment inside the Labour government changed overnight? As pressure mounts, one can expect that internal tensions will rise. As the expression goes "keep your friends close, but keep your enemies closer". 

 

  

British Default: As things go, a British Default is becoming more likely by the day

A British default is becoming more likely by the day. A country that owes trillions of US Dollars, pays billions on a monthly basis and has little to show for a real economy looks increasingly as a ship heading towards the rocks.

John Healey, former Secretary for Defense and now Chancellor of the Exchequer, has very little to be happy about and so do millons of Britons whose lives are turning into a nightmare. Prices that used to be relatively stable are now rising monthly or weekly.

By the time you finish doing your budget, you have to start all over again. If the Chancellor of the Exchequer has even less money to distribute then the risks of job losses and welfare cuts are all too obvious. If this comes together with loss of trust regarding the Pound then the ugly face of Devaluation is all too visible. It is also obvious that is the economy goes drastically downhill then investors trust will evaporate. Investors are already asking for higher and higher returns for public debt.

Reserves? What reserves? When Prime Minister Gordon Brown, former Chancellor of the Exchequer, was in charge then Britain had reserves to deal with the consecuences of an American financial upheaval. He could keep the banking system afloat, but there were many casualties. This time there are no reserves. The ship is going down and there are no lifeboats.

 

How much it costs to rent a one bedroom flat in London? A British pensioner cannot afford it.

 

Today´s state pension can be about 1,000 Pound a month. The rental price of a one bedroom flat is about 1200 Pound, minimum. Then you have to account for other expenses apart from rental payments. So, really, the state pension does not allow pensioners to rent a one bedroom flat anywhere in London, capital city of the United Kingdom,

It usually assumed that by the time somebody retires the said person would own his or her own accommodation. This is not the case and it will increasingly not be the case as more and more people cannot afford to buy property and would have virtually no assets. This a ticking bomb. It is not by chance and/or by choice that more and more adults do not leave the home of their parents. Marriage as an institution if vanishing. Today, more and more parents are not married. It is also the case that vegetatve growth is below replacement rates. There are less and less children. Coupled with unemployment is the fact that there are less and less active workers and more and more people depending on welfare payments.

Monies to pay for pensions are disappearing and pension payments are not enough to have proper living standards. Once again, the clock is ticking. A consumer market that does not have spending power, combined with businesses that do make enough to manage to stay afloat with increasing taxation and other rising operational costs is not the way to Paradise. In spite of annual adjustments, retirees are getting a lot less in terms of that whey need to keep living standards.

Everybody should be talking about these issues, but most people live in cuckooland, oblivious in terms of what lies ahead.

Britain is in debt to the hilt: 105% of GDP and borrowing to pay interest on debt

Every time we hear the debate about British Foreign Aid, we need to think that any amount of Foreign Aid is.... borrowing with rising interest rates. It is not about helping the poorest as much of the so call Forein Aid aid goes to Pakistan - a nuclear power - and to China. To China? How is this possible or even logical?

In the meantime British business have been becoming non competitive as rising taxes are part of the equation of runnnig costs and to this we need to add rising cost of utilities driven by energy prices.

Let put it this way. The British interest payments on public debt are higher that the Defense Budget. Not only that. Britain is borrowing to make interest payments. The economy is heading towards the rocks and devaluation might be the only option left and creditors will not like it as the monies that they are owed will be therefore devalued. Do you think that Britain owes you 1 million US Dollars by comparing the value of the Pound to the value of the US Dollar? Think again. Whatever you think that you are owed will be automatically reduced by devaluation and you will be lucky if you get your monies back. 

What is the real state of the American Economy: Why has the Federal Reserve had to intervene several times during the passing week?

 

What is the real state of the American Economy? Why has the Federal Reserve had to intervene several times during the passing week?

The Federal Government depends on selling bonds in order to borrow considerable amounts of money and two trillion US Dollars - planned borrowing for 2026 - is an awful amount of money, even by US standards. When investors are only willing to buy bonds are increasingly hight rates or not willing to invest at all in US bonds, this is sure sign of trouble for the US Dollar. Things appear shaky, to say the least, and we are not talking about freezing payments for the Federal Budget. Recently, the US administration was in a prolonged lockdown until, somehow, agreement was reached between the White House and Congress. But what is happennig right now is about a lot more than that. 

Internationally, the US Dollar has been used as measure of value and as a way to store wealth. In most cases, if you want to buy energy (fossil fuels), the US Dollar is the currency reference. Despite the fact that with regards to other currencies - ie the Pound or the EURO - the value of the US Dollar has remained relatively unchanged, the US Dollar has lost support and foreign banks are now reluctant to invest in American National Debt. If the USA can only sell bonds at ever higher rates and/or investors are no longer willing to lend any monies, then any additional printing of monies will certainly throw the USA over the edge. If the worst happens before the November 2026 Mid-Term Elections this would mean that the present Administration has only a few months left and that the next administration will be left with an absolute nightmare.

This could well explain why the present Administration has turned out to be such an aggressive Administration when financial breakdown is no longer a possibility but a certainty in the very short term.

European Energy Rationing and strikes: Sanctions against Russian Federation benefit Russian Federation

 

Europe is shooting itself in the foot: sanctions against Russian Federation benefit Russian Federation

In the midst of a hot summer and talk about environmental crisis caused by rising temperatures leading to fires and meltdown snow caps, people can easily forget that winter will come and that when winter comes energy prices will not only hit the roof because of lack of energy sources. Winter will come with rationing and this will bring with it all kinds of unsavoury situations, conflict and most probably social and political unrest across Europe.

Before there was any talk about rationing, prices were rising steadily and utility bills were hitting consumers that are now going to be told that they not only will have to pay more more the energy they use. They will also have to face the certain possiblity of blackouts.

In Germany, head of industry, trade unions and politicians including the Deputy President of the European Commission are alerting about what is to come. Industries that have to pay higher energy costs and/or industries that are told that they will not have the energy they need to be able to function will face extremely harsh choices. If they decide to reduce operations or if they cannot obtain the energy they need to continue operating, the unavoidable consequence will be mass unemployment.

In Britain, the struggle has already begun. Strikes involving transport will be reinforced by strikes of public sector workers that demand salary rises to cope with galloping inflation. Any salary rises will drain even more an already exhausted treasury. Any loss economic activity will lead to economic losses and will threaten the stability of the British Pound. If the currency collapses, then there will be a double wammy. Britain will pay more for the energy it uses not just because of higher market prices, but because the parity with the US Dollar used to buy oil and gas will be less favourable.

The British government is aware that it will come the time when Britain will be paralized by strikes and this is why legislation is being put through Parliament to counter trade unions to allow agency workers to replace ordinary workers. The problem is that alienating ordinary workers is a leading cause to political and civil unrest and there might not be enough manpower to prevent street battles and widespread violence. By passing such legislation the authorities might be unwittingly creating two sides at war in the United Kingdom.

In the meantime, the witchhunt is already underway. British citizens that utterly disagree with UK policies regarding the Russian Federation are being hunted down and their assets are being frozen and there is even the threat of trials for crimes against humanity. Britain has been encouraging British mercenaries to get involved in the war to attack the Russian Federation, but does not like the fact that British citizens of their own volition actually support the Russian Federation.

Britain is at war with the Russian Federation and sooner than later Britain will pay a very high price for it and the same applies to most countries of the European Union. The idea that Europe and/or Britain can target the Russian Federation without any consequences for Britain and Europe is as naive as the words of Hermann Goering when he promised Adolf Hitler that German cities would never be bombed.

Europe and Britain will have to face the consequences, consequences that could be worse than anything conceivable or predictable. Europe and Britain are moving around with the same self-assurance the inhabitants of Hiroshima and Nagasaki had on the eve of the launching of two atomic bombs.

Just yesterday, both Conservative party contenders for the leadership of the Conservative Party were asked very simplistic questions about Britain involvement in Ukraine. Not even the journalists of the BBC have the brainpower to ask proper questions. The issue was not about sending or not sending the Royal Navy to the Black Sea. The issue is what will happen if Britain is formally involved in the war because sending the Royal Navy would be an act of war. The time for intimidation is gone because any additional actions will actually trigger a European conflict.

 

  

Time to buy Pounds

Time to buy Pounds

If it is true that the value of the Pound is falling, if you want to make billions, start buying Pounds right now, as many as you can get. The way speculators make billions in the currency markets is by buying and selling currency using fluctuations in currency markets.

People like George Soros made billions by buying and sellin currency. Therefore if The Independent and other mass media are saying that the value of the Pound is lower this is the time to buy Pounds. The BBC, Sky and others are constantly helping currency speculators by spreading rumours. As some exchange operators said quite a few times: "If people believe that the value of shares is going to fall and sell shares, the value of shares is going to fall. If people believe that the value of shares is going to rise, the value of shares rises." They treat members of the public as useful idiots to enrich already super-rich speculators.