Wednesday, September 23, 2009

We may not have until the next election....

There's a sort of phony war going on. Cuts have been declared - and everyone assumes we can wait six months for a change of national leadership before the blood shed has to start. ( Indeed many Labour and Lib Dem career politicians will be happy to see Conservatives throwing away their careers to save the country - so they can bounce back into office once the responsible adult work has been done claiming they opposed it all along ).

Wat Tyler uses the phony war strategy on his blog to describe the current situation.

We assume we have till after the next general election before cuts have to be made - indeed we can keep the current high burn rate of voter bribing going based on rapidly increasing debt and printing money till then.

But there are other dangers lurking out there. Yes the markets may be willing to wait for a sane Conservative government - all other things being equal. However we may be an island but we are not isolated.

A dollar crisis is getting closer every day. And the value of the dollar is very very unstable.

There are a lot of people who would like their money out of the US currency, but fear pulling it out fast would cause a collapse which would destroy their wealth. But if they think someone else is doing it then the queue's outside Northern Rock will look like a metaphorical picnic in comparison.

The US has no - repeat no - chance of honouring its debts with using inflation to effectively default and cheat its creditors.

Guess which financial genius invested large amounts of the UK's money in US debt - think World Statesman of the Year who is very popular in New York right now, but oddly nowhere else.

A US collapse will drag us to the bottom also because of the debt run up over the last year by insanity Brown. You see there is the risk they never mentioned of "investing your way out of the recession" really being tying a millstone around your neck just at the moment a sudden impact holes your ship below the water line.

( Note the US is already pulling back fast. Missile defence cancelled for Europe, NASA shortly to be told to forget its budget, troops out of Iraq and maybe Afghanistan. The US Suez moment may have already started. )

For those of a nervous disposition its time to head for safe assets like gold.

Declaration of interest ( no pun intended ) MiaS domestic asset management has already moved a proportion of my assets into a well known shiny metal.

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