Brit's are starting to wake up to the reality of what hung parliaments mean which is that voters see what they voted for on the basis of party manifestos at the General Election being stripped out of parties programme's for government to result in a mish mash of weak sludge as coalition governments slowly take form in secret smoke filled rooms.

What is more shameful to watch ?

Labour and Conservatives increasingly humiliating those that voted for them as they fall over one another to woe the Liberal Democrats.

Or the Liberal Democrats prostituting themselves to the highest bidder?

The clear and present danger to Britain is that the Liberal Democrats are literally holding the country to ransom, pitting each of the major parties against one another as to which will succumb to Lib Dem whims with regards to electoral reform that would virtually ensure that neither major party will ever win an election again, instead Britain will be forced into perpetual smoke filled room deals that voters will have no say on what policies the governments will actually deliver. This implies a series of weak and short-lived governments that lack vision and substance that pander to the minor parties.

Both Labour and Conservatives should not fall for Lib Dem wolf in sheep's clothing, in fact it would be far better if both major parties do a Labour / Conservative Coalition in advance of another early General Election. Failing that the obvious outcome should be for the Conservatives to go it alone with a minority Conservative government.

A Labour / Lib Dem / SNP / Plaid Cymru / Ulster Unionists coalition would be a complete disaster for the country that the markets would punish severely as the tail would wag the dog and England would be forced to bear all of the spending cuts whilst Scotland, Wales and Northern Ireland would escape virtually scot free, is that democracy ?

Failing a highly unlikely Labour / Conservative Pact or a Conservative Minority government then Britain has no choice but to go to the polls again within the month! We have had our experiment with a hung parliament and it most definitely should be resigned to the dustbin of history.

Unfortunately Gordon Brown is hell bent on going out with a BANG! and could in fact set in motion a sequence of events that would rip the United Kingdom apart which is exactly what the SNP and PC want to happen hence their eagerness to fall over one another to get the Lib Dems and Labour to form a government with them.

Sterling may have bounced from the post election low of £/$1.45 to as high as £/$1.51 as a consequence of market focus on the Euro zone solvency risks. However this bounce is temporary as once the consequences of perpetually weak UK governments starts to sink in, in terms of economic growth prospects and and inability of weak governments to deal with the huge debt burden that demands urgent public spending cuts then the holders of UK debt will take fright and rush towards less risky bond markets which virtually ensures that both UK bonds and sterling are going to suffer, and were talking in the next few days not weeks or months!

Source: http://www.marketoracle.co.uk/Article19378.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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Comments

Jas Singh
11 May 10, 04:59

Sterling Gold

Nadeem

What about Gold for UK buyers?

Is this a last opportunity to accumulate before we move to the next price level?

Best Regards

Laurence
11 May 10, 15:00

Hoorah!

Fortunately Labour couldn't reach a deal with the Lib Debs partly because of stupifying arrogance.

Now the real battle to cut waste, correct this society's shortfalls and tackle this enormous deficit begins. The Tories were the best choice but will they be able to turn round the benefits culture and disaffected youth. One thing it's going to be interesting and difficult for labour's core support and we can expect many horrors to be discovered when the Tories start examining the true state of the nation's books.

BTW, I am happy. After 13 years of sneaky socialism, no more Blair and Brown. In fact, we have banished Blair and Brown. Tough on socialism, tough on the causes of socialism. Hoorah!

Mehboob Hamza
11 May 10, 15:21

Hung Parliament Disaster for Britain

Your points are fine but the Electoral Reforms must first pass through Parliament and then a Referendum. If voters say yes, it is democracy. Many countries do manage with Hung Parliament situations. UK will do so too without horse trading as you paint it. Perhaps, there could be a better check in place. However, political landscape must change with clear transparency and performance evaluations of MP's. Maybe, Britain may re-write the rules of democracy to further enhance good government, governance and serving the country rather than party.

Sterling may be doomed, may even touch 1.25 and even below. It has been there before. Nothing new under the sun. Should it go there, its time to be bullish. What goes up must come down and so on, part of the spiral of markets.

Bye

Mehboob

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