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'timebomb' Uk Economy Will Explode After Election, Says Albert Edwards

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http://www.theguardian.com/business/2015/apr/14/timebomb-uk-economy-will-explode-after-election-says-albert-edwards

The UK economy is a ticking time bomb set to explode after the general election, according to a leading City commentator who has warned of a fresh crisis for the pound.

Albert Edwards, who heads the global strategy team at investment bank Société Générale and is well known for downbeat views, chides the coalition for a legacy of “grotesquely wide deficits” in both the public sector finances and on the UK’s current account – its overall trading position with the rest of the world.

In a note for the bank, Edwards wrote:

As the UK general election rapidly approaches, we take a look at the UK economic situation. We say what we see, and after five years of the Conservative and Liberal Democrat coalition government, the UK economy looks like a ’ticking time bomb’waiting to explode after the election.”

Edwards says his commentary is apolitical and notes he previously heaped scathing criticism on the UK economic situation under Labour in 2008. The difference with his latest critique, he says, is that this time the UK compares particularly badly with other economies.

He added:

“At least back then [January 2008] the UK was not alone in reaping the sour fruits of economic mismanagement – the US and the eurozone periphery were all sailing in similarly unstable, leaky boats. But now the UK economy stands alone, up to its eyeballs in macro manure. Eventually the stench will fill the nostrils of currency markets with the inevitable result – another sterling crisis.”

Edwards, who has previously taken aim at chancellor George Osborne’s scheme to boost the housing market as one of the “most stupid economic ideas” of the past 30 years, says a push to cut the deficit has failed.

To the extent the UK economy has recovered, it is not because the public sector deficit cutting has worked as the government claim, but because, for the last three years, the government has quietly abandoned all pretence at fiscal cuts, kicking the can into the next parliament,”
he says.

Some morning bear food.

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...the government has quietly abandoned all pretence at fiscal cuts...

They've borrowed £500Bn in 5 years. The debt was c. £1,000,000,000,000 in 2010. It's now c. £1,500,000,000,000. The numbers don't lie, but the Tories do when they open their mouths and say things like "paying down the debt". Our economy needs an extra £100Bn a year to service it. That is unsustainable. Nobody talks about this. Labour do not talk about it. No other parties talk about it. The BBC/MSM do not talk about it.

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All of the LibLabCon are inept. All of them are in thrall to their bankster friends so the policies of the last five years were inevitable. Sooner or later, we get to pay the price of those policies.

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They've borrowed £500Bn in 5 years. The debt was c. £1,000,000,000,000 in 2010. It's now c. £1,500,000,000,000. The numbers don't lie, but the Tories do when they open their mouths and say things like "paying down the debt". Our economy needs an extra £100Bn a year to service it. That is unsustainable. Nobody talks about this. Labour do not talk about it. No other parties talk about it. The BBC/MSM do not talk about it.

doubling time now about 8 years.

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doubling time now about 8 years.

House prices reached the point of doubling in five years about a decade ago leading to the bust. Perhaps that's a ballpark for how bad things can get before ... in this case a sterling crisis and instant doubling of import costs.

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Meanwhile the market ploughs on in its contrarian way, setting new record day after day.

https://www.google.co.uk/finance?cid=12590587

As for fiscal sense being abandoned these last three years...what are they supposed to do with an electorate that has been brain washed into thinking this is Austerity. And we have fairy stories from the left that if you spend even more the deficit will be less...Zimbabwe/ Peron style.

Let's get this one nailed, we have spent more than any other European country our GDP is at the top of the European growth league table 2010-2015.

We have achieved this by going on a reckless left wing spending spree, doubling the debt. This is not even close to austerity.

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They've borrowed £500Bn in 5 years. The debt was c. £1,000,000,000,000 in 2010. It's now c. £1,500,000,000,000. The numbers don't lie, but the Tories do when they open their mouths and say things like "paying down the debt". Our economy needs an extra £100Bn a year to service it. That is unsustainable. Nobody talks about this. Labour do not talk about it. No other parties talk about it. The BBC/MSM do not talk about it.

Huge increases in the pile of debt was obviously going to happen when the deficit was so high. You see that surely, right?

I am not sticking up for the tories explicitly, but does anyone talk about the reasons why the *DEBT* (not deficit) has doubled? Tories have certainly cut the deficit they inherited, but why was it so high and why has it remained relatively high?

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Huge increases in the pile of debt was obviously going to happen when the deficit was so high. You see that surely, right?

I am not sticking up for the tories explicitly, but does anyone talk about the reasons why the *DEBT* (not deficit) has doubled? Tories have certainly cut the deficit they inherited, but why was it so high and why has it remained relatively high?

too much Government.

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I find it particularly amusing when leftists like Nicola Miller and Wee Jimmie Krankie talk about how they're going to increase public spending. They act as if austerity and the debt is all in the minds of the Tories.

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too much Government.

And its getting more expensive due to an ageing population. Triple locks and an insatiable NHS, where any amount of money is not enough to feed the beast.

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They've borrowed £500Bn in 5 years. The debt was c. £1,000,000,000,000 in 2010. It's now c. £1,500,000,000,000. The numbers don't lie, but the Tories do when they open their mouths and say things like "paying down the debt". Our economy needs an extra £100Bn a year to service it. That is unsustainable. Nobody talks about this. Labour do not talk about it. No other parties talk about it. The BBC/MSM do not talk about it.

What did they actually spend this money on? And to think we had "austerity" under the coalition. So why did they need to borrow so much if we had austerity? Obviously Osborne and Cameron are as stupid as they are ugly.

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Albert Edwards may have a bit of an agenda. Of course, he may have gotten out of UK Equities early and may be the one laughing if it goes sub 5000 after the election.

He wrote this article on 9th October when the FTSE 100 was at 6431 during the midst of Ebolgeddon (it has scaled 7100 for the first time this morning).

http://citywire.co.uk/wealth-manager/news/albert-edwards-sell-everything-and-run-for-your-lives/a776980

Pitting your sole wits against the many in the Market is always a gamble.

At the end of the day nobody knows, the winners are just the stupid guys who kept winning by luck.

Edited by crashmonitor

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Yet another who gets the big picture but has been calling the crash for 5 years. Eventually they will be right (and claim they were right all along) while for years their investments have stopped people building for their retirements.

Just wait when the next crash does come for the Keisers, ZHs, Schiffs etc shout how right they were.

Unfortunately HPCers will lap it up.

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Pitting your sole wits against the many in the Market is always a gamble.

At the end of the day nobody knows, the winners are just the stupid guys who kept winning by luck.

It is not a gamble. It is arrogant and egocentric. Get rid of ego and you improve your probability of markets' success leaps and bounds.

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Huge increases in the pile of debt was obviously going to happen when the deficit was so high. You see that surely, right?

The Tories made a pledge in 2010 to eradicate the deficit by 2015/2016. We've supposedly had austerity for the last 5 years in order to reach that target. Look where we are now, still borrowing £100Bn a year. They've kicked that pledge down the road a further 5 years. Tax receipts are going down, not up.

What am I not seeing?

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....BUT, if sterling plummets, won't houses become even cheaper for overseas 'investors'?

With sterling at around 1.36 in Q1 2009 UK houses were at 50% off sale prices.

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It is very likely we will have the next global recession (approx every 7-10 years) in the next parliament too.

Add in Edwards' predicted currency crisis caused by our situation as it currently is.

We may soon be living in interesting times.

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The Tories made a pledge in 2010 to eradicate the deficit by 2015/2016. We've supposedly had austerity for the last 5 years in order to reach that target. Look where we are now, still borrowing £100Bn a year. They've kicked that pledge down the road a further 5 years. Tax receipts are going down, not up.

What am I not seeing?

Fiscal contraction during a depression at the zero bound increases debt. Everyone knows that (Except Gidiot)

Edited by R K

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