Yes, this is the inevitable post on the upcoming General Election. I won’t mind at all if you skip to the links below.
Like most of you, I spent Easter wondering why there’s so little political debate in our lives these days. Such a cosy consensus! Everyone just getting on with the important things in life like laughing, cooking good food, dancing, comparing low-cost investment platforms, and curing cancer.
Thank goodness Theresa May divined again the mood of the nation and called a snap General Election.
Less than a week in and politics is already all we’ve heard about since. Which hardly makes a change from the past 10 months. (How I chortle when I think back to readers telling me the EU Referendum was old news and to move a week after the vote. One problem with people being newly engaged in politics is many of them don’t understand how it works. See also D. Trump.)
The months since the Brexit result have been interesting. While I can make my excuses for why the economy hasn’t missed a beat – specifically the delay in triggering our formal exit – the reality is I was wrong-footed by its ongoing strength. (I console myself that I at least had the flexibility to see that as early as September.)
Will my longer-term misgivings prove equally wide of the mark, too? Economically it will be hard to tell. I was never predicting doom – that’s a straw man, really – rather worse than we would have otherwise had. Socially and culturally, how bad things get may depend on how far politicians go in implementing the self-destructive Will Of The People.
As Brexit-fan Merryn-Somerset Webb writes in the FT this weekend [Search result]:
The rise of populist sentiment (which we can define as parts of the electorate asking for things that mainstream politicians think are both stupid and impossible) pretty much never leads to populist policies being implemented (they are often indeed stupid and impossible).
But it does have a long and useful history of changing the direction of mainstream politics.
Merryn deserves plaudits for being one of the Liberal (-ish) Elite who came out for Leave before the vote, and whose predictions to-date have been better than most.
She is also one of those who believe May called the election to strengthen her hand against the Brexit extremists in her own party. Get this done properly, Merryn argues, and we can have a fairly decent trade deal, fairly free movement of people (with tougher welfare caps), an acceptable exit bill, and the all-important regaining of parliamentary sovereignty.
I hope Merryn continues to be right. And the pound has already rallied on this sort of thinking, reversing some of the windfall gains I talked about when I suggested it might be time to investigate currency hedged ETFs back in January.
Deciphering the new doublespeak of politics
But whatever kind of Brexit we ultimately get, as I’ve said before I don’t think the ends – of which taking back full control of UK law was by far the most legitimate – will justify the means.
The dog whistle politics, the NHS bus boast, the telling people they can have what they can’t.
So even if people like me should be pleased the Prime Minister has called an election that could ultimately lead to a softer Brexit, the ratcheting up of the populist rhetoric in her speech is another black mark on the UK’s political record.
Savvier people than me are keeping tabs on this stuff. The New Statesman published an annotated transcript of May’s speech that dissected its Orwellian rhetoric before noting:
Sometime in the 17th century, Louis XIV is said to have told a gathering in Paris, “L’etat, c’est moi” – I am the nation.
Whether he ever actually uttered that phrase is disputed, but it sums up his unshakeable belief in the divine right of kings – that there was no difference between the interests of France and those of himself.
Well: today we learned that Theresa May feels exactly the same. To convince the world she has brought Britain together, she must find a way of dismissing those who disagree as somehow illegitimate. Opposing her is opposing Britain. Voting for anyone but the Tories is thus unpatriotic.
I wouldn’t mind so much, except she’s going to win in a landslide.
The theme was also taken up by Steven Poole in The Guardian. The author of the prescient book on deceptive language Unspeak wrote that:
May’s speech announcing the election was, paradoxically, profoundly anti-democratic.
“At this moment of enormous national significance, there should be unity here in Westminster, but instead there is division,” she complained. “The country is coming together, but Westminster is not.”
This rather charmingly combined a totally made-up fact (the country is coming together) with a bizarre whine that parliamentary democracy is functioning as it should.
Any persistent total unity in an elected assembly, after all, would signal that it had been hijacked by a fascist.
If there were no “division” in Westminster, we would find ourselves in a de facto one-party state, in which the wisdom of the dear leader is all – a vision of “strong leadership” at which Vladimir Putin would nod sagely.
Poole noted it’s a speech that Lenin would be proud of. Which makes the Daily Mail take ironic as well as depressing:
When this cover went viral many people assumed it was a parody, which shows how far we’ve traveled (down) in a few months.
Panic the ballot box
This is supposed to be a General Election about a range of issues. But barring some kind of campaign trail gaffe it’s going to be Brexit, Brexit, Brexit.
Needless to say the Labour party opposition is so poor that even avowed floating voters like me despair. A tactical voting spreadsheet spread like wildfire across my left-leaning Liberal Elite echo chamber. It purported to explain how to vote to get the Tories out of power.
But I am torn. Labour are sort-of pro-Brexit anyway. I take Merryn Somerset-Webb’s point (also made by others, of course) and I’d ideally want a softer Brexit. Particularly when I see the likes of Jon Redwood posting on Twitter:
I can't breathe pic.twitter.com/OEPR2h4gzI
— Jeremy Vine (@theJeremyVine) April 21, 2017
True, I could vote for the Liberal Democrats if I took this ‘second referendum’ at about-face value. But where I live my vote would be wasted. Meanwhile my local Labour MP is thankfully more New Labour than Corbyn’s Old Labour, I’m in a swing seat – and playing game theory with May’s secret motivations only gets me so far.
I have voted Conservative in the past (I’ve voted for all the main parties) but I have no appetite for a right-wing coronation right now.
Many people like me will be playing this sort of mental Jenga in this election. Hardly ideal.
It’s not the economy, stupid
What are the personal finance and investing consequences?
I joked to a friend a couple of weeks ago that the Conservatives might have to call a General Election if their ‘no mainstream tax rises’ pledge proved crippling in the face of bad Brexit. I can’t help wondering if the fiasco over National Insurance in the recent Budget helped tip May’s hand towards the red button.
Some Tory hardliners are already panicking at the prospect of tax rises to come, but the reality is the pledge itself was a panicked move in the last election. Governments need to be able to adjust the tax base at the best of times, and the next few years are unlikely to be that.
But again, who really knows? Perhaps if the talks drag on for five years, the pound stays low-ish, and we stay in a fast-recovering EU for much longer than expected then the economy will continue to boom. Not much use if you’re a poorer Brexit-voter facing rising prices caused by the weak pound and a falling real income, true, but not so bad for the majority of Monevator readers.
No, much like the past year or so, the frontline of this battle will be fought on emotional territory, not economic matters – whatever people on either side of the fence may believe about their cold-headed analysis of the facts.
Divided we fall
I will admit that I’ve had to learn a few things in the post-EU Referendum climate. I thought I was ahead of the game in noticing how inequality was setting up fault lines in our society. However I underestimated the emotional divisions wrought – or at least brought out – by globalization.
In particular I hadn’t noticed what’s since been well-documented – to massively oversimplify the deep differences between those who believe that you should get up and go, and those who think we should stick to what we know and support those who do so.
Both impulses have their place in fashioning a society that works. But it was (and is) much easier for me to empathize with Claudia, an Eastern European immigrant and reader who despaired that having traveled to an unfamilar country to crowd into over-priced accommodation far from her job and a plane ride from her friends and family and now working long days at the sharp end of the service industry, she was being scapegoated as part of the problem by people who won’t move from one ex-industrial town to the next.
Claudia wrote:
I think we can agree that these relatively low-paid service jobs will not magically move up to Northern England after Brexit, hence the poor people there who were willing to vote out immigrants of the UK because they supposedly make everything worse, will actually have no gain out of the situation.
As somebody who left home for London and who has swapped careers/industries twice to keep myself moving forward, I’m still on the same page as her.
Yet months of reading has helped me understand better those who don’t like the direction that society is going. The people who are upset or alienated by the rate of change, the erosion of previous values, by too many unfamiliar voices or faces on their High Street, or by the opaque (if in my view concrete) benefits even to them of globalisation and integration.
The trouble is there’s not much to be done with this new understanding. I now see better that people can feel that way, but that still doesn’t make their argument logically correct as far as I’m concerned. And they would say the same about me.
I don’t believe Brexit can deliver what many of those people want deep in their hearts. It’s near-impossible, short of some new Dark Ages that reverses at the least technological progress and I doubt they’d really want that. Perhaps stopping immigration and erecting trade barriers would soften the blow emotionally (although not economically) but it probably still wouldn’t be enough.
Yet even in its softest form, Brexit will leave the other half like me unhappy.
It’s like we’re in a marriage where one partner has confessed to an affair and we’ve decided to make a go of staying together, but something has changed forever.
A landslide win could give Theresa May the mandate – and votes – to overwhelm the extremists on the fringes of her party and deliver some sort of workable Brexit.
But I am not quite sure what – except perhaps time, economic growth, more conversation, and perhaps more redistribution – can start to fix the deeper issues.
Note: I’ve been as temperate as I can in the article above – within the limits of being a writer who has to produce something vaguely readable. I think we’d all benefit if anyone who wants to comment below tries to do the same. Thanks!
From the blogs
Making good use of the things that we find…
Passive investing
- Active less risky than passive? Yeah right… – The Evidence-based Investor
- Don’t accept all the risk of stocks for the returns of bonds – Oblivious Investor
- Is the MSCI World Value ETF mostly just a global tracker? – The Value Perspective
- Making sense of bonds [Podcast, beware Canadian specifics] – Canadian Couch Potato
Active investing
- Stock picker? Avoid the worst stocks. Really! – The Irrelevant Investor
- 5 dividend champions with high returns on capital – UK Value Investor
- Howard Marks: The truth about investing [Slideshow] – Market Folly
- How to analyze a business, the Sherlock Holmes way – Safal Niveshak
- JP Morgan’s annual report is always worth reading – Brooklyn Investor
- Investing in a world of Black Swans – Investing Caffeine
- Do stocks outperform Treasury bills? [PDF, research] – SSRN (via Mike)
Other articles
- Smash the system – SexHealthMoneyDeath
- 4 ways to manage sequence of returns risk in retirement – Wade Pfau
- An angry ramble through the British housing market – Simple Living in Suffolk
- What to do with a lump sum in retirement – Can I Retire Yet?
- Stress and comfort: Careful what you wish for – Morgan Housel
- Earth 2.0: What would our economy look like? [Podcast] – Freakonomics
- Change is not easy – Points and Figures
Product of the week: If you told people a decade ago that in 2017 you’d be able to get a mortgage charging just 0.89%, they’d have assumed we’d be living in a second Great Depression. With inflation over 2%, in real terms the bank is paying you to take its money! Yet as The Telegraph reports, that spectacularly negligible charge is exactly what’s being levied by Yorkshire Building Society. Catches abound: It’s a variable not fixed rate, you must have 65% equity in your home, there’s more than £1,500 in fees to pay, and also a 1% early exit penalty. (While I’m here, remember that super-cheap Atom Bank mortgage flagged up a fortnight ago that I said wouldn’t last? Well, it didn’t. It was withdrawn after just nine days! Be nimble if you can with these challenger banks).
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1
Passive investing
- Another big strike against active management – Morningstar
- The world is running out of frontiers for the frontier index – Bloomberg
- Swedroe: Top investment consulting firms fail to beat passives, too – ETF.com
Active investing
- The fearless market ignores perils ahead [Search result, deep dive on VIX] – FT
- Sure, US stocks are overvalued. Now what do you do? – Bloomberg
- The government has almost finished selling its stake in Lloyds – ThisIsMoney
- Look out for ‘Brexit stocks’ that could rise if the pound keeps rallying – Telegraph
Other stuff worth reading
- Buy-to-let slump puts first time buyers in the driver’s seat – Guardian
- How to get out of a Help to Buy home – ThisIsMoney
- Terry Smith: The unique advantage of equity investment [Search result] – FT
- What happens when markets as we know them cease to exist? [Podcast] – Bloomberg
- HMRC is over-taxing some lump sum ‘pension freedom’ withdrawals – Telegraph
- Put just £40 a week aside to enjoy a happy retirement – Guardian
- A stark, bitter, and funny take on the absurdity of London for young people – Vice
- Growth in unpaid internships raises fears over social mobility – Guardian
- How the six-hour workday actually saves money – Bloomberg
- Mentor people who aren’t like you – Harvard Business Review
- First coal-free energy day in Britain since the industrial revolution – BBC
- Time to be honest about the fears getting in your way – New York Times
Book of the week: The Book Essay feature in the Financial Times is an appropriately excellent read. It’s a wander through a topical subject via a few on-trend tomes. If you can scale the pay-wall [perhaps via this search result] then this week’s discussion on the intersection between the remorseless outsourcing of modern businesses and the dash for freedom by some of the self-employed is worth a read. The books highlighted include Down and Out in the New Economy by Ilana Gershon, The Amateur by Andy Merrifield, and Masters of Craft by Richard E. Ocejo.
Like these links? Subscribe to get them every week!
- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]
Who to vote for ? Down in England you are lucky, I have virtually the identical thought processes but have the added complication of the SNP who if you are like me a died in the wool disliker of Nationalistic sentiment adds in yet another layer of complexity.
I think the smaller the majority, the softer the brexit, so tactical voting matters. But also an electoral defeat will finally allow Corbyn to be replaced with someone that could get Labour into power, and we want a proper opposition.
Financially the election will bring forward the end of the triple lock, and hopefully will signal the demise of the probate death tax, suspended the day after it was debated whether it was a fee or tax. Its clearly the latter, should go in a finance bill, and so a manifesto, and I’ll be pushing my Tory MP hard on that.
“Return to the Julian calendar, make the 8th of June be the end of May!”
Hi TI, when can we expect your follow up to the Lifetime ISA post? I’m interested in hearing your thoughts on if it’s worth it for me (a young person thinking about using it for retirement). I’ll be using my H2B ISA very soon – currently waiting on a mortgage to be approved!
For me as a non-EU migrant I have had to jump through many hoops and spend over 14k in the last 10 years to settle in the UK. Since June the absurdity and kafkesque nature of UK immigration policy has finally made some headlines now that EU nationals face the mamoth paperwork and inefficiency of UKVI. Further idiocacy over migration targets, limiting international students while at the same time claiming to want to promote UK exports seems as if the low hanging fruit doesn’t want to be grabbed. Brexit is now a convenient excuse for any economic troubles for the next few years as inequality and the lack of investment in infrastructure can all be sidelined by Brexit noise. We will end up a poorer, inward looking country and sadly the young will bear the costs of a decision made primarily by the middle and old aged.
@Gaz — Tuesday I hope!
Still laughing about the sausages and Twiglets. I am actually looking for a new car a McLaren in beyond my budget. I have found a secondhand Moris Minor on the internet perhaps that’s what John Redwood had in mind. It’s reassuring to know that minds like John Redwoods, steeped in the knowledge of UK industry are in the political party who are negotiating Brexit.
@grislybear — You’ll be wanting to look at the new Austin Brexit:
https://twitter.com/Monevator/status/855774753898082304
@TI Looking forward to it! 🙂
Brave of you to dip your toe into politics again 😉
I laughed ironically at May’s “coming together” line too – I really hope it was political campaigning speak and she doesn’t actually believe it. If she does, then she’s been drinking the D. Trump juice and that’s REALLY worrying.
I’d like to vote Lib Dem as the anti Brexit vote but like you it would be a waste and my current Labour MP has a very small majority over the Tories. Though to be fair to her she was brave and defied the party line and voted against Brexit in the Commons.
Your spreadsheet link above advises voting Labour so I’m torn as another 10 year Tory dictatorship gives me the screaming heebie jeebies. I’d really like to give people like Redwood a shock but I also know that ain’t going to happen.
That spreadsheet you linked has been turned into a more user-friendly website – https://www.tactical2017.com/
I think we have an extra opportunity in Scotland I dislike old style nationalism but we have it in huge measure with the Tories and UKIP. We at least have the opportunity to get out and rejoin the world by voting SNP and then Yes.
I don’t buy that Mayhem and her coven want absolute power to get a softer brexit because they know the alternative will ruin the country because she was gratuitously cruel and spiteful in her last role and now unmuzzled is going for it properly with her natural instincts. She is cunning and has taken what she sees works off both Trump and Merkel, so outright lies off the former and refusal to make clear what she stands for (if she actually knows; beyond simply hanging onto power) from the latter.
She’ll get her landslide because the political system is broken and then ream the poorer half of the nation with austerity again until their eyes pop out, but they must love it if they keep dutifully trotting out in their gimp suits and voting for more every time.
In yet more good news for the brexiteers, they can still buy Bri’ish cars to turn the clock back ~100 years, if they’re willing to just think outside the box, the Hindustan Ambassador even sounds like empire. (aka the ever so eloquently named Morris Oxford)
I read the Grauniad’s article about saving £40 a week towards retirement and thought it was quite good as far as mainstream media retirement planning pep talk goes. And then I made a mistake of reading some of the comments. Jesus F Christ! “But what if I’m earning a minimum wage and have 5 kids to support (seriously? 5? ever heard of vasectomy?), what if I’m on a zero hours contract, why do London luvvies insist on pricing everything in cups of Pret coffee, why does the article use a retired couple as an example while I’m single with no hope of pulling any bird at all before I die?” See, shit like that just turns me from a misanthrope in training to a full-fledged people loather.
But seriously, I think your reader Claudia is absolutely right.
The way I see it, the sole good thing about the Brexit referendum was that it exposed the heartland Labour voters as a bunch of narrow-minded grasping hypocrites they’ve always been. Lifestyle parents who – having never held down a job – don’t give monkeys about workers’ rights (which, by the way, the EU supports and the Tory brexiters don’t). I wonder what they’ll do when they can no longer claim that they “have to” stay on benefits because the Poles have stolen all the jobs?
I think the pop higher in Sterling can be attributed to short GBP/USD positioning from specs that was taken by surprise. If anything, if the Tories get a landslide victory they veer further to the right. It’s usually only the fear of losing that keeps them even vaguely centrist. I wonder if May was concerned the economy would roll over prior to 2020. Even without Brexit, we’re due a downturn. I don’t think she’d want to be seen as the Tory equivalent of Gordon Brown, having never won an election. Plus there are those rumours that she won’t do a full term because she’s finding the job unpleasant.
Here in London, the consensus from friends/colleagues is strongly to vote Lib/Lab tactically. Given we’re talking about people in the 1%, typically working in hedge funds, investment banks, or top law firms this is an amazing about face (I was weirdo having previously voted Lib or Lab). It won’t do much good since many are safe Tory seats and by definition the 1% can’t swing elections. Against that I’ve got my extended family in Lancashire and W Mids, all typically Labour supporters, saying they will vote Tory. Some strange political inversion is going on.
> And the pound has already rallied on this sort of thinking, reversing some of the windfall gains I talked about
Let’s not over-egg those gains though. I bought some IGWD shortly after that article because it made (and makes) sense. Up 1.5%. I got some VWRL which IGWD is a sort of hedged version from, bought before (and a lump not so long after) that ghastly referendum. Up 23%. The Brexit rebound in the £ has a long way to go!
@FI Warrior — As you know I am on broadly the same page as you about Brexit, and I’d find your rhetoric amusing down the pub. But in the interests of fairness and conversation, can you please tone down the gimp suits and coven and whatnot when commenting on Monevator please? I’d consider deleting overly polemic Leaver comments of that ilk, and it’s not really fair for me to overlook yours by the same token. Hope you understand!
The problem though is if you believe that TM is doing this to weaken the hardliners in her party, and you want a softer Brexit, then your only option looks to be voting conservative. Unless you believe the conservatives majority is likely to be overturned and it forced into a coalition. Of course that is probably the best outcome for the softest of Brexits, as I suppose it will need to form a coalition with the lib Dems again (if they would ever go back there). Unkess labour are willing to go into a multi-party coalition but they don’t seem keen on this. Feels like not voting conservative could be more risky than just voting for them.
I am in a fairly safe conservative seat, though arguably what have I to lose if I don’t vote conservative in such circumstances, worst case is you get a conservative candidate again. Harder for those in swing seats. But I am not sure if I like the other policies outside of Brexit the other parties are pushing…..
I don’t really get this notion of a larger Tory majority allowing May room to manoeuvre for a softer Brexit.
Has she ever shown any appetite for that?
For months the best we heard was Brexit means Brexit or indeed a red, white and blue Brexit.
Outside of that there has been some faux concern about JAMs and a sudden notification about the supreme importance of grammar schools.
I understand Matthew Parris has noted in a Times piece that if this election doesn’t see Tory opinion move in “a more aggressive, more nationalistic and harder-edged direction” then he is a “ring-tailed lemur” and that if he were a young man again he wouldn’t join the Party and that he stays only out of tribal loyalty.
And there lies the opportunity for the centre and left, and indeed anyone else concerned about having our empty chair PM, BJ, Davis and others backed by a “more aggressive, more nationalistic and harder edged” Tory majority in charge for five years or more.
Vote for the candidate most likely to defeat the Tory in your constituency and have a situation where the other parties have to debate and agree an alternative strategy. That at least offers more hope than May et al.
We might even see the break-up of the Tories into, on one hand, UKIP v2.0 and, on the other, a new grouping of decent people who favour entrepreneurialism and are ready to argue their economic case without relying on the disgusting “Enemies of the People” tactics of the press barons.
That would be a win-win.
@TI, fair enough, your house, your rules and you did give ample warning. Not an excuse, but it was precisely being in pub mode that caused the straying into partisan rhetoric, what with the football on. I fully understand if you’d be more comfortable deleting the comment; I can’t edit it for courtesy retrospectively or I’d have done it now.
Is it really necessary to perpetuate the concept of a wasted vote by opting for a smaller party, its really not that far away from the mentality of considering your single vote to be pointless because ultimately its only one vote. By all means vote tactically, but if you really believe in what a party stands for, vote for it! When it comes to Brexit, if you’re a remainer i can’t see how you can justify voting for either Tory or Labour.
@flotron – I think this makes sense in a constituency which is ‘safe’ for a particular party or in a swing constituency where you don’t really care which of the two parties vying for control wins. Then vote for whichever party you believe in. But if out of the two dominant parties in a swing one is much more aligned to you and you hate the policies of the other then ‘tactical voting’ makes sense as your voting for a third party could result in the party you hate taking power.
So if as a result of Brexit you are in a swing for labour and conservatives and both are just as bad in power for you, then I agree, vote for who you believe in. If on the other hand you hate conservatives and want to stop them getting power then it may make sense to vote labour. Also depends on the mood of your neighbours. If everyone is going to vote for the third party maybe sentiment has shifted and the original swing is no longer in play.
Of course you also need to look at the bigger picture. Potentially a divided Parliment increases the risk of us never agreeing anything as everything dissolves in bickering. Though as @everreason says, if you believe TMs plan is to get a majority to have a hard brexit then perhaps bickering is the way forward. I don’t see any clear route to reversing Brexit however.
I had heard a rumour that a new Centrist party might be formed (from MPs from all/most parties. This would have been a serious threat to both the Tories and Labour. I wonder if one reason a snap election has been called is to try to secure a larger majority (and a mandate) but with insufficient time for such a centrist party to be put together. My guess is that there will be much tactical voting centered on Brexit. If this gives us MPs from a broader mix of parties and does not increase Tory majority this might lead to more centrist (popular?) policies and a softer Brexit. I live in a constituency with a very safe Tory majority so my vote is often just a protest vote (which I inform the MP of but never get a reply) so makes no difference. However, it was (is?) a strong Remain area with many highly valued and essential people from other EU countries so who know how many will protest and how big a majority might be overturned?
“the entire gain in the U.S. stock market since 1926 is attributable to the best-performing four percent of listed stocks”: hard to believe. Presumably true? I stand astonished.
Putting your faith in journalists based on them correctly calling previous political trends is akin to buying active funds when the evidence points to passive investing winning out over the long term. There is no “good” Brexit that can be negotiated even if May gets a strong majority. Merryyn Somerset Webb’s analysis of the post-Brexit economy bears scant resemblance to the reality that, whether we like it or not, we live in a globally integrated world and trying to disengage from this is a monumental act of self-harm by the UK. In the most optimistic scenarios GDP will not be impacted and the UK can compete on the global stage in a race to the bottom on taxes to attract multinationals. However, that will lead to an acceleration in rising inequality so that despite any economic gains in aggregate the majority of the population will still see declining incomes. It’s not hard to predict the backlash that will result.
It is very easy for those immersed in the political mainstream to dismiss radical thinking as impossible inchoate populist tub-thumping. Mainstream politicians have no monopoly on rational thinking, self-righteous belief in centrist politics does not make it rational, consider the Overton Window. Dismissing Brexit voters from lower income brackets as “narrow-minded grasping hypocrites” (hosimpson) rather misses the point that they feel excluded from participation in the UK’s democracy and denied their share of the economic gains made since 1980. These may traditionally have been Labour voters, but many have simply not voted since 1997. Brexit will not solve their problems and I see nothing in the political mainstream that is prepared for dealing with the fallout.
From an investment perspective it is worth bearing in mind that stock markets do not correlate with GDP growth, so the success of failure of the post-Brexit economy does not directly translate to stock-market returns. My opinion is that corporate cash hoarding and lack of investment will be a long-term drag on corporations and therefore investment returns. We’re probably going to need some “creative destruction” to reinvigorate capitalism, both in the UK and globally. Unfortunately our pro-corporate legal and political systems are stopping the needed liquidation, gumming up the natural mechanisms of capitalism and leading to permanently declining profitability and rising inequality. More medium-term private debt overhangs in many Asian economies (e.g. S. Korea and Australia) are likely to lead to a debt deflation crisis that will cause a global recession and stock market crash in the next 24 months, difficult to say how serious but long-term investors can probably sit tight. Interest rate rises will probably do little to limit inflation but will “correct” the price of “bond-proxy” high-yield stocks. I’ll just stick with my global trackers.
@TI and @Paul – thanks for the links to the tactical voting spreadsheet and site – I’ll be voting tactically come the 8th June.
I asked my MP why a hard Brexit – he wrote back saying it was the will of the people and there was no going back. No attempt to provide any explanation.
Which is why I agree with everreason – I fear that the plan is for the hardest and most extreme of Brexit’s – but either way it’s unclear. Opposition and debate is a good thing – so I can’t vote for a party who can’t explain what they are doing, and call people out for voicing a different opinion. That’s not democracy as far as I can see.
We’ve all gone nuts:
There’s a swath of natural Labour voters attracted to vote Conservative on the basis of a ‘strong leader for Brexit’; but they’ll feel the true affects of ‘taking back control’ when May abolishes the EU red tape of worker rights and consumer protection.
On the other side is a swath of natural Conservative voters attracted to the LibDems, those who oppose Brexit; but they’ll feel the true affects of the progressive taxation and interventionism long advocated by the LibDems (yes the LibDems are as socialist as Labour).
Nuts!
For investors, diversifying away from the UK surely is the (only) sensible plan.
Oh God – the Vice article! I laughed despite myself, being young in London must be a nightmare unless you’re born rich.
It amazes me that people who say that they don’t believe a word a politician says (with good reason obviously) then turn around and point to the politicians they disagree with and say things like look how awful Theresa May is with all her talk of hard brexit and drowning foreigners in bathtubs. It’s obviously all tactics and politics, she’s not about to go into this negotiation with the EU acting like a weakling.
Everything these people say is for an audience, and she is obviously going to try to get the best deal possible, which will mean making concessions where necessary. The people who want to blow up the channel tunnel and order the fleet to sea will be as disappointed as the people who want direct rule from Brussels.
Good article, hopefully you will continue to be proven wrong about the horrors of brexit, i think you will be.
I never imagined myself lying in a room next to my terminally ill father reading monevator at 1 in the morning and nodding profusely.. think you got the tone just right as politics and brexit is as about a divisive group of topics you can get. I don’t always get chance to reply but thank you for your wit charm and knowledge as ever ..
The big question of the hour is why do I have a TV licence ? It is just like leaving a door open to the noise from the rowdy party next door, shout, shout, shout.
Well May needs to stop the EU negotiators from thinking they have an angle on a weak and divided ruling party, and to step well away from the manifesto promises on taxation. Living standards need to decrease unfortunately but don’t suppose that will be articulated.
@Alan p — Thanks for your very generous comments. Sorry to hear about your father. I have been in my version of that room. All the best to you and your family.
@Guido Maluccio.
What an excellent comment, especially your argument in the first paragraph. It exasperates me that this point isn’t made more often. The Tory ideal (fantasy) has always been to create a Hobbesian deregulated winner takes all society that favours the wealthy elite. It will be a living hell for most working class Brexiteers.
Thanks for the post and links, TI.
It’s about choices. Do you watch the Politics show this morning and hmph or enjoy the seething mass of humanity running for health, charity and fun in sunshine in London. Do you drive British or German? (I have both and love them equally — is that what it is to be a good European?) Do you squirrel away forty quid a month (Mildred, today we are allowed two cornflakes!) or do the sums and do it properly? Do you check the spreadsheet and then remember that the main challenger party in your constituency is UKIP — is that really the signal to send? Do you nuke America or Australia with your one (possibly) working device? [If this is a choice that any reader is contemplating this morning, please hand yourself in quietly, Kim].
I’ve chosen to rebalance this week (quarter end), according to my rules, not my market-timing instincts (my poor portfolio devastated from costly house renovations — take note, lucky renters) and now I’m going to listen to the birdsong outside my newly renovated study and contemplate the beauty of the world, and perhaps write up tributes to a friend now passed.
Later, I shall enjoy the links, possibly even Ermine’s housing opus, and I shall rant at the world. In so many ways, consumerism does look like an easier choice than all this thoughtful living 😉
I try and not get dragged into political debates on the tinternet as it is pointless, but to provide balance to the echo chamber above it seems like voting Tory is still the least worst option when you consider the ridiculous alternatives.
Especially for those seeking financial freedom, its like cutting off your nose to spite your face to vote Labour or Lib Dem.
We’ll see if “Spreadsheet Phil” has a pop at pension tax relief for 40% payers in the next couple of budgets, now he has no need to hold off until 2020. He could say its to support the foreign aid budget, which will have liberal-minded wealth accumulators in a real pickle.
SemiPassive – I think’ll you’ll find that the reason that both Thatcher and Blair did well as election winners is that they didn’t assume that everyone who voted Labour or Lib Dem was a lazy so and so who wanted to sit on their bum all day watching TV. That, in fact most people want to have a job and work and improve their lives and have enough to pay the bills and enjoy themselves occasionally. Yes, there are a few who do and if you want to pop out 5 children and expect me to pay for them, then yes I do object (buy a condom for god’s sake and get the father to cough up).
But those who aren’t in the 40% tax bracket also know that shit happens and don’t object to paying taxes to look after those who are sick or disabled or old or unemployed or to have decent roads, and schools and health and libraries. But Tories like Redwood think that only the rich should have a decent life and if you’re poor, it’s your own fault.
@semipassive – I think there is an important point there. In voting only in line with your Brexit beliefs, you are in danger of actually being hit by parties with policies you don’t like. These policies may be more impactful to you than Brexit itself. I personally don’t believe Brexit will be the big deal a lot of commentators think it will. Tory austerity or labour tax hikes may be bigger life impacting issues to think about.
First, a point in your post. The notion that a wider majority might allow May to negotiate a softer Brexit is surely false; it is almost certainly a thought put out tactically by Conservative HQ to try to keep some Remain voters inside the Conservative camp.
Second, my own take: I was a lifelong Conservative voter, and indeed an active paid-up member, even doing the leafleting, canvassing, telling stuff. When May announced the Election, I had to resign. I had been in quite some turmoil anyway. I had heard her immoderate and aggressive hard Brexit Conference speech with dismay (dis..May?). I had seen her attempted avoidance of Parliament process with simple distaste. The Election just made it finally impossible for me to stay. Was I really going to cast my vote to help Theresa May turn a xenophobic coup into a xenophobic tyranny? No, I was not. Instead I was going to fight her every inch of the way. I have no illusions about the small significance of my vote arithmetically but morally it still counts for a lot to me. “Aux barricades, mes amis”. They shall not pass.
Surely a time for cool hearts and cool minds. I sense that our PM wants the country to see this as a General Election and for everyone to line up behind their normal parties and crown her so that she can ride through the streets of Rome with a slave to remind her that she is mortal. In fact it seems that the people see this as a form of Second EU Referendum (and there may well be more than two before this is over). That is largely her own fault because she has made no progress on anything other than Brexit. I also suspect that the lack of significance that general manifestos may have in this election is going to be exacerbated because all main parties intend tax increases. And so the normal reactions of “I don’t want to pay more” or “I want more of your money” may become irrelevant because we are going to get done over anyway. I do have to add that I am having great trouble with May’s Brexit approach which was not at all what I expected given the close referendum result. A proper statesman (stateswoman) would have said “okay, that was close, we are going into the EEA to cool off” but May has veered off into Eurosceptic la-la land. I do suspect that will end badly for her personally – but frankly my main concern is that it does not end badly for all of us.
This whole thing leaves me depressed, we are going to spend years arguing over something that really wasn’t that important whilst ignoring significant problems like climate change, the effects of changing demographics and housing problems.
My take on this is that something is seriously wrong in or around Number 10’s present direction and hard Brexit rhetoric. Mrs May’s attempt to say that she cannot reveal her hand to the British people because it will harm the future EU negotiations sounds plain silly; the EU already knows exactly what is and is not in her hand. You can be quite sure that if she thought her plans were to the good of the nation generally, we would have known all about them very quickly (and I don’t mean silly trade deals with faraway places). Reversing that logic, I have to assume that there is stuff which she (or a clique which has got her political number) is aiming to achieve which is not for the good of the nation generally (purely guessing here but maybe some anti-EU figures think they can subvert regulation standards and profit from that). Anyway, the only safe antidote to her perpetual and wilful secrecy is maximum opposition in Parliament and that is what we must try to arrange on Election Day.
I’m also in the pessimistic camp finding it hard to understand the favourable market reaction to the election announcement. Whenever I try to think it through I go round in circles and still end up concluding that whatever deal we get, we will be worse off. And mindful that May seems to have already given up on the single market and the customs union, which (I thought) were the bits of the EU that the right were in favour of.
I wonder what will happen in the event of no deal? How bad will the deal have to be before the politicians level with the people and stop pretending we can have the advantages of EU membership from outside the EU? And why do we keep blaming the EU for the inevitable consequences of our actions (e.g. moving the EU agencies from London)? Maybe the sanguine will be proved right and it’s all negotiating rhetoric, not to be taken seriously…in which case how are we to sensibly cast a vote at this stage in proceedings, when we have no idea where the government intends to take us or whether any opposition will actually have the guts to oppose them? So many questions, darned if I have any clue about the answers.
@Steve — Hi, thanks for your thoughts. You write:
If you’ve not read it, I’d strongly suggest you read May’s speech in full (via the New Statesman link above perhaps, skip the commentary bits if you’re not in the mood).
The people may have the idea it’s about Brexit because she told them it was. Entirely. Nobody stands behind May in stating this election is anything but 100% about Brexit.
As @Simon says, she’s pretty much saying the rest of the Parliamentary structure, the executive and the opposition etc — not to mention other issues of the day — is all just a bothersome detail compared to the apparently all-important all-consuming and un-challengable Brexit. 🙁
Theresa May will be 61 on 1 October 2017
By winning this election she can secure her mandate
Then she delivers whatever Brexit deal we get in 2019 and her place in history
Then she announces her retirement when she will hit 65 (1/10/2021 I think)
Peerage in the 2022 New Years honours list
Fallout will be someone else’s problem
Why is it that we the English do not get a vote in anybody else’s referendum. When we had an all inclusive referendum it seems that we cannot agree with the result.
We need to be pragmatic about the result and understand that 27 Nation in Europe are unlikely to agree a compromise that we will agree, so are hard Brexit is the likely scenario how much we would like a softer one.
It seems to be the Media and retmainers are as much to blame as those who voted Brexit. Why don’t we just get on with the job of making the best of what democracy has decided? Or maybe its only democracy if we agree with the result?
@baby boomer in Croydon
I don’t think anyone is disagreeing with the result. But people are very strongly disagreeing with T. May’s personal interpretation of what should happen as a consequence. T. May has taken a firm view that the people voted with the intention that immigration should trump economics. I say they did not do that. So does my cat, who is very wise. In fact none of me, nor my cat, nor T. May know why people voted the way they did. The huge problem is that T. May is now trying to impose her personal guess on an entire country’s future and that is not what she gets paid for. In the particular circumstances, she should either have gone back to the country in a referendum targeted to find out the answer or taken us into the EEA as a compromise solution.
@Simon – I thought that is exactly what a PM/ruling party does, try to impose their vision of the country. Of course this is more acceptable if you were elected with a clear manifesto, but she will soon have that (assuming she has a clear answer on Brexit). They get booted out at the next election if the electorate are not happy with what they did, wgich is usually the balance to doing whatever they like.
The real issue is the lack of viable opposition going into this election.
You now have a great sounding board for anti-Brexit.
Congratulations.
@Steve
I found Richard Murphy’s thoughts similar to my own the day after the election was announced: http://www.taxresearch.org.uk/Blog/2017/04/19/this-election-may-not-be-a-foregone-conclusion/. From people I know they view brexit as agreed and this election is not about that; there’s no going back. So fighting it on the basis of all other issues to me seems a much stronger position to take. It has to be talked about of course, but what of everything else the Conservatives haven’t dealt with – health, education, defence, all the things we haven’t heard much about since last June? Or the courts system?
I am surprised no political party has taken the gamble – and used its initiative – to ‘own’ the election conversation in any area away from Brexit.
If we want to remain in the EEA the EU is saying we must accept the freedom of movement of Goods, Capital, Services AND people as well as the jurisdiction of the European Courts.
Try as we might to pick and choose what we would like we must be pragmatic enough to understand it is going to be extremely unlikely to get EU agreement. So a harder Brexit will be forced on us by the EU not T.May. Free Trade should not mean freedom of movement of people or jurisdiction by EU courts but the EU seems to think otherwise.
There are no good outcomes from Brexit. What is needed is damage limitation. Staying part of the single market and customs union is the least worst outcome and would probably be accepted if put to a referendum. Not all Brexit voters were anti-freedom of movement, despite May’s interpretation. We would still end up in a worse position than if we had stayed in, but there is nothing that can be done about that now.
@ Naeclue
Yes, I think you are right. I think Theresa May made a choice which was ideological (not an ideology I approve of) and is now trying to make the Conservative Party into a tool of her ideology. Instead, staying part of the single market and customs union should be the UK’s aim and that should prevail over freedom of movement issues as necessary. (In practical terms, even if someone had voted against freedom of movement, it seems highly likely there will be no drop anyway in numbers of EU citizens working in the UK – they will just have work visas- so there was no really no point in Brexit anyway).
As hosimpson has already mentioned, I too couldn’t believe my eyes when I read the comments under the Guardian’s ‘£40-a-week retirement’ article.
I get that there are plenty of people out there who can barely make ends meet, but there seems to be an almost instinctive backlash in the Guardian’s BTL comments to anything that even hints at self-improvement or applying a bit of graft to fix one’s own problems. Blame culture is alive and well on CIF!
One possible conclusion is that I am an out-of-touch London-based metropolitan elitist and my social bubble is comprised only of champagne-swilling city suits. Or, maybe not.
There’s a huge cohort of people out there that could be realistically labelled the “could, but don’ts”. Not everyone has the luck and/or skill to retire by 40 but plenty of ordinary people could retire much earlier than they think with a bit of planning. The information to help them do it has never been easier to find, but the numbers putting it into practice stays frustratingly low.
The cynic in me wonders who actually benefits from low levels of popular engagement with financial services?
@The Wealth Builder, I think the beneficiaries could well be people like you and me. If more people saved instead of spending that would be bad for the economy and would reduce tax revenue. How would the lost revenue be replaced? If more people saved, that would push up the price of assets and so reduce the long term returns.
From a selfish point of view, the fewer early retirees we have the better, so best not ask too many people to change their profligate and inefficient ways.
@Naeclue I agree we benefit but it’s not like we deliberately engineer this state of affairs (at least I don’t!). I did selfishly shed a tear when RDR did for the nice cross-subsidy benefitting low-cost indexers like me…
It just seems odd that there’s this huge potential untapped market.
Perhaps the financial sector incumbents are just too lumbering to take advantage and we’ll see smaller providers filling the gaps? Alternatively it genuinely is uneconomic to cater for small/micro investors. I’m sceptical because I look at initiatives like micro-insurance in the developing world and where the amounts are measured in tens of dollars but there are still firms seeing opportunities.
Or is the issue more simple in that there is literally nothing that can be done to convince the UK public to buy a vanguard tracker instead of more pointless shit for their house?
Speaking as somebody who runs a blog that’s probably the most popular independent financial blog in the UK (edit: of the investing-focused) and yet is very hard to monetize compared to say a site that gets 5,000 visitors a month and sells six-part courses on trading Forex and becoming a millionaire by next Tuesday, I am pretty sure that smart, engaged, prudent, and cost-conscious customers are not the lucrative end of the financial sector.
I can’t even get Vanguard to advertise, and we’ve multiple times been accused of being some sort of front for them! (There’s another case in point — for every £1 Vanguard makes from its customers, I’d imagine £5-10 are taken out of the turnover of the traditional financial services industry).
I know where I’d fish for customers if I was primarily motivated by money.
@wealthbuilder
MoneySavingExpert is in the top 100 most visited websites in the UK
They have a pretty active retirement forum and an active old style thrift forum
The city of london is just basically distrusted by most british people
Is it just me, or is the mouse wheel scroll function not working on Monevator? It works on other sites. I’m using Chrome Version 57.0.2987.133.
Money and finance is a cultural taboo that must be stepped around carefully in social and work situations.
Personal finance education would be a good addition to the curriculum. Best option is for parents to pass on their hard won personal finance acumen to their children.
Australia has compulsory retirement saving, but that has simply led to a boom in financial services skimming. Middle classes do well because either they take charge or they simply keep working until their retirement pots add up. Lower income groups fail to accumulate sufficient savings because of fees, multiple and lost retirement pots and insufficient saving. Government pensions are means tested.
@Fremantle — It works fine for me on Chrome. I’m not actually sure how we could affect that. Perhaps the page is hanging loading an element (e.g. the Tweet button, which often takes an annoying time to load). Bit concerning that you’re seeing something though!
@The Investor
Working fine now. Mouse scroll wheel was working on other pages but not Monevator. Happened a few times on different days which is why I posted.
Hadn’t noticed anything about the Twitter link.