You can't buck the market: One week to go

Just over a week from now the polls will open in the closest election in decades. It's still not clear if any one party will come out on top. My hunch is that there will be a late swing to the Tories. Apparently 10% of all voters are still undecided and tend to split 2 to 1 in favour of the incumbent. I also think that some UKIPers will swing back to the Tories to deny a Labour/SNP tie up.

We shall see.

I do want to reiterate a point, which I think I've made before, but it's such an important point that it's worth reminding ourselves.

You can't buck the market! It's so old, but still so true! Now, I don't mean this in the way that markets should be let rip, no, there needs to be sensible controls. It's why we have the Monopolies and Merger Commission to make sure that no one company buys out all its competitors to form a monopoly, and why the privatised industries have regulators.

But the Labour Party under Ed Miliband, is falling into some bad 70's style policies. Price freezes, rent controls and compulsory land purchases are some examples of how the Labour leader wants to change our economy. We already know that if we had frozen the energy prices two years ago, when the policy was first raised, we would not have benefitted from recent wholesale oil price falls. It is fine for a company to voluntarily decide to offer price freezes, that is part of competition, and they will factor it into their plans.

For a Government to do it across the whole market means that prices will start to become perverse. Companies would inflate their prices ahead of the price freeze coming in, just to factor in wholesale oil price rises - just in case and the likelihood is that we'd all lose money. Think if you were thinking of selling your house in a rising housing market, knowing that in a week a price freeze will come in. You may know that the house is worth £300,000 today, but you'd put it on the market for £320,000 because in a few months time it will likely be that price.

The same is true for increases in rental values. I've rented, and I also own a property which I rent out. I've never increased the monthly rent, but if I knew I wouldn't be able to I'd probably set a slightly higher rent at the beginning of the tenancy - just in case. Again, this is not particularly want the tenants would want! Recently, I've had to have a legionnaire's disease report done on the property and some remedial action taken. The same is true for all buy to lets due to some new (probably EU) regulations. It's a pain, and with new regulations from a new Government I might just decide to pack it in. That would take the property off the rental market, reduce supply, increase demand, and push up prices. Again, not what the tenants would want.

Every economist knows that rental controls don't work and have precisely the opposite effects of desired results. If you don't believe me, just read Paul Krugman's (the left's most famous living economist) article here. Apparently it's text book economics on how supply and demand works - funny how the two Ed's have missed it.

This all adds up to a complete lack of understanding of how markets work and is profoundly disturbing from someone who used to work in the Treasury. It's college politics - popular but disastrous. Venezuela is an example of the perverse effects of price controls taken to extremes, shortages, queues and high prices. A little tale comes our way of Ed Miliband asking a FTSE-100 CEO why the company had to pay dividends! Again, very disturbing from someone who wants to be First Lord of the Treasury. I hope the CEO shouted at the prospective PM - "it's how we pay a share of our profits to our owners - you first class idiot".

We cannot let the two Eds run free over our economy and ruin it with schoolboy practices - we've matured beyond that.

Let's hope they don't get a chance.

Squiffy.

The puzzling polls

The opinion polls have been fixed on a tie for both main parties for a few months now. Both Labour and the Tories are stuck on a range of 31 to 35%. It's quite puzzling that nothing is moving the polls. Debates, manifestos, policies. Nothing has changed a thing.

As someone of the right, I also find it disturbing that anyone can think of voting for Ed Miliband and his naive policies which would wreck the economy in slow chunks.

But there have been a few chinks of light in the polls to give us some direction. The polling outliers, which we nearly always discount, show that when UKIP goes down, the Tories go up, and vice versa. I believe this is what the Tory election machine sees too. They are throwing everything at the Labour/SNP possible government in the hope that it will influence the UKIP waverers into going back to the Tories.

There's anecdotal evidence that this is beginning to cut through. No matter what Labour say, the SNP is their only way of getting back into Government and electorate knows it.

All the campaigns have been a bit weak so far, and I don't believe the electorate believes much of what they are told. They also know that the manifestos are only wish lists now, and not a promise. The surprise though is just how weak UKIP are performing. We expected Nigel Farage to steal the thunder of this election, but it's actually Nicola Sturgeon who is performing this role.


The questions I want answering now are:

- Are the Tories promising to build one house for every one they sell in rent-to-buy, or is it just a hope? What happened to the garden cities?

- What will be the level of Labour deficit at the end of 5 years?

- How does Labour know exactly how much the mansion tax will raise, but not what level they will set the tax at or any details?

- Which programmes are Labour going to ditch following their zero-based review?

- Do the Tories have any plans for Education at all?

- Where is Boris?

- If UKIP has the EU referendum and the electorate chooses to stay in, what happens to the rest of their manifesto? Is it just trash?

- What planet are the Greens on?

- When Labour says that they will do cuts, is there anything above piddling millions to contribute to the deficit reduction? And they say growth will help, do they expect higher or lower growth than current plans given their increased tax programme?

- Will the Tories make English Votes for English Laws a red line?


I know, just like Andrew Neil, that I wouldn't get any answers to these questions - but you can always hope for clarity!


Anyway, we are going to have another 2 weeks of this....

Squiffy.

Lewis Hamilton has the beating of Nico Rosberg

After four races it's now Hamilton 4 - Rosberg 0 in Qualifying and Hamilton 4 - Rosberg in races. I think it's fair to say that Hamilton now has whip hand at Mercedes. Rosberg is looking more and more like a good number 2. Maybe his best chance to be World Champion has already passed.

Now Lewis Hamilton can focus on being a triple World Champion.

Squiffy.

Anti-business, anti-aspiration, anti-Britain: Ed Miliband's your man

The opening weeks of the election campaign have confirmed one thing. Ed Miliband hates success.

If you want to be successful, don't try to do it in Britain.

The Labour party has announced in the last few months that they would introduce:

• the 50% upper band for anyone earning over £150,000 per annum
• a 'mansion' tax on any properties worth over £2 million
• reduction of tax allowances on pension pots
• 'abolition' of non-dom status for people non resident in the UK
• an increase of 1% in corporation tax

At each point, when the policies have been argued, the Labour party representative has argues that they wouldn't expect it to change any behaviour and so not have a detrimental effect on our economy. But taken together the above policies represent a comprehensive attack on any kind of aspiration, business or successful person. 

We know that tax changes behaviour. Otherwise why put tax on alcohol, cigarettes and fuel? The Labour party policies will deter many people from investing in Britain, living here or setting up successful businesses. The message is clear: Ed Miliband prefers the politics of student bar envy to a entrepreneurial economy creating jobs, employing thousands, paying wages and creating a wider tax base. He would prefer to take money from the well off rather than increase the tax take.

Ed Miliband laughs in the face of Arthur Laffer and his curve!

My worry is that people will fall for it. It all sounds so nice to put the 'burden on those with the widest shoulders'. In 2006 the top 1% paid 24% of the UK income tax take, last year that had increased to 27%. I want to know at what point have the rich paid their fair share? 30%, 35%, 40%? 

How much longer can we continue to soak the rich before they take their pots of money away and the burden then falls on the poor? How much longer will the golden goose lay its eggs? Not much longer if the leader of the Labour party has its way. 

Let's hope that the people of Britain see sense.

Squiffy.

P.S. on another note - I hear Ed Miliband is as decisive as Gordon Brown. Oh God, don't take me back to 2007-2009!

Blog of 7 way leader's debate

Here's my blog for tonight:

Live Blog Leaders Debate - 7 way