1972: The Candidate – Ritchie
As a financial planner it is difficult to assess the true impact of local elections with respect to the impact on our economy, yet clearly yesterday saw a significant vote against the Coalition Government. The markets don’t like this sort of vote. The turnout was woefully low, perhaps due to a fairly grim day, but probably has more to do with the fact that it would seem that the majority feel increasingly disconnected from post-modern politics, if this isn’t the case, then the low voter turnout is even more shocking. As we know, France is also having presidential elections. It would be reasonable to suggest that markets are a little apprehensive about the prospect of France electing someone that may not see through their own austerity measures. The knock on effect of this could be significant for Europe as France is effectively number 2 in the region, The “big one” of course is the US election in November. This is likely to mean that bad economic news is played down and played up by opposing sides and we may not have a clear indication of how well the US is doing until January 2013. As the rain continues to fall and the hosepipe ban persists, my only prediction is that this may be a summer of continued turmoil in Europe.
Sadly there are no easy answers to the economic situation. The debts of the western world are so significant that to carry on as before is really not an option. However for some, life seems to be just as good as it was prior to any austerity measures. Take the Sunday Times Rich list as an example or indeed the auction of the Edvard Munch’sThe Scream” which sold at auction in New York for an enormous $120m. The highest price paid at auction for any piece of artwork. There is a very real sense that wealth begets wealth and the converse is also true, poverty begets poverty. Whilst few in Britain are poor when compared on a global scale (perhaps you saw Ewan McGregor’s Unicef cold chain mission to Napal) the poor need to be encouraged and incentivised to find work and to create wealth. It would seem that many in Britain don’t believe that the Coalition are achieving this aim quickly or clearly enough, hence today’s market fall. In my view it is vital to have a financial plan, one that has been stress-tested and has a long-term, values based focus. This will enable you to avoid the anxiety of markets and meltdowns and the overinflated value of most “news”. Have a great Bank Holiday weekend.
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