It’s All About Me …

David Cameron is facing an election and is currently on the campaign trail across the UK. According to a report in the Guardian, the gaffe-prone Tory leader made the following remark in an inadvertently candid slip of the tongue moment:


“I know I’ve made mistakes. But I’ve learned from them and I promise to do better. But this is a career-defining election …I mean, a country-defining election.



David Cameron, the current ruler of the Debtberg Isles, on the campaign trail …

Photo credit: Stefan Rousseau / PA Wire


Naturally UK journalists were all over this, essentially saying that it seems as though Cameron “secretly” only thinks about himself. Here’s a newsflash for them: it’s not different with other politicians. A great many politicians are sociopaths. Their profession is simply a natural attractor for the worst people society has to offer. They have to be utterly ruthless, they must be prepared to lie practically all the time, and they are doing all this in order to attain power over their fellow men. Their task is mainly consists of the allocation of loot the State has obtained by coercion. What kind of person could possibly be attracted to such a job?


cameron and egyptCameron bringing nice gifts to welcome Egypt’s brutal military dictatorship to the global community


As Friedrich Hayek noted in The Road to Serfdom, the “worst tend to get on top” in politics. While this was said in the context of totalitarian societies, it is per experience also true in democracies, as the typical “leadership qualities” of politicians who are likely to get on top are very similar: “[…] the unscrupulous and uninhibited are likely to be more successful” as Hayek put it. Cameron’s slip of the tongue must be seen in this light. He merely blurted out a truth that applies to almost all leading politicians.


cameron-1Keep calm and bend over … Steve Bell on David Cameron


Britain’s Economy and Debtberg


Global debtBritain has the largest non-financial debt ratio among developed markets ex-Japan – click to enlarge.


Below is a selection of points made in a recent briefing by Deloitte about the UK economy in the context of the upcoming election:


* The UK has seen the policymaker’s dream of accelerating growth and falling inflation over the last 18 months. The long squeeze on UK consumers has drawn to an end: real incomes are rising and the cost of borrowing is very low. On average, economists see the UK growing by 2.5% this year and next, a decent rate of growth which is towards the top of the European growth league.

* There are risks. [no kidding, ed.] US activity data have been on the weak side of expectations since the start of the year. Three months on from the election that swept Syriza to power, Greece’s future in the euro area remains uncertain. At home UK growth came in disappointingly weak in the first quarter, prompting concerns that the UK recovery is running out of steam.

* Concerns about the General Election seem to be behind a decline in corporate risk appetite and rising perceptions of uncertainty in the latest Deloitte survey of Chief Financial Officers. CFOs worry about the risks of higher taxes, more regulation and potential withdrawal from the EU.

* While we think the UK recovery is pretty solid it could yet be derailed. And in the longer term UK faces the challenge of poor productivity and high levels of government borrowing.

* The paradox is that the Coalition missed their deficit reduction targets and the UK deficit, though halved from the levels of five years ago, is still one of the largest in the industrialized world.

* The lesson is that in economics intent matters. Fears about the UK deficit were assuaged by a belief that the Coalition was committed to debt reduction. The euro crisis and a disappointing trend in tax receipts contributed to the failure to meet the deficit target. But markets have remained fairly sanguine, in part because they think the government is serious about deficit-reduction.

* The recovery should not be taken for granted. CFOs’ expectations for investment are already flagging. Given that growth is dependent on the private sector, policymakers need to be acutely sensitive to the effects of their policies on business confidence. Business is nervous about political uncertainty and business-hostile policy change. A strong signal that the new government is committed to pro-growth policies and to stability could help ease such fears.


(emphasis added)

Britain is really lucky that the markets are apparently putting greater value on “intent” rather than on actual results at the moment. Below you can see the effect of several years of UK “austerity” on Britain’s public debt. Similar to the rest of Europe, the constant talk about austerity turned out to be severely misleading. It comes down to whether you want to believe David Cameron and George Osborne or your own lying eyes. In our opinion the markets are far too sanguine about this.


uk-national-debtUK public debt growth, with and without “austerity” – click to enlarge.


Steve Bell's If … 21.04.2014The UK treasury: a faith-based organization


What Deloitte fails to mention is that the “policymaker’s dream of accelerating growth and falling inflation over the last 18 months” is merely a temporary side-effect of years of bubble-blowing on a truly breathtaking scale under the leadership of BoE governor Mervyn King and his successor Mark Carney. The latter has already blown a bubble in Canada that has become so enormous it is apodictically certain to end in a bust of truly historic proportions.


recover or dieHuge money supply growth is as a rule impoverishing society’s lower income strata. They may well fail to recover.


More recently, UK money supply growth has however slowed down somewhat, hence “UK growth came in disappointingly weak in the first quarter”. The so-called “growth” recorded hitherto has very likely been little more than a money illusion. Once it falters for good, market concerns about deficits, public debt and the banking system are bound to return with a vengeance.


UK money supplyUK money supply data, via Michael Pollaro. The growth rate of money TMS has recently slowed to 7.1% annualized – while this is still brisk, it is also far lower than it used to be not very long ago – click to enlarge.


Cameron in Trouble

As Reuters reports, David Cameron is likely to face a tough time regardless of whether he wins or loses the election. A few excerpts:


“Prime Minister David Cameron is Britain’s most popular major party leader and his Conservative Party the most trusted on the economy after helping revive it. But win or lose a knife-edge election this week, his career hangs by a thread.

If he loses, it’s over instantly. And even if he wins but doesn’t secure an overall majority, which opinion polls suggest no party will achieve, he could face a leadership challenge from inside his famously ruthless party before too long.

A descendant of King William IV, Cameron, who came to power in a coalition with the center-left Liberal Democrats in 2010, says he wants to serve another five-year term “to finish the job” of fixing the economy. He also plans to deliver a European Union membership referendum, which he hopes will cure his country and party of its Euroskeptic angst. But if he doesn’t get the Conservatives re-elected on their own, with their first overall majority in the House of Commons for 23 years, he may struggle to serve out a full term.


While polls show voters generally like him personally, Cameron, 48, is the product of an unusually privileged background. The son of a wealthy stockbroker, he attended exclusive boys’ boarding school Eton College and Oxford University, and married a woman who traces her ancestry back to another king – Charles II of England. In a country acutely attuned to class, that rubs some Britons up the wrong way. One of his own outspoken lawmakers once called him and his finance minister “two posh boys who don’t know the price of milk”. Opposition lawmakers and parts of the media have likened him to “Flashman”, a fictional upper class literary anti-hero of the nineteenth century.

His strongest boast is that he pulled the economy from a deep downturn to deliver one of the fastest growth rates in the developed world. But real wage growth has only just started to pick up, meaning many voters say the recovery hasn’t benefited them.


(emphasis added)


the titsDavid Cameron on himself


Politicians are as a rule always “boasting” of having been instrumental in improving the economy if there is a recovery. The press usually goes along with this, but in reality it is rarely true. Cameron’s government did attempt to keep the government’s debt in check, but as can be seen further above, they actually failed to achieve much in this respect. Other than that, the economy is mainly benefiting from the bubble-blowing policies of global central banks, including the BoE. Note that in spite of the allegedly impressive recovery, the BoE’s discount rate remains at a paltry 0.5% – an all time low.


UK discount rateThe UK economy is doing so great that bubble-blower Carney has left the BoE’s discount rate stuck at an all time low of 0.5% – click to enlarge.


We also learn from Reuters that Mr. Cameron is quite adaptive, i.e., he is often changing his tune according to the direction in which the political winds are blowing. Principled he certainly isn’t, but this actually had positive side effects in this case, as he decided to “get rid of all the green crap” and has “downgraded the UK’s military muscle”. As an aside to this, the “environmental credentials” of nearly every politician in the world are mainly cynical electioneering ploys. The resulting policies are involuntarily funded by consumers and society’s wealth-generators. The ability of the latter to contribute to growing prosperity is severely weakened in the process.


Under pressure from right-wingers in his party and the rise of the anti-EU UK Independence Party, Cameron shifted the emphasis towards more conventional conservative themes, opening himself up to accusations he was driven by political expediency.

As public unease about immigration rose, he toughened his rhetoric and made it harder for non-EU citizens to immigrate. And though he said he wanted Britain to stay in the European Union, he promised to hold an in-out membership referendum in 2017 if re-elected, alarming sections of the business community who have traditionally allied themselves with the Conservatives but don’t want their country to leave the EU.

Cameron dropped his nebulous “Big Society” concept. His early enthusiasm for green policies waned, with one aide telling a newspaper he had ordered subordinates to “get rid of all the green crap” – government-imposed fees tacked onto utility bills to subsidize environmental projects.

He became increasingly isolationist on the world stage too. In 2011, he backed involvement in air strikes which toppled Libya’s Muammar Gaddafi. Since then, he has presided over a downgrading of Britain’s military and diplomatic muscle.

A shock defeat in parliament over his desire to conduct air strikes on Syrian government targets in 2013 marked the effective end of his activist foreign policy ambitions. Would-be successors are already circling.”


He’s probably not “isolationist” enough yet. What Reuters appears to be bemoaning as a drawback, should be wholeheartedly supported by every citizen. There is no mileage whatsoever for the average citizen in a government’s ability to “throw around its weight on the world stage”. This always involves huge costs in blood and treasure, usually with absolutely nothing to show for it. The only “benefit” is that the egos of politicians eager to glory in their presumed global importance are stroked. Other than that, the only effect aside from the already mentioned costs is that ever more implacable enemies are created all over the world. Blowback invariably results, which is then invoked as a reason to hasten the transformation of the country into a police state.


police stateSteve Bell on how UK politicians have given ever more power to the police. The UK is already one of the world’s biggest and most intrusive surveillance states. There are cameras everywhere, and the UK’s CGHQ is an intelligence agencies that can seemingly do whatever it likes with impunity (such as amassing what is likely to be one of the world’s largest porn collections by intercepting and recording the web cam images of millions of Yahoo users).


The biggest challenge to Cameron’s Tories remains UKIP, led by the colorful and outspoken Nigel Farage. It will be quite interesting to see how UKIP fares in this election, as it may well produce a major upset. One thing in Cameron’s favor is the recent performance of the UK stock market. The FTSE Index has broken out to a new high for the move earlier this year, however the break-out looks a bit dubious and may yet reverse. In the sense that it is an expression the UK’s social mood, the stock market’s recent strength should be expected to help incumbent politicians to some extent.


FootsieThe Footsie’s recent breakout – will it hold? – click to enlarge.



Whether or not David Cameron wins the UK election and subsequently survives politically, Britain is faced with the same basic problems that are besetting the entire developed world these days: its debt is way too large, and its economic growth much too weak and largely illusory anyway, since it is merely an effect of monetary pumping. Such artificially driven “growth” doesn’t create real wealth; quite on the contrary, it will undermine the economy in the long run.

The markets are still sanguine about the UK’s economic and public debt prospects, but the upcoming election may well provide market participants with a wake-up call. We would keep a close eye on the FTSE Index in particular, as it is about to either confirm its recent move to new highs or conversely produce a very bearish failed breakout. We wouldn’t be surprised if the election outcome ends up as the trigger event.


Steve Bell cartoonTime for taking precautions …


Cartoons by Steve Bell

Charts by: StockCharts, St. Louis Federal Reserve Research, ICMB/CEPR, Market Oracle, Michael Pollaro


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4 Responses to “David Cameron’s “Career Defining Moment” on the Isles of Debt”

  • Calculus:

    Whether you like Farage and UKIP, he’s one of the few that’s warning about the elites, often unelected and their subtle jackboots.

    ANYONE that speaks and warns of the elites hould be respected and listened to. They are the biggest threat to us all.

    No6. I agree, doesn’t matter who gets in, theresult will be the same. When the debt gets unpayable it’s just a matter of time before the confidence goes. That’s why Armstrong is correct, all hell is going to break lose. He says starting Oct this year, maybe, but it’s coming. Probably be good for a $200 smackdown in Gold!

    • I actually like Farage a lot. The only thing I dislike a bit about UKIP is its xenophobia, but I understand that this is to some extent a ploy that helps it greatly in garnering voter support. Among the new European ‘alternative’ parties, UKIP is one of the most libertarian-minded actually, not at all comparable to outfits like the French FN (it is noteworthy in this context that Farage has refused to join a bloc with the FN in the EU parliament, and would rather risk that UKIP gets no EU funding than be associated with the FN).
      Anyway, if you do a Google search on “UKIP, Farage,”, you will find a few articles in which we have discussed our views of UKIP in detail.

  • In the last recession – subprime mortgage crisis – Britain followed the US over the cliff. Britain has always been the 51st state. Much of the problem is the high home ownership rates and the lack of any alternative. The EU is increasingly following the same way. All very sad…

  • No6:

    Voting is a waste of time. The damage is done, the debt is unpayable and there will be deficits infinito payed for by ever more QE.

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