The Conservative Party are trying their best to provoke a financial crisis, and this is not as surprising or as unpatriotic as it may seem. Of course it’s no guarantee that they will get their crisis but they are trying to get it, and at the moment they have a remarkable amount of power for an opposition party. And it could be an opportunity for a trader to profit.
So why are the conservatives so keen on a crisis? It is not that they need to win the election, but they are worried that they will not be able to govern. Britain is, to put it mildly, in a lot of debt. The Spectator magazine runs a debt counter. This is showing that every man, woman and child is more than £31,000 in debt. If this was a person’s unsecured credit card debt the common opinion would be that the person had a serious problem.
This not only means that there is a problem that needs to be dealt with, but that sooner or later there will be a financial crisis. What form this will take is not clear. The bond market could crash, sterling could go through the floor or the stock exchange could be seriously spooked. The fact is that there will be a sudden adjustment from today’s unreality and the Conservatives would rather it were not on their watch.
There is also no appetite among the electorate to deal with the deficit. This needs to change, and the only way to change this is through a good crisis. The Conservatives need to have people voting for them with the negative message, and welcoming the coming pain.
Usually opposition parties have no power over the financial markets, but the financial markets are relying on the Conservatives. Not only are they pricing in a Conservative win they are also pricing in the Conservatives holding their nerve. Even the credit rating agencies have all but admitted that Britain’s AAA rating on its sovereign debt is reliant on the Conservatives coming in, and that a continued Labour government would not be trusted.
So the Conservatives are currently suggesting that they will probably not win the election, at least outright, and if they do they will not be as brutal as we all think. Will this work? We don’t know. But someone has a vested interest in rocking the boat and everyone seems to be investing as if the market is set on calm seas forever. It ain’t.