I wrote yesterday comparing Hannan & Farage's anti Brown speeches at the EU Assembly and how I found Hannan's a much more impressive performance. The market agrees with me. As I write on YouTube Hannan's clip showed 650000 hits to Farage's 12000 ie fifty times more people watched Hannan than Farage on the same topic. Even Jill Cockburn on the Daily Politics showed a bit of Hannan. (When Guido Fawkes pointed out to La Cockburn the BBC had not featured Hannan at all on its main News her pathetic reply was none of the other channels had either!) It is thus much likely people will choose to vote for Hannan's party in preference to Farage's party. Its as simple as that as Nigel likes to say.
I have always thought the claims that Farage is a great media performer have never been subjected to any real scrutiny. Other UKIP spokesmen like Del Young were never given an opportunity on Question Time etc. It not just about being glib in a barrow boy way but about the content you choose, the tone you adopt and the approach you take. On these Hannan won hands down. UKIP simply has to give others a chance in the media spotlight before it is too late.
There was a distinct lack of demand for 40 year gilts in yesterday's DMO auction. I have been forecasting this would happen. Its nice to get something right! The reasons for the relative failure of yesterday's auction are Mervyn King's comments to the TSC on reducing the amount of Gilts the BoE may buy under its QE programme plus the pick up in CPI inflation. The fall in RPI is a transient effect caused by the rapid reduction in the BoE Repo rate to almost zero. This obviously cannot go any further and will most likely have to be rapidly reversed to protect Sterling.
There are really on two concepts to grasp in economics, supply and demand. The market knows there is a huge supply of Gilts in the pipeline so prices will fall and yields and other interest rates rise. At the same time the demand for gilts will fall because financial companies are short of cash and also because of the fall in Sterling and the related rise in inflation. Long dated gilts, and 40 years is a very long dated gilt, are most sensitive to inflation problems as even at 3% inflation the redemption value of a £100 gilt will drop to £31 in 2009 prices over 40 years.
Hannan was correct. You cannot borrow your way out of this mess. Public expenditure, ie Gordon Brown's client state, has to be cut. This means tough decisions a phrase devalued by Labour politicians in a devalued government.