Contrarian? Crazy?

Six months ago the Tories looked set for victory at the next general election, they were the odds on favourites, Labour activists were downhearted. Now things have reversed, Dave is in trouble and can do nothing right. So Guido just put £50 on Betfair on the Tories being the biggest party after the general election.
Why? Well look at the price chart, it appears to have topped out recently with firm support from punters at an implied probability of 40%. Clearly Guido is not the only one who thinks it can’t get any worse for the Tories.

The Ashcroft marginal seats machine is purring away quietly, the SNP control Scotland and seem to be doing well and that will require Labour to divert resources to shore up their crumbling position. The Cameron project’s problems coming now mean they have plenty of time to recover and adjust their approach before the general election. Brown is spinning that the election is around the corner, it ain’t – Labour is bust financially.

Talking of of bust, boom to bust is the other factor. The U.S. economy is spluttering, the property market has some worrying signs, unemployment is as high as it was under Thatcher in 1979*, interest rates are up, inflation is up, government debt is prolific, mortgages payments are ballooning, home repossessions are astonishing and bankruptcies are at a record rate. Brown has not abolished the economic cycle.

So in six months the economic and political picture could, Guido is betting, look very different. Don’t bet against it.

*In 1979 unemployment was 1.4m, in 2007 unemployment is 1.7m, Source: Unemployment ONS Labour Force Survey.




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