We are looking at a (likely) Lib-Lab coalition government with an unpopular and lame-duck PM. Could this be any worse? Yes it can.
First of all, a Lib-Lab coalition is still short of a majority, so they would have to make unholy deals with the Scottish and Welsh national parties, which are very left and have their hands out for tips. Their condition for signing on is "funding guarantees" for their dependent regions--at a time when the government's top priority must be fiscal consolidation.
But wait, there's more. Because Brown has said that he will step down as leader of the Labour Party, that means that the next PM will have to be elected by Labour's electoral college. The Labour electoral college is made up of three parts, each carrying equal weight: lawmakers, labor unions and party members.
So in the midst of a fiscal crisis, we are looking at a government including an enormous amount of regional and left-wing baggage, and a PM chosen by the labor unions. This means higher taxes and more socialism at a time that the country is staring into a fiscal abyss.
And, as part of the Lib-Lab deal, Labour has agreed to change the 300-hundred year old electoral system from single-member constituencies to proportional representation. The represents the Italianization (or Israelization) of the UK.
We can look forward to unending government "crises" every time that some obscure party leaves the government. The government will be hostage to its smallest coalition partners (like Likud's dependence on ultra-right wing religious parties).
Oh, and another thing: bringing in SNP and Plaid Cymru is a UK suicide pact. The closer the UK gets to regional autonomy subsidized by English taxpayers, the closer England will get to demanding its own devolution. It's only a matter of time until England demands equal rights and elects its own parliament, which is the beginning of the end of the United Kingdom.
What a mess. Looks bad for sterling, FTSE, and above all, gilts.
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