I have been negative on Britain for a decade - and with good reason. The British economy was over-dependent on financial services, and government spending - at greater than 50% of gross domestic product (GDP) - was out of control.
However, the new government that took office in May has prompted me to reconsider my investment viewpoint. The new coalition has made progress on both of these once-worrisome issues.
And that means the British market is now one that investors should very carefully consider.
Let me explain...
Great Britain
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Four Ways to Profit From Britain's Surprising Post-Election Rebound
British Companies Becoming Takeover Targets for Cash-Rich U.S. Companies
Some of the largest and most well known British companies could soon find themselves under new, American management.
While the U.S. recovery is losing momentum, the U.K. recovery is nonexistent. Companies across the pond are struggling to stay afloat and the British pound has fallen by about 25% against the dollar in the past two and a half years, leaving British firms vulnerable to American intrusion as takeover targets.
That fact was highlighted earlier this year by Kraft Foods Inc.'s (NYSE: KFT) controversial takeover of British confectioner Cadbury PLC (PINK: CDSCY).
While the U.S. recovery is losing momentum, the U.K. recovery is nonexistent. Companies across the pond are struggling to stay afloat and the British pound has fallen by about 25% against the dollar in the past two and a half years, leaving British firms vulnerable to American intrusion as takeover targets.
That fact was highlighted earlier this year by Kraft Foods Inc.'s (NYSE: KFT) controversial takeover of British confectioner Cadbury PLC (PINK: CDSCY).
Could the British General Election's 'Hung Parliament' Lead to a Resurgent U.K. Economy?
In the depths of the Depression-ridden 1930s, two years after a British General Election that yielded a "hung parliament" - came the formation of a coalition government that resulted in one of the strongest decades the British economy has ever enjoyed.
Seventy-nine years later, in the throes of another global downturn - with another "hung parliament" and yesterday's (Tuesday's) resignation of Britain's prime minister paving the way - could history be repeating itself?
Seventy-nine years later, in the throes of another global downturn - with another "hung parliament" and yesterday's (Tuesday's) resignation of Britain's prime minister paving the way - could history be repeating itself?
To find out how Britain's election results could nurture an economic rebound, please read on...
British General Election: Even the Winners Will be Losers
The British general election campaign reaches its climax on Thursday, and at this point appears to be anybody's game. The most likely outcome is a "hung parliament" in which no party has a majority and a government is formed through backroom haggling.
However, after looking yet again at the state of the economy in my native Britain, I'm forced to ask a simple question: Why would anybody want the job?
However, after looking yet again at the state of the economy in my native Britain, I'm forced to ask a simple question: Why would anybody want the job?
To find out just what the future holds for the British economy, read on...
What's Really Driving Obama's Sudden Interest in Oil
U.S. President Barack Obama generated a lot of hubbub with his decision to open up parts of the Atlantic Ocean and Gulf of Mexico to oil drilling.
We've all heard the criticisms that some of the geological surveys are as much as 30 years old, and the arguments that the ecological impact of drilling off the U.S. East Coast isn't worth the accessible oil, which some critics estimate could play out in as little as six months at current demand levels.
But even after more than a day of debate over the motivations for - and possible results from - President Obama's apparent energy policy about-face, one thing is very clear: This announcement has nothing to do with oil.
It's all about the U.S. dollar.
To find out why President Barack Obama really lifted the moratorium on oil drilling, please read on...
We've all heard the criticisms that some of the geological surveys are as much as 30 years old, and the arguments that the ecological impact of drilling off the U.S. East Coast isn't worth the accessible oil, which some critics estimate could play out in as little as six months at current demand levels.
But even after more than a day of debate over the motivations for - and possible results from - President Obama's apparent energy policy about-face, one thing is very clear: This announcement has nothing to do with oil.
It's all about the U.S. dollar.
To find out why President Barack Obama really lifted the moratorium on oil drilling, please read on...
U.S., Britain Say EU Proposals Will Damage Hedge Fund Industry
The European Union (EU) on Thursday defended its sweeping hedge-fund reform proposals against criticism from the United States and Britain.
British Prime Minister Gordon Brown met with French President Nicolas Sarkozy Friday in hopes of compromising on the proposed regulation.
Many EU countries are determined to change the hedge fund industry, which is often murky. The use of derivatives, such as credit-default swaps have been linked to the downfall of Lehman Bros. and exacerbating Greece's sovereign debt difficulties.
British Prime Minister Gordon Brown met with French President Nicolas Sarkozy Friday in hopes of compromising on the proposed regulation.
Many EU countries are determined to change the hedge fund industry, which is often murky. The use of derivatives, such as credit-default swaps have been linked to the downfall of Lehman Bros. and exacerbating Greece's sovereign debt difficulties.
Plummeting British Pound Leads to Worries of Another Currency Market "Black Wednesday"
Outside of the earthquake rescue efforts in Chile and the Greek-rescue efforts in Brussels, the big news in the world economy last week occurred in currencies.
As you can see in the chart below, the plummeting British pound sterling has dropped even more than the beleaguered euro in the past month and a half, while the good old U.S. dollar has been as good as gold. (That last bit was a bit of currency irony; the dollar has actually been much better than gold, which has flat-lined in the past six weeks.)
As you can see in the chart below, the plummeting British pound sterling has dropped even more than the beleaguered euro in the past month and a half, while the good old U.S. dollar has been as good as gold. (That last bit was a bit of currency irony; the dollar has actually been much better than gold, which has flat-lined in the past six weeks.)
France and Britain Take the Lead on Executive Pay Restrictions
Executive pay has been a delicate issue in the United States where the Obama administration's "Pay Czar," Kenneth Feinberg, has been asked to keep bonuses for top financial managers disciplined without driving off top talent.
However, French President Nicolas Sarkozy and British Prime Minister Gordon Brown have been more blunt about exacting a toll on the financial firms that required taxpayer bailouts.
The United Kingdom on Wednesday announced plans to levy an immediate 50% tax on discretionary bonuses greater than 25,000 pounds, or about $40,000. The U.K. Treasury estimates the tax will affect 20,000 bankers and bring in about 550 million pounds, or about $894,000,000. However, some bankers have suggested the tax would reap about 4 billion pounds, or $6.5 billion, if firms press ahead with large bonus payouts regardless of the tax, the Financial Times reported.
However, French President Nicolas Sarkozy and British Prime Minister Gordon Brown have been more blunt about exacting a toll on the financial firms that required taxpayer bailouts.
The United Kingdom on Wednesday announced plans to levy an immediate 50% tax on discretionary bonuses greater than 25,000 pounds, or about $40,000. The U.K. Treasury estimates the tax will affect 20,000 bankers and bring in about 550 million pounds, or about $894,000,000. However, some bankers have suggested the tax would reap about 4 billion pounds, or $6.5 billion, if firms press ahead with large bonus payouts regardless of the tax, the Financial Times reported.
Which of the "Rich Four" Countries Will Default First?
Volume in the credit default swap market for rich countries has soared and so have credit spreads, according to a recent Financial Times story, while volume in emerging markets CDS has stagnated. In other words, traders are betting against the governments with high budget deficits, like Britain and the United States, as well as against […]
Why You Need to Look at these Three "Zombie-Free Zones"
Quantum Fund co-founder George Soros had it right on Monday, when he said the U.S. recovery would be held back by "basically bankrupt" banks and companies. I call them the "zombies," the institutions being propped up by government bailouts. Companies like Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC), General Motors Corp., Chrysler […]