Might this be a good election to lose?

While the battlebusses have cruised the lanes and A roads of Britain, and as the placards have been waved, the insults thrown and the Labour Party electoral Henge carved, something unusual has been afoot in the global economy. While we were busy looking the other way, global markets have gone alarmingly awry. In the last two weeks $2 trillion has been wiped off their value.

Global stock markets have slumped since hitting a high point last month. Bond markets, which allow companies and governments to borrow, have slumped sharply across the world. In an email to Prospect, Jim O’Neill, the former head of Goldman Sachs Asset management called this an “incredible move,” noting especially the sharp drop in the price of German government debt. This has been sold off in huge volumes, and the price has fallen sharply. In consequence, the “yield”—the interest payment due to the holder of the debt—has risen. Government debt around the world is also being sold off. Globally, the cost of borrowing is starting to rise.

As Barry Eichengreen, professor of economics at Berkeley told me in an email, “bond yields can’t keep falling forever.” “At some point they will surely head back up.”

Unusual economic policies by the UK and US governments among others have caused huge amounts of money to pour into global markets. But now that Quantitative Easing programmes, where governments create new money, are being reduced on both sides of the Atlantic, this is decreasing the amount of money in financial markets. The result, as Eichengreen notes, is that “liquidity is limited.”

George Magnus, chief economic adviser to UBS and regular writer for Prospect, says that: “There's no question though that our encouragement of both asset price inflation and tighter regulation over banks is giving us a foretaste of the illiquidity in markets.”

A further danger he says, concerns interest rates. “If and when the US and UK do raise rates, we'd advised to take cover.” Janet Yellen, the Chairwoman of the Federal Reserve which sets interest rates for the US, said on Wednesday this week that, in her opinion, “long-term interest rates are at very low levels,” adding that she accepted the possibility of a “sharp jump” in long term interest rates.

The picture is a worrying one. There is a diminishing level of liquidity in global markets, and tighter credit conditions mean that borrowing costs are likely to start rising. Economists who gave comment for this piece were quick to say that this was not a credit slowdown comparable to that seen in 2007. But the implications of the slowdown are substantial. It suggests that the era of cheap money, which helped return the global economy to health after the global financial crisis, may soon be coming to an end. It also suggests that Britain’s next government will have to contend with economic circumstances less favourable than those of the last five years.

In the coming days, we will learn the winner of today’s election. In the coming years, will victory come to be seen as a poisoned chalice?