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On paper the England side has good quality. There are weaknesses at the back in my view, but the main problem, I'm sorry to say to TJ, is the overpaid Swede in charge. He has turned what ought to be a good attacking unit into a miserable over-cautious outfit that is painful to watch. And he hasn't got the defence working as a unit, which might at least help to paper over some of the cracks.
It must be said, that he has reversed the old situation where England used to win all its friendlies but struggle to qualify for major championships.
But we keep getting knocked out of tournaments in the quarter finals - usually on penalties - after spending most of the time fighting a rearguard action. The classic example was against Portugal in the last European Championships, but Brazil at the last World Cup was also a case in point (they didn't need penalties to beat us - they had Ronaldinho ...)
In national competitions, England is just one of the many medium good teams along with Sweden, Denmark, Holland, Czech Republic, Spain etc etc, while the great ones are the 4 obvious: Brazil, Germany, Italy & Argentina. So don't hang Sven-Göran for that! At least you're getting to quarter finals nowadays!

Though, I'd agree with you that he's over paid - if it weren't for the british tabloids... How much money compensates for 24/7 surveillance?
Btw, as a little case in point - when was the last time England beat Sweden in soccer?
As for Chelsea, isn't their big strength that they practically have an extra team of equal strength just for replacing injured players? - At least, that's the main reason I think they'll win as the other teams are too dependent on just 11-13 players or a few stars.