Unlikely that the Treasury would be briefing that they are tearing up their economic policies as we speak and Kwarteng is already updating his LinkedIn I suppose.
It's about time Sunak supporters accepted the result of the leadership election.
Just like Conservative MPs in May 1940 should have accepted the results of THEIR previous leadership "election" and just let Neville Chamberlain get on with the job?
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
You have to be up the creek if everyone is writing to the BoE...
Only 3-4 months ago our actuaries tried hard to persuade us that we should proceed with LDIs as a way of reducing risk and volatility for the pension fund I am a trustee of. I am so glad that we declined. It is perhaps a little simplistic but I personally could not understand why anyone who had watched The Big Short could accept that using derivatives in that way reduced risk. Whenever someone tries to tell you that this reduces risk and potentially also improves performance it is time to be deeply cautious.
Was this really all about protecting boomers with DB pensions?!!!!
The immediate issue was Defined Benefit Pensions - as they were going to blow up instantly.
Defined Contribution pensions don't blow up in the same way - you would just have lost x% of their value and been poorer forever more.....
Looks to me like this is yet another instance of the young getting screwed over the wealthy. Why is the BoE backstopping private DB pension schemes? The young are locked out of those scenes - and indeed, paying for them through lower wages and worse DC schemes.
What the fuck are the BoE doing?
When I say Defined Contributions don't blow up in the same way I mean there aren't the same liabilities that result in Defined Benefits schemes blowing up.
So suppose you have a gilt that is worth £1000.
If it drops to £900 the defined benefit scheme has a shortfall of £100 that needs to be recovered (bankruptcy)
but the defined contribution scheme just says bad luck your pension is now worth £100 less.
The BoE had no choice but to support defined benefit schemes but it equally helps the defined Contribution schemes as well..
Unlikely that the Treasury would be briefing that they are tearing up their economic policies as we speak and Kwarteng is already updating his LinkedIn I suppose.
Except that's what they need to brief to restore order in the markets
I still find the pathway to majority for Labour difficult - the SNP hold onto Scotland so tightly I don't see them making gains there. Wales looks like it will be Con free under current polling, and Labour will gain those over anyone else. And I can imagine some Red Wall seats coming "back" to Labour. I just don't know if there are enough competitive seats in the home counties, south and rurally? Maybe the LDs do well enough to win seats / prevent the Tories winning them? Maybe this economic ruin is so bad Tories just won't vote?
I agree. To get a majority (326) they need to win 124 seats + every seat they won last time - 124+202.
In the top 124 target seats are 17 SNP seats, where they will struggle to impact. Plus there will be some losses to someone though maybe only a few. So for a majority you have to look down to target 145 or thereabouts. But several of those also are SNP so difficult. So look to target 153 and consider how likely it is that Labour will win Rochford and Southend East, which they may need to do to get 326 seats. Swing needed: 13.31%.
I still don't put that as a 32% chance. Though no-one can accuse the Tories of not trying to give Labour a thumping majority, but the valiant Tory effort may not be enough.
Right now holding Rochford is highly optimistic. If they don't sort this quickly it will be between total extinction and 100 seats. They might easily get destroyed by a split and new centre right or populist right alternative
I agree this is possible, but not yet a 32% chance.
I don't see a way back for them nor where they get 20,000 votes 'anywhere' right now. There will be a Redfield tomorrow, i expect it to be jaw dropping
There are ways back for the Tories, and if there aren't a NOM is still the most likely result.
Ways back (unlikely): Half the way back is achieved by binning the current set up, appointing a sane one nation leader and cabinet (Hunt, Hat) and levelling up with the public; while the other half is achieved by unremitting effort on behalf of the 'Labour Must Lose' left faction - who need to try harder.
All politics is relative.
As for me, I am currently planning to vote Labour for the first time in a GE for nearly 50 years.
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
"dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich" should at least get them to the election without being in single figures.
Also has the benefit of Sunak being required by Wallace to fund Ukraine. Appearing luke-warm did him no favours in his PM election bid.
Still don't see how you get 300+ Tory MPs converging on a single replacement option, presumably in some secrecy, before pulling the trigger to remove Truss. The likelihood of a membership-pleasing idiot chucking their hat in the ring with enough MPs to get them to the 'public vote' needs to be highly adjacent to zero.
Johnson has the numbers. He would of course run on an 'undo your error' ticket
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
What spending cuts?
Massive spending cuts are already quietly baked into things because there is zero chance departments are going to get 10% increases. So any announcement of spending cuts would be way worse than what was announced as a 10% cut in headline monetary budgets is probably 20% in real terms...
Plus there is very little that can actually be cut - where is there any excess spending - we've already had 12 years of cuts on anything that isn't pensions / the NHS...
So Kwarteng would have to announce 20% across the board cuts, including for the NHS to fund his tax cuts for the rich and calm the markets.
Political suicide. Or reverse his tax cuts for the rich and be humiliated
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Some complex derivative instruments that allow risk management such that solid gilt assets can be leveraged to fund riskier assets that give better pay back is how I understand it. These devices now require marginal calls and that needs liquidity that it sounds like pension funds don't have in a rush like this.
Another fine mess that financial engineering is leading us into...
I don't think that so far this is close to being on the same scale. Its not good but that was just off the charts. A good example is Fred the shred phoning up Darling and saying that their cash machines would stop operating within hours without massive state intervention. The biggest bank in the world at the time. We do need to keep a sense of proportion.
I'm told: - Pension funds getting hammered and losing huge amounts of capital - Banks forcing them to make margin calls and liquidate assets - so gilts - Some pension funds losing large amounts of their fund - Hence BoE stepped in - https://twitter.com/SamCoatesSky/status/1575073150064545797
Good afternoon
Just come back home and catching up
This is a resignation (s) matter no ifs, no buts, and time for the conservative party to put the country first or let someone who will
I cannot recall being as angry with the conservative party top two
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
What spending cuts?
Massive spending cuts are already quietly baked into things because there is zero chance departments are going to get 10% increases. So any announcement of spending cuts would be way worse than what was announced as a 10% cut in headline monetary budgets is probably 20% in real terms...
Plus there is very little that can actually be cut - where is there any excess spending - we've already had 12 years of cuts on anything that isn't pensions / the NHS...
So Kwarteng would have to announce 20% across the board cuts, including for the NHS to fund his tax cuts for the rich and calm the markets.
Political suicide. Or reverse his tax cuts for the rich and be humiliated
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
"dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich" should at least get them to the election without being in single figures.
Also has the benefit of Sunak being required by Wallace to fund Ukraine. Appearing luke-warm did him no favours in his PM election bid.
Still don't see how you get 300+ Tory MPs converging on a single replacement option, presumably in some secrecy, before pulling the trigger to remove Truss. The likelihood of a membership-pleasing idiot chucking their hat in the ring with enough MPs to get them to the 'public vote' needs to be highly adjacent to zero.
Is there any way the 1922 could adjust the rules to prevent a run-off with the membership?
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
What spending cuts?
Massive spending cuts are already quietly baked into things because there is zero chance departments are going to get 10% increases. So any announcement of spending cuts would be way worse than what was announced as a 10% cut in headline monetary budgets is probably 20% in real terms...
Plus there is very little that can actually be cut - where is there any excess spending - we've already had 12 years of cuts on anything that isn't pensions / the NHS...
So Kwarteng would have to announce 20% across the board cuts, including for the NHS to fund his tax cuts for the rich and calm the markets.
Political suicide. Or reverse his tax cuts for the rich and be humiliated
Problem is that those tax cuts for the rich are £2bn. He needs to find the money for the NI changes and corporation tax changes as well because the market and the OBR are going to expect more than just a reversal of the 45% cut
Bad Al. Could be entirely fictional, of course, but it's not inconsistent with the facts.
https://twitter.com/campbellclaret/status/1575062726266671106 Tory Party spin doctor just told me that they don’t know where Truss is, and they can’t find any MPs apart from Redwood and Bridgen to defend the government so they are trying to get the line running that the run on the £ is all Labour’s fault. “Bollocks but we’re desperate”
Ah, it was in reply to this rubbish from Ashcroft, so fair play. A currency trader has just told me that a driver to sell sterling was not just the mini-budget but a concern that Labour could form the next Government…
Source in housing sector: "It really is a shit show. Benefit from stamp duty is totally wiped out. And running at a loss. We’re already seeing cancellations and a few other bad signs. We’re basically trying to build out to make sure customers mortgage offers still hold" https://twitter.com/hoffman_noa/status/1575140756733452288
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
"dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich" should at least get them to the election without being in single figures.
Also has the benefit of Sunak being required by Wallace to fund Ukraine. Appearing luke-warm did him no favours in his PM election bid.
Still don't see how you get 300+ Tory MPs converging on a single replacement option, presumably in some secrecy, before pulling the trigger to remove Truss. The likelihood of a membership-pleasing idiot chucking their hat in the ring with enough MPs to get them to the 'public vote' needs to be highly adjacent to zero.
Johnson has the numbers. He would of course run on an 'undo your error' ticket
....which is why the rest of those with the power to force Truss out will consider carefully before doing so.
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
What spending cuts?
Massive spending cuts are already quietly baked into things because there is zero chance departments are going to get 10% increases. So any announcement of spending cuts would be way worse than what was announced as a 10% cut in headline monetary budgets is probably 20% in real terms...
Plus there is very little that can actually be cut - where is there any excess spending - we've already had 12 years of cuts on anything that isn't pensions / the NHS...
Indeed. I'm currently working inside a government agency (won't say which, but it's one traditionally favoured by the Tories) that is under immense financial pressure - it really needs to invest heavily after 10 years of not having enough funding. The same is true in most areas of government, certainly all the big delivery departments. The only way to cut significantly would be to stop doing something altogether.
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
The linked blog in the comment you quoted seems to give a good explanation to me. What a mess.
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Some complex derivative instruments that allow risk management such that solid gilt assets can be leveraged to fund riskier assets that give better pay back is how I understand it. These devices now require marginal calls and that needs liquidity that it sounds like pension funds don't have in a rush like this.
Another fine mess that financial engineering is leading us into...
Presumably this nonsense happens because if they didn't do it then they'd have to admit that DB pension schemes were bust some time ago.
I don't think that so far this is close to being on the same scale. Its not good but that was just off the charts. A good example is Fred the shred phoning up Darling and saying that their cash machines would stop operating within hours without massive state intervention. The biggest bank in the world at the time. We do need to keep a sense of proportion.
The BoE has literally just printed an unlimited amount of money and given it to people with defined benefit pension schemes.
What a fucking racket.
Don't be silly, of course it hasn't. Just at the rescue of the banks in 2009 wasn't giving money to bankers or their shareholders, but was to protect the integrity of the banking system on behalf of all of us, this measure is to protect the integrity of the gilts market.
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
"dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich" should at least get them to the election without being in single figures.
Also has the benefit of Sunak being required by Wallace to fund Ukraine. Appearing luke-warm did him no favours in his PM election bid.
Still don't see how you get 300+ Tory MPs converging on a single replacement option, presumably in some secrecy, before pulling the trigger to remove Truss. The likelihood of a membership-pleasing idiot chucking their hat in the ring with enough MPs to get them to the 'public vote' needs to be highly adjacent to zero.
Is there any way the 1922 could adjust the rules to prevent a run-off with the membership?
Nope.
I suspect you need Truss to resign immediately, appoint an acting PM and leave a very long time to the next leadership election - for reasons...
Was Rupa Huq basically admitting that she's only "superficially" brown, given that she went to the same school as Winston fucking Churchill's daughter?
I didn't realise until just now that she was Konnie (previously of Blue Peter) Huq's sister.
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Some complex derivative instruments that allow risk management such that solid gilt assets can be leveraged to fund riskier assets that give better pay back is how I understand it. These devices now require marginal calls and that needs liquidity that it sounds like pension funds don't have in a rush like this.
Another fine mess that financial engineering is leading us into...
"Risk management" seems an inappropriate expression
Gonna be a mother of a dip to buy into when the first nuke goes off. How do I get my broadband EMP hardened?
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Your pension fund decides to invest in various things that are interest rate sensitive, or maybe foreign investment that bring exchange rate risk. In order to get predictible returns in the currency of their liabilities (i.e. £s), they hedge away the currency or interest rate risk by entering into interest rate (or currency) swaps with other counterparties.
Those swaps (usually) require you to post collateral, as they’re two way contracts: you might have to pay your counterparty or they might have to pay you.
If you get a big swing in interest rates, you might suddenly have to post a lot more collateral at a time when the thing you’re holding has just gone down in value due to the rise in interest rates. Push this balance far enough & you’re insolvent: if your counterparty calls for more margin according to their contract with you, you don’t have it.
Your hedging can be mathematically correct & your long term liabilities can be absolutely fine, but you can still go tits up because your counterparty needs more collateral from you than you actually have.
(This is the fundamental situation as I understand it.)
You have to be up the creek if everyone is writing to the BoE...
Only 3-4 months ago our actuaries tried hard to persuade us that we should proceed with LDIs as a way of reducing risk and volatility for the pension fund I am a trustee of. I am so glad that we declined. It is perhaps a little simplistic but I personally could not understand why anyone who had watched The Big Short could accept that using derivatives in that way reduced risk. Whenever someone tries to tell you that this reduces risk and potentially also improves performance it is time to be deeply cautious.
The old wisdom of course is that if you don't understand it there is probably a catch. I still think that.
Despite efforts I still don't understand how QE, or the BoE buying its own government's bonds, is in fact anything other than either transferring funds from the left pocket to to the right, or, much worse, printing money in excessive quantities.
And, BTW, if printing money is what QE is, why not just stick £X000 into everyone's account (as with gas bills) rather than do something lacking direct impact.
The BoE has literally just printed an unlimited amount of money and given it to people with defined benefit pension schemes.
What a fucking racket.
The gerontocracy must be protected at all costs.
Huge numbers of working age people have those schemes. It's the entire economy,
Not sure I know anyone my age (mid 40s) or below in the private sector who has one. My pension will pay whatever is in my pot when I retire, it won't get topped up by the government if its value goes down.
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
What spending cuts?
Massive spending cuts are already quietly baked into things because there is zero chance departments are going to get 10% increases. So any announcement of spending cuts would be way worse than what was announced as a 10% cut in headline monetary budgets is probably 20% in real terms...
Plus there is very little that can actually be cut - where is there any excess spending - we've already had 12 years of cuts on anything that isn't pensions / the NHS...
So Kwarteng would have to announce 20% across the board cuts, including for the NHS to fund his tax cuts for the rich and calm the markets.
Political suicide. Or reverse his tax cuts for the rich and be humiliated
Was Rupa Huq basically admitting that she's only "superficially" brown, given that she went to the same school as Winston fucking Churchill's daughter?
I didn't realise until just now that she was Konnie (previously of Blue Peter) Huq's sister.
Silly thing is, everyone is only superficially the colour they are.
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Some complex derivative instruments that allow risk management such that solid gilt assets can be leveraged to fund riskier assets that give better pay back is how I understand it. These devices now require marginal calls and that needs liquidity that it sounds like pension funds don't have in a rush like this.
Another fine mess that financial engineering is leading us into...
Presumably this nonsense happens because if they didn't do it then they'd have to admit that DB pension schemes were bust some time ago.
I naively expected pension schemes would have been in a better position with higher yields, they get more in interest after all.
Was Rupa Huq basically admitting that she's only "superficially" brown, given that she went to the same school as Winston fucking Churchill's daughter?
I didn't realise until just now that she was Konnie (previously of Blue Peter) Huq's sister.
The BoE has literally just printed an unlimited amount of money and given it to people with defined benefit pension schemes.
What a fucking racket.
The gerontocracy must be protected at all costs.
Huge numbers of working age people have those schemes. It's the entire economy,
Not sure I know anyone my age (mid 40s) or below in the private sector who has one. My pension will pay whatever is in my pot when I retire, it won't get topped up by the government if its value goes down.
Im 50 and i have 3 legacy DB pensions from the banking and insurance sectors
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
What spending cuts?
Massive spending cuts are already quietly baked into things because there is zero chance departments are going to get 10% increases. So any announcement of spending cuts would be way worse than what was announced as a 10% cut in headline monetary budgets is probably 20% in real terms...
Plus there is very little that can actually be cut - where is there any excess spending - we've already had 12 years of cuts on anything that isn't pensions / the NHS...
So Kwarteng would have to announce 20% across the board cuts, including for the NHS to fund his tax cuts for the rich and calm the markets.
Political suicide. Or reverse his tax cuts for the rich and be humiliated
Just resign (no not you, Kwarteng)
Will you be voting Labour, G?
Right now it is a plague on all your houses but certainly I could not vote conservative without a complete change at the top
The second half of that first sentence is definitely true.
It's radically transformed Britain into a country with a major economic crisis because no-one can trust the Treasury and the markets are profiteering from it by stress testing anything they can think of...
Was Rupa Huq basically admitting that she's only "superficially" brown, given that she went to the same school as Winston fucking Churchill's daughter?
I didn't realise until just now that she was Konnie (previously of Blue Peter) Huq's sister.
Silly thing is, everyone is only superficially the colour they are.
Skin colour almost defines superficiality, meaning etymologically "of the surface"
Was Rupa Huq basically admitting that she's only "superficially" brown, given that she went to the same school as Winston fucking Churchill's daughter?
I didn't realise until just now that she was Konnie (previously of Blue Peter) Huq's sister.
Who’d be a parent, eh?
I feel for Charlie Brooker at family gatherings, he must have to bite his tongue pretty hard not to go on one of his massive rants about her (Rupa's) stupidity.
Was Rupa Huq basically admitting that she's only "superficially" brown, given that she went to the same school as Winston fucking Churchill's daughter?
I didn't realise until just now that she was Konnie (previously of Blue Peter) Huq's sister.
The BoE has literally just printed an unlimited amount of money and given it to people with defined benefit pension schemes.
What a fucking racket.
The gerontocracy must be protected at all costs.
Huge numbers of working age people have those schemes. It's the entire economy,
Not sure I know anyone my age (mid 40s) or below in the private sector who has one. My pension will pay whatever is in my pot when I retire, it won't get topped up by the government if its value goes down.
You probably need to be 50+ to have a defined Benefit pension - they disappeared in the late 1990s from memory after Gordon Brown changed dividend tax payments
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Basically (and anyone with more detailed knowledge feel free to correct me) the LDI schemes involved pension funds giving up their assets in exchange for promises by gold plated institutions that their liabilities would be met at the relevant future points by means of derivatives and other financial paper that was totally reliable. As soon as those derivatives became less than totally reliable the pension fund had a problem because they no longer had the underlying assets.
As I say, it reminded me strongly of the guarantees by institutions given on CDOs in 2008. The issuing of those guarantees, backed by mortgages in the underlying assets were free money. Until they weren't. Today there was a real risk that that counterparty risk with those gold plated institutions was real.
This sabotage (from whoever did it) was of Nordstream 1.
Interesting how some PBers are eager to advance what appears to be a Putinist line, that pipeline sabotage was done by . . . wait for it . . . the Demented Vegetable aka Joe Biden . . .
This afternoon was an Tory wipe-out event. They are done. A few dozen in the ultra safe seats will survive but it will take at least a decade for them to be even listened to by the public again.
The joke about Truss being a deep agent for Liberals is no longer funny.
Bad Al. Could be entirely fictional, of course, but it's not inconsistent with the facts.
https://twitter.com/campbellclaret/status/1575062726266671106 Tory Party spin doctor just told me that they don’t know where Truss is, and they can’t find any MPs apart from Redwood and Bridgen to defend the government so they are trying to get the line running that the run on the £ is all Labour’s fault. “Bollocks but we’re desperate”
Ah, it was in reply to this rubbish from Ashcroft, so fair play. A currency trader has just told me that a driver to sell sterling was not just the mini-budget but a concern that Labour could form the next Government…
It’s fear of the UKs daft “borrow and spend” socialist opposition getting in, that’s spooked the world markets and destroyed the economy.
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Basically (and anyone with more detailed knowledge feel free to correct me) the LDI schemes involved pension funds giving up their assets in exchange for promises by gold plated institutions that their liabilities would be met at the relevant future points by means of derivatives and other financial paper that was totally reliable. As soon as those derivatives became less than totally reliable the pension fund had a problem because they no longer had the underlying assets.
As I say, it reminded me strongly of the guarantees by institutions given on CDOs in 2008. The issuing of those guarantees, backed by mortgages in the underlying assets were free money. Until they weren't. Today there was a real risk that that counterparty risk with those gold plated institutions was real.
That relies on consumer confidence which will be hit by the last few days , the fear of a big hike in interest rates and wondering when the next drama will hit isn’t the basis for people to go out to spend .
The BoE has literally just printed an unlimited amount of money and given it to people with defined benefit pension schemes.
What a fucking racket.
The gerontocracy must be protected at all costs.
Huge numbers of working age people have those schemes. It's the entire economy,
Not sure I know anyone my age (mid 40s) or below in the private sector who has one. My pension will pay whatever is in my pot when I retire, it won't get topped up by the government if its value goes down.
You probably need to be 50+ to have a defined Benefit pension - they disappeared in the late 1990s from memory after Gordon Brown changed dividend tax payments
I have one which I joined in 2014. I'm 40. It's still open to new members so plenty of people in early-mid twenties joining.
USS, benefits based on average rather than final salary. The contributions are eye-watering though, ~30% of salary IIRC (2/3 from the employer, my contributions somewhere around 10%).
It’s been entertaining hosting the troll for the last few weeks, but I do think it’s now time to pull the plug.
He/she hasn't broken any site rules, so: Let them stay, is my vote
We can't kick people out for having opinions we merely dislike
I heard pro russian opinions in the pub at the weekend from an antiquarian bookseller; they aren't all from a troll farm. The usual thing where you hear that Ukraine is of no strategic importance to anyone. And the... 'but we killed millions of people in Iraq' argument. It is better to accept that they are opinions that are legitimately held and to then debate them.
Don't confuse the "but we killed millions of people in Iraq" argument as being a pro-Russian one.
It seeks to place the current aggression in a broader historical context.
We did indeed kill many people in Iraq as a result of an "illegal" (no such thing) war. The US and its allies decided to invade Iraq for its own reasons and although there was huge opposition in the US and its allied countries, in the end, the US made the rules and most people went along with it because Saddam.
There was not a sophisticated and effective Falujah twitter campaign which sought to influence outsider's view of the conflict. We tutted at the odd wedding party obliteration but in general we went along with it.
"but we killed millions of people in Iraq" is shorthand for saying that Putin learned from Iraq. He learned that might is right and creates its own facts on the ground. We also learned that territorial claims have been made and acted upon throughout history and again, to look at it from an historical perspective, some we have approved of (Israel/Palestine) and others we have condemned (Israel/Palestine). Territorial claims are just that and happen the world over. This is not to excuse Russia's claims now, but to understand them.
We are just trying to get rid of the hypocrisy.
I hope Putin loses. Because I believe that his view of "Greater Russia" poses a threat to us. But I also don't want a nuclear war over Ukraine. The Ukrainians, as is their right, have decided to fight rather than cede territory via negotiation. Perhaps they will never have to negotiate and regain all the territory they believe is theirs. I don't know enough about the history of Ukraine to know which bits of the country are or aren't Russian. Will Russia then make its way to us via Poland, Belgium and the Eurostar? Not sure.
But the "we killed millions of people in Iraq" is not pro Russia.
At a minimum, Liz has to fire Kwasi, and she should probably hire Tom Scholar while she is at it
Yes, Kwasi has to go. He was rather obscure anyway so I doubt anyone will shed a tear, and Liz can just blame her appointing him on a mad moment.
Problem is he knows that everything in the budget was signed off by Liz.
The reality is both of them need to go - even just removing Kwasi raises serious questions about her suitable to select and manage people...
Yes if Kwarteng goes then Truss goes too and she knows that.
The only alternative is Kwarteng to announce deep spending cuts to calm the markets about the deficit but at the cost of ensuring the redwall Tory MPs lose their seats.
Or dump Truss and Kwarteng and replace them with Wallace and Sunak and reverse the Kwarteng tax cuts for the rich
What spending cuts?
Massive spending cuts are already quietly baked into things because there is zero chance departments are going to get 10% increases. So any announcement of spending cuts would be way worse than what was announced as a 10% cut in headline monetary budgets is probably 20% in real terms...
Plus there is very little that can actually be cut - where is there any excess spending - we've already had 12 years of cuts on anything that isn't pensions / the NHS...
So Kwarteng would have to announce 20% across the board cuts, including for the NHS to fund his tax cuts for the rich and calm the markets.
Political suicide. Or reverse his tax cuts for the rich and be humiliated
Problem is that those tax cuts for the rich are £2bn. He needs to find the money for the NI changes and corporation tax changes as well because the market and the OBR are going to expect more than just a reversal of the 45% cut
The NI changes also mainly benefitted higher earners and the corporation tax cuts big corporations.
I’ve detached myself from the hullabaloo to take a look at the Next PM market and who I’m wondering about is Kwasi Kwarteng at 60s. Ok, he’s only just become Chancellor but the same went for John Major when Mrs Thatcher was toppled. Also, and maybe with more resonance since it’s so recent, think back a couple of months ago to the saga of Nadim Zahawi and Boris Johnson. Zahawi was made Chancellor by Johnson then THE VERY NEXT DAY he announced his benefactor had to go and threw his own hat into the ring as a replacement. Incredible behaviour, yes, but Tory politicians – indeed Tories generally - are often like this. They are amoral and ruthless. So, with Truss in all sorts of trouble, looking overmatched by this crisis and lightweight, will Kwarteng put loyalty in a jar and strike? I don’t know but 60s is too big imho.
I don't see any mechanism for an orderly retreat from the Trussterfuck. A new leadership campaign is unthinkable, just a few working days (allowing for the mourning period) after the previous one, and at a time of multiple crises, not all of which are Liz Truss's fault. Even if it were thinkable, what guarantee is there that the outcome would be any better, even in the unlikely event that Tory MPs could agree even in broad terms on what 'better' would be? It's not as though there's a wonderful candidate who somehow got missed out last time.
And even if they somehow managed to get round all that, there's still the problem of what any replacement Tory government would actually do. There are going to have to be huge spending increases, and therefore tax increases, just to stand still. Is the party actually ready to face this reality - let alone the other realities of the Northern Ireland Protocol and the economic disaster which is Brexit?
Demoralised, exhausted, divided, out of ideas, chained to an insane ideology, the party is not going to unite behind a new leader setting a new direction anytime. It will be many years, if ever, before they are in a state where some future David Cameron can come along and drag them into the real, modern, world again.
Re: Asian Hornets, known in Pacific Northwest as Murder Hornets, personally blame the late QEII for her abject failure to curb this menace in her North American realm, aka Canada, thus creating a standing menace to WA State and the rest of USA.
Bad Al. Could be entirely fictional, of course, but it's not inconsistent with the facts.
https://twitter.com/campbellclaret/status/1575062726266671106 Tory Party spin doctor just told me that they don’t know where Truss is, and they can’t find any MPs apart from Redwood and Bridgen to defend the government so they are trying to get the line running that the run on the £ is all Labour’s fault. “Bollocks but we’re desperate”
Ah, it was in reply to this rubbish from Ashcroft, so fair play. A currency trader has just told me that a driver to sell sterling was not just the mini-budget but a concern that Labour could form the next Government…
It’s fear of the UKs daft “borrow and spend” socialist opposition getting in, that’s spooked the world markets and destroyed the economy.
If you're not joking here, this is the single most absurd thing you've ever posted, MoonRabbit, and overall you're an intelligent and valued poster.
You have to be up the creek if everyone is writing to the BoE...
So, can someone explain how pension funds go bust in a day? You take contributions and invest them and pay out pensions. I can see how you go bust over a decade if you have made unaffordable commitments to too many pensioners, but unless you have borrowed to boost your investment, and why would you do that, what is the problem?
Your pension fund decides to invest in various things that are interest rate sensitive, or maybe foreign investment that bring exchange rate risk. In order to get predictible returns in the currency of their liabilities (i.e. £s), they hedge away the currency or interest rate risk by entering into interest rate (or currency) swaps with other counterparties.
Those swaps (usually) require you to post collateral, as they’re two way contracts: you might have to pay your counterparty or they might have to pay you.
If you get a big swing in interest rates, you might suddenly have to post a lot more collateral at a time when the thing you’re holding has just gone down in value due to the rise in interest rates. Push this balance far enough & you’re insolvent: if your counterparty calls for more margin according to their contract with you, you don’t have it.
Your hedging can be mathematically correct & your long term liabilities can be absolutely fine, but you can still go tits up because your counterparty needs more collateral from you than you actually have.
(This is the fundamental situation as I understand it.)
What I think they have done is this. They said to their pensioners don;t worry we have you covered. Meanwhile they entered into a derivative contract to match this commitment and took some of the actual investment that backed the pensioner away (because it was never enough in the first place).
They then used that cash they took away to try to actually make more money on the markets with the derivative still in place. They invested in growth stocks or whatever to try to make up the shortfall to the pensioner that was always there in the first place.
When the derivative moved against them, they then couldn't make their margins
What the f8ck are the regulators on? who on earth ever allowed these practices in the first place? its f8cking madness.
The BoE has literally just printed an unlimited amount of money and given it to people with defined benefit pension schemes.
What a fucking racket.
The gerontocracy must be protected at all costs.
Huge numbers of working age people have those schemes. It's the entire economy,
Not sure I know anyone my age (mid 40s) or below in the private sector who has one. My pension will pay whatever is in my pot when I retire, it won't get topped up by the government if its value goes down.
You probably need to be 50+ to have a defined Benefit pension - they disappeared in the late 1990s from memory after Gordon Brown changed dividend tax payments
I joined my 3 in 1994, 1998 and 2003 respectively. I'm 50 atm
Bad Al. Could be entirely fictional, of course, but it's not inconsistent with the facts.
https://twitter.com/campbellclaret/status/1575062726266671106 Tory Party spin doctor just told me that they don’t know where Truss is, and they can’t find any MPs apart from Redwood and Bridgen to defend the government so they are trying to get the line running that the run on the £ is all Labour’s fault. “Bollocks but we’re desperate”
Ah, it was in reply to this rubbish from Ashcroft, so fair play. A currency trader has just told me that a driver to sell sterling was not just the mini-budget but a concern that Labour could form the next Government…
It’s fear of the UKs daft “borrow and spend” socialist opposition getting in, that’s spooked the world markets and destroyed the economy.
If you're not joking here, this is the single most absurd thing you've ever posted, MoonRabbit, and you're an intelligent and valued poster.
I don't see any mechanism for an orderly retreat from the Trussterfuck. A new leadership campaign is unthinkable, just a few working days (allowing for the mourning period) after the previous one, and at a time of multiple crises, not all of which are Liz Truss's fault. Even if it were thinkable, what guarantee is there that the outcome would be any better, even in the unlikely event that Tory MPs could agree even in broad terms on what 'better' would be? It's not as though there's a wonderful candidate who somehow got missed out last time.
And even if they somehow managed to get round all that, there's still the problem of what any replacement Tory government would actually do. There are going to have to be huge spending increases, and therefore tax increases, just to stand still. Is the party actually ready to face this reality - let alone the other realities of the Northern Ireland Protocol and the economic disaster which is Brexit?
Demoralised, exhausted, divided, out of ideas, chained to an insane ideology, the party is not going to unite behind a new leader setting a new direction anytime. It will be many years, if ever, before they are in a state where some future David Cameron can come along and drag them into the real, modern, world again.
Might be best for Con just to have a general election now, retreat to opposition, hand over to Labour and see how they do with the mess?
I don't see any mechanism for an orderly retreat from the Trussterfuck. A new leadership campaign is unthinkable, just a few working days (allowing for the mourning period) after the previous one, and at a time of multiple crises, not all of which are Liz Truss's fault. Even if it were thinkable, what guarantee is there that the outcome would be any better, even in the unlikely event that Tory MPs could agree even in broad terms on what 'better' would be? It's not as though there's a wonderful candidate who somehow got missed out last time.
And even if they somehow managed to get round all that, there's still the problem of what any replacement Tory government would actually do. There are going to have to be huge spending increases, and therefore tax increases, just to stand still. Is the party actually ready to face this reality - let alone the other realities of the Northern Ireland Protocol and the economic disaster which is Brexit?
Demoralised, exhausted, divided, out of ideas, chained to an insane ideology, the party is not going to unite behind a new leader setting a new direction anytime. It will be many years, if ever, before they are in a state where some future David Cameron can come along and drag them into the real, modern, world again.
An interesting corollary of the current crop of MPs knowing that the jig is up. How many decide not to defend their seats at the next election and line up alternative employment now, from a position of comparative strength?
This sabotage (from whoever did it) was of Nordstream 1.
Interesting how some PBers are eager to advance what appears to be a Putinist line, that pipeline sabotage was done by . . . wait for it . . . the Demented Vegetable aka Joe Biden . . .
How long is it before the Danish military arrest a couple of Russian tourists who claim they scuba dive around pipelines because they know lots of interesting facts about them ?
You have to be up the creek if everyone is writing to the BoE...
Only 3-4 months ago our actuaries tried hard to persuade us that we should proceed with LDIs as a way of reducing risk and volatility for the pension fund I am a trustee of. I am so glad that we declined. It is perhaps a little simplistic but I personally could not understand why anyone who had watched The Big Short could accept that using derivatives in that way reduced risk. Whenever someone tries to tell you that this reduces risk and potentially also improves performance it is time to be deeply cautious.
The old wisdom of course is that if you don't understand it there is probably a catch. I still think that.
Despite efforts I still don't understand how QE, or the BoE buying its own government's bonds, is in fact anything other than either transferring funds from the left pocket to to the right, or, much worse, printing money in excessive quantities.
And, BTW, if printing money is what QE is, why not just stick £X000 into everyone's account (as with gas bills) rather than do something lacking direct impact.
It is just printing money and the Bank has gone back into the printing business big time this afternoon. All those long dated gilts that they bought to stabilise that market came from newly created money (thankfully they don't have to print it because they couldn't keep up). The liquidity they are providing to pension funds likewise.
The problem is that the first couple of times we did this we seemed to get away with it. We kept everything going with QE in 2008 and following. We "borrowed" or more accurately created roughly £400bn to pay for Covid. So much less painful than raising taxes or cutting spending. We were promising to do the same again to pay the gas meter. And, not just here, right around the world the markets have said: enough. If fiat currencies other than the almighty dollar are to be debauched in this way then they will be priced accordingly. Hence inflation.
This sabotage (from whoever did it) was of Nordstream 1.
Interesting how some PBers are eager to advance what appears to be a Putinist line, that pipeline sabotage was done by . . . wait for it . . . the Demented Vegetable aka Joe Biden . . .
How long is it before the Danish military arrest a couple of Russian tourists who claim they scuba dive around pipelines because they know lots of interesting facts about them ?
I don't see any mechanism for an orderly retreat from the Trussterfuck. A new leadership campaign is unthinkable, just a few working days (allowing for the mourning period) after the previous one, and at a time of multiple crises, not all of which are Liz Truss's fault. Even if it were thinkable, what guarantee is there that the outcome would be any better, even in the unlikely event that Tory MPs could agree even in broad terms on what 'better' would be? It's not as though there's a wonderful candidate who somehow got missed out last time.
And even if they somehow managed to get round all that, there's still the problem of what any replacement Tory government would actually do. There are going to have to be huge spending increases, and therefore tax increases, just to stand still. Is the party actually ready to face this reality - let alone the other realities of the Northern Ireland Protocol and the economic disaster which is Brexit?
Demoralised, exhausted, divided, out of ideas, chained to an insane ideology, the party is not going to unite behind a new leader setting a new direction anytime. It will be many years, if ever, before they are in a state where some future David Cameron can come along and drag them into the real, modern, world again.
Truss could call a General Election, it would be a service to the Nation.
Comments
So suppose you have a gilt that is worth £1000.
If it drops to £900 the defined benefit scheme has a shortfall of £100 that needs to be recovered (bankruptcy)
but the defined contribution scheme just says bad luck your pension is now worth £100 less.
The BoE had no choice but to support defined benefit schemes but it equally helps the defined Contribution schemes as well..
Ways back (unlikely): Half the way back is achieved by binning the current set up, appointing a sane one nation leader and cabinet (Hunt, Hat) and levelling up with the public; while the other half is achieved by unremitting effort on behalf of the 'Labour Must Lose' left faction - who need to try harder.
All politics is relative.
As for me, I am currently planning to vote Labour for the first time in a GE for nearly 50 years.
This sabotage (from whoever did it) was of Nordstream 1.
What a fucking racket.
Political suicide. Or reverse his tax cuts for the rich and be humiliated
Another fine mess that financial engineering is leading us into...
A good example is Fred the shred phoning up Darling and saying that their cash machines would stop operating within hours without massive state intervention. The biggest bank in the world at the time. We do need to keep a sense of proportion.
Just come back home and catching up
This is a resignation (s) matter no ifs, no buts, and time for the conservative party to put the country first or let someone who will
I cannot recall being as angry with the conservative party top two
I can barely keep up
https://www.gov.uk/government/news/asian-hornets-identified-in-essex
You heard it here first (from yours truly) BEFORE the Tory "leadership" contest made her Prime Minister.
Putin's master plan's got a LOT of holes in it, but at least he's succeeded in tying up what passes for the "British Government" in knots.
All of these schemes are essentially bankrupt, and what the schemes were doing to pretend otherwise was clearly an accident waiting to happen.
Quite how the regulators could not see this is beyond me and I suspect there will be an enquiry.
These schemes should simply be wound up by law and the recipients allocated the money purchase equivalent of whatever is in the funds.
Could be entirely fictional, of course, but it's not inconsistent with the facts.
https://twitter.com/campbellclaret/status/1575062726266671106
Tory Party spin doctor just told me that they don’t know where Truss is, and they can’t find any MPs apart from Redwood and Bridgen to defend the government so they are trying to get the line running that the run on the £ is all Labour’s fault. “Bollocks but we’re desperate”
Ah, it was in reply to this rubbish from Ashcroft, so fair play.
A currency trader has just told me that a driver to sell sterling was not just the mini-budget but a concern that Labour could form the next Government…
https://twitter.com/hoffman_noa/status/1575140756733452288
https://twitter.com/ZelenskyyUa/status/1575140579251556352
I suspect you need Truss to resign immediately, appoint an acting PM and leave a very long time to the next leadership election - for reasons...
I didn't realise until just now that she was Konnie (previously of Blue Peter) Huq's sister.
Gonna be a mother of a dip to buy into when the first nuke goes off. How do I get my broadband EMP hardened?
Those swaps (usually) require you to post collateral, as they’re two way contracts: you might have to pay your counterparty or they might have to pay you.
If you get a big swing in interest rates, you might suddenly have to post a lot more collateral at a time when the thing you’re holding has just gone down in value due to the rise in interest rates. Push this balance far enough & you’re insolvent: if your counterparty calls for more margin according to their contract with you, you don’t have it.
Your hedging can be mathematically correct & your long term liabilities can be absolutely fine, but you can still go tits up because your counterparty needs more collateral from you than you actually have.
(This is the fundamental situation as I understand it.)
Despite efforts I still don't understand how QE, or the BoE buying its own government's bonds, is in fact anything other than either transferring funds from the left pocket to to the right, or, much worse, printing money in excessive quantities.
And, BTW, if printing money is what QE is, why not just stick £X000 into everyone's account (as with gas bills) rather than do something lacking direct impact.
Tory MPs: Get rid now and be done with them.
We need a 1922 election tomorrow.
Don't give into despair
'Cause I love you, honeybear
(Old lady = Bank of England.)
Kwasi Kwarteng's Budget is a moment in history that will radically transform Britain
With one move, Britain’s competitiveness, its investor friendliness and its attractiveness to top talent has been hugely amplified
https://www.telegraph.co.uk/news/2022/09/23/kwasi-kwartengs-budget-moment-history-will-radically-transform/
Lots of noise will be made, but those fundamentals will hold.
https://twitter.com/tomhfh/status/1575142086764003328
Then another fundamental will hold. In two years Keir Starmer will be Prime Minister of the United Kingdom.
https://twitter.com/DPJHodges/status/1575142519540686848
https://twitter.com/JasonGroves1/status/1575142490000302080
It's radically transformed Britain into a country with a major economic crisis because no-one can trust the Treasury and the markets are profiteering from it by stress testing anything they can think of...
https://twitter.com/NoLieWithBTC/status/1574903383097581570
As I say, it reminded me strongly of the guarantees by institutions given on CDOs in 2008. The issuing of those guarantees, backed by mortgages in the underlying assets were free money. Until they weren't. Today there was a real risk that that counterparty risk with those gold plated institutions was real.
This afternoon was an Tory wipe-out event. They are done. A few dozen in the ultra safe seats will survive but it will take at least a decade for them to be even listened to by the public again.
The joke about Truss being a deep agent for Liberals is no longer funny.
Too clever by half
That relies on consumer confidence which will be hit by the last few days , the fear of a big hike in interest rates and wondering when the next drama will hit isn’t the basis for people to go out to spend .
USS, benefits based on average rather than final salary. The contributions are eye-watering though, ~30% of salary IIRC (2/3 from the employer, my contributions somewhere around 10%).
It seeks to place the current aggression in a broader historical context.
We did indeed kill many people in Iraq as a result of an "illegal" (no such thing) war. The US and its allies decided to invade Iraq for its own reasons and although there was huge opposition in the US and its allied countries, in the end, the US made the rules and most people went along with it because Saddam.
There was not a sophisticated and effective Falujah twitter campaign which sought to influence outsider's view of the conflict. We tutted at the odd wedding party obliteration but in general we went along with it.
"but we killed millions of people in Iraq" is shorthand for saying that Putin learned from Iraq. He learned that might is right and creates its own facts on the ground. We also learned that territorial claims have been made and acted upon throughout history and again, to look at it from an historical perspective, some we have approved of (Israel/Palestine) and others we have condemned (Israel/Palestine). Territorial claims are just that and happen the world over. This is not to excuse Russia's claims now, but to understand them.
We are just trying to get rid of the hypocrisy.
I hope Putin loses. Because I believe that his view of "Greater Russia" poses a threat to us. But I also don't want a nuclear war over Ukraine. The Ukrainians, as is their right, have decided to fight rather than cede territory via negotiation. Perhaps they will never have to negotiate and regain all the territory they believe is theirs. I don't know enough about the history of Ukraine to know which bits of the country are or aren't Russian. Will Russia then make its way to us via Poland, Belgium and the Eurostar? Not sure.
But the "we killed millions of people in Iraq" is not pro Russia.
I’ve detached myself from the hullabaloo to take a look at the Next PM market and who I’m wondering about is Kwasi Kwarteng at 60s. Ok, he’s only just become Chancellor but the same went for John Major when Mrs Thatcher was toppled. Also, and maybe with more resonance since it’s so recent, think back a couple of months ago to the saga of Nadim Zahawi and Boris Johnson. Zahawi was made Chancellor by Johnson then THE VERY NEXT DAY he announced his benefactor had to go and threw his own hat into the ring as a replacement. Incredible behaviour, yes, but Tory politicians – indeed Tories generally - are often like this. They are amoral and ruthless. So, with Truss in all sorts of trouble, looking overmatched by this crisis and lightweight, will Kwarteng put loyalty in a jar and strike? I don’t know but 60s is too big imho.
And even if they somehow managed to get round all that, there's still the problem of what any replacement Tory government would actually do. There are going to have to be huge spending increases, and therefore tax increases, just to stand still. Is the party actually ready to face this reality - let alone the other realities of the Northern Ireland Protocol and the economic disaster which is Brexit?
Demoralised, exhausted, divided, out of ideas, chained to an insane ideology, the party is not going to unite behind a new leader setting a new direction anytime. It will be many years, if ever, before they are in a state where some future David Cameron can come along and drag them into the real, modern, world again.
For shame, Britannia!
AND THEN CAME THE ASIAN HORNETS
What I think they have done is this. They said to their pensioners don;t worry we have you covered. Meanwhile they entered into a derivative contract to match this commitment and took some of the actual investment that backed the pensioner away (because it was never enough in the first place).
They then used that cash they took away to try to actually make more money on the markets with the derivative still in place. They invested in growth stocks or whatever to try to make up the shortfall to the pensioner that was always there in the first place.
When the derivative moved against them, they then couldn't make their margins
What the f8ck are the regulators on? who on earth ever allowed these practices in the first place? its f8cking madness.
The party wouldn't let him enact the policies required.
Bar "I (and my Cabinet) resign".
Or are there financial advantages to losing?
I've added every possible worse case scenario, including nuclear war in Europe, and nothing is quite as bad as what Truss and Kwarteng have done.
That BoE statement, there's absolutely no way the government can delay the spending review until November.
The problem is that the first couple of times we did this we seemed to get away with it. We kept everything going with QE in 2008 and following. We "borrowed" or more accurately created roughly £400bn to pay for Covid. So much less painful than raising taxes or cutting spending. We were promising to do the same again to pay the gas meter. And, not just here, right around the world the markets have said: enough. If fiat currencies other than the almighty dollar are to be debauched in this way then they will be priced accordingly. Hence inflation.