If the market steadies and Tory polling fortunes improve alongside a modest improvement in Truss personal approval ratings, I don’t see that there will be an appetite for a defenestration or coronation. If I’m right then Starmer becomes our next PM.
Yes, because at the back end of that scenario is Liz Truss leading a Tory GE campaign in 2024.
Tories, ask yourself, is that what you really want?
The other thing Tory MPs have to bear in mind is that even if Hunt does a stellar job as Chancellor, gets the markets back on side, manages to thread a route through rising taxes and cutting services, puts the economy on an even keel - the voters still won't give Liz Truss a second longer in office.
Get rid now and have a Cabinet that are getting on with the job like Hunt, under a PM who has no personal radical agenda to change Britain with their half-baked ideas. Once that is in place, Tory fortunes should improve markedly.
Especially as Starmer might be a clean skin but offers little else by way of answers to Britain's problems. Sure, he won't be as bad as Truss. But he still might underwhelm. Come the election in 2 years, that will all need to be weighed in the balance.
So the priority is; calm the markets, win another majority, keep the gravy train on the track.
NO. The Tories still have to go into oppsition. What Hunt might do is convert a decimation scenario into a mere rout instead. No one is questioning the need for destruction, just how far the rubble flies....
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
BTL landlords are going to exit the market and... demolish their houses in a fit of pique? Leave the houses empty whilst still paying their mortgages?
No. Those houses will still exist. They may be sold at a loss if the landlords cannot cover their costs which would add to the (overdue) market correction.
A dream I am afraid, any government causing a market correction is doomed. Doomed I say.
Though he didn’t say so in these exact words Chancellor Hunt’s message to Sky News was clear — prepare for major real terms spending cuts (and maybe further tax rises too). Trussonomics, such as it was, is dead.
I thought that - except that Truss has promised no spending cuts, and she’s still supposed to be in charge. Which suggests the first phase at least is going to be some surprise tax rises.
The triple lock could go, saving a lot of money - does that count as a spending cut?
I agree on the triple lock but realistically the burden of cuts ought to fall everywhere - less harshly on the poorest but there needs to be some pain for all - it's the only way to avoid the howls of the aggrieved on the news programmes with the nodding head of the la 'Burleys' et al...
I will be really miffed if I don't get my 10% pension increase
That raises the intriguing possibility that there are times when you're *not* really miffed at something.
Ydoether , you malign me, I am actually a happy go lucky chappie. I have led a lucky interesting very happy life and hope I have many happy years to go. In reality I am very cheery.
Well, we all hope you have many happy years to go Malc, but will the turnip supply hold out that long?
Ydoethur , there will always be turnips as long as there are Tories around, inedible mind you.
There's always going to be a place for a centre-right party in British politics.
And the sooner the Conservatives get back there, the better!
Agreed. But the only way that will happen is if the cabal who have taken it over, and the membership who have enabled it are somehow displaced. I can't see the next generation of aspirant center right politicians looking to the Conservative party to further their ends.
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
In the USA mortgages are fixed for the lifetime of the loan, and also much less of an issue with negative equity for individuals. Simply hand back the keys and it is the banks problem.
I don't think that's right? There was plenty of talk in US media about the problem of rising rates for existing mortgage holders?
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
The good news for the US is they ditched Adjustable rate mortgages (ARM’s) after 2008, so existing homeowners almost always have their existing rates locked in for the long term. The new, much higher rates will generally only affect new purchases.
Brits aren’t so lucky.
Our mortgages are heavily skewed towards 2 and 5 year fixes.
Luck? Lack of foresight. There is no reason why it could not be done here.
That might not be a good thing for party or country if it means a return to austerity.
The public has had absolutely enough of austerity. It had had enough of it years ago. But lo, here comes Osborne 2.0.
The central conundrum of British politics is now that the only way to afford the level of spending, on health, social protections, schools and everything else, that people expect and demand is through punishingly higher taxes, directed in particular at assets rather than earnings. But such a radical change of approach will entail a binning of the entire post-1979, property speculation model of economic development, and create an awful lot of losers (particularly amongst the homeowning grey vote, which is huge and has a high turnout rate.) Which raises serious doubts about the willingness of any Government actually to do it.
But the homeowning grey vote doesn't vote for Labour to any great extent so policies which target that group wouldn't hurt them as it might the Tories. It's almost a free hit so if I were them I'd take the shot.
Accounting for propensity to turn out, about half of the entire electorate is aged over 55, and the bulk of them will be outright owner-occupiers or paying off the last few years of their mortgages. The older ones in particular will also have expectant heirs waiting to receive a huge windfall when they shuffle off.
The Opposition is going to have to peel a substantial chunk off that vote to take over. And they're allergic to anything - property taxes, IHT, wind turbines, new housing estates - that might interfere with the accumulation (via eternally inflating house prices) and successful transmission of inherited wealth. That's awkward for Labour.
I think it’s way too simplistic to treat all over-55 property owners the same. Of course, some don’t want property taxes, IHT, wind turbines etc., but plenty will support that. Plenty are aware of their children’s struggles to get on the property ladder, plenty care about their grandchildren’s education, and a huge proportion also care about there being a well-funded healthcare system.
And if you want to get on the property ladder in London and the Home counties and are on an average income receiving an inheritance or gift from your parents or grandparents is a huge step towards that and getting a deposit
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
BTL landlords are going to exit the market and... demolish their houses in a fit of pique? Leave the houses empty whilst still paying their mortgages?
No. Those houses will still exist. They may be sold at a loss if the landlords cannot cover their costs which would add to the (overdue) market correction.
A dream I am afraid, any government causing a market correction is doomed. Doomed I say.
Yes, we do remember that by Scottish standards, Private Fraser could be described as "cheery"
class="Quote" rel="stjohn">If the market steadies and Tory polling fortunes improve alongside a modest improvement in Truss personal approval ratings, I don’t see that there will be an appetite for a defenestration or coronation. If I’m right then Starmer becomes our next PM.
PMQs will be interesting. Could we have the organ grinder please?
The Kwarteng chancellorship was a major Cambridge University fail. The crème brûlée and Great Court Run college in particular. Re-establish the monasteries and give them their assets back?
Creme Brulee is Caius, not arriviste Trinity Burnt Cream.
In another universe, Thatcher fell in 1980 and was replaced by Ted Heath. That’s what’s happened this week. Albeit a pound shop Thatcher being replaced by a pound shop Heath.
Lt. Gov Mandela Barnes (D) said Sen. Ron Johnson (R) is a "family man."
Johnson said Barnes is "against America."
The audience booed Johnson.
Too stupid to come up with praise that is actually an insult, too petty to genuinely praise, and too silly to not just reach for an insincere cliche.
Surely "against America" is an insult, given the context?
Yes, but he was asked and was supposed to say something he found admirable, hence the need to show cleverness to disguise the insult through fake praise.
Simply insulting went against the premise of the question.
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
BTL landlords are going to exit the market and... demolish their houses in a fit of pique? Leave the houses empty whilst still paying their mortgages?
No. Those houses will still exist. They may be sold at a loss if the landlords cannot cover their costs which would add to the (overdue) market correction.
A dream I am afraid, any government causing a market correction is doomed. Doomed I say.
Doomed they may be but they are still putting in place the foundations for a market correction. (Through incompetence rather than design, obviously, but it still counts.)
Mr. Jonathan, it's not a zombie government. It's more like a ship in which the pilot knows (or seems to) what he's doing and the captain serves an ornamental purpose.
It's a zombie government, because while there's now a ship's master who can prevent it from sinking, the only thing the crew can decide on is that they can't sail onto the reefs the captain was aiming at, but they've no idea what to do instead.
It's a shame that there is no way to force an early general election in this situation. Two years of stasis is better than the disaster Truss was precipitating, but it's still two years wasted.
In the UK we’ve reached the end point of Johnson “cake and eat it” era. Truss was peak cakeism: tax cuts, but no spending cuts, ignore inflation, ignore the markets - make the problems go away with patriotic rhetoric and fantasies about future growth. Painful reality begins today
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
The good news for the US is they ditched Adjustable rate mortgages (ARM’s) after 2008, so existing homeowners almost always have their existing rates locked in for the long term. The new, much higher rates will generally only affect new purchases.
Brits aren’t so lucky.
Our mortgages are heavily skewed towards 2 and 5 year fixes.
Luck? Lack of foresight. There is no reason why it could not be done here.
From what I can tell, it would require some major changes at the back end of the mortgage market.
We’d need a Fannie Mae / Freddie Mac setup and/or the BoE to buy long dated mortgage backed securities.
I’m out of my depth here, though!
Does anyone on PB actually know how the US mortgage market works, in comparison to the UK?
Why can’t we have 25 year fixed rate mortgages, on decent terms, like the yanks?
Hunt was sober and articulate on the radio. He was also advocating managerial decline. I’m not sure Tories in their heart will buy the medicine.
How is balancing the books "managerial decline"?
Given they have been living on credit since end of WWII it means what it says, draw your belt in and no money to spend. Smug Tories will not be insulated from the shitfest to come.
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
The good news for the US is they ditched Adjustable rate mortgages (ARM’s) after 2008, so existing homeowners almost always have their existing rates locked in for the long term. The new, much higher rates will generally only affect new purchases.
Brits aren’t so lucky.
Our mortgages are heavily skewed towards 2 and 5 year fixes.
You seem to be working on the premise that this is a good idea but it simply isn't. If you have a fixed mortgage from even 6 months ago you are irredeemably stuck. You cannot move, cannot take that great new job in Texas, probably cannot sell your house for as much as paid for it because borrowing multiples have decreased and are facing economic ruin if you lose your current job.
One of our many structural problems in this country is the lack of mobility. Selling and buying houses costs literally thousands so people are reluctant to move. The stamp duty taxes, energy efficiency certificates and the like make this even more difficult so we end up with pockets of unemployment and pockets of severe shortages of labour. We try to compensate by spending significant parts of our day commuting but with current fuel costs and the chaos on the railway network that is becoming ever less viable. Amercia is creating its own problems in this regard and it will be something they regret.
I’m beginning to think the appointment of Hunt is inspired. Yes it’s a complete reversal by Truss. But finally it feels like we have a grown up in government. The fingers of the ERG mob are being wrested off the steering wheel.
And that feeling is why Truss is safe to the new year.
In another universe, Thatcher fell in 1980 and was replaced by Ted Heath. That’s what’s happened this week. Albeit a pound shop Thatcher being replaced by a pound shop Heath.
Thatcher was only able to do what she did after 5 years of high inflation and high tax and frequent strikes under the 1974 to 1979 Labour government after a similar story with the Heath government before.
It takes a failing Labour government for Thatcherite economics to be given a hearing, 12 years into a Tory government and one that was elected on a One Nation platform was not the time for it.
“For a certain type of bureaucratic mind, this current confusion is proof that politicians should be kept out of all this. As if on cue yesterday, the Social Market Foundation declared that “decisions over government borrowing should be taken away from politicians and put in the hands of independent experts to restore confidence in the UK economic framework”. It may not realise that such a policy would remove the original purpose of parliamentary democracy, which is to allow citizens power over how much of their money governments spend.
“The pickle we are in is not the consequence of the democratic process, but of its usurpation by central banks, global banks, bureaucracies and international financial institutions, in which too many political leaders have been complicit. The Truss Government did not do the damage: it merely rushed blindly forward on to the trip-wire set for it by the Blob.”
Baron Moore was the one who talked a pissed Johnson into doing Saving Private Paterson so we'll treat his nostrums with the lack of accord they merit.
If the market steadies and Tory polling fortunes improve alongside a modest improvement in Truss personal approval ratings, I don’t see that there will be an appetite for a defenestration or coronation. If I’m right then Starmer becomes our next PM.
We don't have a presidential system, but we do have a system where the person in charge is supposed to be the PM, not the Chancellor.
She can't do a press conference, or go to a summit. Even PMQs is going to be brutal.
"To ask the Prime Minister what the Chancellor thinks about this..."
It got her through the day. Probably the weekend. Still not sure it lasts more than a week.
You must have read anecdotes about Gordon Brown keeping his budget plans secret from Tony Blair, and they lasted 10 years.
“For a certain type of bureaucratic mind, this current confusion is proof that politicians should be kept out of all this. As if on cue yesterday, the Social Market Foundation declared that “decisions over government borrowing should be taken away from politicians and put in the hands of independent experts to restore confidence in the UK economic framework”. It may not realise that such a policy would remove the original purpose of parliamentary democracy, which is to allow citizens power over how much of their money governments spend.
“The pickle we are in is not the consequence of the democratic process, but of its usurpation by central banks, global banks, bureaucracies and international financial institutions, in which too many political leaders have been complicit. The Truss Government did not do the damage: it merely rushed blindly forward on to the trip-wire set for it by the Blob.”
Baron Moore was the one who talked a pissed Johnson into doing Saving Private Paterson so we'll treat his nostrums with the lack of accord they merit.
Not that something else would not have emerged, but Moore should really reflect on how he lit the match on this government all because he and Paterson are arrogant, entitled shits.
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
In the USA mortgages are fixed for the lifetime of the loan, and also much less of an issue with negative equity for individuals. Simply hand back the keys and it is the banks problem.
I don't think that's right? There was plenty of talk in US media about the problem of rising rates for existing mortgage holders?
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
The good news for the US is they ditched Adjustable rate mortgages (ARM’s) after 2008, so existing homeowners almost always have their existing rates locked in for the long term. The new, much higher rates will generally only affect new purchases.
Brits aren’t so lucky.
Our mortgages are heavily skewed towards 2 and 5 year fixes.
You seem to be working on the premise that this is a good idea but it simply isn't. If you have a fixed mortgage from even 6 months ago you are irredeemably stuck. You cannot move, cannot take that great new job in Texas, probably cannot sell your house for as much as paid for it because borrowing multiples have decreased and are facing economic ruin if you lose your current job.
One of our many structural problems in this country is the lack of mobility. Selling and buying houses costs literally thousands so people are reluctant to move. The stamp duty taxes, energy efficiency certificates and the like make this even more difficult so we end up with pockets of unemployment and pockets of severe shortages of labour. We try to compensate by spending significant parts of our day commuting but with current fuel costs and the chaos on the railway network that is becoming ever less viable. Amercia is creating its own problems in this regard and it will be something they regret.
Energy certificates is a bizarre one to include in that list. Sure, they could be abolished but they cost £80. The real costs of moving are: estate agents, solicitors, stamp duty. Typically several £1000s for each of those.
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
In the USA mortgages are fixed for the lifetime of the loan, and also much less of an issue with negative equity for individuals. Simply hand back the keys and it is the banks problem.
The position on that seems to vary from state to state. A couple of years ago I had the job of enforcing a decree for the shortfall on some fabulous holiday home people and been conned into buying whilst on holiday in Florida (and were no doubt plied with drink). The house had been repossessed and sold at auction for almost nothing, literally a couple of thousand dollars and the lender was looking to recover the shortfall in Scotland. The defenders claimed they had been told that they could just hand back the keys but that proved not to be correct. Whether that was because it was a second home I am not entirely sure but the decree was enforced here.
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
A Labour perspective. I listened to Hunt on R4 this morning, and breathed a huge sigh of relief. Here was somebody who was measured, calm, sensible, intelligent and courteous. While I didn't agree with much of what he said, I had no argument with the tenor or the plausibility of his argument.
My huge sigh of relief, of course, stems from the fact that the Tory party, MPs and members, didn't think the same as me over the summer and offer up a worthwhile opponent to Labour. Instead, they chose to be seduced by the policies of right-wing fanatics (even Sunak joined in in the later stages of his campaign). It's too late now - I don't think they can undo the damage caused by the Truss/Kwarteng/Braverman/Mogg accession to power (which Hunt has already undermined in one round of interviews).
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
Very badly. But not quite as badly as Truss & Kwarteng.
In another universe, Thatcher fell in 1980 and was replaced by Ted Heath. That’s what’s happened this week. Albeit a pound shop Thatcher being replaced by a pound shop Heath.
Freeland rightly points to the other elephant in the Tory room - the death of sovereignty. Brexit was all about Take Back Control. We could do what we like. We held all the cards. We are so important.
What KT vs the markets demonstrated was the stupidity of that argument. We have been humiliated on a global scale and our arrogant exceptionalism has been slapped down by a global community who refused to play along any longer.
I'm sure that Brexit will still keep popping its head above the Tory parapet, but politically it's now dead. People won't be in fear of voters who have had a very expensive demonstration of our lack of power over foreigners. We all work together or we know what happens
I just read that article of Freeland and he hits the nail on the head. Those like Casino who believe that Brexit and those politicians that visited it upon us have nothing to do with the shambles we are in need to give their heads a wobble.
If the market steadies and Tory polling fortunes improve alongside a modest improvement in Truss personal approval ratings, I don’t see that there will be an appetite for a defenestration or coronation. If I’m right then Starmer becomes our next PM.
I don't believe the Tories will now allow Loopy Liz to lead them into a GE
Now the basic rate income tax cut to 19p feels like the next U turn. Hunt tells @BBCr4today "I very much hope we can keep that" but won't make decision yet. The mini Budget filleted again.
I hope he junks that (for one, the maths is highly irritating) and instead increases the personal allowance.
I think this will be what is done. What would it have to be raised to to be tax neutral, what point to save 5 billion ?
I expect Hunt to spunk money at the NHS which might, say, trim waiting lists from 7 million to 5 million by the time of the next election and still leave it hungry for more - with virtually no credit given to him.
Will still happen though.
Some of the stuff in his recent book on the NHS was actually quite sensible. He seems to have learned from his time as Health Sec.
The numbers are too grim for money to make much difference this winter, particularly on staffing, beds (which is really also about staffing) and Social Care.
Meanwhile our Health Secretary is telling Nurses to find better jobs:
Is it any more sophisticated than "it needs a lot more money" ?
Everyone should add Jeremy Hunt's book Zero to their Christmas list. It is about the need to eliminate avoidable errors in the NHS. Alternatively, it is a series of mea culpas for the things he got wrong as Health Secretary. He might be right about both.
In another universe, Thatcher fell in 1980 and was replaced by Ted Heath. That’s what’s happened this week. Albeit a pound shop Thatcher being replaced by a pound shop Heath.
Thatcher was only able to do what she did after 5 years of high inflation and high tax and frequent strikes under the 1974 to 1979 Labour government after a similar story with the Heath government before.
It takes a failing Labour government for Thatcherite economics to be given a hearing, 12 years into a Tory government and one that was elected on a One Nation platform was not the time for it.
So in your model it currently 1972-3, with the Tories creating inflation, economic chaos and taxes that in our universe ultimately lead to Thatcher. But with in this case Thatcher succeeding Heath early after a scandal, tried her 1980 agenda in 1973, failing and discrediting the whole right wing approach for a generation. Interesting.
A Labour perspective. I listened to Hunt on R4 this morning, and breathed a huge sigh of relief. Here was somebody who was measured, calm, sensible, intelligent and courteous. While I didn't agree with much of what he said, I had no argument with the tenor or the plausibility of his argument.
My huge sigh of relief, of course, stems from the fact that the Tory party, MPs and members, didn't think the same as me over the summer and offer up a worthwhile opponent to Labour. Instead, they chose to be seduced by the policies of right-wing fanatics (even Sunak joined in in the later stages of his campaign). It's too late now - I don't think they can undo the damage caused by the Truss/Kwarteng/Braverman/Mogg accession to power (which Hunt has already undermined in one round of interviews).
Is this the same Hunt whose leadership campaign was based around not to just keep corporation tax at 19% instead of 25% but to cut it to 15%? And wanted Esther McVey as Deputy PM to bring broad appeal?
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
In the USA mortgages are fixed for the lifetime of the loan, and also much less of an issue with negative equity for individuals. Simply hand back the keys and it is the banks problem.
I don't think that's right? There was plenty of talk in US media about the problem of rising rates for existing mortgage holders?
Now the basic rate income tax cut to 19p feels like the next U turn. Hunt tells @BBCr4today "I very much hope we can keep that" but won't make decision yet. The mini Budget filleted again.
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
You could bypass the ERG if Truss cooperated: she stays Tory party leader so there's no vacancy, but tells Charles to ask Hunt to form a government.
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
It can't work for long. If nothing else, most of the Cabinet is made up of Trussites who liked Truss's original lala agenda. It's all very well saying "taxes up, spending down" but I don't forsee agreement on what that looks like.
But it buys the PM a bit more time and was probably the only move open to her without resigning herself.
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
The good news for the US is they ditched Adjustable rate mortgages (ARM’s) after 2008, so existing homeowners almost always have their existing rates locked in for the long term. The new, much higher rates will generally only affect new purchases.
Brits aren’t so lucky.
Our mortgages are heavily skewed towards 2 and 5 year fixes.
You seem to be working on the premise that this is a good idea but it simply isn't. If you have a fixed mortgage from even 6 months ago you are irredeemably stuck. You cannot move, cannot take that great new job in Texas, probably cannot sell your house for as much as paid for it because borrowing multiples have decreased and are facing economic ruin if you lose your current job.
One of our many structural problems in this country is the lack of mobility. Selling and buying houses costs literally thousands so people are reluctant to move. The stamp duty taxes, energy efficiency certificates and the like make this even more difficult so we end up with pockets of unemployment and pockets of severe shortages of labour. We try to compensate by spending significant parts of our day commuting but with current fuel costs and the chaos on the railway network that is becoming ever less viable. Amercia is creating its own problems in this regard and it will be something they regret.
Energy certificates is a bizarre one to include in that list. Sure, they could be abolished but they cost £80. The real costs of moving are: estate agents, solicitors, stamp duty. Typically several £1000s for each of those.
It is not the cost of the certificates, it is the cost of the work those certificates will entail. Certainly in Scotland it is going to become illegal to sell properties with the lowest scores, forcing the sellers to carry out insulation works etc. These policies would already be in force but were suspended because of Covid but they will be back.
Now the basic rate income tax cut to 19p feels like the next U turn. Hunt tells @BBCr4today "I very much hope we can keep that" but won't make decision yet. The mini Budget filleted again.
I hope he junks that (for one, the maths is highly irritating) and instead increases the personal allowance.
I think this will be what is done. What would it have to be raised to to be tax neutral, what point to save 5 billion ?
I expect Hunt to spunk money at the NHS which might, say, trim waiting lists from 7 million to 5 million by the time of the next election and still leave it hungry for more - with virtually no credit given to him.
Will still happen though.
Some of the stuff in his recent book on the NHS was actually quite sensible. He seems to have learned from his time as Health Sec.
The numbers are too grim for money to make much difference this winter, particularly on staffing, beds (which is really also about staffing) and Social Care.
Meanwhile our Health Secretary is telling Nurses to find better jobs:
Is it any more sophisticated than "it needs a lot more money" ?
Everyone should add Jeremy Hunt's book Zero to their Christmas list. It is about the need to eliminate avoidable errors in the NHS. Alternatively, it is a series of mea culpas for the things he got wrong as Health Secretary. He might be right about both.
Is it a rehash of Matthew Syed's Black Box Thinking?
Within minutes of the announcement that she had made it to the final two in the Tory leadership contest in July, Liz Truss sent Tory MPs a message on social media.
“Thank you for putting your trust in me,” she tweeted. “I’m ready to hit the ground from day one.” Her post was quickly deleted and the word “running” was added in.
But her initial message could not have been more prescient.
"Get on the property ladder" is such a bankers' (and as a corollary, estate agents') term. Why not just say "own your own house"?
Because you get a ponzi scheme with your home. Why else pay £500k for a one bed flat in a not particularly nice part of London, and not really any different to that you would get from the state if you were really poor?
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
A Labour perspective. I listened to Hunt on R4 this morning, and breathed a huge sigh of relief. Here was somebody who was measured, calm, sensible, intelligent and courteous. While I didn't agree with much of what he said, I had no argument with the tenor or the plausibility of his argument.
My huge sigh of relief, of course, stems from the fact that the Tory party, MPs and members, didn't think the same as me over the summer and offer up a worthwhile opponent to Labour. Instead, they chose to be seduced by the policies of right-wing fanatics (even Sunak joined in in the later stages of his campaign). It's too late now - I don't think they can undo the damage caused by the Truss/Kwarteng/Braverman/Mogg accession to power (which Hunt has already undermined in one round of interviews).
Is this the same Hunt whose leadership campaign was based around not to just keep corporation tax at 19% instead of 25% but to cut it to 15%? And wanted Esther McVey as Deputy PM to bring broad appeal?
Fair point - yes, he joined in with the rush to the right as well, to win Tory votes, and may even have believed what he said. But, regardless, he sounded very good, and plausible, in the interview this morning. Not a headbanger.
A Labour perspective. I listened to Hunt on R4 this morning, and breathed a huge sigh of relief. Here was somebody who was measured, calm, sensible, intelligent and courteous. While I didn't agree with much of what he said, I had no argument with the tenor or the plausibility of his argument.
My huge sigh of relief, of course, stems from the fact that the Tory party, MPs and members, didn't think the same as me over the summer and offer up a worthwhile opponent to Labour. Instead, they chose to be seduced by the policies of right-wing fanatics (even Sunak joined in in the later stages of his campaign). It's too late now - I don't think they can undo the damage caused by the Truss/Kwarteng/Braverman/Mogg accession to power (which Hunt has already undermined in one round of interviews).
Is this the same Hunt whose leadership campaign was based around not to just keep corporation tax at 19% instead of 25% but to cut it to 15%? And wanted Esther McVey as Deputy PM to bring broad appeal?
Fair point - yes, he joined in with the rush to the right as well, to win Tory votes, and may even have believed what he said. But, regardless, he sounded very good, and plausible, in the interview this morning. Not a headbanger.
Yes he looks and sounds the part. From working in the city briefly tall, posh people who look and sound the part can be quite dangerous, as people don't realise their limitations until too late.
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
I have zero seconds available to excuse the appaling shambles of the Liz Truss premiership. She has to go. However, I dispute the notion that all of the country's travails can be laid completely at the dorrs of the politicians. Disfuncionality is endemic in the politics , press, institutions and too many of its voters. This is rooted in an unwillingness to accept any notion of the need to take difficult decisions or to deny any interest group their bounty of taxpayers funds. The country is broke and it cannot be fixed by redistribution here or extra cash there. By blaming greedy pensioners here or lazy scroungers there. Sadly the voters do not want to know the hard truth and this is a key reason why we have such crap politicians. Labour will likely win big next time and D-ream will once again top the charts - only things will not get better for long. We all know it but no-one dares to say it.
It is difficult to conclude that we are not a nation in decline, along with much of the west and politics is now really about who gets to suffer most/least from that decline.
Although I know you won't agree with me but Brexit was another desperate throw of the dice to try to pretend there was an easy solution. I understand why people voted for it in the hope of "levelling up" and not being left behind but it's pretty clear already that that was an illusion and their plight is actually going to get worse.
Hope you are well by the way, I noticed you didn't seem to be posting for quite a while until recently. As least you have nice weather to ease the pain!
Thank you - there were good reasons which I won't go into. BTW I voted Remain - - little love for the EU but both selfishly and otherwise it was a mistake to leave and adds to our current problenms now. Thge search for easy solutions sadly goes way beyond Brexit and is being fed on with vigour by the journo hacks today as the wailing against the 'cuts' gathers speed. One thing you are right about - the weather here is glorious - 27+ degrees and full sun - a great help in otherwise difficult times,
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
It'll be over on Monday.
I reckon so. You can’t have her front the government up - particularly one that needs to regain the perception of competence and explain clearly what they’re doing. She’s the worse communicator we’ve have as PM (I believe most on here could see that, though others promised she would surprise on the upside)
A Labour perspective. I listened to Hunt on R4 this morning, and breathed a huge sigh of relief. Here was somebody who was measured, calm, sensible, intelligent and courteous. While I didn't agree with much of what he said, I had no argument with the tenor or the plausibility of his argument.
My huge sigh of relief, of course, stems from the fact that the Tory party, MPs and members, didn't think the same as me over the summer and offer up a worthwhile opponent to Labour. Instead, they chose to be seduced by the policies of right-wing fanatics (even Sunak joined in in the later stages of his campaign). It's too late now - I don't think they can undo the damage caused by the Truss/Kwarteng/Braverman/Mogg accession to power (which Hunt has already undermined in one round of interviews).
Is this the same Hunt whose leadership campaign was based around not to just keep corporation tax at 19% instead of 25% but to cut it to 15%? And wanted Esther McVey as Deputy PM to bring broad appeal?
Fair point - yes, he joined in with the rush to the right as well, to win Tory votes, and may even have believed what he said. But, regardless, he sounded very good, and plausible, in the interview this morning. Not a headbanger.
Presentation isn't everything, but if you are not good at it you need subordinates who are.
Hunt is a bit of a chimera, but presentationally he was always smooth. Dr Foxy always said we'd had worse Health Secretaries.
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
Their power is heavily correlated with how much we want to borrow from them.
Just like a bank can scrutinise your spending habits line by line if you want to borrow a few hundred £k from them to buy a house but are not interested in you if you are saving or have a small credit card.
The "markets" are basically foreign governments, institutions, companies and people lending money to us. We want to borrow multiple shedloads of money. That makes the markets powerful.
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
If you have a big surplus and the economy is growing you don't need to worry much what the markets think.
If you have a big deficit and might need to borrow and the economy is sluggish then you do
Hunt is a very good step back towards basic competence but there is a long way to go. There is precious little talent available in politics these days in any party and the Tories are no exception. They urgently need to get rid of the nutters and the incompetents and make the best of what they have got. So goodbye Braverman, JRM and Coffey, welcome back Sunak, Gove and the Saj.
Such a government will be a long way from perfect, they will still face a horribly difficult situation with, all too often, no good options, only less bad ones and they will still make mistakes. But at least it would be a government. To me, who doesn't have a bet on this, that is more important than whether Truss stays or goes. We need proper cabinet government, not government by wish fulfilment and untested beliefs. Only then can we hope to move back from obsessing on hourly movements in the market to the issues which are undermining our performance and are of long standing.
That might not be a good thing for party or country if it means a return to austerity.
He has to start from where he is.
Sure, nobody wants austerity but if that's what it takes to calm the markets, so be it. After that he can inch his way forward. It's not going to be fun, but neither is living in La-La Land, where we have dwelt for too long.
I'm not so sure that many in Govt/politics really understands what "calms the markets". Or what things that happen in the markets are actually things that need to be feared. Is there not a case that what really spooked things around the mini budget was the lack of forecasts, rather than any particular aspect of the measures themselves? This underpinned a message that the markets could make their own judgements on what would happen in future, but importantly, they didn't know what the Government was aiming for and/or expecting.
Nobody expects forecasts to be correct all the time but they do set a framework within which the Government is expecting to operate. Because that also gives an indication of how they will respond if things go better or worse than expected in future. But if nobody knows what the Government's assumptions and aims are then everyone is guessing about everyone other than the short term.
As for public sector austerity. Well it's la-la land. Trying to implement it, doesn't make it any less so. Trouble is what is probably at least in part needed is an assumption that living standards will fall. Just because inflation is at 10% doesn't mean that everybody needs a 10% payrise to keep up. Not everyone in the country is living on the breadline where their income must keep pace with (average) inflation or they can't feed themselves. The insistent of every special interest group that they must get a pay rise to fully make up the difference is silly. But the trouble is that the public can see so many at the top end over the last few years raking it in, that they won't restraint any more.
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
You could bypass the ERG if Truss cooperated: she stays Tory party leader so there's no vacancy, but tells Charles to ask Hunt to form a government.
Then Farage would see a quicker revival than Lazarus if the voters who elected Boris with an 80 seat majority in the 2019 general election ended up with Remainer Hunt as PM, Boris' defeated rival in the 2019 Tory leadership contest, leading a technocratic government.
Hunt is there to stabilise the Treasury, not to completely take over the whole government
Re the Header, I agree. For the sake of our democracy and of standards in government and political life the Tories simply have to go into opposition for a period. That's regardless of whether and when Truss is replaced and by who, and regardless of what policy platforms emerge from them or the other parties. The malaise is beyond personalities and policies, something in the core has gone bad.
One lesson from this weekend is that the "libertarian" narrative from some quarters was a lie - a knowing lie, given the commitment to increase cash for the NHS, that behemoth of government spending. Rather, Truss is just unprincipled, as people should have guessed from her life in politics. But fixing the people in government does not end the war, or reduce interest rates, or increase the working-age population, or relieve skilled workers and mobile employers from the constant growth in their tax burdens in the UK.
Hunt is a very good step back towards basic competence but there is a long way to go. There is precious little talent available in politics these days in any party and the Tories are no exception. They urgently need to get rid of the nutters and the incompetents and make the best of what they have got. So goodbye Braverman, JRM and Coffey, welcome back Sunak, Gove and the Saj.
Such a government will be a long way from perfect, they will still face a horribly difficult situation with, all too often, no good options, only less bad ones and they will still make mistakes. But at least it would be a government. To me, who doesn't have a bet on this, that is more important than whether Truss stays or goes. We need proper cabinet government, not government by wish fulfilment and untested beliefs. Only then can we hope to move back from obsessing on hourly movements in the market to the issues which are undermining our performance and are of long standing.
Absolutely. Let's have Rishi as PM. Let's see if Hunt can provide some sensible financially prudent policies. Bring back other sensible people into the Cabinet. Let's have the GE in 2023/2024. CON will still lose but will retain a reasonable number of seats maybe 225 and can rebuild in opposition.
There seems to be an assumption that Sunak would again lose a members vote - if it went to one.
But is that right? He got 43% last time. He would surely do better for two reasons:
1) The economic failure of the last few weeks and Sunak being proved right about what would happen.
2) The last few weeks would make members more risk averse - ie more inclined to choose whoever MPs put first and also more sceptical about anyone who doesn't obviously have the stature of a PM.
He only needs another 7% and I would have thought he would have every chance of getting it - certainly against someone like Braverman who would feel like a similar candidate to Truss.
Indeed the LDs provided a very good example of point 2) with Davey losing to Swinson but then beating Moran the following year - ie the first attempt went badly wrong so they then went for the safe option next time.
The “safe option” has seen the LibDems marooned on 9%ish in the polls right now despite a massively unpopular Tory government.
That's a very misleading 9%.
If there were a GE now there would be tactical voting on a massive scale and the LDs would easily make it to 25 or more seats. That might actually be more than the Conservatives.
Btw, Swinson wasn't a bad General, just an unlucky one. The LDs were caught in a classic squeeze. Nobody dared vote LD for fear of Corbyn.
The worry for the LibDems right now, I think, is that parts of the Blue Wall might just leap straight to Labour rather than the LDs. I can potentially see that happening where I live (Witney) although, sadly, the most likely outcome is a Lab/LD split allowing the useless incumbent Tory (Robert Courts) to retain his seat.
(Walls can’t leap, can they?)
They won't make much impression in the North, but I should have thought Witney was a definite maybe at the next GE.
I certainly share @El_Capitano concern. The LDs need to at least get over 15% in the polls before the start of the election and some decent media.
Not sure.
Electoral Calculus is indicating that whilst the LDs are polling less than were at the last GE, they are predicted to get substantially more seats.
It's a difficult one to call though.
I agree, but I am concerned there will be a lot of seats that Labour will jump from 3rd place to win and also seats where because Labour are very confident and buoyant there won't be enough tactical voting and the Tory will hold on with a horrible split vote between Lab and LD.
So yes I think (as things currently stand) the LDs will make lots of gains, but the potential is there for so, so much more if they were in the 15 - 20% range now, which I guess is pretty obvious, but I mean more than the pro rata extra.
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
If you have a big surplus and the economy is growing you don't need to worry much what the markets think.
If you have a big deficit and might need to borrow and the economy is sluggish then you do
Politically you can see how a Brexit government could make a policy of sound money work for them - taking back control from the foreign money markets by living within our means. It's difficult when Brexit has been sold as the route to the land of milk and honey, but it makes more sense then blindly tax-cutting with borrowed money.
Hunt was sober and articulate on the radio. He was also advocating managerial decline. I’m not sure Tories in their heart will buy the medicine.
How is balancing the books "managerial decline"?
It means us all accepting less, higher taxes and weaker services. It means taking money out the economy. It means accepting the reality that we are all a lot poorer than we thought.
Nonsense. Solvency is the only chance we have for a brighter future.
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
James Carville, Bill Clinton's main advisor/spinner, often called the Ragin Cajun, famously said:
"I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or as a 400 basball hitter. But now I would like to come back as the bond market. You can intimidate everybody."
Hunt was sober and articulate on the radio. He was also advocating managerial decline. I’m not sure Tories in their heart will buy the medicine.
How is balancing the books "managerial decline"?
It means us all accepting less, higher taxes and weaker services. It means taking money out the economy. It means accepting the reality that we are all a lot poorer than we thought.
That sounds like the Anti-Growth Coalition talking.
Quite, Hunt is the anointed leader of the AGC.
What a surprise that as soon as you sense a new prospective Tory leader the attack dogs come out.
In another universe, Thatcher fell in 1980 and was replaced by Ted Heath. That’s what’s happened this week. Albeit a pound shop Thatcher being replaced by a pound shop Heath.
Thatcher was only able to do what she did after 5 years of high inflation and high tax and frequent strikes under the 1974 to 1979 Labour government after a similar story with the Heath government before.
It takes a failing Labour government for Thatcherite economics to be given a hearing, 12 years into a Tory government and one that was elected on a One Nation platform was not the time for it.
So in your model it currently 1972-3, with the Tories creating inflation, economic chaos and taxes that in our universe ultimately lead to Thatcher. But with in this case Thatcher succeeding Heath early after a scandal, tried her 1980 agenda in 1973, failing and discrediting the whole right wing approach for a generation. Interesting.
Thatcher however also pursued tight fiscal discipline in her early years giving her the room for tax cuts.
However it all depends how the likely next Starmer government plays out. If the economy booms, inflation falls, there is peace in Ukraine and the unions are relatively quiet then Labour are likely to be in power and the Conservatives in opposition for a decade or more, as was the case with New Labour and Blair and Brown post 1997.
If however a Starmer government leads to recession, continued high inflation, unions striking regularly and pushing taxes up ever higher then the road will be open for a Thatcherite Conservative Leader of the Opposition to have a chance at the subsequent general election as Thatcher did in 1979 after the economic chaos of the 1974 to 1979 Wilson and Callaghan government
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
James Carville, Bill Clinton's main advisor/spinner, often called the Ragin Cajun, famously said:
"I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or as a 400 basball hitter. But now I would like to come back as the bond market. You can intimidate everybody."
He was right.
It's completely fine to ignore bond markets on one condition - your government doesn't want to pay voters more than they earn. Most governments fall into one of three categories. They threaten their own citizens with guns and terror. They dig precious minerals out of the ground or sea and sell them to foreigners. Or they borrow.
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
If you have a big surplus and the economy is growing you don't need to worry much what the markets think.
If you have a big deficit and might need to borrow and the economy is sluggish then you do
Problem is uk is unique in not just having high debt to gdp but also a massive current account deficit and massive unfunded pension liabilities
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
The good news for the US is they ditched Adjustable rate mortgages (ARM’s) after 2008, so existing homeowners almost always have their existing rates locked in for the long term. The new, much higher rates will generally only affect new purchases.
Brits aren’t so lucky.
Our mortgages are heavily skewed towards 2 and 5 year fixes.
You seem to be working on the premise that this is a good idea but it simply isn't. If you have a fixed mortgage from even 6 months ago you are irredeemably stuck. You cannot move, cannot take that great new job in Texas, probably cannot sell your house for as much as paid for it because borrowing multiples have decreased and are facing economic ruin if you lose your current job.
One of our many structural problems in this country is the lack of mobility. Selling and buying houses costs literally thousands so people are reluctant to move. The stamp duty taxes, energy efficiency certificates and the like make this even more difficult so we end up with pockets of unemployment and pockets of severe shortages of labour. We try to compensate by spending significant parts of our day commuting but with current fuel costs and the chaos on the railway network that is becoming ever less viable. Amercia is creating its own problems in this regard and it will be something they regret.
Energy certificates is a bizarre one to include in that list. Sure, they could be abolished but they cost £80. The real costs of moving are: estate agents, solicitors, stamp duty. Typically several £1000s for each of those.
It is not the cost of the certificates, it is the cost of the work those certificates will entail. Certainly in Scotland it is going to become illegal to sell properties with the lowest scores, forcing the sellers to carry out insulation works etc. These policies would already be in force but were suspended because of Covid but they will be back.
Ah right, apologies. Guilty of an anglo-centric assumption there.
Then again, not actually a current issue, from what you say.
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
If you have a big surplus and the economy is growing you don't need to worry much what the markets think.
If you have a big deficit and might need to borrow and the economy is sluggish then you do
Problem is uk is unique in not just having high debt to gdp but also a massive current account deficit and massive unfunded pension liabilities
If I am skimming a thread there are a few profile pictures that I look out for to read those contributions while I pass over the rest. Jonathan's is one, and yours is another.
There are a couple of posters whose contributions I look for who are still using the default icon, which makes them a bit harder to pick out.
Only was the Truss govt survives is if Jeremy Hunt becomes the defacto prime minister...with Truss hidden away and doing the bare minimum....in this way the conservatives could limp on a bit
Only was the Truss govt survives is if Jeremy Hunt becomes the defacto prime minister...with Truss hidden away and doing the bare minimum....in this way the conservatives could limp on a bit
At the end of the day she’ll still be PM and at the next GE will be the focal point for attacks from the opposition.
Problem with that approach is come the GE when the spotlight is on Truss and she has the joy of leader debates.
The current arrangement can only be temporary. The Tories will surely have a different leader for the GE. What it might do is to quell the immediate sense of panic, and so provide some time for the Tories to work out what they do, and under whose leadership.
Hunt certainly sounded sane but he’s not PM and he’s not going to be PM. The ERG would prevent his coronation. Meanwhile the fact that Truss is still PM is there for all to see at the despatch box every Wednesday, at every summit of international leaders. She cannot but be the public face of the Government. How is this going to work?
You could bypass the ERG if Truss cooperated: she stays Tory party leader so there's no vacancy, but tells Charles to ask Hunt to form a government.
Then Farage would see a quicker revival than Lazarus if the voters who elected Boris with an 80 seat majority in the 2019 general election ended up with Remainer Hunt as PM, Boris' defeated rival in the 2019 Tory leadership contest, leading a technocratic government.
Hunt is there to stabilise the Treasury, not to completely take over the whole government
Have the markets always been this powerful, or is it now because we just have huge amounts of debt as a country they can dictate the terms massively? Basically, any country that can’t show fiscal discipline / balance the books is fecked
The latter is an important factor - but also refresh your political history of the 1970s...
Only was the Truss govt survives is if Jeremy Hunt becomes the defacto prime minister...with Truss hidden away and doing the bare minimum....in this way the conservatives could limp on a bit
At the end of the day she’ll still be PM and at the next GE will be the focal point for attacks from the opposition.
With Hunt steadying the ship it may be possible to improve Truss performances whilst strictly limiting contact with the public...Hunt has to be on the media as much as possible so the public see him as the face of the govt
Though he didn’t say so in these exact words Chancellor Hunt’s message to Sky News was clear — prepare for major real terms spending cuts (and maybe further tax rises too). Trussonomics, such as it was, is dead.
I thought that - except that Truss has promised no spending cuts, and she’s still supposed to be in charge. Which suggests the first phase at least is going to be some surprise tax rises.
The triple lock could go, saving a lot of money - does that count as a spending cut?
I agree on the triple lock but realistically the burden of cuts ought to fall everywhere - less harshly on the poorest but there needs to be some pain for all - it's the only way to avoid the howls of the aggrieved on the news programmes with the nodding head of the la 'Burleys' et al...
I will be really miffed if I don't get my 10% pension increase
You will get your state pension increase based on next week's CPI number, and benefits etc will be updated similarly.
I don't really get why if it is so important for pensioners and those on universal credit or other benefits to get CPI, it is fine for public sector workers to get less than half CPI?
If I were in charge, I would broadly look to give all three groups a similar number, probably a bit less than CPI for most, and a bit above for the poorest.
The argument is that people receiving the pension, or disability benefits, have little opportunity to increase their income from other sources, while for those on unemployment benefits the level is already set at only a subsistence level, so to devalue these in real-terms would be particularly harsh.
Public sector workers have the opportunity to develop their career, find better paying jobs, etc, so aren't so trapped with an income declining in real terms. I can recognise a distinction there.
Of course, the consequence is that you encourage the most able public sector employees to find work elsewhere, and the quality of public services suffers.
Why do pensioners have little opportunity to increase their income nowadays? Part time jobs a plenty (tax system encourages this) and "side hustles" easier to run than ever.
Regardless, it comes down to a combination of motivating public sector workers and fairness in a once in a generation type economic shock.
Lots of them will have been in tough jobs and be absolutely knackered. Saw the other day that something like 21% of working population were off on long term sick, was an incredible number. Hence low unemployment , nobody fit to take a job.
Unfortunately a spike in mortgage rates is also likely to precipitate a spike in rents. BTL landlords will hike rents so they can still make a profit, or exit the market if they think the local market cannot support what they want to charge. The latter means reduced supply and more competition for the remaining properties.
Also, if there is a substantial rise in interest rates, they may not be able to service any mortgage costs on the properties they own.
Bloomberg were forecasting 8.5% US mortgage rates as the Fed continues to increase interest rates as they concentrate on defeating inflation
There are going to be serious consequences for mortgage holders across the west due to this policy
The good news for the US is they ditched Adjustable rate mortgages (ARM’s) after 2008, so existing homeowners almost always have their existing rates locked in for the long term. The new, much higher rates will generally only affect new purchases.
Brits aren’t so lucky.
Our mortgages are heavily skewed towards 2 and 5 year fixes.
Luck? Lack of foresight. There is no reason why it could not be done here.
From what I can tell, it would require some major changes at the back end of the mortgage market.
We’d need a Fannie Mae / Freddie Mac setup and/or the BoE to buy long dated mortgage backed securities.
I’m out of my depth here, though!
Does anyone on PB actually know how the US mortgage market works, in comparison to the UK?
Why can’t we have 25 year fixed rate mortgages, on decent terms, like the yanks?
To simplify a lot, long-term investors like pension funds do not want to take on the credit risk that 10%+ of mortgages fail at the same time. To make sure investors buy US fixed-rate mortgages, Fannie Mae and Freddie Mac buy them first, guarantee the credit risk, then sell on the guaranteed debt as securities. If credit risk were just random, this would work safely, but in the real world, crises cause systemically large numbers of households to stop repaying at the same time. Fannie and Freddie were legally non-government agencies but of course they needed hundreds of billions of dollars of bailout funds in 2008, as everyone expected them to in a huge crisis. So you need a government that will immunise the long-term investors from credit risk by taking on a few percentage points of GDP to debt when things go bad.
In another universe, Thatcher fell in 1980 and was replaced by Ted Heath. That’s what’s happened this week. Albeit a pound shop Thatcher being replaced by a pound shop Heath.
Thatcher was only able to do what she did after 5 years of high inflation and high tax and frequent strikes under the 1974 to 1979 Labour government after a similar story with the Heath government before.
It takes a failing Labour government for Thatcherite economics to be given a hearing, 12 years into a Tory government and one that was elected on a One Nation platform was not the time for it.
So in your model it currently 1972-3, with the Tories creating inflation, economic chaos and taxes that in our universe ultimately lead to Thatcher. But with in this case Thatcher succeeding Heath early after a scandal, tried her 1980 agenda in 1973, failing and discrediting the whole right wing approach for a generation. Interesting.
Thatcher however also pursued tight fiscal discipline in her early years giving her the room for tax cuts.
However it all depends how the likely next Starmer government plays out. If the economy booms, inflation falls, there is peace in Ukraine and the unions are relatively quiet then Labour are likely to be in power and the Conservatives in opposition for a decade or more, as was the case with New Labour and Blair and Brown post 1997.
If however a Starmer government leads to recession, continued high inflation, unions striking regularly and pushing taxes up ever higher then the road will be open for a Thatcherite Conservative Leader of the Opposition to have a chance at the subsequent general election as Thatcher did in 1979 after the economic chaos of the 1974 to 1979 Wilson and Callaghan government
I would caveat that it really depends how bad the Tory defeat is. They only 'just' lost in 1974.
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Tories, ask yourself, is that what you really want?
PMQs will be interesting. Could we have the organ grinder please?
Simply insulting went against the premise of the question.
It's a shame that there is no way to force an early general election in this situation. Two years of stasis is better than the disaster Truss was precipitating, but it's still two years wasted.
https://twitter.com/gideonrachman/status/1581190603593109504
We’d need a Fannie Mae / Freddie Mac setup and/or the BoE to buy long dated mortgage backed securities.
I’m out of my depth here, though!
Does anyone on PB actually know how the US mortgage market works, in comparison to the UK?
Why can’t we have 25 year fixed rate mortgages, on decent terms, like the yanks?
One of our many structural problems in this country is the lack of mobility. Selling and buying houses costs literally thousands so people are reluctant to move. The stamp duty taxes, energy efficiency certificates and the like make this even more difficult so we end up with pockets of unemployment and pockets of severe shortages of labour. We try to compensate by spending significant parts of our day commuting but with current fuel costs and the chaos on the railway network that is becoming ever less viable. Amercia is creating its own problems in this regard and it will be something they regret.
It takes a failing Labour government for Thatcherite economics to be given a hearing, 12 years into a Tory government and one that was elected on a One Nation platform was not the time for it.
NB: This is not a prediction about Truss.
The problem is new or renegotiated mortgages on house moves, but nearly all are fixed for the life of the loan.
Blair and Brown agreed on the general direction of the project.
Hunt has completely denounced everything Truss stood for
My huge sigh of relief, of course, stems from the fact that the Tory party, MPs and members, didn't think the same as me over the summer and offer up a worthwhile opponent to Labour. Instead, they chose to be seduced by the policies of right-wing fanatics (even Sunak joined in in the later stages of his campaign). It's too late now - I don't think they can undo the damage caused by the Truss/Kwarteng/Braverman/Mogg accession to power (which Hunt has already undermined in one round of interviews).
EDIT. Other bit "The ERG would prevent his coronation."
The ERG need to sit down and STFU. We tried it their way. Epic fail.
We have had enough of
expertsfukwits with 3 letter acronyms (ERG, IEA) driving the agenda...I don't believe the Tories will now allow Loopy Liz to lead them into a GE
It's all very well saying "taxes up, spending down" but I don't forsee agreement on what that looks like.
But it buys the PM a bit more time and was probably the only move open to her without resigning herself.
Within minutes of the announcement that she had made it to the final two in the Tory leadership contest in July, Liz Truss sent Tory MPs a message on social media.
“Thank you for putting your trust in me,” she tweeted. “I’m ready to hit the ground from day one.” Her post was quickly deleted and the word “running” was added in.
But her initial message could not have been more prescient.
The current setup is not stable
They’re all retweeting “news” the mortgage rates are going up by £5100/yr
This is politics at its most raw.
A utter disaster for the Tory party.
Hunt is a bit of a chimera, but presentationally he was always smooth. Dr Foxy always said we'd had worse Health Secretaries.
https://en.wikipedia.org/wiki/List_of_economic_crises
Just like a bank can scrutinise your spending habits line by line if you want to borrow a few hundred £k from them to buy a house but are not interested in you if you are saving or have a small credit card.
The "markets" are basically foreign governments, institutions, companies and people lending money to us. We want to borrow multiple shedloads of money. That makes the markets powerful.
If you have a big deficit and might need to borrow and the economy is sluggish then you do
Is that: the average mortgage is going to up by £5100/yr?
Such a government will be a long way from perfect, they will still face a horribly difficult situation with, all too often, no good options, only less bad ones and they will still make mistakes. But at least it would be a government. To me, who doesn't have a bet on this, that is more important than whether Truss stays or goes. We need proper cabinet government, not government by wish fulfilment and untested beliefs. Only then can we hope to move back from obsessing on hourly movements in the market to the issues which are undermining our performance and are of long standing.
Nobody expects forecasts to be correct all the time but they do set a framework within which the Government is expecting to operate. Because that also gives an indication of how they will respond if things go better or worse than expected in future. But if nobody knows what the Government's assumptions and aims are then everyone is guessing about everyone other than the short term.
As for public sector austerity. Well it's la-la land. Trying to implement it, doesn't make it any less so. Trouble is what is probably at least in part needed is an assumption that living standards will fall. Just because inflation is at 10% doesn't mean that everybody needs a 10% payrise to keep up. Not everyone in the country is living on the breadline where their income must keep pace with (average) inflation or they can't feed themselves. The insistent of every special interest group that they must get a pay rise to fully make up the difference is silly. But the trouble is that the public can see so many at the top end over the last few years raking it in, that they won't restraint any more.
Hunt is there to stabilise the Treasury, not to completely take over the whole government
So yes I think (as things currently stand) the LDs will make lots of gains, but the potential is there for so, so much more if they were in the 15 - 20% range now, which I guess is pretty obvious, but I mean more than the pro rata extra.
"I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or as a 400 basball hitter. But now I would like to come back as the bond market. You can intimidate everybody."
He was right.
Discuss.
However it all depends how the likely next Starmer government plays out.
If the economy booms, inflation falls, there is peace in Ukraine and the unions are relatively quiet then Labour are likely to be in power and the Conservatives in opposition for a decade or more, as was the case with New Labour and Blair and Brown post 1997.
If however a Starmer government leads to recession, continued high inflation, unions striking regularly and pushing taxes up ever higher then the road will be open for a Thatcherite Conservative Leader of the Opposition to have a chance at the subsequent general election as Thatcher did in 1979 after the economic chaos of the 1974 to 1979 Wilson and Callaghan government
Then again, not actually a current issue, from what you say.
There are a couple of posters whose contributions I look for who are still using the default icon, which makes them a bit harder to pick out.
Though he said he was right to help with energy bills
https://www.bbc.co.uk/news/uk-63268238
I find his posts interesting. Yours, not so much - but I still read them. Important to engage with those of a different persuasion I believe.
Problem with that approach is come the GE when the spotlight is on Truss and she has the joy of leader debates.
Can’t see him getting a coronation as PM though. He’s not an anti woke libertarian Brexit ultra. Tory members would be furious.