Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
And that's the Sunak/Hunt vision for the UK. A punishment beating, without end, and without hope.
Punishment for what? Sunak, in particular, seems to think he's doing things that ought to be popular.
Everyone likes tax cuts funded by squeezing the size of the state, right?
More good news about the US, and the Internet, from Youyou Zhou: "My boyfriend and I first met on a dating app. I’m Asian, and he is White. Before using dating apps, I had exclusively dated guys of my own background and didn’t give it too much thought. I wondered how much my past choice in partners was shaped by my overwhelmingly Asian social milieu. Looking back, it seems to me that if I hadn’t used dating apps, the chances of me meeting my partner would have been vanishingly small. . . . Couples that first meet online are more likely to be interracial and interethnic than those who first meet offline, according to one 2020 study that analyzed data on more than 3,000 U.S. couples from 2009 to 2017." source$: https://www.washingtonpost.com/opinions/interactive/2023/online-dating-interracial-diversity/ Overall, about 20 percent of US marriages are now interracial, but 30 percent are interracial for those who met on line.
Cinderella this is not, but girl meets boy in any form beats all the other stories. Online has much improved things for many people in these way; but for readability Jane Austen's position in the pantheon is secure.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
I think this may be right. It's a prestige project and you can't miss it. And it's a no win from here. Either cancellation is right, so you were wrong before and spent billions of my money on nothing; or cancellation is wrong, so you are wrong now and wasted the same billions of my money.
"Small improvements in Blackpool bus services" sort of headlines doesn't make up for it.
BTW, as one living in the far north of England and an occasional visitor to my native London, it is obvious to anyone that WRT public transport, London and the north are different like Vienna and rural North Korea are different.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
And that's the Sunak/Hunt vision for the UK. A punishment beating, without end, and without hope.
Punishment for what? Sunak, in particular, seems to think he's doing things that ought to be popular.
Everyone likes tax cuts funded by squeezing the size of the state, right?
Let me know when they happen and I will tell you if I like them.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
And that's the Sunak/Hunt vision for the UK. A punishment beating, without end, and without hope.
Punishment for what? Sunak, in particular, seems to think he's doing things that ought to be popular.
Everyone likes tax cuts funded by squeezing the size of the state, right?
I think you meant to write:
Everyone likes tax rises to spend more money on our voters welfare state, right?
Gillian Keegan is fun, isn’t she? Big fan. For those who forget, she’s the education secretary who burst into the consciousness of a bemused public in September, when she insisted she’d done a “f***ing good job” in belatedly noticing lots of schools might fall down. Last week she was wheeled out to respond to two calamitous by-election defeats, one of which (Tamworth) showed a 23.9 percentage point swing to Labour. To which her response, pretty much, was a barefaced “no it didn’t”.
Brilliant. What? “If you look at the details,” she said, “this did not show a swing to Labour.” Because, she reckoned, the defeat was actually due to the Tory vote plunging, rather than the Labour vote going up. Which is true, but also what I believe is known as “a swing”. Keegan’s argument, though, was that no individual Conservative voters had actually changed their minds. They’d just stayed home.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
What bottomless level of depravity, inhumanity and hatred must you inhabit, to casually chat with a friend then shoot a 7 year old girl hiding under a table?
I’ve read about this stuff with the Nazis in the Holocaust. The absolute chilled-out relaxation with which they murdered children
This tells me that the constant indoctrination of gazan kids into jew-hatred has gone so far it cannot be redeemed
The only plausible outcome from this is an all out war between Israel and its enemies, and who knows how that ends up for the rest of us?
All the details are sickening but the one that has revolted me - simply because it is unimaginable - is hearing from one of the pathologists that women were raped so violently that their pelvises were broken.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
I think this may be right. It's a prestige project and you can't miss it. And it's a no win from here. Either cancellation is right, so you were wrong before and spent billions of my money on nothing; or cancellation is wrong, so you are wrong now and wasted the same billions of my money.
"Small improvements in Blackpool bus services" sort of headlines doesn't make up for it.
BTW, as one living in the far north of England and an occasional visitor to my native London, it is obvious to anyone that WRT public transport, London and the north are different like Vienna and rural North Korea are different.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
And that's the Sunak/Hunt vision for the UK. A punishment beating, without end, and without hope.
Punishment for what? Sunak, in particular, seems to think he's doing things that ought to be popular.
Everyone likes tax cuts funded by squeezing the size of the state, right?
They like it in theory. Turns out when you cut away the dead wood people discover they still had a use for it after all.
Gillian Keegan is fun, isn’t she? Big fan. For those who forget, she’s the education secretary who burst into the consciousness of a bemused public in September, when she insisted she’d done a “f***ing good job” in belatedly noticing lots of schools might fall down. Last week she was wheeled out to respond to two calamitous by-election defeats, one of which (Tamworth) showed a 23.9 percentage point swing to Labour. To which her response, pretty much, was a barefaced “no it didn’t”.
Brilliant. What? “If you look at the details,” she said, “this did not show a swing to Labour.” Because, she reckoned, the defeat was actually due to the Tory vote plunging, rather than the Labour vote going up. Which is true, but also what I believe is known as “a swing”. Keegan’s argument, though, was that no individual Conservative voters had actually changed their minds. They’d just stayed home.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Furthermore, claiming that fiscal policy is solely responsible for the instability rather than monetary policy doesn't absolve the bank anyway. The unwinding of the Bank's bond portfolio at a loss *is* being paid for by the exchequer, in sums that dwarf the cost of the mini-budget tax cuts, if not the whole thing. www.cnbc.com/2023/08/30/bank-of-england-bond-losses-to-cost-government-20b-more-than-expected.html
From another place; cannot speak for its veracity. It refers to the Russians launching their Adivka adventure.
"They (the Russians) started the offensive at the exact same time HAMAS attacked Israel , to the hour."
If true (and depending on time zones, it might be, as they were both on the 6/7 October), then it cannot really be a coincidence, can it? Especially given Iran's hand in both.
Why would either Russia or Hamas (or Iran) want to launch these at the exact same time "to the hour"? It's not as if the Ukrainian defence would be distracted by things happening in Israel, or the IDF by events in Avdiivka.
More good news about the US, and the Internet, from Youyou Zhou: "My boyfriend and I first met on a dating app. I’m Asian, and he is White. Before using dating apps, I had exclusively dated guys of my own background and didn’t give it too much thought. I wondered how much my past choice in partners was shaped by my overwhelmingly Asian social milieu. Looking back, it seems to me that if I hadn’t used dating apps, the chances of me meeting my partner would have been vanishingly small. . . . Couples that first meet online are more likely to be interracial and interethnic than those who first meet offline, according to one 2020 study that analyzed data on more than 3,000 U.S. couples from 2009 to 2017." source$: https://www.washingtonpost.com/opinions/interactive/2023/online-dating-interracial-diversity/ Overall, about 20 percent of US marriages are now interracial, but 30 percent are interracial for those who met on line.
Cinderella this is not, but girl meets boy in any form beats all the other stories. Online has much improved things for many people in these way; but for readability Jane Austen's position in the pantheon is secure.
Reader, I right-swiped him
Cough-C. Bronte-cough
It is a truth universally acknowledged that a single man in possession of a gsoh & a six pack must be in want of a fit bird
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
It's an...interesting cartoon, in that it's so bland. I guess it's making a point about Suella stealing the limelight from Rishi, talking to the MPs who will soon need to pick a new leader, but that might be giving it more credit than it deserves?
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Which is fine, except when it's lazily used as an excuse as if a) it really is a conspiracy, with clear enemies, and b) doesn't account for that decent ministers with drive, vision, and energy, should be able to overcome inertia.
It's like opposition leaders moaning about the press giving them a hard time - that may be true and is not a conspiracy either, but it's their job to overcome it.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
From another place; cannot speak for its veracity. It refers to the Russians launching their Adivka adventure.
"They (the Russians) started the offensive at the exact same time HAMAS attacked Israel , to the hour."
If true (and depending on time zones, it might be, as they were both on the 6/7 October), then it cannot really be a coincidence, can it? Especially given Iran's hand in both.
Why would either Russia or Hamas (or Iran) want to launch these at the exact same time "to the hour"? It's not as if the Ukrainian defence would be distracted by things happening in Israel, or the IDF by events in Avdiivka.
What's "another place"?
Someone sold the offensive to Putin as the Great Breakthrough Suprise Attack? Timing it with an attack on Israel would have had all that jazz of “distracting the Americans”, “opening a new front - at no expense to us”, “the world will be looking the other way”…
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Unless that change is a new Toyota Hillux for Jihadi John.
Gillian Keegan is fun, isn’t she? Big fan. For those who forget, she’s the education secretary who burst into the consciousness of a bemused public in September, when she insisted she’d done a “f***ing good job” in belatedly noticing lots of schools might fall down. Last week she was wheeled out to respond to two calamitous by-election defeats, one of which (Tamworth) showed a 23.9 percentage point swing to Labour. To which her response, pretty much, was a barefaced “no it didn’t”.
Brilliant. What? “If you look at the details,” she said, “this did not show a swing to Labour.” Because, she reckoned, the defeat was actually due to the Tory vote plunging, rather than the Labour vote going up. Which is true, but also what I believe is known as “a swing”. Keegan’s argument, though, was that no individual Conservative voters had actually changed their minds. They’d just stayed home.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
Gillian Keegan is fun, isn’t she? Big fan. For those who forget, she’s the education secretary who burst into the consciousness of a bemused public in September, when she insisted she’d done a “f***ing good job” in belatedly noticing lots of schools might fall down. Last week she was wheeled out to respond to two calamitous by-election defeats, one of which (Tamworth) showed a 23.9 percentage point swing to Labour. To which her response, pretty much, was a barefaced “no it didn’t”.
Brilliant. What? “If you look at the details,” she said, “this did not show a swing to Labour.” Because, she reckoned, the defeat was actually due to the Tory vote plunging, rather than the Labour vote going up. Which is true, but also what I believe is known as “a swing”. Keegan’s argument, though, was that no individual Conservative voters had actually changed their minds. They’d just stayed home.
I think this Gaza Israel debate is possibly even more depressing than discussing proportional representation
I know. Controversial take
The correct take. It's ruining PB.
And yet it fires up debate - worldwide - like no other geopolitical issue. Especially in proportion to its numerical scale
Why? - is a fascinating question. I am pretty sure the deep rooted mental fungus of anti Semitism is partly to blame. If you analyse most ardent pro Palestinians hard enough you will find fear and hatred of Jews. As we have seen this last week; many of the sufferers won’t even realise it
And I wonder what 'urges' drive the more exuberant of the pro-Israel brigade? And will they admit to or even realize it?
I don't know if you'd call me one of the "more exuberant of the pro-Israel brigade?", but here's an answer as to why I'm unwilling to see Israel be driven into the sea.
*) Israel is, in laws and lifestyle, more like the 'west' than many of its neighbouring countries. Homosexual rights being a classic example. If I had to live anywhere in that region (and not having visited the region), I'd choose Israel. As an agnostic with a Christian upbringing, I'd feel like my rights would most be respected there.
*) History. Not just the obvious Holocaust, but also the way Jews have been treated throughout time. There's still a massive amount of sympathy for their plight out there.
*) Emerging from the above, an understanding that many (not all) Jews believe they can only be 'safe' within their own country. (I also support a Kurdish state as well, although also accept that it would be massively complex to create one.)
*) Israel has already made moves for peace many times; for instance returning Sinai to Egypt, or their withdrawal from Gaza twenty-odd years ago.
For these reasons, I find it hard to paint Israel as the bad guy - or at least, the only bad guy. In contrast, see the way Palestinians and Palestinian refugees have been treated by their neighbouring countries over the years. Innocent Palestinian civilians are used, not just by the shits of Hamas, but also by Egypt, Jordan, Syria etc. Ditto Lebanon.
On the other hand, my position is that Israel has to make the first (in fact, more...) moves to peace.
Superb post. Pretty much expresses my thoughts. Thank you.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Argh. I want him back. I want him at least in the cabinet. Boris did some important things for this country but he also did many terrible things. Driving Rory out of the Conservative Party was arguably amongst the worst.
What bottomless level of depravity, inhumanity and hatred must you inhabit, to casually chat with a friend then shoot a 7 year old girl hiding under a table?
I’ve read about this stuff with the Nazis in the Holocaust. The absolute chilled-out relaxation with which they murdered children
This tells me that the constant indoctrination of gazan kids into jew-hatred has gone so far it cannot be redeemed
The only plausible outcome from this is an all out war between Israel and its enemies, and who knows how that ends up for the rest of us?
All the details are sickening but the one that has revolted me - simply because it is unimaginable - is hearing from one of the pathologists that women were raped so violently that their pelvises were broken.
Tens of thousands of people in this country of ours have calmly read accounts of these kind of things. And then gone on to attend a demo condemning Israel. Quite a thing.
Boris did some important things for this country but he also did many terrible things. Driving Rory out of the Conservative Party was arguably amongst the worst.
You could make a very credible cabinet out of every MP BoZo expelled, whereas you can't make a single credible cabinet out of the ones who stayed...
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Unless that change is a new Toyota Hillux for Jihadi John.
Overseas aid target - quota for Syria
I’ve mentioned before - I was told that during COVID, ministers gave written instructions to do X. Y was done instead. Civil servants became angry when told that, at the COVID enquiries, if asked, the ministers in question wouldn’t take responsibility for Y.
All of those people calling for an immediate ceasefire but not also insisting on the unconditional surrender of all hostages held by Hamas are completely disingenuous *****. Anyone who does this should be ignored, I'm getting sick of all the idiots out there suggesting Israel should come to the table and negotiate a ceasefire with Hamas but it's a step to far for Hamas to surrender the hostages. Bunch of disgusting *****.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
Also worth noting that it is possible (and often rational) to oppose the cancellation of an ongoing project despite opposing its construction before works began.
I think this Gaza Israel debate is possibly even more depressing than discussing proportional representation
I know. Controversial take
The correct take. It's ruining PB.
And yet it fires up debate - worldwide - like no other geopolitical issue. Especially in proportion to its numerical scale
Why? - is a fascinating question. I am pretty sure the deep rooted mental fungus of anti Semitism is partly to blame. If you analyse most ardent pro Palestinians hard enough you will find fear and hatred of Jews. As we have seen this last week; many of the sufferers won’t even realise it
And I wonder what 'urges' drive the more exuberant of the pro-Israel brigade? And will they admit to or even realize it?
I don't know if you'd call me one of the "more exuberant of the pro-Israel brigade?", but here's an answer as to why I'm unwilling to see Israel be driven into the sea.
*) Israel is, in laws and lifestyle, more like the 'west' than many of its neighbouring countries. Homosexual rights being a classic example. If I had to live anywhere in that region (and not having visited the region), I'd choose Israel. As an agnostic with a Christian upbringing, I'd feel like my rights would most be respected there.
*) History. Not just the obvious Holocaust, but also the way Jews have been treated throughout time. There's still a massive amount of sympathy for their plight out there.
*) Emerging from the above, an understanding that many (not all) Jews believe they can only be 'safe' within their own country. (I also support a Kurdish state as well, although also accept that it would be massively complex to create one.)
*) Israel has already made moves for peace many times; for instance returning Sinai to Egypt, or their withdrawal from Gaza twenty-odd years ago.
For these reasons, I find it hard to paint Israel as the bad guy - or at least, the only bad guy. In contrast, see the way Palestinians and Palestinian refugees have been treated by their neighbouring countries over the years. Innocent Palestinian civilians are used, not just by the shits of Hamas, but also by Egypt, Jordan, Syria etc. Ditto Lebanon.
On the other hand, my position is that Israel has to make the first (in fact, more...) moves to peace.
Having been to most of the countries in the area I'd choose Lebanon by a distance. A really beautiful country with interesting educated trilingual beautiful people. And a recent history that is extraordinary but fascinating
The Blob doesn't actually exist, other than as an extraordinarily convenient scapegoat for Ministers to use when they're so incompetent they can't get anything achieved. See also "The Civil Service", which takes the blame for Ministers' uselessness and, of course, can't defend itself, making it even easier to blame.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
. . . as candidate filing for the New Hampshire Presidential Primary is ongoing, note items below now featured on Politico.com
DeSantis-Haley feud escalates with dueling attack ads The super PAC supporting Ron DeSantis is going up with a new web ad portraying Nikki Haley as a flip-flopper.
In the escalating feud between Ron DeSantis and Nikki Haley, the super PAC supporting the Florida governor is going up with a new ad portraying Haley as flip-flopping over aid to Palestinians in Gaza.
‘I’m disappointed’: Even Tim Scott’s friends and fans see a campaign on the ropes Scott’s polling is down, his super PAC is in retreat and his hometown newspaper is cheering on Nikki Haley instead.
. . . In a strategy shift, Scott over the past two weeks has appear[ed] eight times on CNN, CBS, ABC and CNBC after spending a summer engaging almost exclusively with the conservative press.
The shake-up may come too late to energize Scott’s faltering campaign.
After months of staying out of the conversation, the South Carolina senator is now sputtering below 2 percent in national polls. On Saturday, Scott’s hometown newspaper called for the Republican field to coalesce not around Scott, but rival South Carolinian Nikki Haley, to take on Donald Trump directly. Even some prominent Scott fans are beginning to acknowledge Scott’s presidential campaign has been a disappointment, and that his path forward appears dim. . . .
[T]he first debate [was] a highly anticipated event where Scott spoke less than most of the other candidates and seemed to disappear for long stretches. Multiple Scott allies point to that moment — both the senator’s seeming lack of preparedness for the dynamics of the debate stage and refusal to embrace an aggressive earned-media strategy ahead of time — as a significant turning point. Ever since, Scott has trended down in Iowa, New Hampshire and in national polling. In an ominous sign for the campaign, his super PAC this week announced it was canceling millions of dollars in fall advertising. . . .
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Unless that change is a new Toyota Hillux for Jihadi John.
Overseas aid target - quota for Syria
I’ve mentioned before - I was told that during COVID, ministers gave written instructions to do X. Y was done instead. Civil servants became angry when told that, at the COVID enquiries, if asked, the ministers in question wouldn’t take responsibility for Y.
Yes. It's appalling. But it's really a system thing. It seems from that little account that civil servants take instruction from every which way. I am appalled that it would even be thought appropriate for a Ministerial order to be countermanded by an American civil servant, albeit one leading a joint military effort. Everything like that should go through a Minister. Reward, preferment and punishment for civil servants should all be in the hands of Ministers, and they aren't. I don't think even civil service titles and gongs are in the hands of Ministers, though Ministers gongs can apparently be vetoed by civil servants. Politicians have to claw back some control if we're going to achieve anything.
more from Politico from the campaign trail, this time about
He Was Once a Favorite of the Right. Now, Mike Pence Can’t Get a Crowd of 15 to a Pizza Ranch. The former vice president has gone all out to win Iowa. But is anyone listening?
ATLANTIC, Iowa — On a crisp evening in a small town not far from Iowa’s southwestern border, Mike Pence’s decades-long quest for the White House has come down to a coin toss.
Here he is, the most recent former GOP vice president, standing at the 50-yard-line of a high school football field in a town just shy of 7,000. The team captains stand alongside him and his wife Karen, the smell of brats grilling and corn popping in the air. Tails. The hometown Trojans win the toss against the Perry Bluejays. “There’s nothing like Friday night lights,” he will soon tell a reporter from the student newspaper. “We wouldn’t have missed it for the world.”
Next, he makes his way to the press box to provide color commentary for the game on the local AM radio station. . .
Pence had capably debated Kamala Harris in front of an audience of 57.9 million back in 2020 and led the White House’s coronavirus task force press briefings as the world watched. But this was Iowa, and he was fretting about an AM radio hit. Pence, determined to get any Iowa voter to listen to him, so help him God, needed this.
. . . Nearly six months into his presidential campaign, and fewer than 90 days until the Iowa caucuses, Pence is not seeing massive crowds like his former running mate Donald Trump, or his fellow Midwesterner Vivek Ramaswamy, or Florida Gov. Ron DeSantis, or even his longtime frenemy, former U.N. Ambassador Nikki Haley. Thirty folks at Penn Drug store in Sidney on a recent Friday morning; another 30 at the Olive Branch Restaurant in Greenfield that afternoon; 60 at a senior center in Glenwood the next day. Nor is he seeing anything but single-digit backing in polls. In Iowa, he’s currently averaging just 2.6 percent among Republican voters. . .
“The media has already decided how all this is going to end,” he told just 13 people at a Pizza Ranch in Red Oak. “But as you all know, I think Iowa has a unique opportunity to give our party, give our country a fresh start.” He encouraged them to “keep an open mind.”
. . . Iowa inflicts its own quadrennial and peculiar political indignities and hazing rituals on candidates. But few have submitted to them so fully as Pence, who even his own aides admit must deliver a surprise finish here next January to keep his decades-long presidential ambitions alive. He was the only candidate to actually ride a motorcycle at Iowa Sen. Joni Ernst’s July Roast and Ride. He spent more time at the Iowa State Fair than any other candidate. . . .
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Unless that change is a new Toyota Hillux for Jihadi John.
Overseas aid target - quota for Syria
I’ve mentioned before - I was told that during COVID, ministers gave written instructions to do X. Y was done instead. Civil servants became angry when told that, at the COVID enquiries, if asked, the ministers in question wouldn’t take responsibility for Y.
Yes. It's appalling. But it's really a system thing. It seems from that little account that civil servants take instruction from every which way. I am appalled that it would even be thought appropriate for a Ministerial order to be countermanded by an American civil servant, albeit one leading a joint military effort. Everything like that should go through a Minister. Reward, preferment and punishment for civil servants should all be in the hands of Ministers, and they aren't. I don't think even civil service titles and gongs are in the hands of Ministers, though Ministers gongs can apparently be vetoed by civil servants. Politicians have to claw back some control if we're going to achieve anything.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
Wasn't any secret, was it - at least in leading CUP circles, that both Truss and Kwarteng are BIG fans of pain and suffering to achieve joy and satisfaction.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Florence of Belgravia comes across as being as soft as clarts in that. Why was he fucking around arguing the toss with them? He should have told them not to do it then leaked the whole thing to the Daily Mail who would have supplied a front page with the word 'FURY' in 60 point type. The whole thing would have been dead by the weekend.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
‘Blob’, ‘activist’, ‘woke’ - all helpfully nebulous terms that can be ascribed to things that our rulers dislike or that stop them from doing stupid and/or hateful things. Anything from gender identity to bin collections to high speed trains to nurses.
‘The Blob’ specifically was, iirc, a Cummings term to describe the educational establishment, not entirely unfairly it has to be said.
It reflects through inverted binoculars Chief Bromden’s ‘combine’ from One Flew Over The Cuckoo’s Nest. A system which grinds down oppresses the powerless, but is a *system* with no evil overlord at the top. Just a way of working that keeps the shit running down the pyramid and the money rising up.
Bromden and the Tories differ in they are at opposite ends of the pyramid. Both believe they are victims but only one is correct.
The Blob doesn't actually exist, other than as an extraordinarily convenient scapegoat for Ministers to use when they're so incompetent they can't get anything achieved. See also "The Civil Service", which takes the blame for Ministers' uselessness and, of course, can't defend itself, making it even easier to blame.
A surprising number of people buy it though, and even have second-hand anecdotes to back it up
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
Trust me, the bond markets can move very rapidly when they want to.
Because if there is money to be made (or lost) people don't wait until the next day to do it.
I particularly liked “No 10 said to be 'bruised' that conference, particularly HS2, did not shift dial.” I mean, it did shift the dial, just not in the direction they expected it to.
I have a theory the HS2 cancellation has inadvertently ratnered the Tories’ big Brexit message.
Not that voters weren’t coming round to the idea that Brexit had been naffed up and possibly wasn’t a great idea in the first place, mind.
But think about what the mood music was around Boris and Brexit - it was the idea that we could recapture a Britain that made things, that built things, that projected power and influence and progress. I can quite easily see why some voters (who might even have been against HS2 in the first place) would be appalled by its cancellation, because it suggests an impotent, weak, bankrupt Britain. The very antithesis of what the Brexit campaign, and Boris, tried to sell.
And that's the Sunak/Hunt vision for the UK. A punishment beating, without end, and without hope.
Punishment for what? Sunak, in particular, seems to think he's doing things that ought to be popular.
Everyone likes tax cuts funded by squeezing the size of the state, right?
They like it in theory. Turns out when you cut away the dead wood people discover they still had a use for it after all.
Generally “I just found a name for a rhetorical technique on Wikipedia and now I am going to bandy it around all week” irritates the hell out of me, but this is classic Chesterton’s Fence and you are 100% right.
Interesting German poll including the new left wing party that suggests they could challenge the SPD:
More likely challenge the Greens on that poll
Yes, an interesting development. Die Linke - the classical ex-Communists - have become very green, pro-Ukraine and generally hard to distinguish from Guardian-reading left-wingers, and they struggle to get over 5% since the actual Greens are in the way. Sabine Wagenknecht (the BSW leader and their only well-known figure) mixes left-wing social policies with opposition to mass immigration and opposition to Ukraine. They aren't yet sure if they'll stand in elections, but polls like that will obviously encourage them, and they may take votes from the AfD as well as the SPD and their old party. It's basically about East German populism, but she's quite a formidable figure.
Worth pointing out this is hypothetical polling for a party that doesn't yet exist. In terms of voting intention polling the hypothetical support no doubt mostly comes from people currently saying they will vote AfD or "Others" (including Freie Wähler). It's an alternative for people who want a stronger line against immigration and refugees (and less action on climate change, less support for Ukraine, fewer sanctions on Russia, and more EU scepticism). So unlikely to appeal to many current Green voters.
It shows how weak and divided die Linke are that they didn't expel Wagenknecht months ago, she has been talking about starting her own party for over a year now.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Florence of Belgravia comes across as being as soft as clarts in that. Why was he fucking around arguing the toss with them? He should have told them not to do it then leaked the whole thing to the Daily Mail who would have supplied a front page with the word 'FURY' in 60 point type. The whole thing would have been dead by the weekend.
Rory Stewart - decent bloke, good writer, crap politician.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Unless that change is a new Toyota Hillux for Jihadi John.
Overseas aid target - quota for Syria
I’ve mentioned before - I was told that during COVID, ministers gave written instructions to do X. Y was done instead. Civil servants became angry when told that, at the COVID enquiries, if asked, the ministers in question wouldn’t take responsibility for Y.
Yes. It's appalling. But it's really a system thing. It seems from that little account that civil servants take instruction from every which way. I am appalled that it would even be thought appropriate for a Ministerial order to be countermanded by an American civil servant, albeit one leading a joint military effort. Everything like that should go through a Minister. Reward, preferment and punishment for civil servants should all be in the hands of Ministers, and they aren't. I don't think even civil service titles and gongs are in the hands of Ministers, though Ministers gongs can apparently be vetoed by civil servants. Politicians have to claw back some control if we're going to achieve anything.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
Our public sector is consuming more than 40% of our GDP and is simply not providing anything like value for money. The quality of our services deteriorate as the cost rises. It has reached the point it is no longer sustainable.
God knows, we need a change of government but I really fear that a wet behind the ears Labour administration will not have a chance in hell of doing anything about this. It is a major problem.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
What's the alternative? Become an Empire? Make our own reality?
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
Trust me, the bond markets can move very rapidly when they want to.
Because if there is money to be made (or lost) people don't wait until the next day to do it.
It's the (lost) part everyone wants to avoid. People are unlikely to get sacked for not making a few hundred million bucks but they probably will if they lose that amount.
Gillian Keegan is fun, isn’t she? Big fan. For those who forget, she’s the education secretary who burst into the consciousness of a bemused public in September, when she insisted she’d done a “f***ing good job” in belatedly noticing lots of schools might fall down. Last week she was wheeled out to respond to two calamitous by-election defeats, one of which (Tamworth) showed a 23.9 percentage point swing to Labour. To which her response, pretty much, was a barefaced “no it didn’t”.
Brilliant. What? “If you look at the details,” she said, “this did not show a swing to Labour.” Because, she reckoned, the defeat was actually due to the Tory vote plunging, rather than the Labour vote going up. Which is true, but also what I believe is known as “a swing”. Keegan’s argument, though, was that no individual Conservative voters had actually changed their minds. They’d just stayed home.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Florence of Belgravia comes across as being as soft as clarts in that. Why was he fucking around arguing the toss with them? He should have told them not to do it then leaked the whole thing to the Daily Mail who would have supplied a front page with the word 'FURY' in 60 point type. The whole thing would have been dead by the weekend.
Rory Stewart - decent bloke, good writer, crap politician.
I was reading those passages with Caro's biography of LBJ in mind. Difficult to imagine that Big Daddy would have tolerated this kind of obstruction.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
Your belief in the traditional methods of controlling inflation when the inflation is quite clearly based on an external supply shock rather than overspending is baffling.
Just flipped on my humble (no joke) television, and discovered that the el cheapo broadcast channel is airing "The Blob" starring a very young Steve McQueen playing an even younger teenager confronted by the title character.
From another place; cannot speak for its veracity. It refers to the Russians launching their Adivka adventure.
"They (the Russians) started the offensive at the exact same time HAMAS attacked Israel , to the hour."
If true (and depending on time zones, it might be, as they were both on the 6/7 October), then it cannot really be a coincidence, can it? Especially given Iran's hand in both.
Why would either Russia or Hamas (or Iran) want to launch these at the exact same time "to the hour"? It's not as if the Ukrainian defence would be distracted by things happening in Israel, or the IDF by events in Avdiivka.
What's "another place"?
Someone sold the offensive to Putin as the Great Breakthrough Suprise Attack? Timing it with an attack on Israel would have had all that jazz of “distracting the Americans”, “opening a new front - at no expense to us”, “the world will be looking the other way”…
It’s all in Red Storm Rising…
Yes maybe around about the same time - but why would it need to be the exact same hour?
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Unless that change is a new Toyota Hillux for Jihadi John.
Overseas aid target - quota for Syria
I’ve mentioned before - I was told that during COVID, ministers gave written instructions to do X. Y was done instead. Civil servants became angry when told that, at the COVID enquiries, if asked, the ministers in question wouldn’t take responsibility for Y.
Yes. It's appalling. But it's really a system thing. It seems from that little account that civil servants take instruction from every which way. I am appalled that it would even be thought appropriate for a Ministerial order to be countermanded by an American civil servant, albeit one leading a joint military effort. Everything like that should go through a Minister. Reward, preferment and punishment for civil servants should all be in the hands of Ministers, and they aren't. I don't think even civil service titles and gongs are in the hands of Ministers, though Ministers gongs can apparently be vetoed by civil servants. Politicians have to claw back some control if we're going to achieve anything.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
Are you sure about that?
From ONS;
There were an estimated 5.87 million employees in the public sector in June 2023...
There were an estimated 27.01 million employees in the private sector in June 2023...
Now, I'm sure it's possible to cut 1 in 6 jobs from the public sector, but I don't think you'd like the consequences. Getting rid of the entire Civil Service, for example, only gets you halfway there.
Which illustrates the difficulty with the 'No, Minister' scenario. I'm sure that sometimes, the establishment squashes radical new ideas out of arrogance. But a lot of radical ideas are rightly squashed because they're not going to work.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
Technically, it's creating a haircut for the BoE, but its balance sheet (and profits) are separate from the Treasury, no?
In other words, it doesn't create an additional liability/costs for the government.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Just flipped on my humble (no joke) television, and discovered that the el cheapo broadcast channel is airing "The Blob" starring a very young Steve McQueen playing an even younger teenager confronted by the title character.
Last time I was there the diner still had a jar of 'blob' on display
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
The cost to the Treasury, though, is simply the higher price of debt it pays because of additional supply. Losses incurred by the BoE do not result in the Treasury needing to raise taxes to compensate, because the BoE's balance sheet is entirely separate.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
Yes QT is the wrong policy to tackle inflation. Better to rise base rates slightly higher and avoid the distortion in fiscal policy than try to do it via QT as well (at least active QT, passive QT fine as not crystallising loses).
I'm also not sure the indemnity to the Treasury is strictly necessary, economically speaking. Not all countries have it.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
Technically, it's creating a haircut for the BoE, but its balance sheet (and profits) are separate from the Treasury, no?
In other words, it doesn't create an additional liability/costs for the government.
The government has agreed to recapitalise the BoE from treasury funds whenever it's liquidity has been depleted by QT. So far it has cost ~£20bn, which has been added to the PSNCR requiring the debt management office to write a lot of additional paper.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
Your belief in the traditional methods of controlling inflation when the inflation is quite clearly based on an external supply shock rather than overspending is baffling.
Not nearly as shocking as your apparent belief that we were not over spending both as a government and a country. What do you call more than 30 years of deficits if it is not overspending?
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
The cost to the Treasury, though, is simply the higher price of debt it pays because of additional supply. Losses incurred by the BoE do not result in the Treasury needing to raise taxes to compensate, because the BoE's balance sheet is entirely separate.
If I'm understanding you correctly, that's wrong. The Treasury is giving the Bank real taxpayer's money every month to cover its losses. This is different to the US, where the Fed is just chalking it up on their own accounting system.
Off topic, but I think this little story will amuse some of you:
I was waiting for my hamburger at a local Shake Shack, when I saw a large, middle-aged lady come in, and pick up two large sacks. Since it was crowded, and the door rather heavy, I opened the door for her. She smiled and called me a real “gentlemon” — from which you can probably guess more about the lady.
(It still surprises me to see how pleased many girls and women are by such ordinary acts of politeness. I think that’s especialy true of those who aren’t sure everyone thinks of them as “ladies”, because they are too young, or too poor.
But, as with giving presents, it probably does more for me, than for them.)
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Florence of Belgravia comes across as being as soft as clarts in that. Why was he fucking around arguing the toss with them? He should have told them not to do it then leaked the whole thing to the Daily Mail who would have supplied a front page with the word 'FURY' in 60 point type. The whole thing would have been dead by the weekend.
Rory Stewart - decent bloke, good writer, crap politician.
I was reading those passages with Caro's biography of LBJ in mind. Difficult to imagine that Big Daddy would have tolerated this kind of obstruction.
There’s some fun stuff in the archives. I’ve seen minutes from one civil servant to another, furious that a carefully wrought policy on sulphur dioxide emissions was overturned by Margaret Thatcher.
Apparently, instead of confining herself to the contents of her red boxes, she changed the policy (bigger reductions) on the say so of some FRS who had a Professorial Chair in the field.
I quite understand their frustration. If politicians ignore the experts and start asking mere professors for advice….
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
The cost to the Treasury, though, is simply the higher price of debt it pays because of additional supply. Losses incurred by the BoE do not result in the Treasury needing to raise taxes to compensate, because the BoE's balance sheet is entirely separate.
Not true. The Treasury indemnified the BoE for any losses under QE and pays real money across raised from borrowing to cover the mark to market losses on any sales.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Thanos. Randomly select from all departments. It's unlikely anyone will notice.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
The cost to the Treasury, though, is simply the higher price of debt it pays because of additional supply. Losses incurred by the BoE do not result in the Treasury needing to raise taxes to compensate, because the BoE's balance sheet is entirely separate.
If I'm understanding you correctly, that's wrong. The Treasury is giving the Bank real taxpayer's money every month to cover its losses. This is different to the US, where the Fed is just chalking it up on their own accounting system.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
The cost to the Treasury, though, is simply the higher price of debt it pays because of additional supply. Losses incurred by the BoE do not result in the Treasury needing to raise taxes to compensate, because the BoE's balance sheet is entirely separate.
If I'm understanding you correctly, that's wrong. The Treasury is giving the Bank real taxpayer's money every month to cover its losses. This is different to the US, where the Fed is just chalking it up on their own accounting system.
I am wrong, and you are right.
Alone of the major central banks, back in 2009, the BoE was indemnified against losses on QE by the government. I didn't know that.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
Yes QT is the wrong policy to tackle inflation. Better to rise base rates slightly higher and avoid the distortion in fiscal policy than try to do it via QT as well (at least active QT, passive QT fine as not crystallising loses).
I'm also not sure the indemnity to the Treasury is strictly necessary, economically speaking. Not all countries have it.
Yes, the indemnity policy is another example of our "Rolls Royce" civil service making an error. The treasury should have told the BoE to shut the fuck up, they decided, as an independent body, to buy a bunch of gilts and they, as an independent body, need to eat the losses or not fucking sell them at such a gigantic loss.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Thanos. Randomly select from all departments. It's unlikely anyone will notice.
Except the departments for education and transport - just sack the lot.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Thanos. Randomly select from all departments. It's unlikely anyone will notice.
Elon did it on TwiX, big time, and despite all the lefty whining it still works fine for me
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
The cost to the Treasury, though, is simply the higher price of debt it pays because of additional supply. Losses incurred by the BoE do not result in the Treasury needing to raise taxes to compensate, because the BoE's balance sheet is entirely separate.
If I'm understanding you correctly, that's wrong. The Treasury is giving the Bank real taxpayer's money every month to cover its losses. This is different to the US, where the Fed is just chalking it up on their own accounting system.
I am wrong, and you are right.
Alone of the major central banks, back in 2009, the BoE was indemnified against losses on QE by the government. I didn't know that.
Doesn’t mean they have to keep doing it - every Chancellor signs off the agreement. Now you know why I've been fuming so much about it; it's fucking nuts. And then Jeremy Hunt sits there on TV doing his serious face and tells us there's no money to cut taxes. When he's sending wheelbarrows of the stuff to the BOE for them to burn.
In the US, the "Blob" has often been used to describe those who resist education reforms in our public schools, education departments, teacher's unions, school administrators, and so forth.
Reformers consider the Blob so strong in some states that the reformers back "charter" schools to get around it, rather than confronting it directly.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Thanos. Randomly select from all departments. It's unlikely anyone will notice.
Elon did it on TwiX, big time, and despite all the lefty whining it still works fine for me
A company we've invested in has done that as well, they let go of 30% of their payroll and no one has noticed. In fact their customer satisfaction ratings have gone up because feature development and releases are no longer held up in a "billion committee stages" according to the CTO who oversaw the policy.
As I understand it "the blob" refers to members of the reality based community, who believe that solutions emerge from the judicious study of discernible reality.
The best recent exposition of the ‘blob’ came from Rory Stewart describing how he was given the runaround by the civil service and prevented from taking an action that he deemed necessary as the responsible minister, and was later proved correct.
Thanks for highlighting this @williamglenn it should be read by everyone here who superciliously opines about 'the adults in the room' and blames politicians for everything wrong with our state.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Inside the civil service, there is a Departmental Policy, in each department.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Yep, 100%
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
Unless that change is a new Toyota Hillux for Jihadi John.
Overseas aid target - quota for Syria
I’ve mentioned before - I was told that during COVID, ministers gave written instructions to do X. Y was done instead. Civil servants became angry when told that, at the COVID enquiries, if asked, the ministers in question wouldn’t take responsibility for Y.
Yes. It's appalling. But it's really a system thing. It seems from that little account that civil servants take instruction from every which way. I am appalled that it would even be thought appropriate for a Ministerial order to be countermanded by an American civil servant, albeit one leading a joint military effort. Everything like that should go through a Minister. Reward, preferment and punishment for civil servants should all be in the hands of Ministers, and they aren't. I don't think even civil service titles and gongs are in the hands of Ministers, though Ministers gongs can apparently be vetoed by civil servants. Politicians have to claw back some control if we're going to achieve anything.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
Our public sector is consuming more than 40% of our GDP and is simply not providing anything like value for money. The quality of our services deteriorate as the cost rises. It has reached the point it is no longer sustainable.
God knows, we need a change of government but I really fear that a wet behind the ears Labour administration will not have a chance in hell of doing anything about this. It is a major problem.
You know the big picture, though.
Pension spending will have to continue rising, because more pensioners.
Health spending will likely continue rising because the alternatives are politically unacceptable.
Ditto schools. There are no pain free savings left to make.
Pretty much everything else is pretty much loose change.
It would have been better had the currently retiring generation paid/saved more over the last forty years, but it's too late to do anything about that now.
From another place; cannot speak for its veracity. It refers to the Russians launching their Adivka adventure.
"They (the Russians) started the offensive at the exact same time HAMAS attacked Israel , to the hour."
If true (and depending on time zones, it might be, as they were both on the 6/7 October), then it cannot really be a coincidence, can it? Especially given Iran's hand in both.
Why would either Russia or Hamas (or Iran) want to launch these at the exact same time "to the hour"? It's not as if the Ukrainian defence would be distracted by things happening in Israel, or the IDF by events in Avdiivka.
What's "another place"?
Someone sold the offensive to Putin as the Great Breakthrough Suprise Attack? Timing it with an attack on Israel would have had all that jazz of “distracting the Americans”, “opening a new front - at no expense to us”, “the world will be looking the other way”…
It’s all in Red Storm Rising…
Yes maybe around about the same time - but why would it need to be the exact same hour?
The childish belief that this would be the Great Breakthrough, so that hours would count?
See the start of the hilariously bad film the Battle of The Bulge. The hundred hour clock…
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Thanos. Randomly select from all departments. It's unlikely anyone will notice.
Except the departments for education and transport - just sack the lot.
Hey, we need the crews for the first manned landings on the Sun!
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Indeed. And given ministers are often either inexperienced in a field, don't last very long, or are appointed for reasons other than their competence, you'd dread to think what would happen if there wasn't a certain amount of institutional memory to keep things running. Over the past 7 or so years if ministers had been hiring and firing at will, we'd have had utter chaos as each one got the boot or promotion. I tend to think too that while there's undoubtedly a point about some civil servants stymieing governments' more radical plans with inertia, those who are effective ministers find ways to get their agenda done - there have been both Labour and Tory ministers who have managed significant changes over the past few decades. And with the odd notable exception, those who have tended to blame civil servants rather than just get on with it, tend to have been those who have been pretty ineffective and not very easy to work with.
From another place; cannot speak for its veracity. It refers to the Russians launching their Adivka adventure.
"They (the Russians) started the offensive at the exact same time HAMAS attacked Israel , to the hour."
If true (and depending on time zones, it might be, as they were both on the 6/7 October), then it cannot really be a coincidence, can it? Especially given Iran's hand in both.
Why would either Russia or Hamas (or Iran) want to launch these at the exact same time "to the hour"? It's not as if the Ukrainian defence would be distracted by things happening in Israel, or the IDF by events in Avdiivka.
What's "another place"?
Someone sold the offensive to Putin as the Great Breakthrough Suprise Attack? Timing it with an attack on Israel would have had all that jazz of “distracting the Americans”, “opening a new front - at no expense to us”, “the world will be looking the other way”…
It’s all in Red Storm Rising…
Yes maybe around about the same time - but why would it need to be the exact same hour?
The childish belief that this would be the Great Breakthrough, so that hours would count?
See the start of the hilariously bad film the Battle of The Bulge. The hundred hour clock…
I detest that film. The whole point of the batle was that it was fought out under heavy cloud in the middle of winter. So where do they film it? Spain. With clear blue skies. And US tanks that looking nothing like the German stuff.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Thanos. Randomly select from all departments. It's unlikely anyone will notice.
Elon did it on TwiX, big time, and despite all the lefty whining it still works fine for me
A company we've invested in has done that as well, they let go of 30% of their payroll and no one has noticed. In fact their customer satisfaction ratings have gone up because feature development and releases are no longer held up in a "billion committee stages" according to the CTO who oversaw the policy.
When most BBC news presenters went on strike a couple of years ago, the programme markedly improved with the new stand-in presenters.
It's the kind of system that exists because it's impossible to sack the bastards. If I have an insubordinate in my team who won't do as they are told they will find themselves with a one way ticket to unemployment. In the civil service not listening to (Tory) ministers is encouraged and it's impossible to get rid. That is always going to be a problem and this is why burning the whole thing down is the only way forwards. The civil service and more widely the state sector needs to shed over a million jobs. Too many busy bodies, too many officious box tickers making misery for ordinary people. We won't seriously be able to cut taxes for working people until the state is forced to slim down and the civil service is severely curtailed.
There's no doubt that, other things being equal, civil servants will generally recommend the status quo, since they were there already in the Department that created it. But they generally take pride in following a clear line from a confident Minister, and the standard of intelligence is in my experience pretty high. Who are these hypothetical million civil servants who you'd like to sack? Can you break it down by Department so we can get a clearer picture of what you want to abolish?
Indeed. And given ministers are often either inexperienced in a field, don't last very long, or are appointed for reasons other than their competence, you'd dread to think what would happen if there wasn't a certain amount of institutional memory to keep things running. Over the past 7 or so years if ministers had been hiring and firing at will, we'd have had utter chaos as each one got the boot or promotion. I tend to think too that while there's undoubtedly a point about some civil servants stymieing governments' more radical plans with inertia, those who are effective ministers find ways to get their agenda done - there have been both Labour and Tory ministers who have managed significant changes over the past few decades. And with the odd notable exception, those who have tended to blame civil servants rather than just get on with it, tend to have been those who have been pretty ineffective and not very easy to work with.
"Who are these hypothetical million civil servants who you'd like to sack?"
It is often forgotten that most civil servants aren't pinstripe suited Sir Humphreys but frontline staff in say the DWP answering hundreds of phone calls per day from exhausted claimants who yet again have found a cock up in their benefit payments.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
Yes QT is the wrong policy to tackle inflation. Better to rise base rates slightly higher and avoid the distortion in fiscal policy than try to do it via QT as well (at least active QT, passive QT fine as not crystallising loses).
I'm also not sure the indemnity to the Treasury is strictly necessary, economically speaking. Not all countries have it.
Yes, the indemnity policy is another example of our "Rolls Royce" civil service making an error. The treasury should have told the BoE to shut the fuck up, they decided, as an independent body, to buy a bunch of gilts and they, as an independent body, need to eat the losses or not fucking sell them at such a gigantic loss.
@MaxPB - you mentioned the other day some difficulties your wife was having at work. Does her workplace have a whistleblowing / Speak Up policy which may help? DM me if you would like to discuss.
Some forecast models predict that 20-30 inches of rain could fall in the next 24 hours near Al Ghaydah, Yemen, as Tropical Cyclone Tej stalls over the region.
Al Ghaydah receives ~2 inches of rain per year, which means over 10 year's worth of rain could fall in just 24 hours, leading to catastrophic flooding.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
I agree that QT into a period of high inflation and rapidly rising interest rates is stupid and will inevitably result in gilts held by the Bank being sold at substantial discounts. It would be better for the Bank to hold them until maturity and then cancel them.
The cost to the Treasury, though, is simply the higher price of debt it pays because of additional supply. Losses incurred by the BoE do not result in the Treasury needing to raise taxes to compensate, because the BoE's balance sheet is entirely separate.
If I'm understanding you correctly, that's wrong. The Treasury is giving the Bank real taxpayer's money every month to cover its losses. This is different to the US, where the Fed is just chalking it up on their own accounting system.
I am wrong, and you are right.
Alone of the major central banks, back in 2009, the BoE was indemnified against losses on QE by the government. I didn't know that.
Rishi had the chance to quietly reverse this in 2019 before any hint of QT was on the cards too. I remember reading some research from JP Morgan suggesting he should do it and call it alignment with internationally agreed practices or something along those lines, basically matching the US government and the Fed.
From another place; cannot speak for its veracity. It refers to the Russians launching their Adivka adventure.
"They (the Russians) started the offensive at the exact same time HAMAS attacked Israel , to the hour."
If true (and depending on time zones, it might be, as they were both on the 6/7 October), then it cannot really be a coincidence, can it? Especially given Iran's hand in both.
Why would either Russia or Hamas (or Iran) want to launch these at the exact same time "to the hour"? It's not as if the Ukrainian defence would be distracted by things happening in Israel, or the IDF by events in Avdiivka.
What's "another place"?
Someone sold the offensive to Putin as the Great Breakthrough Suprise Attack? Timing it with an attack on Israel would have had all that jazz of “distracting the Americans”, “opening a new front - at no expense to us”, “the world will be looking the other way”…
It’s all in Red Storm Rising…
Yes maybe around about the same time - but why would it need to be the exact same hour?
The childish belief that this would be the Great Breakthrough, so that hours would count?
See the start of the hilariously bad film the Battle of The Bulge. The hundred hour clock…
I detest that film. The whole point of the batle was that it was fought out under heavy cloud in the middle of winter. So where do they film it? Spain. With clear blue skies. And US tanks that looking nothing like the German stuff.
Awful. Just awful.
Though Robert Shaw does give an interesting take on mentality of the “realist” hard core fanatic Nazis who fought to the steps of the Bunker.
“Realist” because they admitted what they were facing, but fought on anyway. And killed millions more for no point what so ever.
Do you really believe that UK bond market prices are not principally set by participants future expectations of inflation?
I believe that in any market, if a large holder of something is racing to offload that thing, that reduces its value. The Bank insists that the impact of its sell off on yields is minimal - it's reasonable then to ask why the Bank's intervention to stabilise the markets by buying bonds worked, and why when it stopped they continued to rise, despite Sunak/Hunt giving an avowedly professional and reassuring performance.
1) The Bank of England did not sell a single bond in September 2022. It announced it would at a future date.
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
1) The market prices in expectations, so simply announcing that it will is sufficient to move markets.
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
Point 1 is true but was small compared to the movement on Friday during the mini budget.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
The announcement by the Bank of England happened on the Thursday, so a Friday movement in the markets is entirely fitting with it being affected by the Bank's announcements. Can't divorce one from the other.
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
You're talking rubbish. The BoE announcement was at 12pm on Thursday and yields rose slightly in response. It was already expected by markets as passive QT (not reinvesting maturing bond payments) started in March 2022.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I broadly agree. The BoE did not cover itself in glory, the QT policy was very badly timed, and they had been painfully slow in seeking to address the surge in inflation. But the fiscal policy of Kwarteng and Truss was reckless in the extreme and completely ignored the highly vulnerable position the UK was in. I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
'Cost' of the tax cuts in the mini budget: £45bn
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
The tax cuts. They were a year on year cost, not a one off. Also QT is desirable. It shows that we are interested in maintaining the fiscal base of our fiat currency and it has the potential to reduce the money supply reducing inflation expectations. Ceteris paribus it should protect the currency and reduce imported inflation.
It was the timing that was awry.
QT creates supply of bonds in the secondary markets which will raise gilt yields and therefore mortgage rates, which will push CPIH up in the short term before any demand destruction can push core inflation back down. It's a completely stupid policy to start QT heading into a high inflationary period, you don't need the additional upwards pressure on rates to bring inflation back down, high interest rates will do that anyway.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
Yes QT is the wrong policy to tackle inflation. Better to rise base rates slightly higher and avoid the distortion in fiscal policy than try to do it via QT as well (at least active QT, passive QT fine as not crystallising loses).
I'm also not sure the indemnity to the Treasury is strictly necessary, economically speaking. Not all countries have it.
Yes, the indemnity policy is another example of our "Rolls Royce" civil service making an error. The treasury should have told the BoE to shut the fuck up, they decided, as an independent body, to buy a bunch of gilts and they, as an independent body, need to eat the losses or not fucking sell them at such a gigantic loss.
Which is all very well, until you can't find anyone else to buy your gilts.
Comments
2) Its intervention worked because the market was in freefall with the number of forced sellers increasing with every 0.5% increase in long-dated yields (which was happening in a matter of hours, normally it takes weeks in a volatile market). There was no buyer of sufficient size to buck this trend until the BoE intervened.
3) Base rates rose higher than previously expected to combat inflation and are now expected to remain high. This is the primary reason for higher bond yields now.
4) UK and US debt issuance remains high by historical standards, which combined with the BoE/FED selling bonds is applying additional upward pressure on yields. But it is gradual as the market finds the right clearing price.
Truss and Kwarteng deliberately took a 'shock and awe' approach to fiscal policy. They achieved that, just not in the way they had hoped.
Everyone likes tax cuts funded by squeezing the size of the state, right?
"Small improvements in Blackpool bus services" sort of headlines doesn't make up for it.
BTW, as one living in the far north of England and an occasional visitor to my native London, it is obvious to anyone that WRT public transport, London and the north are different like Vienna and rural North Korea are different.
And it has also both improved my opinion of Rory Stewart greatly, and explained why promotion eluded him.
Everyone likes tax rises to spend more money on our voters welfare state, right?
Brilliant. What? “If you look at the details,” she said, “this did not show a swing to Labour.” Because, she reckoned, the defeat was actually due to the Tory vote plunging, rather than the Labour vote going up. Which is true, but also what I believe is known as “a swing”. Keegan’s argument, though, was that no individual Conservative voters had actually changed their minds. They’d just stayed home.
https://www.thetimes.co.uk/article/we-really-cant-wait-15-months-for-an-election-k3wp53lvs
2) The forced sellers were being forced to sell after the BoE had announced it would sell bonds which devalued them.
3) Base rates have risen globally.
4) Agreed, which is part of the reason why the BoE selling bonds is economic vandalism of the highest order. It is like selling gold all over again and making taxpayers write the cheque.
This isn’t a neat, leather bound volume, with brass corners and good paper, but an amorphous collection of The Ways Things are Done.
Politicians of every stripe since the first Parliament say in Westminster Hall have noticed this. The first Cromwell was notable for taking control of the administration, rather than it controlling him.
The policies in question are no better or worse than those proposed by the politicians. How could they be? They are proposed and enacted by the same shallow thinking - generalist nostrums made manifest. Actually evidenced research is sometimes involved, but only incidentally.
As much as anything, these policies are as a result of the inertia of the system. Not some conspiracy.
Insight of the Day
Rishi Sunak is the early 20th-century's answer to Gerald Ford . . . just without Jerry's charisma.
What's "another place"?
It is a truth universally acknowledged that a single man in possession of a gsoh & a six pack must be in want of a fit bird
The blob isn't so much a conspiracy as simply a handbrake on any change happening.
It's like opposition leaders moaning about the press giving them a hard time - that may be true and is not a conspiracy either, but it's their job to overcome it.
Point 2 is simply untrue - the size of movements that day was in the normal range. It all kicked off on Friday and Monday.
Point 4 I agree QT isn't necessary.
You can blame the BoE it you wish, but I was following yields continuously during that week and know exactly what went on in the LDI market. Rising rates and the BoE may have dried the wood but Truss/Kwarteng lit the match. And the BoE put out the fire just in time before the LDI crisis became a banking crisis.
Fiscal irresponsibility had consequences.
It’s all in Red Storm Rising…
Its like Chancellor's Budgets that sound good on the day, then have fallen apart two days later.
The BoE "put out the fire" by reversing its own announcement. The BoE set the fire, but that doesn't excuse the Chancellor who should have known what the Bank was upto and not timed his statement at the same time as the Bank's, or better instructed the Bank that the taxpayer would not be writing a blank cheque for QT so the Bank would have to operate in a way that doesn't affect taxpayers finances.
The mini budget was on Friday morning - I know because I was on a team meeting where I saw yields rise rapidly as Kwarteng spoke (much more than all Thursday) - which led to the almighty sell-off. The size and scale of unfunded tax cuts with no OBR report shocked the market.
Your alternative view of history undermines the valid criticism of the BoE by trying to defend Truss/Kwarteng who are undoubtedly lit the match.
I’ve mentioned before - I was told that during COVID, ministers gave written instructions to do X. Y was done instead. Civil servants became angry when told that, at the COVID enquiries, if asked, the ministers in question wouldn’t take responsibility for Y.
https://x.com/LoisMcLatch/status/1715774964459053116?s=20
of an ongoing project despite opposing its construction before works began.
See also "The Civil Service", which takes the blame for Ministers' uselessness and, of course, can't defend itself, making it even easier to blame.
I think it’s long term effects have been exaggerated but short term we stepped off a cliff without a parachute.
DeSantis-Haley feud escalates with dueling attack ads
The super PAC supporting Ron DeSantis is going up with a new web ad portraying Nikki Haley as a flip-flopper.
In the escalating feud between Ron DeSantis and Nikki Haley, the super PAC supporting the Florida governor is going up with a new ad portraying Haley as flip-flopping over aid to Palestinians in Gaza.
https://www.politico.com/news/2023/10/20/desantis-haley-feud-escalates-with-dueling-attack-ads-00122834
‘I’m disappointed’: Even Tim Scott’s friends and fans see a campaign on the ropes
Scott’s polling is down, his super PAC is in retreat and his hometown newspaper is cheering on Nikki Haley instead.
. . . In a strategy shift, Scott over the past two weeks has appear[ed] eight times on CNN, CBS, ABC and CNBC after spending a summer engaging almost exclusively with the conservative press.
The shake-up may come too late to energize Scott’s faltering campaign.
After months of staying out of the conversation, the South Carolina senator is now sputtering below 2 percent in national polls. On Saturday, Scott’s hometown newspaper called for the Republican field to coalesce not around Scott, but rival South Carolinian Nikki Haley, to take on Donald Trump directly. Even some prominent Scott fans are beginning to acknowledge Scott’s presidential campaign has been a disappointment, and that his path forward appears dim. . . .
[T]he first debate [was] a highly anticipated event where Scott spoke less than most of the other candidates and seemed to disappear for long stretches. Multiple Scott allies point to that moment — both the senator’s seeming lack of preparedness for the dynamics of the debate stage and refusal to embrace an aggressive earned-media strategy ahead of time — as a significant turning point. Ever since, Scott has trended down in Iowa, New Hampshire and in national polling. In an ominous sign for the campaign, his super PAC this week announced it was canceling millions of dollars in fall advertising. . . .
https://www.politico.com/news/2023/10/22/tim-scott-disappointed-campaign-00122896
He Was Once a Favorite of the Right. Now, Mike Pence Can’t Get a Crowd of 15 to a Pizza Ranch.
The former vice president has gone all out to win Iowa. But is anyone listening?
ATLANTIC, Iowa — On a crisp evening in a small town not far from Iowa’s southwestern border, Mike Pence’s decades-long quest for the White House has come down to a coin toss.
Here he is, the most recent former GOP vice president, standing at the 50-yard-line of a high school football field in a town just shy of 7,000. The team captains stand alongside him and his wife Karen, the smell of brats grilling and corn popping in the air. Tails. The hometown Trojans win the toss against the Perry Bluejays. “There’s nothing like Friday night lights,” he will soon tell a reporter from the student newspaper. “We wouldn’t have missed it for the world.”
Next, he makes his way to the press box to provide color commentary for the game on the local AM radio station. . .
Pence had capably debated Kamala Harris in front of an audience of 57.9 million back in 2020 and led the White House’s coronavirus task force press briefings as the world watched. But this was Iowa, and he was fretting about an AM radio hit. Pence, determined to get any Iowa voter to listen to him, so help him God, needed this.
. . . Nearly six months into his presidential campaign, and fewer than 90 days until the Iowa caucuses, Pence is not seeing massive crowds like his former running mate Donald Trump, or his fellow Midwesterner Vivek Ramaswamy, or Florida Gov. Ron DeSantis, or even his longtime frenemy, former U.N. Ambassador Nikki Haley. Thirty folks at Penn Drug store in Sidney on a recent Friday morning; another 30 at the Olive Branch Restaurant in Greenfield that afternoon; 60 at a senior center in Glenwood the next day. Nor is he seeing anything but single-digit backing in polls. In Iowa, he’s currently averaging just 2.6 percent among Republican voters. . .
“The media has already decided how all this is going to end,” he told just 13 people at a Pizza Ranch in Red Oak. “But as you all know, I think Iowa has a unique opportunity to give our party, give our country a fresh start.” He encouraged them to “keep an open mind.”
. . . Iowa inflicts its own quadrennial and peculiar political indignities and hazing rituals on candidates. But few have submitted to them so fully as Pence, who even his own aides admit must deliver a surprise finish here next January to keep his decades-long presidential ambitions alive. He was the only candidate to actually ride a motorcycle at Iowa Sen. Joni Ernst’s July Roast and Ride. He spent more time at the Iowa State Fair than any other candidate. . . .
https://www.politico.com/news/magazine/2023/10/21/mike-pence-sad-presidential-campaign-00122589
Addendum - Many PBers likely shocked - and appalled - to discover that in America, pizza is raised on ranches.
Cost of underwriting the Bank's losses on its QT programme (as announced, the actual cost based on monthly payments so far has been higher): £80bn
Which is more fiscally irresponsible?
Personally, professionally, individually, collectively.
It was the timing that was awry.
‘The Blob’ specifically was, iirc, a Cummings term to describe the educational establishment, not entirely unfairly it has to be said.
It reflects through inverted binoculars Chief Bromden’s ‘combine’ from One Flew Over The Cuckoo’s Nest. A system which grinds down oppresses the powerless, but is a *system* with no evil overlord at the top. Just a way of working that keeps the shit running down the pyramid and the money rising up.
Bromden and the Tories differ in they are at opposite ends of the pyramid. Both believe they are victims but only one is correct.
Because if there is money to be made (or lost) people don't wait until the next day to do it.
https://thoughtbot.com/blog/chestertons-fence
It shows how weak and divided die Linke are that they didn't expel Wagenknecht months ago, she has been talking about starting her own party for over a year now.
Worse still is that QT right now is crystallising a huge haircut for the taxpayer because gilt prices are rock bottom, increasing our necessary borrowing and further sending up gilt supply and crashing gilt prices further. They are pushing gilts into a negative feedback cycle which is why we've gone from having a market premium on gilts to very much the opposite which can no longer be blamed on Liz the lettuce.
God knows, we need a change of government but I really fear that a wet behind the ears Labour administration will not have a chance in hell of doing anything about this. It is a major problem.
https://www.threads.net/@rosieisaholt/post/CyvJVsKs1GO
From ONS;
There were an estimated 5.87 million employees in the public sector in June 2023...
There were an estimated 27.01 million employees in the private sector in June 2023...
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/publicsectorpersonnel/bulletins/publicsectoremployment/june2023
Now, I'm sure it's possible to cut 1 in 6 jobs from the public sector, but I don't think you'd like the consequences. Getting rid of the entire Civil Service, for example, only gets you halfway there.
Which illustrates the difficulty with the 'No, Minister' scenario. I'm sure that sometimes, the establishment squashes radical new ideas out of arrogance. But a lot of radical ideas are rightly squashed because they're not going to work.
In other words, it doesn't create an additional liability/costs for the government.
I'm also not sure the indemnity to the Treasury is strictly necessary, economically speaking. Not all countries have it.
I was waiting for my hamburger at a local Shake Shack, when I saw a large, middle-aged lady come in, and pick up two large sacks. Since it was crowded, and the door rather heavy, I opened the door for her. She smiled and called me a real “gentlemon” — from which you can probably guess more about the lady.
(It still surprises me to see how pleased many girls and women are by such ordinary acts of politeness. I think that’s especialy true of those who aren’t sure everyone thinks of them as “ladies”, because they are too young, or too poor.
But, as with giving presents, it probably does more for me, than for them.)
Apparently, instead of confining herself to the contents of her red boxes, she changed the policy (bigger reductions) on the say so of some FRS who had a Professorial Chair in the field.
I quite understand their frustration. If politicians ignore the experts and start asking mere professors for advice….
"UK government faces £150bn bill to cover Bank of England’s QE losses - https://on.ft.com/408560K"
Reformers consider the Blob so strong in some states that the reformers back "charter" schools to get around it, rather than confronting it directly.
Pension spending will have to continue rising, because more pensioners.
Health spending will likely continue rising because the alternatives are politically unacceptable.
Ditto schools. There are no pain free savings left to make.
Pretty much everything else is pretty much loose change.
It would have been better had the currently retiring generation paid/saved more over the last forty years, but it's too late to do anything about that now.
See the start of the hilariously bad film the Battle of The Bulge. The hundred hour clock…
Awful. Just awful.
It is often forgotten that most civil servants aren't pinstripe suited Sir Humphreys but frontline staff in say the DWP answering hundreds of phone calls per day from exhausted claimants who yet again have found a cock up in their benefit payments.
@US_Stormwatch
Some forecast models predict that 20-30 inches of rain could fall in the next 24 hours near Al Ghaydah, Yemen, as Tropical Cyclone Tej stalls over the region.
Al Ghaydah receives ~2 inches of rain per year, which means over 10 year's worth of rain could fall in just 24 hours, leading to catastrophic flooding.
“Realist” because they admitted what they were facing, but fought on anyway. And killed millions more for no point what so ever.
Conservative - Peter Bone - 32,277 - 62.2%
Labour - Andrea Watts - 13,737 - 26.5%
Liberal Democrats - Suzanna Austin - 4,078 - 7.9%