At the very centre of this crisis, two arsonists responsible for the heat, Reeves and Starmer - who put the government on the spot with this insane needless borrowing plan in the first place.
I personally wouldn't agree with that at all ; look again at Germany's bailout. I would say it's the combination of things, as per the IFS's report, that's the issue.
It’s not complicated. UK gov proposes £220B of expensive borrowing promising to give much away to those who don’t need it. And who came up with the idea of doing such a stupid thing, becuase an aggressive extension of windfall tax would have brought in £30B tops before hitting investment - saying anything different would have been Starmer and Reeves looking you in the face and lying - hence they talked about 6months worth not probable through life costs.
Other countries start with different models of providing energy, more quasi state owned than us for example. But the key thing here is the UK government could last Friday have announced the borrowing for freeze, could have put it through the OBR, could have not announced the £45B growth push instead announced windfall tax extension, and talked about plans to balance books in medium term, and STILL the markets would have reacted the way they did, still home grown and foreign economists calling it to big a borrowing hit for the freeze programme - because, IT IS. We should tackle the bills problem with one of the less regressive, better targeted much cheaper options available.
It's already going to work out a lot cheaper than 60bn. Thank goodness.
You think the £220B+ of freezing bills is going to work out cheaper than £60B?
Firstly. Ignore the front of the Telegraph - the Telegraph is lying to you - remember how the paper was summoned up on Yes Minister “they think we are being controlled by a foreign country and permanently angry about it”.
It’s not the £2B top rate tax cut that bothers economists and markets everywhere they want reversed, it’s the other £218B+ of uncosted unmitigated borrowing they rightly find incredible.
Secondly, you think you can do what the US does and get away with it like they they do - here’s the twist - you can’t. UK can’t get away with the same policy tricks the US gets away it, we can’t copy their successes, you just have to suck it down that you can’t.
This IMF statement is extraordinary. The cut to the 45% tax rate is fiscally irrelevant. So why are they making a public pronouncement to the effect it must be reversed and that they are “monitoring the UK”?
I suspect there’s far more going on right now than meets the eye. There’s no rational reason for UK gilts to be attacked in this way.
Could you expand on whatever you are impying here, moonshine ? I'm genuinely Interested to hear what you mean.
Global markets are basically just a giant bipolar hive mind. They’re quite easy to tip one way or the other, it just needs a sufficient pool of cash or media reach to shift sentiment. I’ve seen it done quite effectively on the micro but it’s also possible on the macro. Sometimes it needs an active conspiracy, sometimes it’s just big money pushing a self fulfilling narrative.
I think we’re seeing a couple of things going on. Instinctive anti Brexit among key decision makers. Brexit really ain’t that big a deal and yet you still see senior (mostly foreign) execs at bulge bracket banks banging on about it.
This IMF attack shows a second ideological front, namely that the UK has an anti socialist govt and that cannot be allowed to stand! The 45% tax cut is white noise in the UK’s fiscal picture but that’s what they choose to highlight? After a decade lf fiscal incontinence bailing out banks after 08, the whole economy in covid and now again with the energy shock?
There’s not really a rationale reason for the pound or gilts to be attacked this severely, UK inflation, debt and the deficit all compare reasonably or even quite favourable vs peers. And Uk Inc has much going for it, far more so in terms of growth prospects than most immediate peers.
It doesn’t need to be an organised conspiracy. Most market participants just read and reflect sentiment. “I’m selling gilts today like a mother-f!”. Why? “Because the market is selling gilts”.
Of course there is room for an organised conspiracy too. Whether we wish to admit it or not, we are basically engaged right now in WW3, just that it looks and feels very different to how anyone predicted. It was low liquidity post weekend asia hours when this story really got going, plenty of poorly regulated money out there. The story doesn’t need that to be the culprit but who am I to rule it out.
Could be the chinese are supporting the russians by selling off us treasurys and uk gilts
I'm suddenly remembering a story I actually posted on a speculation of combined chinese-russian efforts to weaken the pound and dollar at the beginning of the war. This is the part of moonshine's post that I find most interesting.
Nordstream + gilts. Putin strikes back?
Maybe we should offer Eurovision to Lviv (and guarantee security) in response.
NATO may not feel able to send in the troops, but Putin never said anything about the European Broadcast Union. No one messes with those guys.
I believe Putin means it when he says he thinks Nato is at war with him. There are only so many ways he can sting back. I wouldn’t rule it out in the gilts market to be honest. Nordstream is a clear story of Russian hybrid warfare. It spikes gas prices again because it shows capability and probable willingness to do it on pipelines that are active.
Bit worried about Norwegian gas and our offshore turbines. Hope the RN aren't actually as useless as some of our posters make out.
If that happens then it's a hot war and we'll have a lot more to worry about than just our offshore turbines.
Unfortunately it all feels terribly, terribly possible at this moment in time.
Look on the plus side - it solves the pensions crisis, the obesity crisis, the cost-of-living crisis and climate change.
I fear we may be at march in the threads film...the nuclear exchange occurred at the end of may so we may get a nice christmas present
Here is another way to look at it. Putin lets off steam by blowing a gas pipe. US doesn't respond to this but makes it clear where the red lines are. Both sides happy - Russia can show to its domestic audience it's tweaking the West, the West doesn't get a nuclear incident.
Where you should be scared is if Russia does something serious and is open about it.
I imagine there’s some (modest) concern that the UK’s problems could trigger a wider contagion.
As others have pointed out, the UK’s net position is not so different from various EU countries or indeed the US.
Liz and Kwasi have totally bungled it, they continue to bungle it, and to be honest the best outcome for the UK is that they resign tomorrow.
That’s not going to happen, so we are in for an incredibly unpleasant time. A property crash is no longer unlikely. Recourse to the IMF is of course unlikely but no longer impossible.
Meanwhile, the government are already effectively planning a 10 or 15% cut in the NHS budget in real terms.
🚨 Moody's rating agency tonight warns the UK's new fiscal policy regime is "credit negative". "A sustained confidence shock arising from market concerns over the credibility of the government's fiscal strategy...could permanently weaken the UK's debt affordability" https://twitter.com/MehreenKhn/status/1574879376801497089/photo/1
Give it six months and Moody's will have changed its tune. That is what most financial analysts do.
This IMF statement is extraordinary. The cut to the 45% tax rate is fiscally irrelevant. So why are they making a public pronouncement to the effect it must be reversed and that they are “monitoring the UK”?
I suspect there’s far more going on right now than meets the eye. There’s no rational reason for UK gilts to be attacked in this way.
Could you expand on whatever you are impying here, moonshine ? I'm genuinely Interested to hear what you mean.
Global markets are basically just a giant bipolar hive mind. They’re quite easy to tip one way or the other, it just needs a sufficient pool of cash or media reach to shift sentiment. I’ve seen it done quite effectively on the micro but it’s also possible on the macro. Sometimes it needs an active conspiracy, sometimes it’s just big money pushing a self fulfilling narrative.
I think we’re seeing a couple of things going on. Instinctive anti Brexit among key decision makers. Brexit really ain’t that big a deal and yet you still see senior (mostly foreign) execs at bulge bracket banks banging on about it.
This IMF attack shows a second ideological front, namely that the UK has an anti socialist govt and that cannot be allowed to stand! The 45% tax cut is white noise in the UK’s fiscal picture but that’s what they choose to highlight? After a decade lf fiscal incontinence bailing out banks after 08, the whole economy in covid and now again with the energy shock?
There’s not really a rationale reason for the pound or gilts to be attacked this severely, UK inflation, debt and the deficit all compare reasonably or even quite favourable vs peers. And Uk Inc has much going for it, far more so in terms of growth prospects than most immediate peers.
It doesn’t need to be an organised conspiracy. Most market participants just read and reflect sentiment. “I’m selling gilts today like a mother-f!”. Why? “Because the market is selling gilts”.
Of course there is room for an organised conspiracy too. Whether we wish to admit it or not, we are basically engaged right now in WW3, just that it looks and feels very different to how anyone predicted. It was low liquidity post weekend asia hours when this story really got going, plenty of poorly regulated money out there. The story doesn’t need that to be the culprit but who am I to rule it out.
Could be the chinese are supporting the russians by selling off us treasurys and uk gilts
I'm suddenly remembering a story I actually posted on a speculation of combined chinese-russian efforts to weaken the pound and dollar at the beginning of the war. This is the part of moonshine's post that I find most interesting.
Nordstream + gilts. Putin strikes back?
Maybe we should offer Eurovision to Lviv (and guarantee security) in response.
NATO may not feel able to send in the troops, but Putin never said anything about the European Broadcast Union. No one messes with those guys.
I believe Putin means it when he says he thinks Nato is at war with him. There are only so many ways he can sting back. I wouldn’t rule it out in the gilts market to be honest. Nordstream is a clear story of Russian hybrid warfare. It spikes gas prices again because it shows capability and probable willingness to do it on pipelines that are active.
Bit worried about Norwegian gas and our offshore turbines. Hope the RN aren't actually as useless as some of our posters make out.
If that happens then it's a hot war and we'll have a lot more to worry about than just our offshore turbines.
Unfortunately it all feels terribly, terribly possible at this moment in time.
Look on the plus side - it solves the pensions crisis, the obesity crisis, the cost-of-living crisis and climate change.
I fear we may be at march in the threads film...the nuclear exchange occurred at the end of may so we may get a nice christmas present
I'm banking on not getting irradiated by fallout from a strike on Mildenhall/Lakenheath. The usual prevailing wind would take the core fallout from a 250kt strike annoyingly close
At the very centre of this crisis, two arsonists responsible for the heat, Reeves and Starmer - who put the government on the spot with this insane needless borrowing plan in the first place.
I personally wouldn't agree with that at all ; look again at Germany's bailout. I would say it's the combination of things, as per the IFS's report, that's the issue.
It’s not complicated. UK gov proposes £220B of expensive borrowing promising to give much away to those who don’t need it. And who came up with the idea of doing such a stupid thing, becuase an aggressive extension of windfall tax would have brought in £30B tops before hitting investment - saying anything different would have been Starmer and Reeves looking you in the face and lying - hence they talked about 6months worth not probable through life costs.
Other countries start with different models of providing energy, more quasi state owned than us for example. But the key thing here is the UK government could last Friday have announced the borrowing for freeze, could have put it through the OBR, could have not announced the £45B growth push instead announced windfall tax extension, and talked about plans to balance books in medium term, and STILL the markets would have reacted the way they did, still home grown and foreign economists calling it to big a borrowing hit for the freeze programme - because, IT IS. We should tackle the bills problem with one of the less regressive, better targeted much cheaper options available.
Well, if the government is going to be handing ridiculous bungs for the best-off, the argument for them being able to pay their fare share on energy certainly increases massively in relevance there. To the extent that we seem to have a dog's dinner of an essentially Boris policy combined with the more aggressive Trussonomics policy of handing money straight to the rich on top, I agree with you there.
At the very centre of this crisis, two arsonists responsible for the heat, Reeves and Starmer - who put the government on the spot with this insane needless borrowing plan in the first place.
I personally wouldn't agree with that at all ; look again at Germany's bailout. I would say it's the combination of things, as per the IFS's report, that's the issue.
It’s not complicated. UK gov proposes £220B of expensive borrowing promising to give much away to those who don’t need it. And who came up with the idea of doing such a stupid thing, becuase an aggressive extension of windfall tax would have brought in £30B tops before hitting investment - saying anything different would have been Starmer and Reeves looking you in the face and lying - hence they talked about 6months worth not probable through life costs.
Other countries start with different models of providing energy, more quasi state owned than us for example. But the key thing here is the UK government could last Friday have announced the borrowing for freeze, could have put it through the OBR, could have not announced the £45B growth push instead announced windfall tax extension, and talked about plans to balance books in medium term, and STILL the markets would have reacted the way they did, still home grown and foreign economists calling it to big a borrowing hit for the freeze programme - because, IT IS. We should tackle the bills problem with one of the less regressive, better targeted much cheaper options available.
Well, if the government is going to be handing ridiculous bungs for the best-off, the argument for them paying their fare share certainly increases there. To the extent that we seem to have a dog's dinner of an essentially Boris policy combined with the more aggressive Trussonomics policy of handing money straight to the rich on top, I agree with you there.
This IMF statement is extraordinary. The cut to the 45% tax rate is fiscally irrelevant. So why are they making a public pronouncement to the effect it must be reversed and that they are “monitoring the UK”?
I suspect there’s far more going on right now than meets the eye. There’s no rational reason for UK gilts to be attacked in this way.
Could you expand on whatever you are impying here, moonshine ? I'm genuinely Interested to hear what you mean.
Global markets are basically just a giant bipolar hive mind. They’re quite easy to tip one way or the other, it just needs a sufficient pool of cash or media reach to shift sentiment. I’ve seen it done quite effectively on the micro but it’s also possible on the macro. Sometimes it needs an active conspiracy, sometimes it’s just big money pushing a self fulfilling narrative.
I think we’re seeing a couple of things going on. Instinctive anti Brexit among key decision makers. Brexit really ain’t that big a deal and yet you still see senior (mostly foreign) execs at bulge bracket banks banging on about it.
This IMF attack shows a second ideological front, namely that the UK has an anti socialist govt and that cannot be allowed to stand! The 45% tax cut is white noise in the UK’s fiscal picture but that’s what they choose to highlight? After a decade lf fiscal incontinence bailing out banks after 08, the whole economy in covid and now again with the energy shock?
There’s not really a rationale reason for the pound or gilts to be attacked this severely, UK inflation, debt and the deficit all compare reasonably or even quite favourable vs peers. And Uk Inc has much going for it, far more so in terms of growth prospects than most immediate peers.
It doesn’t need to be an organised conspiracy. Most market participants just read and reflect sentiment. “I’m selling gilts today like a mother-f!”. Why? “Because the market is selling gilts”.
Of course there is room for an organised conspiracy too. Whether we wish to admit it or not, we are basically engaged right now in WW3, just that it looks and feels very different to how anyone predicted. It was low liquidity post weekend asia hours when this story really got going, plenty of poorly regulated money out there. The story doesn’t need that to be the culprit but who am I to rule it out.
Could be the chinese are supporting the russians by selling off us treasurys and uk gilts
I'm suddenly remembering a story I actually posted on a speculation of combined chinese-russian efforts to weaken the pound and dollar at the beginning of the war. This is the part of moonshine's post that I find most interesting.
Nordstream + gilts. Putin strikes back?
Maybe we should offer Eurovision to Lviv (and guarantee security) in response.
NATO may not feel able to send in the troops, but Putin never said anything about the European Broadcast Union. No one messes with those guys.
I believe Putin means it when he says he thinks Nato is at war with him. There are only so many ways he can sting back. I wouldn’t rule it out in the gilts market to be honest. Nordstream is a clear story of Russian hybrid warfare. It spikes gas prices again because it shows capability and probable willingness to do it on pipelines that are active.
Bit worried about Norwegian gas and our offshore turbines. Hope the RN aren't actually as useless as some of our posters make out.
If that happens then it's a hot war and we'll have a lot more to worry about than just our offshore turbines.
Unfortunately it all feels terribly, terribly possible at this moment in time.
Look on the plus side - it solves the pensions crisis, the obesity crisis, the cost-of-living crisis and climate change.
I fear we may be at march in the threads film...the nuclear exchange occurred at the end of may so we may get a nice christmas present
Here is another way to look at it. Putin lets off steam by blowing a gas pipe. US doesn't respond to this but makes it clear where the red lines are. Both sides happy - Russia can show to its domestic audience it's tweaking the West, the West doesn't get a nuclear incident.
Where you should be scared is if Russia does something serious and is open about it.
Kylo Ren throwing a tantrum and committing racquet abuse with his lightsaber.
Putin has the capacity to cause a multi trillion dollar problem for the west and think that if he’s smart or reckless enough he might even get away with it. I am not attracted to equities right now certainly. But I still think we’ll wake up one day to the sudden news that he’s dead.
At the very centre of this crisis, two arsonists responsible for the heat, Reeves and Starmer - who put the government on the spot with this insane needless borrowing plan in the first place.
I personally wouldn't agree with that at all ; look again at Germany's bailout. I would say it's the combination of things, as per the IFS's report, that's the issue.
It’s not complicated. UK gov proposes £220B of expensive borrowing promising to give much away to those who don’t need it. And who came up with the idea of doing such a stupid thing, becuase an aggressive extension of windfall tax would have brought in £30B tops before hitting investment - saying anything different would have been Starmer and Reeves looking you in the face and lying - hence they talked about 6months worth not probable through life costs.
Other countries start with different models of providing energy, more quasi state owned than us for example. But the key thing here is the UK government could last Friday have announced the borrowing for freeze, could have put it through the OBR, could have not announced the £45B growth push instead announced windfall tax extension, and talked about plans to balance books in medium term, and STILL the markets would have reacted the way they did, still home grown and foreign economists calling it to big a borrowing hit for the freeze programme - because, IT IS. We should tackle the bills problem with one of the less regressive, better targeted much cheaper options available.
It's already going to work out a lot cheaper than 60bn. Thank goodness.
You think the £220B+ of freezing bills is going to work out cheaper than £60B?
Firstly. Ignore the front of the Telegraph - the Telegraph is lying to you - remember how the paper was summoned up on Yes Minister “they think we are being controlled by a foreign country and permanently angry about it”.
It’s not the £2B top rate tax cut that bothers economists and markets everywhere they want reversed, it’s the other £218B+ of uncosted unmitigated borrowing they rightly find incredible.
Secondly, you think you can do what the US does and get away with it like they they do - here’s the twist - you can’t. UK can’t get away with the same policy tricks the US gets away it, we can’t copy their successes, you just have to suck it down that you can’t.
That in a nutshell is it.
Any questions.
Interesting point re your last paragraph . The US being the worlds reserve currency and their huge economy gives them much more flexibility even though their national debt is huge .
Whether people like it or not the markets will give their judgement on Truss and co’s policies . The UK cannot afford a run on the pound given there’s already huge inflationary pressures . This point seems to have missed those in no 10 and 11 . Sunak has been proven right , unfortunately the Tory membership has inflicted the clueless Maggie clone on the UK and many are now going to suffer because of this .
Russia tries a nuclear attack and Putin gets whacked - if not by the internal factions then by the Chinese who can easily see such a step would lead to Japan / SK / Taiwan going nuclear.
And if Russia is about to launch nukes, it is a bit strange to be sending their Strategic Missile Force troops to be shoring up the front line:
Is Liz Truss on holiday? I haven't seen her around for ages.
Labour conference week, so she should be keeping a low profile.
I've got to say, I suspect rebel Tory MPs are grossly underestimating the reception Truss will get at the Tory conference next week.
She's doing exactly what it said on the tin. That isn't what I want, and it fairly clearly isn't sensible. But it is very much what the Tory selectorate wanted. The argument "Rishi woz right" just isn't going to go down as they think.
Heads down and make the best of it is the only realistic choice for a Tory MP who is sceptical about it all. She'll lead the Conservatives into the next election, and they've just got to hang together or hang separately.
At the very centre of this crisis, two arsonists responsible for the heat, Reeves and Starmer - who put the government on the spot with this insane needless borrowing plan in the first place.
I personally wouldn't agree with that at all ; look again at Germany's bailout. I would say it's the combination of things, as per the IFS's report, that's the issue.
It’s not complicated. UK gov proposes £220B of expensive borrowing promising to give much away to those who don’t need it. And who came up with the idea of doing such a stupid thing, becuase an aggressive extension of windfall tax would have brought in £30B tops before hitting investment - saying anything different would have been Starmer and Reeves looking you in the face and lying - hence they talked about 6months worth not probable through life costs.
Other countries start with different models of providing energy, more quasi state owned than us for example. But the key thing here is the UK government could last Friday have announced the borrowing for freeze, could have put it through the OBR, could have not announced the £45B growth push instead announced windfall tax extension, and talked about plans to balance books in medium term, and STILL the markets would have reacted the way they did, still home grown and foreign economists calling it to big a borrowing hit for the freeze programme - because, IT IS. We should tackle the bills problem with one of the less regressive, better targeted much cheaper options available.
It's already going to work out a lot cheaper than 60bn. Thank goodness.
You think the £220B+ of freezing bills is going to work out cheaper than £60B?
Firstly. Ignore the front of the Telegraph - the Telegraph is lying to you - remember how the paper was summoned up on Yes Minister “they think we are being controlled by a foreign country and permanently angry about it”.
It’s not the £2B top rate tax cut that bothers economists and markets everywhere they want reversed, it’s the other £218B+ of uncosted unmitigated borrowing they rightly find incredible.
Secondly, you think you can do what the US does and get away with it like they they do - here’s the twist - you can’t. UK can’t get away with the same policy tricks the US gets away it, we can’t copy their successes, you just have to suck it down that you can’t.
That in a nutshell is it.
Any questions.
Interesting point re your last paragraph . The US being the worlds reserve currency and their huge economy gives them much more flexibility even though their national debt is huge .
Whether people like it or not the markets will give their judgement on Truss and co’s policies . The UK cannot afford a run on the pound given there’s already huge inflationary pressures . This point seems to have missed those in no 10 and 11 . Sunak has been proven right , unfortunately the Tory membership has inflicted the clueless Maggie clone on the UK and many are now going to suffer because of this .
Is Liz Truss on holiday? I haven't seen her around for ages.
Labour conference week, so she should be keeping a low profile.
I've got to say, I suspect rebel Tory MPs are grossly underestimating the reception Truss will get at the Tory conference next week.
She's doing exactly what it said on the tin. That isn't what I want, and it fairly clearly isn't sensible. But it is very much what the Tory selectorate wanted. The argument "Rishi woz right" just isn't going to go down as they think.
Heads down and make the best of it is the only realistic choice for a Tory MP who is sceptical about it all. She'll lead the Conservatives into the next election, and they've just got to hang together or hang separately.
Most Tory MPs don’t have the intellectual ability to actually understand what is going on.
They do know however, that Truss has almost certainly lost the next election and that a seize-up of the mortgage market is not a good thing.
The conference will be fascination to watch. Truss takes on the world, while depressed MP clap robotically, fighting to suppress nausea.
The commentary from the US is somewhat odd. Maybe we have overreacted somewhat? I notice that Paul Krugman and Simon Wren Lewis, two economists who I don't ever remember saying much good about the Conservative party think that a Sterling crisis is unlikely. Krugman saying that the emails he was getting from city economists said their main problem was that the budget was 'moronic.'
Krugman, whilst implacably against Brexit, said immediately that his fellow economists’ predictions of doom were vastly overdone. He may be biased, but he does have a sense of proportion.
Simon Wren Lewis, being a former economic advistor to Corbyn, presumay is relaxed about market turmoil!
Fuck them and their pathetic opining on whether the UK's tax changes will result in 'inequality' - Mind your own fucking business.
Is that you Liz?
Plainly it's too much to hope for that a remainer has a shred of appreciation for how utterly out of order it is for a series of figures from international bodies to seek to intervene in the domestic policies of the elected UK Government. If someone from the IMF kicked you in the face you'd send them a letter of thanks.
Will you be saying that when the UK goes cap in hand for an IMF loan?
It must be terrible to be so full of craven self-loathing.
It’s not the package of tax cuts and push for growth in particular Lucky - it’s the amount of borrowing to freeze the energy market that has no costings done for it but involves vast swathes of all that borrowed money handed out to so many who don’t need hand out.
I’m putting you in charge at the IMF Lucky with task to comment on what UK is borrowing for the freeze, and how they will be using the incredible amount of borrowed money - let’s be honest you would come out with exactly the same comment? Why? Becuase you don’t have to be paid by the IMF to say it, you can see for yourself right now that it’s quite simply the wrong bonkers route to have gone down.
UK politics and the world outside is now waking up to the stupid thing the UK has done here with such massive borrowing for unnecessary hand outs to so many who don’t need it. The up to 45B of welcome with a few controversial tax cuts is mere fluff round the edges easily brushed off - the UKs mistake to borrow so much to freeze its energy market is so big it can tip the whole world into recession.
Yes. The subtext of the IMF statement is 'we dont want you doing the energy bailout' hence the 'targetted' comments. Reversing 2 billion for the 45p rate will make zero difference to the macro picture. This needs to be made clear. These interventions, the markets etc are NOT about the 45p tax rate
Exactly.
The bit, rather big bit, the markets and the IMF, other leading economists around the world are heated about, was actually somehow hidden last Friday domestically in our country by the row over Gordon Brown’s outgoing trick present for George Osborne from 2010 being, courageously as they say in Yes Minister, binned.
UK politics has sleep walked into this stupid unnecessary and expensive freeze policy - the Boris administration and Treasury seem to have done nothing to have helped the new government by warning them about it and giving them alternatives, Lib Dems and Labour initially proposed it, and have made a huge mistake by failing to publicly announce they changed their minds, because they own it too now. Labour and Lib Dems own this run on the pound as much as the Tories because it’s their stupid freeze policy that is causing it.
LuckyGuy is ruffled by foreign economists calling it mad and regressive, then listen to all our home grown economists in our own think tanks, most of whom have called it mad and regressive at every stage themselves.
Is Liz Truss on holiday? I haven't seen her around for ages.
Labour conference week, so she should be keeping a low profile.
I've got to say, I suspect rebel Tory MPs are grossly underestimating the reception Truss will get at the Tory conference next week.
She's doing exactly what it said on the tin. That isn't what I want, and it fairly clearly isn't sensible. But it is very much what the Tory selectorate wanted. The argument "Rishi woz right" just isn't going to go down as they think.
Heads down and make the best of it is the only realistic choice for a Tory MP who is sceptical about it all. She'll lead the Conservatives into the next election, and they've just got to hang together or hang separately.
Most Tory MPs don’t have the intellectual ability to actually understand what is going on.
It's been a relief not having Dorries pop up every few minutes and share her wisdom. Unfortunate that now we have to cope with JRM thinking he's a serious player.
Is Liz Truss on holiday? I haven't seen her around for ages.
Labour conference week, so she should be keeping a low profile.
I've got to say, I suspect rebel Tory MPs are grossly underestimating the reception Truss will get at the Tory conference next week.
She's doing exactly what it said on the tin. That isn't what I want, and it fairly clearly isn't sensible. But it is very much what the Tory selectorate wanted. The argument "Rishi woz right" just isn't going to go down as they think.
Heads down and make the best of it is the only realistic choice for a Tory MP who is sceptical about it all. She'll lead the Conservatives into the next election, and they've just got to hang together or hang separately.
Most Tory MPs don’t have the intellectual ability to actually understand what is going on.
They do know however, that Truss has almost certainly lost the next election and that a seize-up of the mortgage market is not a good thing.
The conference will be fascination to watch. Truss takes on the world, while depressed MP clap robotically, fighting to suppress nausea.
If they feel that way (and I suspect they are right to) then they have a couple of years to suss out alternative job options. Meanwhile, the only credible option is not to rock the boat, hope they are wrong and, short of that, hope that it's 1974 rather than 1997.
All this stuff about further changes of leader or radical changes of policy is away with the fairies nonsense. They've made their bed and must lie in it - the alternatives aren't realistic.
High rates “not seen since the financial crisis” implies the financial crisis caused high rates
Quite the opposite!
That is a quote from a pro-Truss source, during the Conservative "leadership" campaign, lampooning (or so he thought) her opponents for saying her expressed economic policies were irresponsible.
At the very centre of this crisis, two arsonists responsible for the heat, Reeves and Starmer - who put the government on the spot with this insane needless borrowing plan in the first place.
I personally wouldn't agree with that at all ; look again at Germany's bailout. I would say it's the combination of things, as per the IFS's report, that's the issue.
It’s not complicated. UK gov proposes £220B of expensive borrowing promising to give much away to those who don’t need it. And who came up with the idea of doing such a stupid thing, becuase an aggressive extension of windfall tax would have brought in £30B tops before hitting investment - saying anything different would have been Starmer and Reeves looking you in the face and lying - hence they talked about 6months worth not probable through life costs.
Other countries start with different models of providing energy, more quasi state owned than us for example. But the key thing here is the UK government could last Friday have announced the borrowing for freeze, could have put it through the OBR, could have not announced the £45B growth push instead announced windfall tax extension, and talked about plans to balance books in medium term, and STILL the markets would have reacted the way they did, still home grown and foreign economists calling it to big a borrowing hit for the freeze programme - because, IT IS. We should tackle the bills problem with one of the less regressive, better targeted much cheaper options available.
It's already going to work out a lot cheaper than 60bn. Thank goodness.
You think the £220B+ of freezing bills is going to work out cheaper than £60B?
Firstly. Ignore the front of the Telegraph - the Telegraph is lying to you - remember how the paper was summoned up on Yes Minister “they think we are being controlled by a foreign country and permanently angry about it”.
It’s not the £2B top rate tax cut that bothers economists and markets everywhere they want reversed, it’s the other £218B+ of uncosted unmitigated borrowing they rightly find incredible.
Secondly, you think you can do what the US does and get away with it like they they do - here’s the twist - you can’t. UK can’t get away with the same policy tricks the US gets away it, we can’t copy their successes, you just have to suck it down that you can’t.
That in a nutshell is it.
Any questions.
Interesting point re your last paragraph . The US being the worlds reserve currency and their huge economy gives them much more flexibility even though their national debt is huge .
Whether people like it or not the markets will give their judgement on Truss and co’s policies . The UK cannot afford a run on the pound given there’s already huge inflationary pressures . This point seems to have missed those in no 10 and 11 . Sunak has been proven right , unfortunately the Tory membership has inflicted the clueless Maggie clone on the UK and many are now going to suffer because of this .
Collapse of the £ now a news item on CNN and NPR
We’ve had falls in the pound before but what makes this much worse is the timing , so a perfect storm and Truss and co decided to go sailing at that point ! They now have a choice to u-turn on the tax cuts which won’t happen , to bring in cuts to services or see the BOE raise interest rates much higher than would have been the case to support the pound . Standing there cutting services after you’ve just given unnecessary tax cuts to the richest would look horrendous to most people which leaves the interest rate hikes as the likely scenario .
Is Liz Truss on holiday? I haven't seen her around for ages.
Labour conference week, so she should be keeping a low profile.
I've got to say, I suspect rebel Tory MPs are grossly underestimating the reception Truss will get at the Tory conference next week.
She's doing exactly what it said on the tin. That isn't what I want, and it fairly clearly isn't sensible. But it is very much what the Tory selectorate wanted. The argument "Rishi woz right" just isn't going to go down as they think.
Heads down and make the best of it is the only realistic choice for a Tory MP who is sceptical about it all. She'll lead the Conservatives into the next election, and they've just got to hang together or hang separately.
Most Tory MPs don’t have the intellectual ability to actually understand what is going on.
They do know however, that Truss has almost certainly lost the next election and that a seize-up of the mortgage market is not a good thing.
The conference will be fascination to watch. Truss takes on the world, while depressed MP clap robotically, fighting to suppress nausea.
If they feel that way (and I suspect they are right to) then they have a couple of years to suss out alternative job options. Meanwhile, the only credible option is not to rock the boat, hope they are wrong and, short of that, hope that it's 1974 rather than 1997.
All this stuff about further changes of leader or radical changes of policy is away with the fairies nonsense. They've made their bed and must lie in it - the alternatives aren't credible.
Obviously I have no time for Tory MPs. The problem is that the bed they’ve made is our bed.
For the sake of the country, Truss and Kwasi need to be replaced, with someone who doesn’t act like they are addicted to turps.
For what it's worth, I don't think the Kwarteng/Truss plans are as bad as are being portrayed.
For a start, with the exception of the removal of the 45% rate, most of the measures are targeted towards those on middle and lower incomes, in particular the abolition of the NI increase, and the changes to Stamp Duty.
Now, there are quite a few things I would do differently. For example, I would have simplified taxes around the £100k mark (i.e. no more removal of the tax free allowance). And instead of a blanket cut to corporation tax, I would probably have increased investment incentives.
Probably, as well, I would have looked to have limited the increase in the deficit. Because right now there is a very real risk that - if growth does not accelerate as hoped for - then the UK government will be forced into some measures to close the gap next year. And closing a gap is always a hell of a lot more painful than not letting it appear in the first place.
I find it incredible that the unelected IMF thinks it can criticise an elected government when it implements its tax policies. Astonishing really.
The IMF is a treaty organisation. You can ask your MP to push for Britain to renege on the treaty or to propose a review of it or for the IMF's board to sack its managing director.
You might as well say the Bank of England is unelected.
Is it astonishing that UNESCO or the IAEA ever criticise governments?
I find it incredible that the unelected IMF thinks it can criticise an elected government when it implements its tax policies. Astonishing really.
I’m not a big fan of the IMF but that doesn’t excuse the shambles Truss and Kwarteng have made of these tax cuts , it was the height of arrogance to ignore advice and refuse to publish anything to support these .
Is Liz Truss on holiday? I haven't seen her around for ages.
Labour conference week, so she should be keeping a low profile.
I've got to say, I suspect rebel Tory MPs are grossly underestimating the reception Truss will get at the Tory conference next week.
She's doing exactly what it said on the tin. That isn't what I want, and it fairly clearly isn't sensible. But it is very much what the Tory selectorate wanted. The argument "Rishi woz right" just isn't going to go down as they think.
Heads down and make the best of it is the only realistic choice for a Tory MP who is sceptical about it all. She'll lead the Conservatives into the next election, and they've just got to hang together or hang separately.
Most Tory MPs don’t have the intellectual ability to actually understand what is going on.
They do know however, that Truss has almost certainly lost the next election and that a seize-up of the mortgage market is not a good thing.
The conference will be fascination to watch. Truss takes on the world, while depressed MP clap robotically, fighting to suppress nausea.
If they feel that way (and I suspect they are right to) then they have a couple of years to suss out alternative job options. Meanwhile, the only credible option is not to rock the boat, hope they are wrong and, short of that, hope that it's 1974 rather than 1997.
All this stuff about further changes of leader or radical changes of policy is away with the fairies nonsense. They've made their bed and must lie in it - the alternatives aren't credible.
Obviously I have no time for Tory MPs. The problem is that the bed they’ve made is our bed.
For the sake of the country, Truss and Kwasi need to be replaced, with someone who doesn’t act like they are addicted to turps.
The route to do that is via the next election.
I agree with the thrust of what you say, but ultimately it's rhetoric. This is a betting site, and we're trying to predict what can happen and will happen in the real world. Tory MPs turning round and saying "oh yeah, you're right", and doing something that plunges themselves into further chaos whilst offering limited chance of a better outcome, is just not really on the cards.
The level of overseas commentary is completely unacceptable. Yellen might like to consider the US crushing everything because of Fed activity is a reason for the global turmoil. Globalists swarming.
Banking systems of Ghana and Egypt have run out of foreign currency as a direct consequence of the Fed’s irrational hawkishness. Places that really are vulnerable to currency crises. Probably there are others that I’m not as familiar with. The world today is a bizarre place that is for sure. It’s not helped by certain posters thinking they are clever pasting glib tweets that shine no light whatsoever.
It's not just the Fed's policy, it's also high energy prices. If you're -say- Pakistan, then your USD foreign reserves are being annihilated by the increased cost of importing coal and gas.
For what it's worth, I don't think the Kwarteng/Truss plans are as bad as are being portrayed.
For a start, with the exception of the removal of the 45% rate, most of the measures are targeted towards those on middle and lower incomes, in particular the abolition of the NI increase, and the changes to Stamp Duty.
Now, there are quite a few things I would do differently. For example, I would have simplified taxes around the £100k mark (i.e. no more removal of the tax free allowance). And instead of a blanket cut to corporation tax, I would probably have increased investment incentives.
Probably, as well, I would have looked to have limited the increase in the deficit. Because right now there is a very real risk that - if growth does not accelerate as hoped for - then the UK government will be forced into some measures to close the gap next year. And closing a gap is always a hell of a lot more painful than not letting it appear in the first place.
As you know, the issue is not with individual measures.
The issue is with a seeming disregard for affordability, inflation risk, and scrutiny/challenge from institutions (OBR, Treasury).
For what it's worth, I don't think the Kwarteng/Truss plans are as bad as are being portrayed.
For a start, with the exception of the removal of the 45% rate, most of the measures are targeted towards those on middle and lower incomes, in particular the abolition of the NI increase, and the changes to Stamp Duty.
Now, there are quite a few things I would do differently. For example, I would have simplified taxes around the £100k mark (i.e. no more removal of the tax free allowance). And instead of a blanket cut to corporation tax, I would probably have increased investment incentives.
Probably, as well, I would have looked to have limited the increase in the deficit. Because right now there is a very real risk that - if growth does not accelerate as hoped for - then the UK government will be forced into some measures to close the gap next year. And closing a gap is always a hell of a lot more painful than not letting it appear in the first place.
As you know, the issue is not with individual measures.
The issue is with a seeming disregard for affordability, inflation risk, and scrutiny/challenge from institutions (OBR, Treasury).
Perhaps the roles of Prime Minister and Chancellor are themselves just vestiges of an antiquated system and too risky to be entrusted to politicians who might have their own ideas. In this day and age, can it really be right not to leave it to the experts?
For what it's worth, I don't think the Kwarteng/Truss plans are as bad as are being portrayed.
For a start, with the exception of the removal of the 45% rate, most of the measures are targeted towards those on middle and lower incomes, in particular the abolition of the NI increase, and the changes to Stamp Duty.
Now, there are quite a few things I would do differently. For example, I would have simplified taxes around the £100k mark (i.e. no more removal of the tax free allowance). And instead of a blanket cut to corporation tax, I would probably have increased investment incentives.
Probably, as well, I would have looked to have limited the increase in the deficit. Because right now there is a very real risk that - if growth does not accelerate as hoped for - then the UK government will be forced into some measures to close the gap next year. And closing a gap is always a hell of a lot more painful than not letting it appear in the first place.
As you know, the issue is not with individual measures.
The issue is with a seeming disregard for affordability, inflation risk, and scrutiny/challenge from institutions (OBR, Treasury).
Perhaps the roles of Prime Minister and Chancellor are themselves just vestiges of an antiquated system and too risky to be entrusted to politicians who might have their own ideas. In this day and age, can it really be right not to leave it to the experts?
Italy currently has a technocratic PM, Mario Draghi, a former economics professor, Goldman Sachs Vice President and ECB President. However the Italians have just voted his government out in favour of the populist right led by the opposition Brothers of Italy who were never part of his coalition government
The fall in prices has created a lot of forced sellers, as pension funds bought government bonds using leverage. That needs to be collateralised daily and the speed and size of the moves (completely unprecedented) means many are struggling to sell other assets in time. That forced selling pushes prices down further and exacerbates the problem.
This is spiraling out of control and will only get worse without intervention. Absent that, this could end up massively increasingly the deficit of UK DB Pension Funds and removing what buyers the government already had for its debt.
In short, the government is fucked.
I don't understand this. Why are pension funds buying gilts using leverage? Presumably they couldn't borrow at the same rate as government. Thus holding until maturity would be a loss. So only way this makes sense is short-medium term speculation on longer term rates curve. In which case they made a bad trade, oh well.
The fall in prices has created a lot of forced sellers, as pension funds bought government bonds using leverage. That needs to be collateralised daily and the speed and size of the moves (completely unprecedented) means many are struggling to sell other assets in time. That forced selling pushes prices down further and exacerbates the problem.
This is spiraling out of control and will only get worse without intervention. Absent that, this could end up massively increasingly the deficit of UK DB Pension Funds and removing what buyers the government already had for its debt.
In short, the government is fucked.
I don't understand this. Why are pension funds buying gilts using leverage? Presumably they couldn't borrow at the same rate as government. Thus holding until maturity would be a loss. So only way this makes sense is short-medium term speculation on longer term rates curve. In which case they made a bad trade, oh well.
Pensions trustees can’t just gamble by investing in whatever they think will deliver the highest return. They have legal responsibilities to their members to safeguard against excessive risk and to deliver an income stream that is reliable, predictable and safe, projected many years into the future. Government bonds consequently form a significant part of most funds, particularly the more mature ones.
The UK looks to be experiencing a form of the kind of crisis that Nouriel Roubini and I posited that the United States could face back in our (in)famous 2005 paper –
The UK looks to be experiencing a form of the kind of crisis that Nouriel Roubini and I posited that the United States could face back in our (in)famous 2005 paper –
1/
I saw that earlier, and while I don't agree 100%, it's a fascinating thread from a smart guy.
The UK looks to be experiencing a form of the kind of crisis that Nouriel Roubini and I posited that the United States could face back in our (in)famous 2005 paper –
1/
I saw that earlier, and while I don't agree 100%, it's a fascinating thread from a smart guy.
The fundamental problem at the root of all this is the fact the UK borrowed as a country, year after year after year. We needed to balance the books in the national accounts a long time ago. That meant less government borrowing, yes, but also more private saving and more regulation of the financial sector.
I often wonder if monetary policy should switch to increasing interest rates for contractionary policy and helicopter money for expansionary policy. The US system for COVID money shows it is very effective at increasing inflation where needed.
I can only assume that Moon Rabbit is enjoying an intimate affair this evening with a bottle of Stoli.
The idea that the government’s latest global megashambles is Angela Rayner’s fault is one for the album.
Before you keep it for the album, actually go and find where I said that. You will struggle.
I didn’t. 😇
I accused Labour as being on the same page as Truss and Kwarteng on the uneccesarily regressive and expensive bills hand out, that is main cause of the run on the pound. And I am right, and so much of PB tonight, waving fists at IMF - how dare they tell us we can’t cut a few of our own taxes - is just plain embarrassing. Do you PBers know how funny it is to read knowing the penny hadn’t dropped for so many of you yet?
Here’s the cold sober truth. There isn’t a run on the pound and debt cost increase over the axing of browns old tax hike on most wealthy, so contentious in UK politics (just as it was designed to go off at whatever point in history it was axed) you are talking paltry billions, IMF ain’t bothered by that alone - the crisis is on our bill freeze policy worth thru life £200B+.
Listen carefully Anabob, because it’s double embarrassing for you than just the IMF fist wavers after what you just posted - the bill freeze plan that has led to the world losing confidence in us isn’t Tory, Labour, Lib Dem and Tory are all signed up to about £200B borrowing to pay for it, only slight differences such as about a 6th of the cost Labour and Lib Dem will get from some windfall tax. Maybe not even that much.
It’s a genuine crisis for all British politics. Labour, Lib Dem and Tory seem wedded to it, due to media pressure to grab anything and act, but UK economists, world economists and the markets are ranged against them. I’m against it too, it stinks as a policy compared to variable price cap. If UK can’t uturn - not on the tax cuts given last week, paltry stuff in the bigger picture of confidence in UK, but on the regressive, poorly targeted and far to expensive freeze plan for households, then the lack of confidence in us, and the world of pain it’s bringing to debt rates, extra inflation, expensive imports for industry, isn’t going away.
'Beyond the correct rate of taxation, however, lie the much deeper problems of the country. For years, regardless of who was in power, government policy has been to import cheap unskilled or semi-skilled labor'
This bit is true. Under Blair and Brown, this was open and explicit for both EU and non-EU migration. Under Cameron, it was restricted in the non-EU points system but continued to pour in via the EU. The end of FoM and May actually looked like sorting the issue, but then Boris opened it up again via the points system being made more lax. Truss is planning on doing it further. Whether red or blue, there is a policy of mass immigration.
'while paying large numbers of people to remain economically inactive, in the process placing great strain on housing and public services through overpopulation. The government has subsidized socially irresponsible behavior to the point at which, for people at the lower end of the socioeconomic scale, such behavior is more profitable than work; these people depend on the government for everything.'
This bit isn't true. The Tories threw so many hurdles in getting benefits and cut them so much, that it is extremely hard to do this any more.
And the whole article misses the central problem long term. We don't save enough and we don't invest enough.
The pipe sabotage is extraordinary. I don't see how Russia destroys its own means of leverage with Europe. I don't see how Ukraine has the capability - or would be able to act without American sponsorship. That seems to leave only one suspect.
Yes, comrade. And that suspect is Russia.
Why would they do it? (Taking a list from here and elsewhere):
*) They know Germany and most of Europe is not going to go back to gas. *) Damage may be repairable. And if not, Europe is moving away from gas anyway. *) It sends a message - they can go after other pipelines or comms cables. This will be a *major* worry to the west. *) It is a deniable escalation. *) It may get Gazprom off some significant costs.
I also wonder if production is an issue: Russia were flaring off millions of dollars worth of gas a day, and with gas prices falling and few other markets, it may be cheaper to just mothball most of the extraction kit - kit which they will be finding hard to maintain under sanctions. And if production is cut, why keep the pipeline?
Am looking at your list of possible reasons why Russia might have done it. Can't see that 1,2,4 are even reasons. 3? Wouldn't they be telling the intended message recipient, i.e. presumably US and its satellites in NATO, what they already knew anyway? As for 5 - what costs? Why not just let the pipeline crumble?
1,2 and 4 are reasons: they feed into the decision. 3 tells the recipients of the message they are willing to do so. 5 might get Gazprom off any contractual costs for non-deliver under force majeure clauses.
They're certainly stronger arguments than the "The US did it" shrieks from the usual suspects. Especially when you factor in that Russia is routinely doing silly things daily at the moment.
I can only assume that Moon Rabbit is enjoying an intimate affair this evening with a bottle of Stoli.
The idea that the government’s latest global megashambles is Angela Rayner’s fault is one for the album.
Before you keep it for the album, actually go and find where I said that. You will struggle.
I didn’t. 😇
I accused Labour as being on the same page as Truss and Kwarteng on the uneccesarily regressive and expensive bills hand out, that is main cause of the run on the pound. And I am right, and so much of PB tonight, waving fists at IMF - how dare they tell us we can’t cut a few of our own taxes - is just plain embarrassing. Do you PBers know how funny it is to read knowing the penny hadn’t dropped for so many of you yet?
Here’s the cold sober truth. There isn’t a run on the pound and debt cost increase over the axing of browns old tax hike on most wealthy, so contentious in UK politics (just as it was designed to go off at whatever point in history it was axed) you are talking paltry billions, IMF ain’t bothered by that alone - the crisis is on our bill freeze policy worth thru life £200B+.
Listen carefully Anabob, because it’s double embarrassing for you than just the IMF fist wavers after what you just posted - the bill freeze plan that has led to the world losing confidence in us isn’t Tory, Labour, Lib Dem and Tory are all signed up to about £200B borrowing to pay for it, only slight differences such as about a 6th of the cost Labour and Lib Dem will get from some windfall tax. Maybe not even that much.
It’s a genuine crisis for all British politics. Labour, Lib Dem and Tory seem wedded to it, due to media pressure to grab anything and act, but UK economists, world economists and the markets are ranged against them. I’m against it too, it stinks as a policy compared to variable price cap. If UK can’t uturn - not on the tax cuts given last week, paltry stuff in the bigger picture of confidence in UK, but on the regressive, poorly targeted and far to expensive freeze plan for households, then the lack of confidence in us, and the world of pain it’s bringing to debt rates, extra inflation, expensive imports for industry, isn’t going away.
Apologies, you said it was Rachel Reeves' fault –– equally as mad.
I find it incredible that the unelected IMF thinks it can criticise an elected government when it implements its tax policies. Astonishing really.
One imagines you find a lot of things “incredible” these days.
You know it's totally out of order, but you don't have enough principles to say so because in this case the intervention accords with your political persuasions. That's fairly pathetic, but oh well.
I can only assume that Moon Rabbit is enjoying an intimate affair this evening with a bottle of Stoli.
The idea that the government’s latest global megashambles is Angela Rayner’s fault is one for the album.
Before you keep it for the album, actually go and find where I said that. You will struggle.
I didn’t. 😇
I accused Labour as being on the same page as Truss and Kwarteng on the uneccesarily regressive and expensive bills hand out, that is main cause of the run on the pound. And I am right, and so much of PB tonight, waving fists at IMF - how dare they tell us we can’t cut a few of our own taxes - is just plain embarrassing. Do you PBers know how funny it is to read knowing the penny hadn’t dropped for so many of you yet?
Here’s the cold sober truth. There isn’t a run on the pound and debt cost increase over the axing of browns old tax hike on most wealthy, so contentious in UK politics (just as it was designed to go off at whatever point in history it was axed) you are talking paltry billions, IMF ain’t bothered by that alone - the crisis is on our bill freeze policy worth thru life £200B+.
Listen carefully Anabob, because it’s double embarrassing for you than just the IMF fist wavers after what you just posted - the bill freeze plan that has led to the world losing confidence in us isn’t Tory, Labour, Lib Dem and Tory are all signed up to about £200B borrowing to pay for it, only slight differences such as about a 6th of the cost Labour and Lib Dem will get from some windfall tax. Maybe not even that much.
It’s a genuine crisis for all British politics. Labour, Lib Dem and Tory seem wedded to it, due to media pressure to grab anything and act, but UK economists, world economists and the markets are ranged against them. I’m against it too, it stinks as a policy compared to variable price cap. If UK can’t uturn - not on the tax cuts given last week, paltry stuff in the bigger picture of confidence in UK, but on the regressive, poorly targeted and far to expensive freeze plan for households, then the lack of confidence in us, and the world of pain it’s bringing to debt rates, extra inflation, expensive imports for industry, isn’t going away.
Apologies, you said it was Rachel Reeves' fault –– equally as mad.
The freeze policy is owned by all the main parties, the Tories seem to come to it last.
The problem isn’t the tax cuts and cancelled proposed tax cuts announced last Friday - the problem is the world has woken up to the fact we are going to borrow near on a quarter of a trillion for a regressive policy of freezing bills for everyone.
I made it clear in my posts in this thread, if Kwasi hadn’t cut a single penny, this crisis would have still happened.
I know this is so because I worked it out before it happened. I sent a post/header I wrote myself to Mike Smithson ten days ago predicting exactly what was going to happen. I have been on the case the last two weeks that the freeze policy is wrong, we can’t get away with it, it is too expensive, it needs tweaking, we need a cheaper better directed solution than how it currently stands.
Comments
Firstly. Ignore the front of the Telegraph - the Telegraph is lying to you - remember how the paper was summoned up on Yes Minister “they think we are being controlled by a foreign country and permanently angry about it”.
It’s not the £2B top rate tax cut that bothers economists and markets everywhere they want reversed, it’s the other £218B+ of uncosted unmitigated borrowing they rightly find incredible.
Secondly, you think you can do what the US does and get away with it like they they do - here’s the twist - you can’t. UK can’t get away with the same policy tricks the US gets away it, we can’t copy their successes, you just have to suck it down that you can’t.
That in a nutshell is it.
Any questions.
Where you should be scared is if Russia does something serious and is open about it.
As others have pointed out, the UK’s net position is not so different from various EU countries or indeed the US.
Liz and Kwasi have totally bungled it, they continue to bungle it, and to be honest the best outcome for the UK is that they resign tomorrow.
That’s not going to happen, so we are in for an incredibly unpleasant time. A property crash is no longer unlikely. Recourse to the IMF is of course unlikely but no longer impossible.
Meanwhile, the government are already effectively planning a 10 or 15% cut in the NHS budget in real terms.
https://twitter.com/nolanwpeterson/status/1574889522839670784?s=20&t=UCfa2tIXKbWeT7zA2aEw1A
Putin has the capacity to cause a multi trillion dollar problem for the west and think that if he’s smart or reckless enough he might even get away with it. I am not attracted to equities right now certainly. But I still think we’ll wake up one day to the sudden news that he’s dead.
Whether people like it or not the markets will give their judgement on Truss and co’s policies . The UK cannot afford a run on the pound given there’s already huge inflationary pressures . This point seems to have missed those in no 10 and 11 . Sunak has been proven right , unfortunately the Tory membership has inflicted the clueless Maggie clone on the UK and many are now going to suffer because of this .
No, he was still wrong, it’s just he was right about *this*.
In truth, the Tory Party are ideologically bankrupt after Brexiting for a mess of pottage.
And if Russia is about to launch nukes, it is a bit strange to be sending their Strategic Missile Force troops to be shoring up the front line:
https://twitter.com/RALee85/status/1574404206257180672
She's doing exactly what it said on the tin. That isn't what I want, and it fairly clearly isn't sensible. But it is very much what the Tory selectorate wanted. The argument "Rishi woz right" just isn't going to go down as they think.
Heads down and make the best of it is the only realistic choice for a Tory MP who is sceptical about it all. She'll lead the Conservatives into the next election, and they've just got to hang together or hang separately.
They do know however, that Truss has almost certainly lost the next election and that a seize-up of the mortgage market is not a good thing.
The conference will be fascination to watch.
Truss takes on the world, while depressed MP clap robotically, fighting to suppress nausea.
Simon Wren Lewis, being a former economic advistor to Corbyn, presumay is relaxed about market turmoil!
Lord Falconer
All this stuff about further changes of leader or radical changes of policy is away with the fairies nonsense. They've made their bed and must lie in it - the alternatives aren't realistic.
The problem is that the bed they’ve made is our bed.
For the sake of the country, Truss and Kwasi need to be replaced, with someone who doesn’t act like they are addicted to turps.
For a start, with the exception of the removal of the 45% rate, most of the measures are targeted towards those on middle and lower incomes, in particular the abolition of the NI increase, and the changes to Stamp Duty.
Now, there are quite a few things I would do differently. For example, I would have simplified taxes around the £100k mark (i.e. no more removal of the tax free allowance). And instead of a blanket cut to corporation tax, I would probably have increased investment incentives.
Probably, as well, I would have looked to have limited the increase in the deficit. Because right now there is a very real risk that - if growth does not accelerate as hoped for - then the UK government will be forced into some measures to close the gap next year. And closing a gap is always a hell of a lot more painful than not letting it appear in the first place.
Anyone would think the Euro was in some sense a systemic part of the world’s financial system.
You might as well say the Bank of England is unelected.
Is it astonishing that UNESCO or the IAEA ever criticise governments?
The idea that the government’s latest global megashambles is Angela Rayner’s fault is one for the album.
In the former two cases, their remit includes published research on financial stability.
I agree with the thrust of what you say, but ultimately it's rhetoric. This is a betting site, and we're trying to predict what can happen and will happen in the real world. Tory MPs turning round and saying "oh yeah, you're right", and doing something that plunges themselves into further chaos whilst offering limited chance of a better outcome, is just not really on the cards.
I mostly ignore conspiracy theorists and right wing lunatics though.
The issue is with a seeming disregard for affordability, inflation risk, and scrutiny/challenge from institutions (OBR, Treasury).
Strange, then, that you choose to spend so much time on here
It is fascinating though how the current events shine a light on the truly batshit.
Is there something I'm missing here?
Paging @rcs1000 and other sober financial types.
https://twitter.com/brad_setser/status/1574919621269929985?s=46&t=aJKcfLzj8ADwTz_KCa-rCA
The UK looks to be experiencing a form of the kind of crisis that Nouriel Roubini and I posited that the United States could face back in our (in)famous 2005 paper –
1/
I often wonder if monetary policy should switch to increasing interest rates for contractionary policy and helicopter money for expansionary policy. The US system for COVID money shows it is very effective at increasing inflation where needed.
I didn’t. 😇
I accused Labour as being on the same page as Truss and Kwarteng on the uneccesarily regressive and expensive bills hand out, that is main cause of the run on the pound. And I am right, and so much of PB tonight, waving fists at IMF - how dare they tell us we can’t cut a few of our own taxes - is just plain embarrassing. Do you PBers know how funny it is to read knowing the penny hadn’t dropped for so many of you yet?
Here’s the cold sober truth. There isn’t a run on the pound and debt cost increase over the axing of browns old tax hike on most wealthy, so contentious in UK politics (just as it was designed to go off at whatever point in history it was axed) you are talking paltry billions, IMF ain’t bothered by that alone - the crisis is on our bill freeze policy worth thru life £200B+.
Listen carefully Anabob, because it’s double embarrassing for you than just the IMF fist wavers after what you just posted - the bill freeze plan that has led to the world losing confidence in us isn’t Tory, Labour, Lib Dem and Tory are all signed up to about £200B borrowing to pay for it, only slight differences such as about a 6th of the cost Labour and Lib Dem will get from some windfall tax. Maybe not even that much.
It’s a genuine crisis for all British politics. Labour, Lib Dem and Tory seem wedded to it, due to media pressure to grab anything and act, but UK economists, world economists and the markets are ranged against them. I’m against it too, it stinks as a policy compared to variable price cap. If UK can’t uturn - not on the tax cuts given last week, paltry stuff in the bigger picture of confidence in UK, but on the regressive, poorly targeted and far to expensive freeze plan for households, then the lack of confidence in us, and the world of pain it’s bringing to debt rates, extra inflation, expensive imports for industry, isn’t going away.
The country has much deeper-seated problems.
Theodore Dalrymple"
https://www.city-journal.org/tinkering-with-taxes-wont-save-britain
Reaganism is a good idea, but Reaganism without the dollar isn’t
JANAN GANESH" (via G search)
https://www.ft.com/content/bd511177-f2a3-4787-937a-f67856e09c4e
This bit is true. Under Blair and Brown, this was open and explicit for both EU and non-EU migration. Under Cameron, it was restricted in the non-EU points system but continued to pour in via the EU. The end of FoM and May actually looked like sorting the issue, but then Boris opened it up again via the points system being made more lax. Truss is planning on doing it further. Whether red or blue, there is a policy of mass immigration.
'while paying large numbers of people to remain economically inactive, in the process placing great strain on housing and public services through overpopulation. The government has subsidized socially irresponsible behavior to the point at which, for people at the lower end of the socioeconomic scale, such behavior is more profitable than work; these people depend on the government for everything.'
This bit isn't true. The Tories threw so many hurdles in getting benefits and cut them so much, that it is extremely hard to do this any more.
And the whole article misses the central problem long term. We don't save enough and we don't invest enough.
3 tells the recipients of the message they are willing to do so.
5 might get Gazprom off any contractual costs for non-deliver under force majeure clauses.
They're certainly stronger arguments than the "The US did it" shrieks from the usual suspects. Especially when you factor in that Russia is routinely doing silly things daily at the moment.
“We need to remortgage in May. I feel physically sick. These 6% rates will cost us an extra £800 per month.
Truss and Kwarteng should go to prison for what they have done. “
https://forums.moneysavingexpert.com/discussion/6390116/nationwide-announce-revised-interest-rates
….Somewhat suboptimal for the tories….
That's none of their business.
The problem isn’t the tax cuts and cancelled proposed tax cuts announced last Friday - the problem is the world has woken up to the fact we are going to borrow near on a quarter of a trillion for a regressive policy of freezing bills for everyone.
I made it clear in my posts in this thread, if Kwasi hadn’t cut a single penny, this crisis would have still happened.
I know this is so because I worked it out before it happened. I sent a post/header I wrote myself to Mike Smithson ten days ago predicting exactly what was going to happen. I have been on the case the last two weeks that the freeze policy is wrong, we can’t get away with it, it is too expensive, it needs tweaking, we need a cheaper better directed solution than how it currently stands.