I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
We'd never done QE to the extent that we had done, so of course QT is unprecedented. We need to do it now because inflation is up to 10%. Some of that is due to the war, but a lot of it isn't.
Since when did you look to the ECB for an example of a well-run institution?
I'm no hater of the EU, we should all be able to learn from the rest of the world rather than assume everything Britain does is best.
Excluding America which is for obvious reason sui generis, not only the UK but no country anywhere else has ever, in history, that I can think of (correct me if I'm wrong) engaged in QT of this scale. And within 24 hours of this absolutely unprecedented action of a Central Bank saying it going to be selling gilts like this, the gilt market turmoil began.
It's just like Gordon Brown saying he's going to sell the gold reserves, leading to a price crash on gold as it gets sold.
Today's Prime Minister's Questions taught us two things. 1. Starmer has still got a long way to go before he is the one putting Liz Truss on the ropes. 2. Truss has got a long way to go before she isn't putting herself on the ropes instead.
Wishful thinking on behalf of the Specie. Getting Truss to say on the record that she ruled out spending cuts was a win for Starmer.
Cuts =/= real terms cuts although I suspect that’s how Labour will try to spin it (I didn’t see PMQ so this is a generic comment)
If Tories think borrowing a quarter of a trillion for the ghastly Energy Price Guarantee acts a “spending overall shows no cut” smokescreen, they should lose more than their jobs - there are prison cells below the Palace of Westminster waiting for them 😡
GB News is facing a second investigation by the media regulator Ofcom over its coverage of the coronavirus vaccine.
The latest investigation relates to an interview with the author Naomi Wolf in which she claimed women were being harmed by Covid-19 vaccines as part of an effort to “to destroy British civil society”.
Ofcom said it would investigate whether the programme broke “rules designed to protect viewers from harmful material” after receiving more than 400 complaints from members of the public.
In the interview, which was originally broadcast on 4 October, Wolf also compared doctors’ support for the vaccine rollout to the behaviour of the medical profession in Nazi Germany and described herself as the “last remaining independent journalist” willing to question this.
Not necessarily. It could be 400 from one very angry person.
I know GBeebies is piss poor. But as nobody sensible thinks it is actual serious news why bother complaining?
Naomi Wolf used to be non insane. Did she catch the Trump Stupidity Virus or what?
I'm cynical enough to believe this sort of person is *not* insane - it's just that there's a heck of a lot of money to be made from holding 'alternative' views.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Seems like the BoE started passive runoff in February, so the QT from the Bank isn't even that new.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
We'd never done QE to the extent that we had done, so of course QT is unprecedented. We need to do it now because inflation is up to 10%. Some of that is due to the war, but a lot of it isn't.
Since when did you look to the ECB for an example of a well-run institution?
I'm no hater of the EU, we should all be able to learn from the rest of the world rather than assume everything Britain does is best.
Excluding America which is for obvious reason sui generis, not only the UK but no country anywhere else has ever, in history, that I can think of (correct me if I'm wrong) engaged in QT of this scale. And within 24 hours of this absolutely unprecedented action of a Central Bank saying it going to be selling gilts like this, the gilt market turmoil began.
It's just like Gordon Brown saying he's going to sell the gold reserves, leading to a price crash on gold as it gets sold.
The Bank had been running down its holdings since much earlier in the year, since they weren't replacing them when they reached maturity. There was no crisis for seven months - until the Special Budgetary Operation destroyed market confidence in HMG to balance the books.
This attempt to rewrite history and shift blame onto the Bank of England is pathetic. Why are you even bothering?
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
We'd never done QE to the extent that we had done, so of course QT is unprecedented. We need to do it now because inflation is up to 10%. Some of that is due to the war, but a lot of it isn't.
Since when did you look to the ECB for an example of a well-run institution?
I'm no hater of the EU, we should all be able to learn from the rest of the world rather than assume everything Britain does is best.
Excluding America which is for obvious reason sui generis, not only the UK but no country anywhere else has ever, in history, that I can think of (correct me if I'm wrong) engaged in QT of this scale. And within 24 hours of this absolutely unprecedented action of a Central Bank saying it going to be selling gilts like this, the gilt market turmoil began.
It's just like Gordon Brown saying he's going to sell the gold reserves, leading to a price crash on gold as it gets sold.
The Bank had been running down its holdings since much earlier in the year, since they weren't replacing them when they reached maturity. There was no crisis for seven months - until the Special Budgetary Operation destroyed market confidence in HMG to balance the books.
This attempt to rewrite history and shift blame onto three Bank of England is pathetic. Why are you even bothering?
BR specialises in the rewriting of economic history.
Ed Conway @EdConwaySky · 37m Veiled threat from Putin: “All Infrastructure at Risk” That’s def the fear of energy users in Europe. The boss of a leading industrial firm recently told me: “I’d be shocked if there weren’t submarines & warships patrolling the Langeled pipeline [Norway -> UK] right now.”
Happily we are trying to legislate to stop power generation here. So it will be fine.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
We'd never done QE to the extent that we had done, so of course QT is unprecedented. We need to do it now because inflation is up to 10%. Some of that is due to the war, but a lot of it isn't.
Since when did you look to the ECB for an example of a well-run institution?
I'm no hater of the EU, we should all be able to learn from the rest of the world rather than assume everything Britain does is best.
Excluding America which is for obvious reason sui generis, not only the UK but no country anywhere else has ever, in history, that I can think of (correct me if I'm wrong) engaged in QT of this scale. And within 24 hours of this absolutely unprecedented action of a Central Bank saying it going to be selling gilts like this, the gilt market turmoil began.
It's just like Gordon Brown saying he's going to sell the gold reserves, leading to a price crash on gold as it gets sold.
The Bank had been running down its holdings since much earlier in the year, since they weren't replacing them when they reached maturity. There was no crisis for seven months - until the Special Budgetary Operation destroyed market confidence in HMG to balance the books.
This attempt to rewrite history and shift blame onto three Bank of England is pathetic. Why are you even bothering?
For the <10% of the country who actually agree with the direction Truss has taken recent events must be pretty galling. They have waited 40 years for a return of Thatcherism and are understandably all over the place in their defence of a cosplay Thatcher without her brains, courage or knowledge.
Technically I should probably have someone 'qualified' do this but the aforementioned electrician convinced me long ago that I will probably do a better job. BS7671 isn't that hard to read.
IIRC Part P allows you to replace existing fittings
Yes - direct replacement is definitely allowed - although I'm not sure about replacing low voltage fittings with earthed 240V fittings. Whatever...
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
How was it unexpected? The Bank signalled it would start sales at the end of September at its early August meeting and confirmed with details in mid September. And it has been running down its balance sheet for months already. The current crisis was caused by the government primarily, not the BOE. I should add that this is also the opinion of every market participant and international official that I have spoken to on the subject.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
Yet 90% of that extra was known about before Kwasi spoke.
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
Yet 90% of that extra was known about before Kwasi spoke.
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
No it wasn't. Liz Truss the candidate said whatever, that doesn't move markets. Kwasi the UK chancellor cut £45bn in taxes and didn't match even half of them with spending cuts and no forecast for additional growth generated from those tax cuts.
You're rewriting history to suit your narrative, but it's very clear what caused the run on gilts and sterling, it wasn't QT which has been priced in since August, it was the market pricing in a risk premium for hugely increased gilt supply.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
Yet 90% of that extra was known about before Kwasi spoke.
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
Let's not overthink this. The market wanted to know how the tax cuts would be paid for and what spending plans would look like as a result. KK didn't tell them and all hell broke loose.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
Yet 90% of that extra was known about before Kwasi spoke.
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
Ed Conway @EdConwaySky · 37m Veiled threat from Putin: “All Infrastructure at Risk” That’s def the fear of energy users in Europe. The boss of a leading industrial firm recently told me: “I’d be shocked if there weren’t submarines & warships patrolling the Langeled pipeline [Norway -> UK] right now.”
Happily we are trying to legislate to stop power generation here. So it will be fine.
Could you explain as I am not sure what you mean
Banning solar farms from farms, I expect. ['Here' being England.]
Ed Conway @EdConwaySky · 37m Veiled threat from Putin: “All Infrastructure at Risk” That’s def the fear of energy users in Europe. The boss of a leading industrial firm recently told me: “I’d be shocked if there weren’t submarines & warships patrolling the Langeled pipeline [Norway -> UK] right now.”
Happily we are trying to legislate to stop power generation here. So it will be fine.
Could you explain as I am not sure what you mean
They want to ban people building solar farms which generate power now. Vs banging on about nuclear which generates power in 2033.
Tories need to realise a horrible truth. When they say "the last thing we need is another leadership election", they are wrong. They cannot start to recover until they have another leadership election.
They need a leadership appointment. Time to re-enter the smoke filled room.
The problem with changing leader is it doesn't dispel the new attack line of "who voted for this"? If anything, it will be stronger, as every leader further away from Johnson will look less legitimate in the eye of the electorate.
Even Sunak, who was Johnson's Chancellor, was stepping away from Johnson's policies in many ways, and we know they disagreed at times in gov when Sunak wanted to spend less.
The Tories need to write a new manifesto and go to the public, not keep playing pass the parcel.
In normal times I would agree with you. Changing a leader twice in a Parliament pretty much signifies you’ve given up any pretence of being serious about being in government.
However the Tories have a stark choice - they can stick with Liz and potentially face utter annihilation in 2024 (I honestly think it could make 1997 look like a flesh wound) or they can bring a steady hand in who can keep things going and keep them 200-230 or so seats. That is the stark reality of the choice they have now. Absent a miracle they are losing in 2024, and likely losing badly, so the choice now is between a noble defeat and wipeout.
The problem for them is which Tory MPs will be brave enough to tell the membership they were wrong.
Should they be afraid of the membership? I would be. I've known a whole spectrum of weirdos in my time but none that might have selected Rees Mogg as a candidate
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
How was it unexpected? The Bank signalled it would start sales at the end of September at its early August meeting and confirmed with details in mid September. And it has been running down its balance sheet for months already. The current crisis was caused by the government primarily, not the BOE. I should add that this is also the opinion of every market participant and international official that I have spoken to on the subject.
Assume THESE folks, unlike some of the PM's more ardent PB apolotists, are NOT graduates of the Ezra Pound PPE Correspondence School?
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
Yet 90% of that extra was known about before Kwasi spoke.
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
Your own link completely contradicts your thesis and supports mine.
No, the ceasing reinvestment which is relatively uncontroversial started in February. Your own link warns that it is if or when actual sales begin, which is unprecedented, that it would be "interesting", and would only be a small amount at first like 25 billion. Instead they went for 80 billion at once.
Will the Bank be among the first to start actively selling bonds? This is where things get more interesting. On top of ending reinvestments, the BoE said last summer that it would “consider” actively selling assets back into the market when the Bank rate hits 1% - something that could feasibly happen this year.
The motivation is understandable, given the relatively slow initial pace of balance sheet reduction that can be achieved by stopping reinvestments.
But it’s fair to say that actively selling bonds adds a number of extra complexities, not least how much to sell and how to sell it. What if markets entered a turbulent patch, would sales be paused or scaled back?
Governor Bailey said recently “we would not do QT during a period of financial instability”. And with that in mind, we suspect any foray into selling bonds would be fairly tentative. Based on the impact of QE in the previous cycle, we estimate that £25bn of gilt sales in any given year would have a comparable tightening effect on financing conditions as 0.125% to 0.25% of rate hikes.
Also for those who keep talking about a risk-premium, its worth noting that your own link forecasts (based on an assumed £2.1bn per month, see chart) that there would be a risk-premium added.
Actively selling gilts is a process fraught with risks, many of which will only be known ex-post. So it is only natural for financial markets to bake a greater risk premium in anticipation of such an event.
Eighty billion in actively sold QT was not remotely forecast or priced in risk premium.
I don't know whether there's a psephological term for the tipping point where, under FPTP, as it loses votes, a party stops gaining an advantage from the system and instead starts being punished by it.
But whatever it's called, the Tories seem intent on locating it.
Wouldn't it be easier to rename the anti-growth coalition as the UK?
As political slogans go this is one of the funniest. Listening to them hurl it around they must be *so pleased* with themselves having thought up this absolutely killer line.
Meanwhile everyone else just laughs. At them. They are painfully and dangerously inept as politicians.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
Yet 90% of that extra was known about before Kwasi spoke.
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
Your own link completely contradicts your thesis and supports mine.
No, the ceasing reinvestment which is relatively uncontroversial started in February. Your own link warns that it is if or when actual sales begin, which is unprecedented, that it would be "interesting", and would only be a small amount at first like 25 billion. Instead they went for 80 billion at once.
Will the Bank be among the first to start actively selling bonds? This is where things get more interesting. On top of ending reinvestments, the BoE said last summer that it would “consider” actively selling assets back into the market when the Bank rate hits 1% - something that could feasibly happen this year.
The motivation is understandable, given the relatively slow initial pace of balance sheet reduction that can be achieved by stopping reinvestments.
But it’s fair to say that actively selling bonds adds a number of extra complexities, not least how much to sell and how to sell it. What if markets entered a turbulent patch, would sales be paused or scaled back?
Governor Bailey said recently “we would not do QT during a period of financial instability”. And with that in mind, we suspect any foray into selling bonds would be fairly tentative. Based on the impact of QE in the previous cycle, we estimate that £25bn of gilt sales in any given year would have a comparable tightening effect on financing conditions as 0.125% to 0.25% of rate hikes.
Also for those who keep talking about a risk-premium, its worth noting that your own link forecasts (based on an assumed £2.1bn per month, see chart) that there would be a risk-premium added.
Actively selling gilts is a process fraught with risks, many of which will only be known ex-post. So it is only natural for financial markets to bake a greater risk premium in anticipation of such an event.
Eighty billion in actively sold QT was not remotely forecast or priced in risk premium.
The Bank had told the market, more than a year ago, to expect active QT once the base rate reached 1%, and since then has faced a lot of criticism for falling behind the curve on controlling inflation.
There's another aspect your are ignoring. This isn't just about gilt rates. We can see that this is a matter of the market losing confidence in the fiscal continence of the government by the large fall in the value of Sterling, to a new record low against the Dollar, that happened after the Special Budgetary Operation. All other things being equal QT should have led to Sterling gaining strength.
Sterling crashed because of the loss of market confidence. That's all down to Truss and Kwarteng.
Corbyn is the unluckiest anti-racist in the world.
Mona Issa of Lebanese website al Mayadeen (which recently interviewed Corbyn) says there's a Mossad CIA Netanyahu plan to ferment "identity confusion" by getting Iranians to watch Netflix and "Beverly Hills 90210" and how "the fruit of that behaviour it's occurring today"
Tories need to realise a horrible truth. When they say "the last thing we need is another leadership election", they are wrong. They cannot start to recover until they have another leadership election.
What's it going to achieve?
The Tory party is riven with divisions that have undermined three leaders in a row. Cameron I wouldn't count, he lost a vote with the public, but then Theresa May, Boris and now supposedly Truss the backbenchers haven't consistently supported any of them.
The problem once can be with the leader, twice is getting a bit silly, but three times now? Surely it has to be three strikes and you're out?
The Tories have just spent the summer having a leadership campaign and chosen their new leader, but some here were making mutterings about her from day one, before the mini Budget. This self-indulgence is ridiculous, having spent the summer choosing their leader they need to now get on with the job and deliver for the country.
If they can't, they don't deserve to be in Government, and can choose their next leader from Opposition where it doesn't affect us.
"This self-indulgence is ridiculous, having spent the summer choosing their leader they need to now get on with the job and deliver for the country"
But she can't. She doesn't have that in her. It's not her style. You need to change. Put someone with managerial competence in and an ability to comminucate and rebuild from there.
'....they need to get on with the job and deliver for the country'
It's not very likely, but it would be good if this led to a collective effort to create a credible fiscal policy with some of the tax simplifications that have been discussed on here.
There is a potential route for the government to retreat from the abyss with admittedly some humiliation but in a way which could be spun as not total humiliation. It's basically to follow the advice given as long ago as September 28th by the excellent @Sime0nStylites, and issue a statement along these lines:
"“In light of recent global market turmoil, HMG will re-evaluate the measures announced on September 23 in the context of recent sharp rise in interest rates. HMG remains fully committed to cutting taxes and reforming the supply side of the economy to generate economic wealth. At the same time, we also recognise the value of prudence. As a result, we will provide a detailed update on our plans at our announcement on November 23 [now it will have to be earlier, of course], which will also include a full OBR forecast.”
In terms of actual measures, they could do three things:
1. Scale back the tax cuts without reversing them completely, for example by taking Corporation Tax to (say) 22% rather than the full 19%.
2. Phase in the tax cuts over a longer period
3. Add in some compensatory tax rises elsewhere, especially ones which they can spin as not impacting on growth.
This could all be presented as a refinement of what they were originally going to do. This would be pure tosh, of course, but it would have a good chance of getting them (and more to the point, her) through the immediate storm.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
So you seriously don't think an unexpected and extra £80bn supply is having any impact whatsoever?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
Not particularly. I think it's the market adjusting to a new risk premium for UK government debt based on spending plans requiring an additional £300bn in gilts to be sold over the next 4-5 years.
Yet 90% of that extra was known about before Kwasi spoke.
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
No it wasn't. Liz Truss the candidate said whatever, that doesn't move markets. Kwasi the UK chancellor cut £45bn in taxes and didn't match even half of them with spending cuts and no forecast for additional growth generated from those tax cuts.
You're rewriting history to suit your narrative, but it's very clear what caused the run on gilts and sterling, it wasn't QT which has been priced in since August, it was the market pricing in a risk premium for hugely increased gilt supply.
I don’t know why Barry is flogging this dead horse. There have been at least half a dozen institutional fund managers who’ve been on the BBC in the last few days saying pretty well what you’re saying. None are blaming the Bank.
It's not very likely, but it would be good if this led to a collective effort to create a credible fiscal policy with some of the tax simplifications that have been discussed on here.
Ireland had imposed on them a much more open budget process, where there is an OBR-style statement in advance of the budget, so that there can then be an open and public debate about what steps to take in the budget in the context of the money available.
Would give a chance for issues like those to be raised and discussed.
If you put all these developments together - totally convincing fake humans, AI, Dalle and Stable Diffusion, lab grown brains.... you have an amazing recipe for dystopia. And the end of humanity as we know it
But then, we're not exactly doing a great job, so maybe it's for the best
GB News is facing a second investigation by the media regulator Ofcom over its coverage of the coronavirus vaccine.
The latest investigation relates to an interview with the author Naomi Wolf in which she claimed women were being harmed by Covid-19 vaccines as part of an effort to “to destroy British civil society”.
Ofcom said it would investigate whether the programme broke “rules designed to protect viewers from harmful material” after receiving more than 400 complaints from members of the public.
In the interview, which was originally broadcast on 4 October, Wolf also compared doctors’ support for the vaccine rollout to the behaviour of the medical profession in Nazi Germany and described herself as the “last remaining independent journalist” willing to question this.
Not necessarily. It could be 400 from one very angry person.
I know GBeebies is piss poor. But as nobody sensible thinks it is actual serious news why bother complaining?
Naomi Wolf used to be non insane. Did she catch the Trump Stupidity Virus or what?
I'm cynical enough to believe this sort of person is *not* insane - it's just that there's a heck of a lot of money to be made from holding 'alternative' views.
Corbyn is the unluckiest anti-racist in the world.
Mona Issa of Lebanese website al Mayadeen (which recently interviewed Corbyn) says there's a Mossad CIA Netanyahu plan to ferment "identity confusion" by getting Iranians to watch Netflix and "Beverly Hills 90210" and how "the fruit of that behaviour it's occurring today"
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
Ah hem: that does create meaningful additional supply.
Most government bond holders roll over their positions, so the net new issuance is usually fairly modest. If there's one major holder (holding say a third of gilts), and they aren't rolling over one half of their positions, that might mean the government needs to sell 2-3x the normal quantities.
There is a potential route for the government to retreat from the abyss with admittedly some humiliation but in a way which could be spun as not total humiliation. It's basically to follow the advice given as long ago as September 28th by the excellent @Sime0nStylites, and issue a statement along these lines:
"“In light of recent global market turmoil, HMG will re-evaluate the measures announced on September 23 in the context of recent sharp rise in interest rates. HMG remains fully committed to cutting taxes and reforming the supply side of the economy to generate economic wealth. At the same time, we also recognise the value of prudence. As a result, we will provide a detailed update on our plans at our announcement on November 23 [now it will have to be earlier, of course], which will also include a full OBR forecast.”
Yes, how do we know that one of these mini-brains doesn't have consciousness? It's such a huge ethical minefield and if they do, what kind of implications does it have wrt "programming" these mini-brains to perform computational tasks? Is it slavery?
These kinds of experiments are on the edge of what the rules should and shouldn't allow.
It’s a shame there’s not a general election today. It would be so fun. There are a few blue wall areas that would really benefit from a shake up. The local lot are so complacent.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
We'd never done QE to the extent that we had done, so of course QT is unprecedented. We need to do it now because inflation is up to 10%. Some of that is due to the war, but a lot of it isn't.
Since when did you look to the ECB for an example of a well-run institution?
I'm no hater of the EU, we should all be able to learn from the rest of the world rather than assume everything Britain does is best.
Excluding America which is for obvious reason sui generis, not only the UK but no country anywhere else has ever, in history, that I can think of (correct me if I'm wrong) engaged in QT of this scale. And within 24 hours of this absolutely unprecedented action of a Central Bank saying it going to be selling gilts like this, the gilt market turmoil began.
It's just like Gordon Brown saying he's going to sell the gold reserves, leading to a price crash on gold as it gets sold.
The Bank had been running down its holdings since much earlier in the year, since they weren't replacing them when they reached maturity. There was no crisis for seven months - until the Special Budgetary Operation destroyed market confidence in HMG to balance the books.
This attempt to rewrite history and shift blame onto the Bank of England is pathetic. Why are you even bothering?
It's a bit more complex than that: earlier this year, the UK economy was booming, labour markets were tight, and tax revenues were bountiful, while spending was subdued (due to falling unemployment). This meant that there was relatively limited net issuance of UK government bonds and it was easy for the private sector to absorb.
That's now switched - government spending is rising, tax receipts are falling, and (with the energy price guarantee) it's only going to get worse. So it's much harder to just not roll over a portion of the debt.
I really do fear what will happen to the markets now given Liz’s latest fantasy economics turn at the dispatch box.
FFS this is what concerned so many about a Corbyn government, and it’s the Tories who have delivered it.
Honestly think Brady and some other cabinet grandees should pay Liz a visit this week and agree a crisis plan. Kwarteng has to go this week (remarkably I think the loss of a chancellor would actually increase market confidence rather than dent it). A replacement needs to be found to basically scrap the mini budget and reinstitute Rishi’s economic plans (it might be too humiliating for her to appoint Rishi, so let’s say someone like Gove or May). And Liz confirms she’ll oversee the winter period but won’t fight the next GE. Gives the Tory Party time to organise a coronation in the spring.
Speaking of fantasies...
Maybe, but I can dream that there will be a will in government to take clear action to stabilise things. At the moment I have no such confidence.
It is not within the gift of the Government to stabilise things - the instability is being stoked by the BOE.
How long has the BoE been going? How long has this government been going? When did the instability start? Did Sunak and others warn such instability would start if the govt pressed ahead?
Is this a serious post? You're ignoring the substance of what has actually taken place and giving the BOE the benefit of the doubt because they've 'been going' a long time? Wow.
One organisations whole ethos is about maintaining stability and has been going a long time.
The other one has been going a couple of weeks and promised to completely shake things up, which they have done (or at least attempted to do).
I think the shakers up are far more likely to be causing the instability on that basis, yes.
That is another answer that is wholly disconnected from reality. It is up to you to look into what has actually happened. The BOE *has* launched a totally unprecedented attempt to dump £80bn of UK Government bonds on the market in the space of a single year, after 15 years of hoovering them up. That is the reality of the situation and that is how we judge their approach to stability, not the fact that they've got nice marble floors and have been going since the Normans.
Quantitative Tightening is a very sensible policy response for the Bank at a time when inflation is around 10%. Any government with any sense would have known this was coming and they had to reduce the deficit as a result.
The attempt to blame the Bank is risible.
Firstly, if the aim is stability, you introduce your policy slowly and carefully, and show your workings. Haven't you and your co-believers been bleating about that very thing in relation to Kwasi? How do you square wanting a strong, stable, soft approach with this sort of screeching handbrake turn?
Secondly, the inflation is, to a large degree, caused by an external supply issue, not by an overheating economy, and that demands different solutions.
Thirdly, it is arguable that recession, or even depression, is a far greater threat than inflation, which will in due course be eased by some sort of normalisation in the energy market. The BOE seems determined to swerve into a recession rather than take any steps to avoid it.
Don't criticise me with what other people have said. I've been consistently worried about inflation for some time, and it's clear that is gone far beyond being only about imported inflation from a supply shock.
The Bank had trailed the move to QT for some time. Everyone knew it was coming. They didn't expect HMG to have such a reckless plan for unfunded tax cuts that they were too scared to let the OBR publish its forecasts.
You can 'trail' something - that still doesn't mean people are going to want to buy British Government bonds when the previous biggest buyer of them is having a firesale.
Which is why the government should be cutting the deficit instead of massively expanding it with tax cuts. Duh.
Which is why the bank shouldn't be ducking well doing it in the first place. Why is it that you feel that the elected Government's fiscal plans (which are relatively modest outside of energy support, which presumably you agree with?) should be subordinate to the unelected Bank's monetary plans? Do you just have a general bias toward unelected institutions?
The elected government have given the Bank of England a remit to target inflation at 2%. It's currently 9.9%. What else are the Bank going to do but QT and increase interest rates?
If HMG want to pursue an expansionary and inflationary policy at a time when inflation is 9.9%, then they need to change the remit for the Bank.
As it happens I don't agree with the energy support. I think it's absurd that people like me, who can afford high energy prices, are being massively subsidised, and thereby encouraged to use more energy. We should be doing much more to encourage reductions in consumption and increases in supply. Generally subsidies are almost always a very bad idea. Help should have been targeted to those who were genuinely facing a choice between freezing or starving.
Raise rates, yes, QT, no. Also take a long view that a lot of current inflationary pressures are temporary due to the war and 2% is a medium not short term target.
The ECB aren't engaging in QT, the Bank has never done QT like this ever before, why uniquely should it be happening here, now?
The main reason is the relatively long maturity of UK government debt and the BOE's gilt holdings. Other central banks' holdings roll off more quickly so there is less need for active sales. The overall balance sheet unwind isn't especially aggressive, IIRC. There is nothing special about active sales vs passive runoff, both involve increased gilt supply to the market.
Yes, from the few details so far a fair chunk of the QT will just be holding gilts to maturity and not replacing them so that doesn't create any real additional supply. QT doesn't strike me as a particularly major issue wrt gilt prices, I'd suggest the government looking to write an additional £300bn worth over the next 4-5 years is the issue as they are hugely increasing supply while which means the risk premium will need to rise to increase demand to match. That's all this is, a simple supply/demand dynamic, IMO.
Ah hem: that does create meaningful additional supply.
Most government bond holders roll over their positions, so the net new issuance is usually fairly modest. If there's one major holder (holding say a third of gilts), and they aren't rolling over one half of their positions, that might mean the government needs to sell 2-3x the normal quantities.
That's quite a change.
Yeah but it's only £80bn over a year that is being sold/not repurchased. It's not an earth shattering number. If the BoE announced all £895bn was being sold off over a year then sure, I think there's something in that.
There is a potential route for the government to retreat from the abyss with admittedly some humiliation but in a way which could be spun as not total humiliation. It's basically to follow the advice given as long ago as September 28th by the excellent @Sime0nStylites, and issue a statement along these lines:
"“In light of recent global market turmoil, HMG will re-evaluate the measures announced on September 23 in the context of recent sharp rise in interest rates. HMG remains fully committed to cutting taxes and reforming the supply side of the economy to generate economic wealth. At the same time, we also recognise the value of prudence. As a result, we will provide a detailed update on our plans at our announcement on November 23 [now it will have to be earlier, of course], which will also include a full OBR forecast.”
There is a potential route for the government to retreat from the abyss with admittedly some humiliation but in a way which could be spun as not total humiliation. It's basically to follow the advice given as long ago as September 28th by the excellent @Sime0nStylites, and issue a statement along these lines:
"“In light of recent global market turmoil, HMG will re-evaluate the measures announced on September 23 in the context of recent sharp rise in interest rates. HMG remains fully committed to cutting taxes and reforming the supply side of the economy to generate economic wealth. At the same time, we also recognise the value of prudence. As a result, we will provide a detailed update on our plans at our announcement on November 23 [now it will have to be earlier, of course], which will also include a full OBR forecast.”
Except it also needs the statement to be made by Rishi Sunak, who has replaced Kwasi
Ideally, yes, although not necessarily Rishi himself, it could be someone like Hunt or Javid.
Anyone with an ounce of credibility would do. Kwasi and Liz have precisely zero. The feeling here is that they are no longer to be trusted when making fiscal pronouncements.
There is a potential route for the government to retreat from the abyss with admittedly some humiliation but in a way which could be spun as not total humiliation. It's basically to follow the advice given as long ago as September 28th by the excellent @Sime0nStylites, and issue a statement along these lines:
"“In light of recent global market turmoil, HMG will re-evaluate the measures announced on September 23 in the context of recent sharp rise in interest rates. HMG remains fully committed to cutting taxes and reforming the supply side of the economy to generate economic wealth. At the same time, we also recognise the value of prudence. As a result, we will provide a detailed update on our plans at our announcement on November 23 [now it will have to be earlier, of course], which will also include a full OBR forecast.”
Honestly shocked not to see more of a revival in the SW there for the LDs, or Labour filling the gaps (yes, even with that big drop I'd expect more on those numbers)
In many of the seats the LDs have still not recovered second place, yet Labour just don't seem able to get sufficiently high, so the wall might be more resistant than expected.
Yes, how do we know that one of these mini-brains doesn't have consciousness? It's such a huge ethical minefield and if they do, what kind of implications does it have wrt "programming" these mini-brains to perform computational tasks? Is it slavery?
These kinds of experiments are on the edge of what the rules should and shouldn't allow.
It shouldn't be allowed at all, but without a world government is inevitable. The West aren't going to leave this stuff to the Chinese and the Chinese aren't going to leave it to the West. So humankind will go all in blind (and probably create mayhem). Best not to worry about it though.
Labour 41% (+20) Conservative 28% (-22) Liberal Democrat 24% (-3) Green 4% (+3) Reform UK 3% (New) Other 1% (–)
Truss is so screwed...
These are the seats defined as being "Blue Wall" by Redfield Wilton.
Bournemouth East Chelsea and Fulham Cheltenham Chingford and Woodford Green Chippenham Chipping Barnet Cities Of London and Westminster Colchester Esher and Walton Filton and Bradley Stoke Finchley and Golders Green Guildford Harrow East Hendon Henley Hitchin and Harpenden Lewes Milton Keynes North Milton Keynes South Mole Valley Reading West Romsey and Southampton North South Cambridgeshire South East Cambridgeshire South West Surrey St Ives Sutton and Cheam Taunton Deane Thornbury and Yate Totnes Truro and Falmouth Tunbridge Wells Uxbridge and South Ruislip Wantage Watford Wells West Dorset Wimbledon Winchester Woking Wokingham Wycombe
I see Rees-Mogg, the thinking man's fool, was deflecting blame on the current crisis by referring to the government's actions as a 'minor part of fiscal policy'.
Has he told Truss or Kwarteng this, as I am sure they were telling us how the government's actions were vital, necessary and massively impactful in a positive way.
There is a potential route for the government to retreat from the abyss with admittedly some humiliation but in a way which could be spun as not total humiliation. It's basically to follow the advice given as long ago as September 28th by the excellent @Sime0nStylites, and issue a statement along these lines:
"“In light of recent global market turmoil, HMG will re-evaluate the measures announced on September 23 in the context of recent sharp rise in interest rates. HMG remains fully committed to cutting taxes and reforming the supply side of the economy to generate economic wealth. At the same time, we also recognise the value of prudence. As a result, we will provide a detailed update on our plans at our announcement on November 23 [now it will have to be earlier, of course], which will also include a full OBR forecast.”
Yes, how do we know that one of these mini-brains doesn't have consciousness? It's such a huge ethical minefield and if they do, what kind of implications does it have wrt "programming" these mini-brains to perform computational tasks? Is it slavery?
These kinds of experiments are on the edge of what the rules should and shouldn't allow.
CAN WE PLEASE HAVE NO MORE TALK OF THESE MINI-BRAINS. @LEON WILL COME ALONG, GET REALLY EXCITED AND ANNOUNCE THAT THEY'RE WOKE ALIEN MINI-BRAINS AND WILL TOTALLY DERAIL THE CONVERSATION.
COULD ALL PBers PLEASE DELETE ALL REFERENCES TO MINI BRAINS BEFORE IT'S TOO LATE.
On energy consumption every single person I speak to is talking about what they are doing to reduce it. Not using the tumble dryer. Short cycles on washing machines. Avoiding using the central heating. Reducing time the hot water is on. Layering up. Turning off unused lights. This is all easy to do stuff. We just never bothered before. This is going to add up to a big reduction in energy usage.
Even if you can afford to pay for it, I think reducing energy usage right now is preceived as the moral & patriotic thing to do. Every therm you don’t use is a therm that can be used in other parts of the EU that are more dependent on gas than we are, ensuring they make it through the winter.
Christmas lights are going to divide the nation! Fury from both sides, pitchforks at dusk in small rural villages, town councils baffled as to what to do.
Make sure they’re all LED lights, powered by batteries.
Anyone using thousands of incandescent lights, will have the shock of their lives when the bill comes through!
I have trouble getting to grips with a mentality amongst average or above income households that has prevented there being *any* forward planning or self-reflection by them in the last decade in an age when most claim to be 'green'.
If you are stopping using it now, why were you using the tumble dryer before? A washing line and some pegs costs a couple of £, or you can use a Pulley Maid, or just the bathroom with the extractor fan turned on, or a simple dehumidifier.
Lights powered by batteries sounds like a good call, just like a house connected to rainwater harvester is this best route to protection from the mouth-breath pitchfork lobby - even if you have an entitlement to an exemption such as plants in containers.
Labour 41% (+20) Conservative 28% (-22) Liberal Democrat 24% (-3) Green 4% (+3) Reform UK 3% (New) Other 1% (–)
Truss is so screwed...
These are the seats defined as being "Blue Wall" by Redfield Wilton.
Bournemouth East Chelsea and Fulham Cheltenham Chingford and Woodford Green Chippenham Chipping Barnet Cities Of London and Westminster Colchester Esher and Walton Filton and Bradley Stoke Finchley and Golders Green Guildford Harrow East Hendon Henley Hitchin and Harpenden Lewes Milton Keynes North Milton Keynes South Mole Valley Reading West Romsey and Southampton North South Cambridgeshire South East Cambridgeshire South West Surrey St Ives Sutton and Cheam Taunton Deane Thornbury and Yate Totnes Truro and Falmouth Tunbridge Wells Uxbridge and South Ruislip Wantage Watford Wells West Dorset Wimbledon Winchester Woking Wokingham Wycombe
WFH a factor there. Basically places if you were a liberal well off metropolitan office based worker you might move to to get more space and work from home.
Yes, how do we know that one of these mini-brains doesn't have consciousness? It's such a huge ethical minefield and if they do, what kind of implications does it have wrt "programming" these mini-brains to perform computational tasks? Is it slavery?
These kinds of experiments are on the edge of what the rules should and shouldn't allow.
CAN WE PLEASE HAVE NO MORE TALK OF THESE MINI-BRAINS. @LEON WILL COME ALONG, GET REALLY EXCITED AND ANNOUNCE THAT THEY'RE WOKE ALIEN MINI-BRAINS AND WILL TOTALLY DERAIL THE CONVERSATION.
COULD ALL PBers PLEASE DELETE ALL REFERENCES TO MINI BRAINS BEFORE IT'S TOO LATE.
Just to be clear are we talking about Truss and Kwarteng here?
Labour 41% (+20) Conservative 28% (-22) Liberal Democrat 24% (-3) Green 4% (+3) Reform UK 3% (New) Other 1% (–)
Truss is so screwed...
These are the seats defined as being "Blue Wall" by Redfield Wilton.
Bournemouth East Chelsea and Fulham Cheltenham Chingford and Woodford Green Chippenham Chipping Barnet Cities Of London and Westminster Colchester Esher and Walton Filton and Bradley Stoke Finchley and Golders Green Guildford Harrow East Hendon Henley Hitchin and Harpenden Lewes Milton Keynes North Milton Keynes South Mole Valley Reading West Romsey and Southampton North South Cambridgeshire South East Cambridgeshire South West Surrey St Ives Sutton and Cheam Taunton Deane Thornbury and Yate Totnes Truro and Falmouth Tunbridge Wells Uxbridge and South Ruislip Wantage Watford Wells West Dorset Wimbledon Winchester Woking Wokingham Wycombe
WFH a factor there. Basically places if you were a liberal well off metropolitan office based worker you might move to to get more space and work from home.
Labour 41% (+20) Conservative 28% (-22) Liberal Democrat 24% (-3) Green 4% (+3) Reform UK 3% (New) Other 1% (–)
Truss is so screwed...
These are the seats defined as being "Blue Wall" by Redfield Wilton.
Bournemouth East Chelsea and Fulham Cheltenham Chingford and Woodford Green Chippenham Chipping Barnet Cities Of London and Westminster Colchester Esher and Walton Filton and Bradley Stoke Finchley and Golders Green Guildford Harrow East Hendon Henley Hitchin and Harpenden Lewes Milton Keynes North Milton Keynes South Mole Valley Reading West Romsey and Southampton North South Cambridgeshire South East Cambridgeshire South West Surrey St Ives Sutton and Cheam Taunton Deane Thornbury and Yate Totnes Truro and Falmouth Tunbridge Wells Uxbridge and South Ruislip Wantage Watford Wells West Dorset Wimbledon Winchester Woking Wokingham Wycombe
Most of those seats either voted Remain or were soft Leave ie Tory held seats now vulnerable post Brexit and the polar opposite of the strong Leave Labour held seats in the redwall that went Tory in 2019
Comments
Excluding America which is for obvious reason sui generis, not only the UK but no country anywhere else has ever, in history, that I can think of (correct me if I'm wrong) engaged in QT of this scale. And within 24 hours of this absolutely unprecedented action of a Central Bank saying it going to be selling gilts like this, the gilt market turmoil began.
It's just like Gordon Brown saying he's going to sell the gold reserves, leading to a price crash on gold as it gets sold.
The Tories are debating their options under Liz Truss like a party of chefs fretting over different ways to unscramble eggs.
https://www.theguardian.com/commentisfree/2022/oct/12/liz-truss-populist-brexit-mandate-economic
This attempt to rewrite history and shift blame onto the Bank of England is pathetic. Why are you even bothering?
It feeds into supply and demand dynamics too. Its like this year the gilt market is expected to cover not just the energy support, regular deficit and some tax cuts (almost all of which had long been signalled) but also for the very first time Furlough and then some too on top of that.
As you may well know already from your own experience (personal and/or professional)?
What wasn't known about until that 24h period was the 80bn of unprecedented QT sales from the Bank too.
You're rewriting history to suit your narrative, but it's very clear what caused the run on gilts and sterling, it wasn't QT which has been priced in since August, it was the market pricing in a risk premium for hugely increased gilt supply.
https://think.ing.com/amp/article/our-guide-to-the-bank-of-englands-quantitative-tightening/
Says a government U-turn on tax cuts may be the only way to calm the markets.
But could Truss survive such a humiliating climbdown? https://twitter.com/MelJStride/status/1580220631492485120
No, the ceasing reinvestment which is relatively uncontroversial started in February. Your own link warns that it is if or when actual sales begin, which is unprecedented, that it would be "interesting", and would only be a small amount at first like 25 billion. Instead they went for 80 billion at once.
Will the Bank be among the first to start actively selling bonds?
This is where things get more interesting. On top of ending reinvestments, the BoE said last summer that it would “consider” actively selling assets back into the market when the Bank rate hits 1% - something that could feasibly happen this year.
The motivation is understandable, given the relatively slow initial pace of balance sheet reduction that can be achieved by stopping reinvestments.
But it’s fair to say that actively selling bonds adds a number of extra complexities, not least how much to sell and how to sell it. What if markets entered a turbulent patch, would sales be paused or scaled back?
Governor Bailey said recently “we would not do QT during a period of financial instability”. And with that in mind, we suspect any foray into selling bonds would be fairly tentative. Based on the impact of QE in the previous cycle, we estimate that £25bn of gilt sales in any given year would have a comparable tightening effect on financing conditions as 0.125% to 0.25% of rate hikes.
Also for those who keep talking about a risk-premium, its worth noting that your own link forecasts (based on an assumed £2.1bn per month, see chart) that there would be a risk-premium added.
Actively selling gilts is a process fraught with risks, many of which will only be known ex-post. So it is only natural for financial markets to bake a greater risk premium in anticipation of such an event.
Eighty billion in actively sold QT was not remotely forecast or priced in risk premium.
To help rally the markets?
But whatever it's called, the Tories seem intent on locating it.
https://twitter.com/DavidHerdson/status/1580222218881363969
https://twitter.com/tmlbk/status/1580208920718893056
Meanwhile everyone else just laughs. At them. They are painfully and dangerously inept as politicians.
https://twitter.com/jessicaelgot/status/1580223436215193601
https://twitter.com/MelJStride/status/1580220633212129282
There's another aspect your are ignoring. This isn't just about gilt rates. We can see that this is a matter of the market losing confidence in the fiscal continence of the government by the large fall in the value of Sterling, to a new record low against the Dollar, that happened after the Special Budgetary Operation. All other things being equal QT should have led to Sterling gaining strength.
Sterling crashed because of the loss of market confidence. That's all down to Truss and Kwarteng.
Mona Issa of Lebanese website al Mayadeen (which recently interviewed Corbyn) says there's a Mossad CIA Netanyahu plan to ferment "identity confusion" by getting Iranians to watch Netflix and "Beverly Hills 90210" and how "the fruit of that behaviour it's occurring today"
https://twitter.com/hurryupharry/status/1580172895753744389
https://mobile.twitter.com/wongmjane/status/1579901494929018881
Bartholomew is Liz Truss!
Nearly there...
"“In light of recent global market turmoil, HMG will re-evaluate the measures announced on September 23 in the context of recent sharp rise in interest rates. HMG remains fully committed to cutting taxes and reforming the supply side of the economy to generate economic wealth. At the same time, we also recognise the value of prudence. As a result, we will provide a detailed update on our plans at our announcement on November 23 [now it will have to be earlier, of course], which will also include a full OBR forecast.”
https://twitter.com/Sime0nStylites/status/1575098262155304965
In terms of actual measures, they could do three things:
1. Scale back the tax cuts without reversing them completely, for example by taking Corporation Tax to (say) 22% rather than the full 19%.
2. Phase in the tax cuts over a longer period
3. Add in some compensatory tax rises elsewhere, especially ones which they can spin as not impacting on growth.
This could all be presented as a refinement of what they were originally going to do. This would be pure tosh, of course, but it would have a good chance of getting them (and more to the point, her) through the immediate storm.
There have been at least half a dozen institutional fund managers who’ve been on the BBC in the last few days saying pretty well what you’re saying.
None are blaming the Bank.
Would give a chance for issues like those to be raised and discussed.
"why does it look more real than him?"
If you put all these developments together - totally convincing fake humans, AI, Dalle and Stable Diffusion, lab grown brains.... you have an amazing recipe for dystopia. And the end of humanity as we know it
But then, we're not exactly doing a great job, so maybe it's for the best
But what do I do Max and myself know about this sector?
Labour leads by 13% in the Blue Wall.
Blue Wall Voting Intention (7-8 October):
Labour 41% (+20)
Conservative 28% (-22)
Liberal Democrat 24% (-3)
Green 4% (+3)
Reform UK 3% (New)
Other 1% (–)
Truss is so screwed...
Most government bond holders roll over their positions, so the net new issuance is usually fairly modest. If there's one major holder (holding say a third of gilts), and they aren't rolling over one half of their positions, that might mean the government needs to sell 2-3x the normal quantities.
That's quite a change.
Blue Wall Voting Intention (7-8 October):
Labour 41% (+20)
Conservative 28% (-22)
Liberal Democrat 24% (-3)
Green 4% (+3)
Reform UK 3% (New)
Other 1% (–)
Changes +/- 2019 General Election
https://twitter.com/RedfieldWilton/status/1580226802617753600
These kinds of experiments are on the edge of what the rules should and shouldn't allow.
That's now switched - government spending is rising, tax receipts are falling, and (with the energy price guarantee) it's only going to get worse. So it's much harder to just not roll over a portion of the debt.
https://twitter.com/ElectionMapsUK/status/1580227096651014146?s=20&t=mhEbr0Qah4rHLapkm6Kh1g
https://twitter.com/ElectionMapsUK/status/1580227603645878272
Wasn't the old rule that competency trumps likeability?
Labour and the blue wall? Only Lib Dems can win here. Start printing those bar charts.
In many of the seats the LDs have still not recovered second place, yet Labour just don't seem able to get sufficiently high, so the wall might be more resistant than expected.
Liz Truss = Stepmon
Electorate = 12 stepsons.
Bournemouth East
Chelsea and Fulham
Cheltenham
Chingford and Woodford Green
Chippenham
Chipping Barnet
Cities Of London and Westminster
Colchester
Esher and Walton
Filton and Bradley Stoke
Finchley and Golders Green
Guildford
Harrow East
Hendon
Henley
Hitchin and Harpenden
Lewes
Milton Keynes North
Milton Keynes South
Mole Valley
Reading West
Romsey and Southampton North
South Cambridgeshire
South East Cambridgeshire
South West Surrey
St Ives
Sutton and Cheam
Taunton Deane
Thornbury and Yate
Totnes
Truro and Falmouth
Tunbridge Wells
Uxbridge and South Ruislip
Wantage
Watford
Wells
West Dorset
Wimbledon
Winchester
Woking
Wokingham
Wycombe
Has he told Truss or Kwarteng this, as I am sure they were telling us how the government's actions were vital, necessary and massively impactful in a positive way.
COULD ALL PBers PLEASE DELETE ALL REFERENCES TO MINI BRAINS BEFORE IT'S TOO LATE.
If you are stopping using it now, why were you using the tumble dryer before? A washing line and some pegs costs a couple of £, or you can use a Pulley Maid, or just the bathroom with the extractor fan turned on, or a simple dehumidifier.
Lights powered by batteries sounds like a good call, just like a house connected to rainwater harvester is this best route to protection from the mouth-breath pitchfork lobby - even if you have an entitlement to an exemption such as plants in containers.
"The only way to stop the war and to deter future aggression is for the invasion to end with an unequivocal Russian failure."
"Ukrainians would also fight on even if hit by a nuclear attack—for Ukrainians, there is no scenario worse than Russian occupation"
https://www.foreignaffairs.com/ukraine/ukraines-path-victory
But not a 21% swing.
Has this ever happened before?
You have only yourselves to blame.