we are absolutely ****.
Over dramatic statements like this make for difficult reading when you are trying tow work through these threads. Sure, some things will get more expensive, life will change for most of us - in a very bad way for some - but we will all still be living and getting on with things as best we can. Its funny how you don't see similar positive drama in the former years in the good low interest times. Its always doom, doom doom.
Lets just help each other out eh, financially, physically and mentally.
Is the plan to run the country into the ground, call a snap election, leave Labour to try and rescue it and then claim its all the fault of the Labour government?
I suspect its merely that they are wedded to the idea of a low tax low regulation economy and have surrounded themselves with other true believers so never listen to a dissenting voice. The fact that germany is successful with a higher tax and tightly regulated society is dismissed as irrelevant.
Basically wishful thinking and groupthink allied to rigidity.
Looks like the B of E are already talking a full percentage rise already
No doubt the governments response to that will be to give more borrowed money to rich people and find another way to further inflate the housing market
Well all that's happening because there few bullish signals left in the markers (at least domestically) then ways are being sought to transfer wealth to the wealthy.
We operate phoney market economies. So in a downtrend then you make cash by shorting the hell out of stuff.
When that eventually resets the cycle it will try and go the the other way (there's already been a bounce of 5% on the £/$ a short while ago.)
Again it's not borrowed money. It's simply bond issuance. The Tories are just being Tories but in a bearish trending market.
Small guy never wins irrespective.
I don't think the housing market will survive this in the short term - USA mortgages are shooting up. We tend to follow. Defaults will begin as the FED transfers Inflation to mortgages.
Lots of dark economic skies ahead.
On Saturday on R4 I heard some Tory say all this was the fault of the last Labour Govt… and not the last three or four Tory leaderships. It did make me laugh
How many years is it acceptable to blame?
Based on what some body said on Saturday morning by the time my mortgage ends it’s FR it will go up between £750 and £1200 a month. Time to move then.
Feels like we are already approaching the death spiral of the Lawson boom of the 1980s/early 90s, but without enjoying the boom bit first. Conservatives perhaps have forgotten that these 'dash for growth' policies normally result in lost elections, unless they are counting on the relative weakness of Labour allowing them a narrow John Major-style win in 2024.
I don't think they care. Right now it's about making good on their donors markers from brexit/leadership campaign funding. Worry about the recession and stagflation when that's cleared up and your nonexec directorships are secure.
The tory faithful will be happy as their savings will be getting a better rate. Even though their pound will now only get them a 1/4 Oz of rat meat.
The tory faithful will be happy as their savings will be getting a better rate.
Against inflation though it's negative.
Even though their pound will now only get them a 1/4 Oz of rat meat.
The savvy invester will be shorting. (Probably not the average Tory though - they will rely on an institution.)
The tory faithful will be happy as their savings will be getting a better rate.
Lolz etc
https://moneyfacts.co.uk/savings-accounts/
I read somewhere that they had a meeting with city investors a few days before the mini budget when they laid out the plans. Those investors then shorted the pound.
Surely this is the very definition of insider trading.
Surely this is the very definition of insider trading.
The corruption is in plain sight, and normalised. That's the achievement of the past 12 years.
The corruption is in plain sight, and normalised. That’s the achievement of the past 12 years.
Well put.
bond yields have shot up to 4.2%, and 4.2tn of debt, so who pays that?
are there implications to the 'get debt - issue bonds - get free money' cycle?
I think (happy to be proved wrong) that when the government issues a bond, the pricing is effectively set for the duration of that bond - so the bonds we issued last year for 20 years at ~1% will not be impacted by the recent yeilds - however, any new borrowing we do (and there's a lot of that approaching fast) will be under the rates today
When your government bonds are less attractive as an investment, you have have to price them more attractively to sell them if you need to raise money that way, which we hugely do, following the 'fiscal event' shat out by Kwarteng last week.
They are less attractive because our currency is weakening, our economy is stagnant or even contracting, and inflation and debt are high.
Investors will be aware that inflation and currency changes could actively undermine the value of any bond they take over the fixed period. Governments in the past have used high inflation and devaluation to reduce debt.
The economic gamble/fantasy is that the measures announced will grow the economy in the meantime before a bomb goes off in the public finances. Whether giving rich people money leads to economic growth is already dubious in the extreme, especially with the existing economic conditions - high inflation, no baseline growth, rising interest rates, high personal debt, high energy/raw material prices, reduced access to our biggest markets. Where is the route to growth in all of that?
We are an economic petri dish and the IEA shills have grabbed a random bottle out of the lab. Is it sugar, or is it bleach?
the pricing is effectively set for the duration of that bond
Sorry, no time for details... but it's not that simple... some is indexed linked.
https://www.dmo.gov.uk/data/gilt-market/index-linked-gilts/
The problem is that all of the big players here other than the B of E appear to be brainless short term-ists.
Starting with the Government who only care about getting to the next election.
Stock and currency markets which are full of over-priced idiots looking to make even more money.
Then the B of E doing what we always knew they’d do since nobody has come up with a better idea - ie to raise interest rates.
You would have thought at the very least the B of E and Government would have had some dialogue along the lines of not trying to announce policies that are in absolute direct conflict with each other.
The problem is that all of the big players here other than the B of E appear to be brainless short term-ists.
I'd argue that the current top staff at the BofE aren't much better, to be honest. Governor was a poor appointment in particular.
@tjagain I met a lot of “I’m right because I say I’m right” types at medical school. They gravitated naturally to specialities like neurosurgery where god complexes seem to be tolerated. Intelligent enough to pass exams yes. Intelligent enough to listen to others and consider the wider picture maybe not.
Ernie. Do you still think Kwerteng is supersmart and there on merit? He clearly has made a huge blunder here. Or is he deficient in some some forms of intelligence?
He seems to me to have avoided all experience and context to insist that what he would like to be right must be right and his behaviour at the queens funeral shows a huhe lack of emotioal intelligence.
Do I believe that the man who was part of the team which won the University Challenge in the 1990s and was given a scholarship by Eton because of his exceptional academic abilities is intelligent? Yes of course I do.
I also believe that people who have attained high levels of educational achievement can also, ironically, be intellectually lazy and say stupid things, eg all Tories are moronic halfwits and all working-class people are stupid racists, this place is testimony to that.
Oh and of course if you don't think that all Tories are cretinous morons that makes you a Tory yourself - I hear that all the time.
There was nothing in Kwarteng's mini budget which suggests that he lacks intelligence. He is Tory Chancellor of the Exchequer who plans next year to giveaway £45billion in tax cuts to mainly the wealthiest in society.
He claims that it will generate a boom, something which is almost certainly to a decree true, although no doubt he is fully aware that giving extra money to people struggling to buy goods and services would be more effective. But he is a Tory not a socialist.
He is however taking a massive gamble, everyone knows that, including no doubt Kwarteng himself, because precedence dictates that it will end in tears. But taking a gamble doesn't necessarily equate with being unintelligent - do you think Mike Ashley, all bankers, and everyone who frequents a casino is stupid?
And there is always the possibility that Kwarteng's gamble will work far better than expected, especially if there are unexpected developments which work in the UK's economy favour (as opposed to unexpected developments which work against the UK's economy favour, eg energy prices, war) in which case Kwarteng will considered a genius.
Even if Kwarteng is partially successful and the bust which follows the artificial boom occurs under a Labour government, and which results in Labour being consigned to opposition for twenty years, it will have been worthwhile for the Tories.
Those "stupid" Tories very successfully managed to get a Labour government to take all the blame of the mess created by the neo-liberal policy of keeping wages low and giving credit to people to buy stuff which they couldn't afford on their pisspoor wages.
And undeterred by public condemnation, which to be fair hasn't been spectacular with regards to Labour, it's almost been at the level of "down with that sort of thing", Kwarteng appears determined to carry on doing what Tories do best and redistribute wealth in favour of the wealthy:
Was just about to going and convert the remainder of my holiday money (Croatian Kunas) back into Sterling. Checked exchange rate trends. Back in the drawer it goes. 🙂
How low would the £ have to sink before Kwertang has to resign?
Promising more tax cuts to come over the weekend seemed particularly daft, is he trying to make things worse?!
Johnson was beset by u-turns, truss obviously trying not to go that way
Lower pound, higher interest rates... as everyone predicted (and the OBR reports would have laid out).
How do either help with the cost of living crisis for normal people in the UK...?
Making the rich richer, and the less well off even less well off... it's been going on for a decade now... the current round of increasing the divide will hurt precisely because it comes on top of years and years of this.
This article was particularly prescient
https://www.omfif.org/2022/08/if-truss-becomes-prime-minister-sterling-will-crash/
If Truss becomes leader, she would follow the opposite course, with a pliant chancellor (perhaps Kwasi Kwarteng, the present business secretary) carrying out her bidding. Truss’s policy on tax cuts would prolong the often bizarre nature of Johnson’s three year rule.
Conservatives perhaps have forgotten that these ‘dash for growth’ policies normally result in lost elections, unless they are counting on the relative weakness of Labour allowing them a narrow John Major-style win in 2024.
This is an interesting point imo, the Tories really should not have won the 1992 general election, and indeed the polls suggested that they wouldn't. So how come they did?
I don't think it is fair to say that Labour was relatively weak under Neil Kinnock, especially against John Major. Labour had pretty much got their shit together to the point that even the Financial Times backed Labour in the 1992 general election.
And wasn't really even that close - the Tories ended up with about 8% more than Labour.
I don't honestly know what the answer is other than after Thatcher the Tories managed to rebrand themselves and people were prepared give John Major a chance. Major's scrapping of Thatcher's deeply unpopular poll tax flagship policy - the new council tax was due the following year, undoubtedly help to create the impression that this would be a different Tory administration.
Although I strongly disagree, John Major was imo every bit as right-wing as Thatcher and apart from the poll tax, which he had absolutely no choice but to scrap, he carried on and in fact expanded Thatcher's economic policies.
John Major was indeed Thatcher's own choice to replace her. And her backing undoubtedly helped him become Tory Party leader.
So if giving the richest 1% a massive 50k+ handout wasn't enough of a 'f*** you' to millions of working people who are already struggling to pay their energy bills and mortgages/rents. Now we'll also have to endure the impacts of even higher interest rates and the even deeper recession they will cause. Labour must be wondering what they've done to deserve such good fortune. Carry on like this and I think there's a high chance of not just defeat, but a massive tory collapse at the next general election.
This is an interesting point imo, the Tories really should not have won the 1992 general election, and indeed the polls suggested that they wouldn’t. So how come they did?
I don’t think it is fair to say that Labour was relatively weak under Neil Kinnock
I get your points, probably more accurate to say that Labour was not strong enough at that point to overcome the 'home advantage' of media bias. We'd probably disagree on what constitutes a 'strong Labour party' for that era, or indeed the current era, or whether that's the wrong way of approaching it in the run-up to 2024. But that's for the other threads.
Throwing it on purpose?
As above, get labour in for the next round and then blame them.
None of this particularly complex.
Our friend neoliberalism is failing and has been on the cards for a while. Aided by pandemic and war, plus general instability.
So the Tories try to fix it with more neoliberalism.
The game plan is exactly the same as it's always been. Transfer wealth from the power of the state, and the poor to the wealthy.
Trouble is this time a boat load of middle-class homeowners are in the firing line.
We built a society around markets - no point crying when all of those markets conspire against you because you never thought left-wing economics might be the thing that generates true prosperity and voted successive right-wing governments.
Markets sometimes tank - they don't always go up. Welcome to the reality the establishment created.
None of this is a shock but perhaps the speed it's happening is.
We got to used to the idea that we believed the markets serve us.
Throwing it on purpose?
No, their best case is for a brief bubble of growth in late 2023 which will get them another term. Last throw of the dice time, make their mates a bit richer while they're at it.
Literally everybody else, even those who are doubtless even now enriching themselves, knew what the result of this farce would be. They didn't need the purported briefing ahead of the mini budget that had them shorting the pound.
You would have thought at the very least the B of E and Government would have had some dialogue along the lines of not trying to announce policies that are in absolute direct conflict with each other
Again no surprise the BoE are only *independent* when they deliver what the government wants - now we have a different scenario.
It's a ridiculous situation.
We need to get away from assessing 'intelligence' re suitability to govern. We don't live in a technocracy where aspirants sit the 11+ to prove their worth, we live in a capitalist society and politicians (clever or otherwise) have to choose which of two classes they're defending. The problem is to varying degrees we have both major parties defending the one class and its symbol of an unequal society, the monarchy.
When your government bonds are less attractive as an investment, you have have to price them more attractively to sell them if you need to raise money that way, which we hugely do, following the ‘fiscal event’ shat out by Kwarteng last week.
Hence forth the ridiculous nature of bonds that actually serve the purpose to help control interest rates rather than raise money for a currency issuing government.
But I don't expect our government to use the tools properly.
So how come they did?
Desert Storm was seen as a victory, John Major was seen as the "change" candidate (despite being Thatcher's preferred candidate) and he dumped Poll tax. 1992 was also the "If Labour get elected will the last person to leave, turn out the light" Sun Headline.
No, their best case is for a brief bubble of growth in late 2023 which will get them another term.
This. And, importantly, they have done what enough super rich backers want them to do to get in the fighting funds. Come the election, they will be spending multiple times what the opposition parties have to spend on campaigning... and don't forget they have completely neutered the Electoral Commission... if they are offered more money than they can legally spend, they'll just use work arounds. And all this is on top of the free help they'll get from press and media that either back them or have been cowed with threats to their funding and "independence". The next election will be anything but fair. Don't bet against them winning once the election campaign is done, despite that being seen as so clearly against the interests of all of us before that campaign gets properly under way.
The point Ernie that you seem to want to ignore is there are multiple types of intelligence and academic achievement only measures a very narrow range. So you can be a high academic student and still be thick as mince in other aspects of intelligence. Thats the situation imo with the current crop of tories.
Read up on it. You might find it interesting. You would certainly score highly in some areas despite your 2 gsce or whatever it was. 🤣🙄
Optimistic take:
The longer this goes on, and the deeper the crisis, the stronger mandate Labour will eventually have to really change things.
Kwarteng has never struck me as being thick.
He's always struck me as being a serial, unashamed, bare faced liar and psychotically right wing.
Optimistic take:
The longer this goes on, and the deeper the crisis, the stronger mandate Labour will eventually have to really change things.
Maybe, but I'm inclined to think the Tories will have exhausted the nation's reserves of patience by that point.
In much the same way that the job of PM was a poisoned Chalice after Brexit with whover took it up having to deliver an ill defined set of wild promises, the next Non-Tory PM (lets not assume anything) will have to contend with the state of the UK Lizzy & Co. leave it in, plus the weight of public expectations and any campaign promises they went and made.
You can only blame your predecessors for so long, I reckon they can only say "it was the last lot's fault" for a maximum of 6 months before it wears thin, even if it is the truth. By the time they leave the Truss Government may well have just ensured the problems a new government has to tackle are too big and they end up as a single term footnote before normal Tory business is resumed...
I honestly can't see how this is all going to pan out, This first stab at a Budget (that apparently can't be called a budget) is very much a gamble on growth (with very little to really stimulate growth), unfortunately those with the most to loose in this gamble (the poor and increasingly squeezed middle) don't seem to have much of a say in all of it, or anyone particularly representing their interests.
As others have said, this is a proper test of the whole Neo-liberal/Capitalist belief system; is there really any such thing as "trickledown"? Having stuffed the top 10%ers pockets full of extra cash, does anyone believe they'll be redistributing that money to the plebs or just find more clever ways horde it?
Kwassi is a brave man, not just because He's taken a gamble, but because He's done it with everyone else's financial security... definitely deserves a slow hand clap.
Rumoured Bank of England announcement of an emergency rate rise later today
Absolutely outstanding achievement by our new PM and Chancellor, who both appear to be following their predecessors example and are presently hidden in a fridge
Rishi Sunak must be laughing his tits off at this biblical scale of fiscal illiteracy
Day two of the Special Fiscal Operation. Major success imminent. Generals tight-lipped about advances.
https://twitter.com/bmay/status/1574368172328849414
Immediately after kwarteng's fiscal event Bloomberg issued a forecast of interest rates at 5.3% next August; this morning markets were anticipatung 6.1% next March.
Now the BoE are considering an emergency rise of 1 point.
Pray for mortgage holders.
But...an emergency intervention by the BoE will be seen as a panic reaction and would be likely to cause further problems.
What a mess.
BTW
I didn't call Kwerteng thick. I suggested he was not there on merit. Not quite the same. Do you really think.he is the best potential chancellor in the tory party or just the one who agrees with truss and her( to be kind) unorthodox and dogmatic view?
Lots of people complaining here, but forgetting that thanks to Liz Truss we are all getting a bankers bonus soon.
Thank goodness we didn't have Chaos with Ed Miliband.
