The BoE is getting really good at simply doing its job, raising interest rates, buying bonds. People often think it performs special tasks – these are all within its regular operations as necessary, designed to help big asset holders and let the pensions markets carry on doing their risky hedging / leverage. (The real problem here.)
The markets are a house of cards that sit on a precipice often with too much leverage in the system.
By the way we are now seeing money moving back to the dollar which will weaken the £ as risk-on assets are facing uncertainty again. (There is a lot of liquidity somewhere in the system probably on the sidelines.)
Proof that it’s not Truss really, it’s simply the way the global markets operate – when their world doesn’t get what it wants.
FTSE just made an all time high of 7901. And yet the real economy is in mess.
Maybe, just maybe these stock markets don’t accurately reflect the wealth of most folk, and indeed productive capacity.
There’s more damage to come from the Tory camp. New money has to be spent from government or the country will just carry on declining. Sunak is likely to be under pressure to offer tax cuts soon. Because it is the only thing Tories try to do. Tax cuts won’t work (Unless on lower earners.)
Sunak, Truss or Johnson it will be same end result.
The country is simply in the mess because the UK government is the source of all new net money creation, and neither party has the imagination to spend on a massive scale. They are not limited financially and could do it tomorrow.
Giving public sector workers a big pay rise is the obvious starting point – that would start the economy growing very quickly.
We are going to sit dwindling economically until some numbskull realises this.
The irony is the Tories could fix their own problems very quickly but ideologically believe the private sector generates wealth on its own.
Total bullshit and technically impossible – the private sector simply swills money around that has been spent by government, sometimes into innovation and employment; sometimes into tax havens and profits.
But it never creates it.
Anyway tax cuts offered soon I believe.