Monday, 05 September 2022
  780 Replies
  25K Visits
With a new Prime Minister to be announced today (Mon 5th Sept 2022), we’ll start a fresh thread for all the discussion, and also use this one for any other Westminster/Politics related stuff going forward.

The old thread is now locked as Boris and his Government are replaced.

If you are quoting from a website, please add a link to back it up. (Click on ‘Links’ below the text box and you should be able to post them in the little box, we’ve added one to this post as an example!) - Posts without a link to back up the discussion may be removed.

Thanks.

Admin.
2 months ago
·
#317079
Coming up with a raft of uncosted policies maybe wasn’t the best way to start then. Just got a message from a friend in Sweden to say the papers there are asking the question “is the UK becoming a banana republic “. Clearly not but current chaos not doing much for our reputation
Grab yourself a coffee Laffy, sit down, and listen to every single one of her local radio car crash interviews this morning. Truly astounding stuff!!
2 months ago
·
#317081
Inflation, rising interest rates, and heating are global issues-just like the pandemic.They are not specific to the U.K.!All of a sudden, it’s a Truss mistake.Very poor and short sighted.

It’s how she manages her way out of this that counts now.


This is correct ,but let's equate is to driving a car ... Truss has seen a corner coming up and instead of slowing down and making plans to get round the corner , she has put her foot down and accelerated into it, in the hope that we get to the destination quicker but it just looks like she's taking us off the edge of a cliff.
2 months ago
·
#317082
Grab yourself a coffee Laffy, sit down, and listen to every single one of her local radio car crash interviews this morning. Truly astounding stuff!!


That’s the best The Conservative’s have !!!!
2 months ago
·
#317083
Grab yourself a coffee Laffy, sit down, and listen to every single one of her local radio car crash interviews this morning. Truly astounding stuff!!


That’s the best The Conservative’s have !!!!


I think she was expecting Tommy Thomas
2 months ago
·
#317087
Worth a read-easy to blame the naughty Tories but this blow out has been rumbling for a while.

This is about punishing a UK government in my opinion for not pursuing ‘Davos consensus’ economic policy.The independent BOE should take a lot of the blame



Another twist in the Great Melt has occurred. For decades now bond vigilantes have been asleep on their sunbeds, lulled into a slumber by the soothing lapping of waves of secular stagnation and the froth of QE washing gently against the shore. Now all that has been drowned out by the sound of UK Gilts screaming in agony as the UK’s tortured public sector finances have awoken Rip Van Vigilante and he ain’t happy.

I’ve been transported back in time this week to the mid-1990s. In 1994 as the Fed tightened rates faster than the market had expected, the US bond market suffered a historic rout that culminated in the Orange County bankruptcy and the Mexican Peso Crisis. I remember it well. In that same year, James Carville, a political adviser to President Clinton, famously remarked that if there were such a thing as reincarnation, he would like to be reincarnated as the bond market, such was the power of the bond vigilantes to police the government.
Fast forward a decade to February 2005 and the contrast was stark. In Congressional testimony, Alan Greenspan identified his “conundrum”. Despite the fact that the Fed had raised the Fed Funds rate 150bp since June 2004, the 10y Treasury yield was essentially unchanged. All sorts of explanations were put forward, and years later Fed Chair Ben Bernanke excused his own responsibility for the (consequent) housing bust and GFC by claiming that excess Chinese savings were the likely explanation for Greenspan’s conundrum.
The simple fact is that it was the emergence of Ice Age deflationary forces that were the primary secular factors underpinning the Japanification of western bond markets. Sure, bond yields would rise briefly on a cyclical basis at the peak of any economic cycle, but the downtrend always remained intact. That secular downtrend was then cemented in place by the emergence of QE after the GFC, which also lulled governments into a false sense of confidence that the bond vigilantes would never return – and even if they did, central banks would have their backs.
As G7 government debt ratios exploded though repeated crises, the bond vigilantes’ breathing may have got shallower, but they remained asleep. To be honest most of us in the markets thought if any economy were to suffer the first violent blows of vigilante retribution, it would be Japan. But no, as it turns out the UK has crossed that invisible line of credibility. While most press attention is on sterling’s weakness, it is UK Gilts that have crashed horribly. But the markets have proved that, as in 2018, QT is not “boring like watching paint dry” and they have forced the BoE into an ignominious Powell-like pivot. What comes next? “Not-QE” comes next.
image006.jpg
Sterling’s post- budget weakness is a sideshow by comparison to what is happening in the UK bond market. There are loads of charts to show just how bad the situation is in UK Gilts – like this one.

image008.jpg
Actually, despite the angst about the budget deficit, the UK government finances are in pretty good shape - but only relative to the much higher ratios we see elsewhere, including the US!

image010.jpg
So how did the new UK Government lose the confidence of the markets so quickly? I believe it is too easy to blame the budget’s dash for growth as the trigger. Indeed, the recent unprecedented criticism of a G7 budget by the IMF just reinforces my view that the Davos-consensus on the ‘correct’ economic policies to pursue were never going to tolerate someone trying to break away from the pack without trying to bring them into line. Look how the ECB has treated recalcitrant Italian governments of recent years – with similar threatening noises being heard once again.

What is interesting looking at the tax cuts announced in the UK budget is that almost 90% of the cuts in the budget (in terms of size) were preannounced weeks ago and so were old news already in the price. The 1p cut in the basic rate of tax was a surprise on the day, but that was only bringing forward the pre-announced cut by one year. And the politically questionable move to abolish the highest 45% rate of tax cost ‘only’ £2bn – against a total income tax take of £900bn.

Commentators such as the well-regarded Institute for Fiscal Studies (IFS) are lining up to claim that this was the biggest fiscal stimulus since the disastrous Barber Budget of 1972, when you had a similar dash for growth. That comparison is utter rubbish, because it compares the mini-budget to the former Chancellor Rishi Sunak’s plans to impose massive tax hikes on corporations and national insurance contributions – and not to the current status quo. Hiking taxes going into a recession, as Sunak was about to do, was in my opinion, bonkers – it was just another pursuit of the failed policy of fiscal austerity leading to the tight fiscal/easy monetary policy mix which the Davos-consensus so approve (maybe because it pushes financial asset prices to the moon).

image012.jpg
Bloomberg, I think, has inadvertently uncovered the truth. They write “To fund the stimulus, the nation’s Debt Management Office lifted its government bond sales for this fiscal year by £62.4 billion ($69.8 billion), even more than an estimated £60 billion increase expected by banks surveyed by Bloomberg. The extra bond supply from the UK government might prove especially challenging for the gilt market now that the BOE is also offloading debt from its portfolio, in stark contrast to during the pandemic when they were buying gilts under quantitative easing. The central bank said on Thursday it plans to sell around £10 billion in gilts each quarter starting on Oct. 3.” – link.

So did an increase in bond sales to £62.4bn against an expected £60bn really trigger the rout? No of course not! It was on the Thursday, the day before the budget that Gilts started selling off sharply, led by a continued rout in the US bond market, but crucially as an adverse reaction to the BoE policy meeting that day. Despite awful inflation news, the BoE failed to keep up with the Fed’s 75bp hike and ‘only’ delivered a 50bp rise, undermining sterling. Also, the BoE announced they were about to ramp up Quantitative Tightening (QT) with outright sales of Gilts. At a time when global bond markets were already under severe pressure, one could reasonably suggest this was foolhardy timing. Gilt yields surged on that BoE announcement on Thursday, effectively pulling the rug out from under an unsuspecting and overly complacent Chancellor on Friday. An increase in the Gilt supply of £62.4bn instead of an expected £60bn, cited by Bloomberg above, is hardly the stuff of Gilt market nightmares, but full-blown QT most certainly is!

Central Banks are very good at deflecting blame. They did it in the wake of the GFC (blaming commercial bankers) and again for the explosion of inflation since the pandemic (blaming the war in Ukraine). And so it goes on. Of course, for the BoE it is very convenient that almost all commentators are saying this week’s market turmoil is the direct result of the budget, but the BoE should also shoulder their share of the blame for this debacle. And they look especially inept now, with their resumption of QE to stabilise the Gilt market. They might well claim this is not QE, but that has echoes of Fed Chair Powell who claimed Fed intervention to stabilise the repo market in October 2019 was “not-QE” as it laughingly became known - link. And the UK isn’t the only G7 economy trying to stimulate growth with historically loose fiscal policies, as the recent CBO costing of US student loan forgiveness makes clear – link.

The bottom line is, after decades of central bank stimulus inflating bubbles and financial leverage to grotesque heights, the markets are still in charge and they just won’t tolerate QT.

I keep citing Mike Tyson’s famous quote, “everyone has a plan till they get punched in the face”. Which reminds me, isn’t the Fed in the process of doubling its QT to $96bn a month? Good luck with that!

How long did it take to write or copy and paste all that shite?

I'm sure you have put minds at rest of people coming off their fixed deal.
2 months ago
·
#317089
Worth a read-easy to blame the naughty Tories but this blow out has been rumbling for a while.

This is about punishing a UK government in my opinion for not pursuing ‘Davos consensus’ economic policy.The independent BOE should take a lot of the blame



Another twist in the Great Melt has occurred. For decades now bond vigilantes have been asleep on their sunbeds, lulled into a slumber by the soothing lapping of waves of secular stagnation and the froth of QE washing gently against the shore. Now all that has been drowned out by the sound of UK Gilts screaming in agony as the UK’s tortured public sector finances have awoken Rip Van Vigilante and he ain’t happy.

I’ve been transported back in time this week to the mid-1990s. In 1994 as the Fed tightened rates faster than the market had expected, the US bond market suffered a historic rout that culminated in the Orange County bankruptcy and the Mexican Peso Crisis. I remember it well. In that same year, James Carville, a political adviser to President Clinton, famously remarked that if there were such a thing as reincarnation, he would like to be reincarnated as the bond market, such was the power of the bond vigilantes to police the government.
Fast forward a decade to February 2005 and the contrast was stark. In Congressional testimony, Alan Greenspan identified his “conundrum”. Despite the fact that the Fed had raised the Fed Funds rate 150bp since June 2004, the 10y Treasury yield was essentially unchanged. All sorts of explanations were put forward, and years later Fed Chair Ben Bernanke excused his own responsibility for the (consequent) housing bust and GFC by claiming that excess Chinese savings were the likely explanation for Greenspan’s conundrum.
The simple fact is that it was the emergence of Ice Age deflationary forces that were the primary secular factors underpinning the Japanification of western bond markets. Sure, bond yields would rise briefly on a cyclical basis at the peak of any economic cycle, but the downtrend always remained intact. That secular downtrend was then cemented in place by the emergence of QE after the GFC, which also lulled governments into a false sense of confidence that the bond vigilantes would never return – and even if they did, central banks would have their backs.
As G7 government debt ratios exploded though repeated crises, the bond vigilantes’ breathing may have got shallower, but they remained asleep. To be honest most of us in the markets thought if any economy were to suffer the first violent blows of vigilante retribution, it would be Japan. But no, as it turns out the UK has crossed that invisible line of credibility. While most press attention is on sterling’s weakness, it is UK Gilts that have crashed horribly. But the markets have proved that, as in 2018, QT is not “boring like watching paint dry” and they have forced the BoE into an ignominious Powell-like pivot. What comes next? “Not-QE” comes next.
image006.jpg
Sterling’s post- budget weakness is a sideshow by comparison to what is happening in the UK bond market. There are loads of charts to show just how bad the situation is in UK Gilts – like this one.

image008.jpg
Actually, despite the angst about the budget deficit, the UK government finances are in pretty good shape - but only relative to the much higher ratios we see elsewhere, including the US!

image010.jpg
So how did the new UK Government lose the confidence of the markets so quickly? I believe it is too easy to blame the budget’s dash for growth as the trigger. Indeed, the recent unprecedented criticism of a G7 budget by the IMF just reinforces my view that the Davos-consensus on the ‘correct’ economic policies to pursue were never going to tolerate someone trying to break away from the pack without trying to bring them into line. Look how the ECB has treated recalcitrant Italian governments of recent years – with similar threatening noises being heard once again.

What is interesting looking at the tax cuts announced in the UK budget is that almost 90% of the cuts in the budget (in terms of size) were preannounced weeks ago and so were old news already in the price. The 1p cut in the basic rate of tax was a surprise on the day, but that was only bringing forward the pre-announced cut by one year. And the politically questionable move to abolish the highest 45% rate of tax cost ‘only’ £2bn – against a total income tax take of £900bn.

Commentators such as the well-regarded Institute for Fiscal Studies (IFS) are lining up to claim that this was the biggest fiscal stimulus since the disastrous Barber Budget of 1972, when you had a similar dash for growth. That comparison is utter rubbish, because it compares the mini-budget to the former Chancellor Rishi Sunak’s plans to impose massive tax hikes on corporations and national insurance contributions – and not to the current status quo. Hiking taxes going into a recession, as Sunak was about to do, was in my opinion, bonkers – it was just another pursuit of the failed policy of fiscal austerity leading to the tight fiscal/easy monetary policy mix which the Davos-consensus so approve (maybe because it pushes financial asset prices to the moon).

image012.jpg
Bloomberg, I think, has inadvertently uncovered the truth. They write “To fund the stimulus, the nation’s Debt Management Office lifted its government bond sales for this fiscal year by £62.4 billion ($69.8 billion), even more than an estimated £60 billion increase expected by banks surveyed by Bloomberg. The extra bond supply from the UK government might prove especially challenging for the gilt market now that the BOE is also offloading debt from its portfolio, in stark contrast to during the pandemic when they were buying gilts under quantitative easing. The central bank said on Thursday it plans to sell around £10 billion in gilts each quarter starting on Oct. 3.” – link.

So did an increase in bond sales to £62.4bn against an expected £60bn really trigger the rout? No of course not! It was on the Thursday, the day before the budget that Gilts started selling off sharply, led by a continued rout in the US bond market, but crucially as an adverse reaction to the BoE policy meeting that day. Despite awful inflation news, the BoE failed to keep up with the Fed’s 75bp hike and ‘only’ delivered a 50bp rise, undermining sterling. Also, the BoE announced they were about to ramp up Quantitative Tightening (QT) with outright sales of Gilts. At a time when global bond markets were already under severe pressure, one could reasonably suggest this was foolhardy timing. Gilt yields surged on that BoE announcement on Thursday, effectively pulling the rug out from under an unsuspecting and overly complacent Chancellor on Friday. An increase in the Gilt supply of £62.4bn instead of an expected £60bn, cited by Bloomberg above, is hardly the stuff of Gilt market nightmares, but full-blown QT most certainly is!

Central Banks are very good at deflecting blame. They did it in the wake of the GFC (blaming commercial bankers) and again for the explosion of inflation since the pandemic (blaming the war in Ukraine). And so it goes on. Of course, for the BoE it is very convenient that almost all commentators are saying this week’s market turmoil is the direct result of the budget, but the BoE should also shoulder their share of the blame for this debacle. And they look especially inept now, with their resumption of QE to stabilise the Gilt market. They might well claim this is not QE, but that has echoes of Fed Chair Powell who claimed Fed intervention to stabilise the repo market in October 2019 was “not-QE” as it laughingly became known - link. And the UK isn’t the only G7 economy trying to stimulate growth with historically loose fiscal policies, as the recent CBO costing of US student loan forgiveness makes clear – link.

The bottom line is, after decades of central bank stimulus inflating bubbles and financial leverage to grotesque heights, the markets are still in charge and they just won’t tolerate QT.

I keep citing Mike Tyson’s famous quote, “everyone has a plan till they get punched in the face”. Which reminds me, isn’t the Fed in the process of doubling its QT to $96bn a month? Good luck with that!



At times Laffy you have to “stop digging” Your wonderful new Prime Minister has **** up big style Show some humility ifThe Conservative’s (sorry The ERG) put up Coco the clown you would defend them
2 months ago
·
#317090
Naughty Tories really, they are possibly the worst Govt we've ever had or pretty near with their lies and corruption.
2 months ago
·
#317092
I’m not defending her-in saying this is a global issue and it’s been around a while
2 months ago
·
#317093
Well the latest yougov poll gives Labour a 33% lead. Whatever the rights and wrongs of her policies, the naive way they have been enacted and the way they have been presented has been a car crash. Polls next week I suspect will be even more of an eye opener. Barring major conflict I have no idea how the tories change the narrative on this one.
2 months ago
·
#317094
I’m not defending her-in saying this is a global issue and it’s been around a while


Which other European central banks had to bail out pension funds yesterday ?

Thank goodness Gordon Brown made the Bank of England independent could you imagine if Dizzy Lizzy and Kamikaze had to make that decision !!!!!
2 months ago
·
#317095
Imagine the bile Comical Lapping would be spouting if it was Labour that had announced £150 billion of unfunded spending, trashed the pound, crashed the property market and made us a financial laughing stock.

But only because the clowns behind all this wear a blue rosette every 4 years its somehow a masterstroke
2 months ago
·
#317096
I’m not defending her-in saying this is a global issue and it’s been around a while


And in a amazing twist of fate it all kicked off just as Kwasi stopped speaking on Friday morning. What a coincidence eh
2 months ago
·
#317097
I’m not defending her-in saying this is a global issue and it’s been around a while


Bollocks. The gilt market is how the government borrows money. The tories have always borrowed and borrowed and borrowed. Now it's caught up with them

The biggest mistake is to think this is accidental. I said to blues86 (?) a year ago. They are coming for your pension and your house. Savings have been wiped out by inflation, if you are 50 your pension pot is now 2/3 of contributions and there are no mortgages so house prices will collapse. If assets have little value and the £ tanks, it's a good time to have cash in dollars. We are being sold
2 months ago
·
#317101
I disagree-our debt position is better than most.The reality is all the developed works has been feeding on debt and it’s come home to roost.We are an outlier post Brexit and the markets have seized on the U.K.

Inflation is global,energy inflation global, interest rates rising global.This is not a U.K. phenomena-most currencies have fallen against the dollar whilst Biden throws cash around like confetti.

Where were the learned IMF last year?Certainly not prophets of doom.

This will blow over-the 45pc cut was just a stupid move timing wise.
2 months ago
·
#317102
Oh look-the pound dollar is now 1.11-though you wont get that news in the catastrophising press.

Did you know Ibo that Leonard Rossiter starred in 2001 Space Oddity which is on the TV just now?

At the risk of sounding like CJ,‘I didn’t get to where I am by following the herd or blind panic’
2 months ago
·
#317103
And German inflation hits 11pc today-all down to Truss cutting the 45pc tax rate didn’t you know?
2 months ago
·
#317104
Why do you think the yield on Uk 10 year gilts is double that of Germany’s though?
Oh look-the pound dollar is now 1.11-though you wont get that news in the catastrophising press.

Did you know Ibo that Leonard Rossiter starred in 2001 Space Oddity which is on the TV just now?

At the risk of sounding like CJ,‘I didn’t get to where I am by following the herd or blind panic’



Funny, I’ve just been reading about the pound going up - so it clearly is being reported.

Thank you, BoE. Swift action taken to reduce the fallout from the government’s ridiculous ideologically driven policy announcements.
1 month ago
·
#317110
The boe has announced it will continue buying long dated gilts until 14/10 and is buying pounds. That's why the market is bouncing. The pound is still down 20% (?), interest rates up from 0.1% to 2.25% and the boe warming on material instability in the financial sector. A lot of funds making a lot of money.

In other news the bombing of the nord stream pipelines constitutes an attack on critical Nato infrastructure, announces Nato, while blaming Russia. The attack of course being next to an island where the US had exercises in the summer to test new undersea mines. This allows Nato to expand the sphere of the war. So, a step closer to war.

Thank God we didn't get Corbyn!
1 month ago
·
#317113
What YouGov poll could look like in a General Election:

LAB: 498 (+296)
CON: 61 (-304)
SNP: 36 (-12)
LDM: 29 (+18)
PLC: 4 (=)
Others: 2 (+2)
GRN: 1 (=)

:o
1 month ago
·
#317114
Vogel-I have absolutely no idea other than Germany is perceived to be more efficient than most, higher productivity rates etc-but the 11pc inflation rate makes it clear that this is global.

Much of the malaise in the U.K. is down to lax monetary policy by the BOE-that’s my view and most others.But at least they have woken up
1 month ago
·
#317115
I don't think you can blame the BoE for Britain's malaise although it has been very slow to react. The BoE supplies liquidity as needed to the market bearing in mind its inflation target. Britain's productive capacity has been declining for years. We have been too dependent on domestic services such as retailing, hair and beauty, restaurants and takeaways to keep people employed. A buoyant housing market has underpinned people's confidence to spend. But it is like spinning plates. Once those plates start to wobble it isn't long before they crash down. Kwarteng's crazy mini-budget spooked the markets. Yet his performance as business minister showed that he was bull-headed and reckless, e.g pushing ahead with Sizewell C without a workable plan. The problems in our economy can't be fixed quickly with tax cuts, especially after two and a half years of the population relying on the government for handouts thanks to Covid. A recession and a Labour government in two years time are now inevitable.
There are no replies made for this post yet.

Online Users

The Football League Paper
Website and all content © Copyright 2022 TheCumbrians.net. All Rights Reserved.