[shark]

Starmer pushing to recall parliament.

https://news.sky.com/story/amp/keir-starmer-calls-for-recall-of-parliament-over-economic-crisis-12706923

Fuck me, if Shark is reading the non-climbing threads on this forum then we must be completely shafted!

I’d laugh if I didn’t feel like crying

[teestub]

Wonder how close we came today to our pensions being worthless? Absolute madness. 

[Nigel]

Starmer pushing to recall parliament.

https://news.sky.com/story/amp/keir-starmer-calls-for-recall-of-parliament-over-economic-crisis-12706923

If they haven't gone before next week, then they will be back in parliament surely - I just can't see Truss brazening out Tory conference after this. Meant to start Sunday.

[Bradders]

The impression I was getting from earlier this thread was that there were UKB'ers who could see the sanity in this budget?

I asked earlier how a corporation tax cut of 0% is meant to cause a quadrupling of growth to 2.5%? Especially in the teeth of a global downturn? Er...Will borrowing-to-invest in tax cuts for the top few % do it? Not according to the marxists. Sorry, markets who due to this now charge us more to borrow than Italy and Greece. The answer apparently must lie in "supply side reforms" and "spending restraint". For that code please read dispensing with planning regs and increasing immigration, amongst other things, for the first. These are not popular with the Tories' own voters. To say the least. For the second read public sector pay freezes, funding cuts etc. This is not popular with anyone after a decade of austerity and the current rate of inflation.

If they do survive the current market turmoil then the "big reveal" of all this stuff will be the end of them.

I'll pipe up - I objected to the description of the budget as insane, mainly as that sort of excessive hyperbole in political discourse is unhelpful, and I think the language of both sides of the argument can make things worse. You can be wrong whilst still being perfectly sane.

People make all sorts of economic decisions which others think are mad (for me whenever anyone plays the lottery, for instance), but those decisions can make perfect sense in the context of that person's experience and outlook.

I can also see some sense in the changes, however context is everything and unfortunately for Kwarteng (and the rest of us), their timing really couldn't be worse.

When I say I can see sense; the way I've thought of it is it's a bit like a company running a big marketing campaign, whilst cutting their charges for the service they provide. They borrow some money to make an investment in that hoped for growth. If it works, and they bring in lots of wealthy people who spend lots of money (albeit at the reduced charge) then all is well and they can pay the money back, whilst the company has grown and therefore has more money on its own books, which it can reinvest and grow some more. The big problem with the way they've done it is they've at the same time stuck all the energy bills on a credit card, are still paying off last year's debt after a bout of sickness meant they had to hire more temp staff, and are doing it in the middle of a recession / cost of living crisis when fewer people have money spare. And they've refused to let their accountant look at the plan. All of which makes it less likely they'll be able to pay the money back, meaning they're charged a higher rate to borrow it.

I.e., the idea is not bad per se, but the timing of it is.

If these changes had been made in 2019 after the Conservatives won the election, there would be a hell of a lot less fuss than there is now.

[cowboyhat]

I had a good idea once, in a context free temporal anomaly vacuum

[Nigel]

If these changes had been made in 2019 after the Conservatives won the election, there would be a hell of a lot less fuss than there is now.

Apart from it basically setting fire to the 2019 manifesto on which they had just been elected of course?

[shark]

And they've refused to let their accountant look at the plan.

That seems to be key to the loss in confidence of the currency and bond market. I’m not clear whether the OBR where muzzled or hadn’t time to pass an opinion but either way it clearly looked reckless without some independent judgement to back it up which was a communication disaster.

[teestub]

I thought it was made quite clear that the OBR weren’t given the opportunity to review the proposals, and that’s why they tried to call it a ‘fiscal event’ or whatever rather than a budget?

[JamieG]

The big problem with the way they've done it is they've at the same time stuck all the energy bills on a credit card, are still paying off last year's debt after a bout of sickness meant they had to hire more temp staff, and are doing it in the middle of a recession / cost of living crisis when fewer people have money spare. And they've refused to let their accountant look at the plan. All of which makes it less likely they'll be able to pay the money back, meaning they're charged a higher rate to borrow it.

I don't understand how you can write this and then question why people are calling it insane. Yes its a strong word but as you have just pointed out their actions would hardly be characterised as sane either.

[ali k]

I’m not clear whether the OBR where muzzled or hadn’t time to pass an opinion but either way it clearly looked reckless without some independent judgement to back it up which was a communication disaster.

It was the former. Mel Stride (Tory chair of Treasury Select Committee) was on R4 earlier saying he’d spoken to the head of the OBR who confirmed they had a forecast prepared and Kwarteng refused to publish.

[mrjonathanr]

Wonder how close we came today to our pensions being worthless? Absolute madness.

By all accounts, very close. I wonder how much stability £65bn buys these days? I guess we’ll find out very soon.

[andy popp]

And they've refused to let their accountant look at the plan.

That seems to be key to the loss in confidence of the currency and bond market.

I really don't think that's the principal issue or cause. It doesn't look reckless, it is reckless (as the OBR would probably have pointed out).

[andy popp]

And if it's principally a communications disaster then why aren't they fixing that by getting out in front of a camera and communicating?

[SA Chris]

So now do they try and fix or soldier on and try to save face? My money is on the latter.

[Will Hunt]

And if it's principally a communications disaster then why aren't they fixing that by getting out in front of a camera and communicating?

I think it's clear that Truss doesn't feel able to stand up to rigorous interview on this. She's interviewing on local radio this morning while Chris Philp does the Today programme.

[spidermonkey09]

 She's also repeatedly mischaracterised the energy cap policy starting next week, saying twice that "nobody will pay more then £2500", which is simply not true.

[Bradders]

The big problem with the way they've done it is they've at the same time stuck all the energy bills on a credit card, are still paying off last year's debt after a bout of sickness meant they had to hire more temp staff, and are doing it in the middle of a recession / cost of living crisis when fewer people have money spare. And they've refused to let their accountant look at the plan. All of which makes it less likely they'll be able to pay the money back, meaning they're charged a higher rate to borrow it.

I don't understand how you can write this and then question why people are calling it insane. Yes its a strong word but as you have just pointed out their actions would hardly be characterised as sane either.

Sorry to get hung up on this but I do think it's important. As I said before, people make financial decisions which to someone else might look crazy, but make perfect sense to that person. I've already explained this though so probably best to leave it there.

If these changes had been made in 2019 after the Conservatives won the election, there would be a hell of a lot less fuss than there is now.

Apart from it basically setting fire to the 2019 manifesto on which they had just been elected of course?

Well their 2019 manifesto included a pledge not to increase national insurance, so I'm kind of ignoring that and assuming they could have run on any platform they liked and still beaten Jeremy Corbyn.

[Will Hunt]

And if it's principally a communications disaster then why aren't they fixing that by getting out in front of a camera and communicating?

I think it's clear that Truss doesn't feel able to stand up to rigorous interview on this. She's interviewing on local radio this morning while Chris Philp does the Today programme.

In fact these local radio interviews are 5 minutes apiece! Nick Robinson was quite pointed about her not being on Today and was positively licking his chops at the thought of interviewing her at conference.

[andy popp]

Well, that seems to have gone well.

https://twitter.com/sharonodea/status/1575381284091830273

[petejh]

The impression I was getting from earlier this thread was that there were UKB'ers who could see the sanity in this budget?

There are sane policies in the budget as Mark Carney acknowledged this morning if you listened to his whole interview. What isn't wise is the timing, the communication and the oversight. Your appeal to 'this is insanity' might be popular, but it isn't factual.

Kwartang and Truss's bigger-picture market timing, their gauging of how market sentiment would react, their communication to markets and the public and their failure to back up the figures with OBR overview were all very shoddy and appear politically suicidal very high risk.

This was my early impression last week:

The markets will be the judge of that, starting on Friday.
But rockets of economic growth are not expected in the skies above any western country this year or next. The Fed has basically told everyone, without telling everyone, that it expects the US to enter recession imminently. The EU and UK likewise. It’s just a matter of time.
...
Agree with you that Truss’s policies seem destined to crash into the wall of economic reality. But Kwasi’s Kwartang's an intelligent bloke, maybe he’ll pull a rabbit out the hat.

and

Truss is gambling that her policies will spark growth*. The question I think is timescale - because due to forces larger than any government policy there is going to be very little if any growth for the UK, EU or the US for the next 6 months, and possibly the next 12-24 months. We may tip into a severe recession depending on how events play out, but definitely a mild recession. Will she manage to face down the naysayers while we're in a recession? She'll need to if she wants to give her policies time to create conditions of growth, that's if they actually do work.

and

But with the caveat that nobody knows what's going to happen least of all me, I'll be surprised if this government manage to carry out this set of policies. My guess is market sentiment is going to stop them before they get started. Maybe leading to yet another vote of no confidence, the shortest serving PM ever, and the end of this tory government's term?

and

Still think the markets will puke so much next week that it gets shelved.

and

I’m in the middle ground on the budget announcement, some of it seems logical, some it seems risky, some of it seems plain illogical such as the stamp duty cut not just being confined to first time buyers. Instead giving BTL landlords and people wanting to buy second homes more margin, this will take house prices further out of reach in a market with house price to wage ratio that’s already too far out of reach for far too many. It appears to me designed to further kill hopes of home buying. Alternatively, they were concerned about heading off an imminent house price crash which some have predicted. Dunno.

I still expect the markets to kill this government unless Kwartang and Truss can privately quickly convince them to have confidence in the plan.

[Wellsy]

I guess we could argue over the use of the word "insane" all day but sure, I'm happy to not use it. I feel like there are plenty of other pejoratives applicable. Tbh even if the markets/currency hadn't crashed I still think it would be deplorable but that they have makes me wonder who actually wants this budget at all other than Truss and Kwarteng?

I'm not sure what will happen when the 1922 realises she needs to go. Who will they pick next? A General Election is desperately needed.

[petejh]

TBH I'm far more interested in the dynamics that underlie the market's reaction to this budget. There's a much bigger picture at play here and we're only beginning to get glimpses of how it may play out. This week's terrified reaction by the markets and the public to the prospect of interest rate rises beyond a limit of mid single digits hints at the larger problem. The problem  began with the supply of QE following 2008 which created liquidity in the markets, asset speculation on a huge scale (housing market being one) and a decade of artificially low interest rates for lots of people to get into high debt-to-wage ratios. I think the problem is now starting play out and will gradually snowball from here. More QE will be announced in Europe, the US and UK just like the BoE did yesterday but on a larger scale - the so-called Fed pivot. The widely-held expectation by market commentators is this will eventually devalue the dollar, pound and Euro beyond recovery. I mentioned this in a comment earlier this year, Sean didn't seem to think underlying debt was too big a concern. I wonder if he still doesn't.

[Nigel]

Your appeal to 'this is insanity' might be popular, but it isn't factual.

Where have I said that?!

[Offwidth]

There are sane policies in the budget as Mark Carney acknowledged this morning if you listened to his whole interview. What isn't wise is the timing, the communication and the oversight. Your appeal to 'this is insanity' might be popular, but it isn't factual.

Kwartang and Truss's bigger-picture market timing, their gauging of how market sentiment would react, their communication to markets and the public and their failure to back up the figures with OBR overview were all very shoddy and appear politically suicidal very high risk.

This was my early impression last week

What's the sense in picking out sane bits of an overall insane package (a properly planned budget is the policy with OBR and BoE input, and the politics, its communication and the expected market response). The most worrying thing for me before yesterday was some big players effectively saying it was insane but being rather opaque as to why. Then DB pensions started in a 'death spiral' on liquidity yesterday and the BoE were forced to stop it (with an inflationary QE measure!) and hints were made the IMF input was partly due to risk of contagion spreading to the US treasury....these factors dwarf worries about changes in the pound... I notice your crystal ball missed them.

[petejh]

I don't have a crystal ball and its a bit of a bell-endish thing to say, which is what I'd expect. On that note I know it's usually time for me to leave the discussion as soon as you turn up, as anything said from this point on will only be ideologically driven. Not what I'm interested in.