POLITICS CORNER

[plaques]

In those sun lit days of Cameron and Osborne when you could get up on the roof to fix the economy it was all about austerity and getting the national debt down. After 12 Years of Tory rule the UK is in a worse position than 12 years ago but with one big difference the approach to the national debt has taken a 180 degree U-turn. Austerity still remains. Its now OK to build up massive debts to feed the whims of the market while doing nothing to improve the basic infrastructure of roads, education, health and welfare, jobs skills and supply of workers. These basic building blocks are classed as socialism and not part of their ideology. How Liz Truss is going to grow the economy while building up massive debts, reducing wages and cutting back on welfare spending is a miracle of biblical proportions.

Keynes' famous quote, “In the long run we are all dead” – meaning that capitalism will fail . Looks like Truss has speeded the process up.

[Stanley]

Good post Ken and this was the phrase that rang a bell with me....
"These basic building blocks are classed as socialism and not part of their ideology. "
I think you've put your finger on something that struck me throughout the 'leadership debate'.... Both candidates kept talking about 'The Conservative Way' and I took this to mean that they didn't want to frighten the horses in the Shires or the blue-rinse Tory members because they wanted their votes but you are right, it goes deeper than that.
It was adherence to dogma and tradition that drove the Leave Campaign and forced Cameron, against his will to have a national referendum. They interpreted the split vote as a massive confirmation that the nation wanted to leave the EU and as part of that kept banging on about another shibboleth, that they are the Party 'who understands money' by bigging up the New Economy. Problem was that the New Economy never existed and we were never the most dynamic economy in Europe.
Since then they have realised that this is true and have appropriated policy ideas from the other parties, mainly Labour and so they no longer carry the taint of being 'Socialist' but are now true blue Tory.
“You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.” is mis-attributed to Abe Lincoln but is still appropriate here.
The Tories are still certain they are correct about the economy and so far they have fooled enough people to retain power but the evidence against that proposition is growing and may soon overwhelm them. Trouble is it will be very painful for the rest of the country!

[Stanley]

I tripped over something in the archive that is pertinent.... Here it is. (I wasn't far off the truth!)

LOST IN THE FOREST

Imagine you’re lost in a large forest with no map, compass or GPS. How do you find your way out? Anyone who ever spent any time in the Scouts will know the answer, get your direction from the moss on the trees, it always grows on the north side. If you can see the sun, use that to get a bearing. If all else fails, follow the course of a stream in the direction of flow, it will eventually exit the forest. Forget the lack of modern technology, this is how our ancestors functioned by using observation, experience and that rarest of commodities, common sense.

Take another case. You have a dog to civilise, I don’t like the concept of ‘training’ I regard the process as one of persuasion to get the dog to be an acceptable member of the family, it applies to kids as well. If it does something that is unacceptable you signal your disapproval, one very good way with a dog or child is to deprive it of eye contact, what a very good primary teacher I used to live with called ‘benign neglect’. Try it, it works! Good behaviour is rewarded in some way, by affection, attention and perhaps a treat of some sort. Nothing very complicated in that, the key to success is to set a standard of behaviour and avoid deviation from that benchmark. One of my daughters once told me that she thought I was hard on her when she was young but that she got a lot of security from knowing where the boundaries were.

All right, so you didn’t really need a survival guide or advice on civilising kids and dogs. The point I’m trying to make is that when you are faced with quite complicated tasks, it’s usually a good thing to go back to first principles and keep it simple stupid. Computer experts call this the KISS principle.

I’m writing this the day after the news that the US Treasury is throwing one thousand billion dollars to hedge funds, investment bankers and private investors to subsidise the purchase of otherwise unsaleable securities. Now I may be simple-minded but the thing that worries me about this is that in my mind it’s rather like chucking the dog a chocolate treat for crapping on the doormat. Forgive the basic example but it demonstrates my point. What is the dog going to learn from this process? Is it going to be deterred from the unacceptable activity? I think not.

Is it more likely that the investment bankers are going to see this as a safety net thrown to them to help retrieve the consequences of their excesses and even worse, that it has been done because they really are the Lords of the Universe and cannot be allowed to fail. One investment banker gets into trouble and nobody notices. A disaster on this scale can’t be ignored and assumes a completely different dimension, not only in scale but in liability to punishment. Why do I think of the political equivalent of the Big Lie?

We are told (by bankers!) that losses have been made and punishment accepted. At the same time we see ridiculous bonus payments and a major US investment bank ordering two top of the range executive jets. Where is the evidence that the consequences of lax regulation, laisser faire attitudes towards the major capital holders and mistaken interpretation of monetarism leading to de-regulation have modified our systems of governance? Has the credit crunch hit Washington and Westminster? Do we see any cut backs in maintaining incredibly expensive nuclear weaponry which can never be used? Do we see any improvement in systems of government procurement leading to efficient budgeting and project management?

All I am hearing is politicians speaking reassuring words designed to persuade us that they have a plan and know what they are doing. Bankers assuring us that ‘lessons have been learned’ and that things will gradually get better. Meanwhile, the poorest people in the system carry the burden of the mistakes and greed. The trillion dollars will be paid back by our children. Our standard of living will suffer for decades because of this enormous cock-up.

Meanwhile we move inexorably towards climate change, energy shortages, water shortages, food shortages, population growth and the possible collapse of human life as we know it. It may be time to stop, think and look for the moss on the trees.

SCG/24 March 2009

[There may be an upside, if only a small one. We may be looking at the end of the dominance of monetarism and reliance on the markets. For the time being…..]

[plaques]

Stanley on energy don't fall for the old trick like a mugger asking for your wallet then giving a Fiver back with the parting shot "you can pay me back later."

All eyes and ears will be concentrating on Liz's tax cuts. If you are sitting at the bottom of the income ladder its not going to be very much. The rise in NI contributions was said to be necessary to pay for better NHS and social care. What replaces it we have yet to hear.
There appears to be lots of tax cuts which will benefit those at the top. The theory being offered up is that they will spend or invest this extra money which will eventually trickle down to those at the bottom. How to measure this trickle down affect and over what period they are talking about has not been said. Aspirational jam tomorrow with no end date. If this came as a text on you phone it would be instantly dismissed as a scam.

[Stanley]

Listening to the commentary on Quasi Kwarteng's con trick I was impressed by Lisa Nandy and appalled by Rocco Forte.
If Truss is wrong about growth from trickle down, the Tories are going to regret this package and we will all suffer.

[Whyperion]

All eyes and ears will be concentrating on Liz's tax cuts. If you are sitting at the bottom of the income ladder its not going to be very much. The rise in NI contributions was said to be necessary to pay for better NHS and social care. What replaces it we have yet to hear.

Borrowing

There appears to be lots of tax cuts which will benefit those at the top. The theory being offered up is that they will spend or invest this extra money which will eventually trickle down to those at the bottom. How to measure this trickle down effect and over what period they are talking about has not been said.

There is another way of looking at Trickle Down in terms of some kind of stream of water from a great height from the richest to the poorest.

[Whyperion]

I dont always agree that a Strong Pound and a strong stockmarket are of themselves indicators of well-offness for common workers. but even so for a tory budget leading to , if those markets are correct

BBC Website :
The pound has fallen to a fresh 37-year low against the dollar as markets react to the chancellor's mini-budget announcement.

UK stocks also slid after Kwasi Kwarteng outlined a series of tax cuts and economic measures in a massive shake-up of the country's finances.

The pound dropped by nearly 2% against the dollar, putting it close to $1.10.

Sterling also fell against the euro on Friday, with the pound down more than 1% at €1.12.

Meanwhile, the UK's FTSE 100 of major shares fell to its lowest level for more than two months.

City analysts have been increasing their expectations of earlier and higher interest rates after the government announced a £45bn tax giveaway, leading some to conclude that inflation will remain high for some time.

According to Bloomberg data, analysts expect UK interest rates to hit 5.2% in August 2023, with expectations rising that there could be a one percentage point interest rate hike at the Bank of England's next meeting in November.

The cost of servicing the UK's debt has also risen after the announcement of government borrowing to fund tax cuts.

[Whyperion]

Gyles Brandreth was on ITV This Morning saying that mortgage interest rates not too bad given that when he was in parliament they were 18percent (that was of course only for a few - and for many - worrying - days , resulting mostly from again international casino economy activities).
His take on the Tory policies was not vigorously queried by the journalistic hosts, there appears to a lack of meaningful challenge to Trussonomics.
(Anyone want Martin Lewis For President ?)

Meanwhile Labour consider removal of the House of Lords and Allowing regions to have greater independence of tax and spend. Can someone please bang Labour together , remove Brown and Blair out of the country permanently and address the attacks on the low paid, the sick, the old, the carers, parents of young children, workers and their contractable hours, loss of pension rights. Labour needs to call the Casino one arm bandit of the Chancellor as he goes borrowing to fund his habit in the hope of finding Four Gold Coins, when he will be lucky to get a cherry and a lemon.

The Stamp Duty Changes just add to housebuilder profits and inflation in the housing sector.

The mini budget seems to be a way of the final robbery of the country's tax revenues before the next general election lands Labour a heap of trouble to deal with.

What does The PM and The Monarch actually discuss - how to prevent the masses from revolting - they have been practicing putting the armed military on the street.

[Stanley]

See THIS BBC report. Quasi Kwarteng can argue until he is blue in the face that his measures are fair but that doesn't make them so.
"Paul Johnson, director of the independent Institute for Fiscal Studies, said the plans were a "big gamble", with money being pumped into the economy when inflation remains high. There was an immediate reaction in financial markets, as the pound sunk and UK stocks fell."
It looks as though the markets think the same. By going for broke and gambling on 'a rising tide floating all boats' Truss and Kwarteng have bet the house on the economic situation improving miraculously. It ain't going to happen!
I listened to the start of Question Time on R4 last night. The venue was Fallowfield in Manchester and you should have heard the violent response to Moon Face's standard Tory mantra crap. Andy Burnham savaged the budget and was cheered to the roof. Interestingly, there are also mutterings from Tory backbenchers. Their only criterion is "Is this a good basis for a general election manifesto?" and this gamble doesn't fill the bill.
Andy Burnham raised the question of possibly 300,000 people on Universal Credit who are threatened with benefit cuts if they don't work more than 15 hours a week. He got a roar of approval from the audience. He was right, that one single fact is the face of Tory policy towards the poor. Burnham also made the point that the fight against these measures is the wave of protest and strikes about low wages and he forecast that this will increase. He is right, the dockers have already moved, a national rail strike is in prospect and nothing in this budget does anything to improve the lot of public service workers, the NHS and teachers. Tin hats on Lads!

[plaques]

The flood of money coming from the NI tax reversals (£20,000, = £3 per week. £30,000 = £8 , £50,000 = £17. ) Will not cover the increase in food prices for the first two income levels. Every penny is welcome but its not going to have a big surge affect in growing the economy. April 2023 tax reductions will give similar hands outs but with the cost of living crisis projected to last well into 2024 it will basically be a repeat of todays hand out with those at the bottom suffering the most and those who are just managing will be joining the ranks of the poor. The trickle down economy is like rain in the Sahara it evaporates before it hits the ground. Should by some miracle those at the top do decide to spend their tax breaks it will come at a time of shortages driving prices up for everybody. This by-the-way includes holiday flights and new cars neither of which would directly help our economy to grow.
Its early days yet but this budget fiscal adjustment needs to be analysed by experts but the fact that the £ and stock market have dropped immediately doesn't bode too well for future outcomes. The £ and stocks have never dropped like this on previous budgets.

[Stanley]

Quite right Ken. The reason they dropped like that is that trickle down has never worked before and it won't now. Quasi and Liz have backed the wrong horse but having won the leadership on promises to be radical (a la Thatcher) and hitting the ground running (even though they are in deep shit) there was nothing else Truss could do but gamble. The successes she imagines that resulted from Thatcher's economic measures are illusory. It was a different time and what kept Thatcher afloat was the dividend of North Sea Oil and a technological revolution that was transforming the financial markets. These are absent today and the Deadly Duo's policies are going to sink like a stone under the onslaught of a global recession.
The markets got the message immediately, how long before it 'trickles down' to her backbenchers and the resistance to the policies starts?
Meanwhile, at Liverpool, expect Starmer to unveil his policy for survival.... See THIS BBC report of what is expected. Zero carbon energy by 2030.
At first glance this looks like a viable plan but there is a lot to do before we get there....

[plaques]

Truss's break free budget is billed by many professional economists as a gamble but even then comes with qualifications that the background conditions are far from favorable, rising energy prices, cost of living crisis, a global slow down on trade plus our own spectacular own goal of trade barriers making it a Lincoln odds gamble. The dash for growth based on tax cuts and borrowing has been tried before by the Conservatives and failed even when conditions were better. Truss has yet to published how this debt will be serviced the public being asked to wait until the next 'official' budget in November but with guesses at between £130 - £200 Billion at a suggested rate of 3.5%.the numbers are enormous. Borrowing on this scale would make it impossible to borrow even more on infrastructure, green energy or the NHS and aftercare. In effect Truss has poisoned the ground for any future Labour policies. Its worth remembering that Corbyn's manifesto of green energy. NHS etc, etc, were based on borrowing on a similar scale as Truss but branded as total blackhole economics by the right-wing Conservatives.

Starmer's Labour Party conference will try to concentrate on the 'Gamble' but I can predict that the right-wing press will focus on a minority fringe group who will be discussing Republicanism V Monarchism. Starmer being branded as a closeted communist bent on giving up our hard won sovereignty to workers rather than giving it to billionaire oligarchs.

[Tizer]

I've nowt worth saying on UK politics, or indeed world politics, except that we're stuffed!

[Stanley]

Dis you hear Ken Clarke giving his opinion? Basically he wishes them well but believes they are barking mad.

[plaques]

From Stanley's 'Seen in the News' by The Guardian'

Kwarteng .... he was focused on boosting longer-term growth, not on short-term market moves,

“As chancellor of the exchequer, I don’t comment on market movements. What I am focused on is growing the economy and making sure that Britain is an attractive place to invest,” he said.

Where have I heard that comment before?

Its the old Nelson touch. "I see no ships".

The immediate downside of the plummeting £ is to make imports more expensive usually starting with oil and gas > electric. My first move this morning is to TRY to get some diesel before the prices soar. The problem is that everybody knows this is going to happen except Kwarteng and Truss so the queue will be enormous.
The BofE is honor bound to put up interest rates adding to to cost of living which will increase basic costs especially mortgages and create more industrial unrest.

Has the dynamic duo set the UK off into a downward spiral that will collapse the economy rather than growing.it? The rest of the world's economists and monetary experts thinks so but who are these to question "I am focused on is growing the economy and making sure that Britain is an attractive place to invest".

[Tizer]

Putin probably regards Kwarteng and Truss as two of his best assets for bringing down the West. Why resort to nuclear weapons when you can leave it to two lunatic Tories and their blind followers?

[Stanley]

Both of you are right. See THIS clear message from the BofE. and then consider this....
"Investors are now predicting that interest rates could more than double by next spring to 5.8% from their current 2.25%, to curb high inflation, which is expected to be fuelled by the huge tax cuts announced in Friday's mini-budget.
'Not affordable'. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said if interest rates rise as predicted, the average household refinancing a two-year fixed rate mortgage in the first half of next year would see monthly payments jump to £1,490 from £863. "Many simply won't be able to afford this," he said. "
Truss said she would hit the ground running..... Problem is that Quasi has arranged for her to land in a quicksand.
And where are the deadly duo now? Drawing breath and preparing for the mini coronation of the new leader at Conference.

[plaques]

Put me in the totally confused bracket. We have always been told that business need stable financial conditions so that they can plan ahead and plan future investments. This was always the reason given for discussions with business leaders before changes were introduced. Now we have got the polar opposite. The government have introduce 'new era' economics to quote Kwarteng that leaves everybody uncertain about future events. Massive borrowing with no explanation on how its going to be funded. A 'trickle down' theory that has been dismissed by the worlds economists as rubbish. The independent Office of Budget Responsibility shut out of the loop giving the impression that they, the government, don't know what they are are doing or its bad news to be kept quiet. Then we are told the Bank of England are monitoring the situation closely but not planned to meet again until November. Another prop of confidence pulled away all adding to the uncertainty. This vacuum of information has been filled by financial institutions making their own guesses to fill these 'what if' probabilities. The £ going up and down like a yo-yo. Todays news is that mortgage lenders have shut shop until they know what's going on. This is government by chaos by a political party that prides themselves on knowing what business requires. We are the Party of Business brain washed into peoples minds for decades turns out to be another Party Gate.

[PanBiker]

Looks like Truss and her mates are bent on setting records. Reported yesterday on the news feed on my phone that the 1922 Committee have received "no confidence" letters from a number of Tory MP's. Could be the one of the shortest tenures for PM with a bit of luck. The natives are restless.

[Tizer]

Meanwhile, in Ukraine the Russian-held eastern regions of Donetsk and Luhansk, and the southern regions of Kherson and Zaporizhzhia finish `voting' today. The result will be announced on Friday. As it's corrupted we can expect Putin to then declare these regions as part of Russia and warn that any attack on them by the West will be an act of war and `force him' to step up his aggression and threaten use of nuclear weapons and other outlandish acts.

The BBC has a headline today: `Oath Keepers trial is biggest Capitol riot case yet'. This page dated 7 September gives the background...
`Oath Keepers: Leaked membership list includes police and politicians' LINK
It's about a far-right militia. But especially note this which illustrates how they've penetrated US institutions: The report raises fresh concerns about the presence of extremist ideology in law enforcement and the military. "The Oath Keepers are a virulently anti-government, violent extremist group," Anti-Defamation League (ADL) chief executive Jonathan Greenblatt said in a statement on Wednesday....Analysis of the leaked data by the Anti-Defamation League (ADL) identified 81 people across the country who currently hold public office, or are running in November's midterm elections. Researchers also found that nearly 400 current law enforcement officers and more than 1,000 former officers are connected to the group, along with more than 100 currently serving military personnel.'...

[Whyperion]

Put me in the totally confused bracket. We have always been told that business need stable financial conditions so that they can plan ahead and plan future investments. This was always the reason given for discussions with business leaders before changes were introduced. Now we have got the polar opposite. The government have introduce 'new era' economics to quote Kwarteng that leaves everybody uncertain about future events. Massive borrowing with no explanation on how its going to be funded. A 'trickle down' theory that has been dismissed by the worlds economists as rubbish. The independent Office of Budget Responsibility shut out of the loop giving the impression that they, the government, don't know what they are are doing or its bad news to be kept quiet. Then we are told the Bank of England are monitoring the situation closely but not planned to meet again until November. Another prop of confidence pulled away all adding to the uncertainty. This vacuum of information has been filled by financial institutions making their own guesses to fill these 'what if' probabilities. The £ going up and down like a yo-yo. Todays news is that mortgage lenders have shut shop until they know what's going on. This is government by chaos by a political party that prides themselves on knowing what business requires. We are the Party of Business brain washed into peoples minds for decades turns out to be another Party Gate.

Is it crash the £ so that overseas investors by cheap UK property / companies then screw what remains as rents and higher prices in the future from us ?

Rees-Mogg had already foreshadowed the trashing of (financial) experts a few weeks ago when he said the OBR had always been wrong on their forecasts and so were not worth bothering about

[Whyperion]

Apparently Local Authorities are strapped for cash and cannot afford to put up and light the christmas illuminations. Having been criticised for potentially cancelling previous christmas due to covid restrictions looks like that Truss is going to manage to complete the job

[Tizer]

Just posted by Faisal Islam, BBC Economics editor...
`Kwasi Kwarteng faces U-turn on tax or spending cuts' LINK

[Whyperion]

The IMF have run a rough slide rule over the proposals, and come up with negative conclusions

[Stanley]

"Put me in the totally confused bracket."
Move over Ken, there are many more trying to get in there with you. If Peter's clip from the BBC economist is anywhere near the truth the OBR might give us an anchor point and yes, it might signal the need for a U Turn.
Basically what happened was... early in the head to head with Sunak the Truss advisors sat down with her and told her she had to have a USP that defined her in the public mind, it had to be a simple one liner and diametrically opposed to Sunak's conventional economic line. She chose 'go for growth' and that was what they plugged from then on. That meant that she had already set out her new Chancellor's policy for him. Quasi had to fall in line if he wanted the job and so the question was asked "How can we do something different than what has been tried before? The answer they came up with was slash taxes and as a bonus make that upper echelon taxes so we please the the high net worth supporters. Job done and Truss scrapes in over Sunak by a small margin.
Problem is the aim and the policy were nonsense, modern economic theory has long since consigned 'trickle down' to the dustbin of history. Further, they ignored market reaction, perhaps they thought they wouldn't be looking. The cunning wheeze of not calling it a budget but a 'financial event' meant the OBR were shut out. They could hit the ground running into a glorious future. (Truss said as much....). Trouble was they landed in a pile of crap and lost momentum immediately as all the markets rejected Quasi's 'New Era' economic theory.
We are where we are, sat helplessly waiting for the conference to find what the latest pearls of wisdom are from Truss. Meanwhile, from California comes the manic laughter of Little Rishi as he lies in the sun.....
We were right when we suspected she was thick. This is inept bungling of the first order. Quasi must be just as thick to have agreed with the strategy.
(Meanwhile.... look at THIS reaction from the IMF......)