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Post by Orac on Jan 24, 2023 11:35:17 GMT
But what do you think caused the adverse reaction of the international markets? A small nu8mber of people making a large amount of noise about a relatively small amount of money. The media helped quite a bit here. There were two soft coups in quick succession and the confused public are reassured that everything is normal |
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Post by steppenwolf on Jan 25, 2023 14:35:23 GMT
Steppenwolf asked:
But what do you think caused the adverse reaction of the international markets? You have to bear in mind that the markets are heavily affected by sentiment and when large numbers of the Tory party trashed the mini-budget (including the previous Chancellor Sunak) it was bound to have a bad effect on Sterling - which in turn meant that the UK had to raise interest rates and made borrowing more costly. This was a deliberate attempt by the Tory MPs to get rid of Truss because they didn't vote for her. However, the main problem with the mini-budget was the removal of the top rate of income tax. This is what Labour were complaining about and what the markets didn't like because they thought it was a bad time to cut taxes. Yet the cost of this tax cut was negligible (less than £2 billion). It's called "sentiment" - it's not rational, but markets are often not rational.
Most of the mini-budget was quite sensible - going for growth and slashing Corporation Tax for example. Remember it was slashing CT that led Ireland's recovery after the Credit Crunch. Yet Sunak is just about to put it UP. Sunak trashed Sterling to get into power, but now he finds that in getting rid of Truss he's left himself with no room for manouevre whatsoever. He HAS to put up taxes and stifle growth. It's his own fault.
So what did you think was "Fisher-Price" about the budget? ******* What you refer to as sentiment is really confidence. Even before Truss was foisted on MPs by a mostly elderly and out of touch Tunbridge Wells types of blue rinses and Col Blimps, her campaign thoughts were being questioned and criticised by Sunak and economists. Once Truss was installed and she and her lapdog chancellor were readying her budget they never passed it by the OBR, which would normally check figures and feasibility and would have found the glaring £8+ billion hole in the proposed funding. The immediate drop in the pound at the budget’s presentation, and chaos on the stock market, needed Bank of England intervention to stop UK pension funds falling off a cliff top. No, it's called "sentiment". And the policies that were in the "Autumn Statement" that cost the most - i.e. the support for energy bills - were also accepted by Sunak and the Labour Party. The policy that caused all the trouble was the abolition of the top rate of tax - which should have been abolished as soon as Brown left office and brought in very little revenue. That's called sentiment. And the policy that Truss wanted that also caused trouble was the reduction in CT, which Sunak is now raising. Even Sunak must realise that this is bonkers. This was a stitch up to get rid of Truss and install Sunak - and they've crushed growth by doing this and they'll lose the next election. And you haven't said which policies you didn't agree with anyway. |
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Post by patman post on Jan 25, 2023 15:20:52 GMT
There's little room for sentiment in financial matters, where confidence is king.
There was no way the Truss budget, which included the biggest tax cuts since 1972 funded by a vast expansion in borrowing, could be accepted when the justification was it could be paid for by an unlikely economic boom. Sunak and others said as much during the hustings.
It was a fairy tale that £45bn of unfunded tax cuts for the rich would be the catalyst for economic growth and pay for itself in the way the government argued.
Anyone with the slightest financial idea could see that with inflation at a 40-year-high, rising recession risks and higher borrowing costs, it was a wild gamble and definitely at the wrong time.
I doubt there's been a UK budget that's caused such political and economic damage.
The pound fell to its lowest-ever level against the dollar and gilt prices collapsed. Britain's reputation for sound economic management (perhaps tested by Brexit) has been trashed...
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Post by steppenwolf on Jan 26, 2023 8:43:51 GMT
There's little room for sentiment in financial matters, where confidence is king.There was no way the Truss budget, which included the biggest tax cuts since 1972 funded by a vast expansion in borrowing, could be accepted when the justification was it could be paid for by an unlikely economic boom. Sunak and others said as much during the hustings. It was a fairy tale that £45bn of unfunded tax cuts for the rich would be the catalyst for economic growth and pay for itself in the way the government argued. Anyone with the slightest financial idea could see that with inflation at a 40-year-high, rising recession risks and higher borrowing costs, it was a wild gamble and definitely at the wrong time. I doubt there's been a UK budget that's caused such political and economic damage. The pound fell to its lowest-ever level against the dollar and gilt prices collapsed. Britain's reputation for sound economic management (perhaps tested by Brexit) has been trashed... The markets are "spooked" by sentiment. Confidence is a different thing - it's usually based on rational data, whereas sentiment is not. Haven't you noticed that stock markets (and currency valuations) move in ways that are often very hard to explain? What's usually happened is that traders have been caught out shorting the wrong sector/currency or having to get rid of various stocks that have been marked down, but it can also happen for no discernible reason. That's why markets are so unpredictable. They're NOT rational. The "£45 billion of unfunded tax cuts for the rich" didn't happen. The removal of the 45% income tax band cost only £2 billion - and that's probably an overestimate because the rich have ways of getting round high taxes - like taking salary in different forms. And the cut in Corporation Tax may have actually benefited the country. As I said look at how much Ireland made by slashing their CT rate to be about the lowest in the EU. Suddenly they became the HQ for many businesses who all paid their VAT in Ireland. The really BIG expense was the capping of energy prices at £2500 pa until 2024 - but that benefited lower earners most - not the rich - and it dwarfs ALL other tax cuts. It amounted to about £150 billion, yet there was no alternative to supporting people who couldn't afford their energy bills. But basically the only changes that Sunak made were to cancel the abolition of the 45% rate - which is inconsequential. He's cancelled the CT cut and is now raising it instead! That's crazy as we need growth. And he's limited the energy support to April 2023 - but the problem doesn't necessarily go away . Next winter will probably cause the same problems with energy bills. So Sunak has probably made things worse. I see that the govt borrowing last month was an all time record (about £30 billion). As for Sterling going down that was definitely sentiment. Currency traders are the ultimate short term investors. They don't look ahead more than a few minutes. They reacted to trashing of the mini-budget - which was orchestrated by anti-Truss pollticians (of which there are many in the Tory party, and of course all the Labour party). Our politicians trashed our currency deliberately to oust Truss. The mistake that Truss and Kwarteng made was in not understanding how easily the market can be spooked. The measures they took were basically reasonable (and better than Sunak's rubbish) but they should have been more careful about how they announced it. They made a big point of how they're cutting taxes when they should have played it down and made the changes more gradually. |
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Post by andrewbrown on Jan 27, 2023 17:58:21 GMT
JRM is upping his media career as he knows that he is likely losing his seat at the next GE.
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Post by ratcliff on Jan 27, 2023 18:53:00 GMT
There's little room for sentiment in financial matters, where confidence is king. There was no way the Truss budget, which included the biggest tax cuts since 1972 funded by a vast expansion in borrowing, could be accepted when the justification was it could be paid for by an unlikely economic boom. Sunak and others said as much during the hustings. It was a fairy tale that £45bn of unfunded tax cuts for the rich would be the catalyst for economic growth and pay for itself in the way the government argued. Anyone with the slightest financial idea could see that with inflation at a 40-year-high, rising recession risks and higher borrowing costs, it was a wild gamble and definitely at the wrong time. I doubt there's been a UK budget that's caused such political and economic damage. The pound fell to its lowest-ever level against the dollar and gilt prices collapsed. Britain's reputation for sound economic management (perhaps tested by Brexit) has been trashed... How can delaying/reducing future tax rises be unfunded if it hadn't yet happened? |
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Post by bancroft on Jan 27, 2023 19:18:20 GMT
I hear he is going to get his own program on Gb News, perhaps he is going to step down next election.
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Post by Orac on Jan 28, 2023 1:47:03 GMT
How can delaying/reducing future tax rises be unfunded if it hadn't yet happened? it's the inverse reasoning of a criminal. Not taking money off you is like a business cost and a cost has to be funded |
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Post by steppenwolf on Jan 28, 2023 8:24:36 GMT
People always seem to assume that tax cuts have to be "funded" (by borrowing or raising other taxes), but that's obviously not true. Some tax cuts generate more revenue - e.g. cuts to corporation tax. It always seems to be assumed that tax changes cause no changes in behaviour but of course that's not true. For example Brown created the 50% income tax rate just weeks before he got booted out. It was a political trick that Brown knew would be very difficult to get rid of. The Tories eventually reduced it to 45% and it resulted in greater revenue. Of course some of the extra revenue was caused by behavioural change - people delaying salary until the 45% band was brought in - but it was generally recognised that the 50% caused little or no increase in revenue. And Truss's abolition of the band almost certainly would have cost nothing. It was just politically insensitive - even if it would have been beneficial. It was a Conservative thing to do, but of course Sunak is not a Conservative.
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Post by johnofgwent on Jan 28, 2023 9:24:27 GMT
I hear he is going to get his own program on Gb News, perhaps he is going to step down next election. Most tories choosing to step down seem to be doing it because they can see all too clearly the likelihood of themselves having to repeat the final speech of Michael Portillo to his canvassers delivered after the returning officer has their say. I cannot for the life of me see the electorate that put him in Westminster going that way. |
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Post by Red Rackham on Jan 29, 2023 4:22:24 GMT
JRM is upping his media career as he knows that he is likely losing his seat at the next GE. Possibly, but it would be a loss. He is one of the few politicians, from either side of the house who actually behaves like an elected politician. He may be a figure of fun for lefties, but lefties could learn a lot from him. Regardless of political viewpoint, he is always thoughtful polite and respectful, unlike some of the chavs on the opposition benches who are an embarrassment. |
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Post by andrewbrown on Jan 29, 2023 7:02:42 GMT
JRM is upping his media career as he knows that he is likely losing his seat at the next GE. Possibly, but it would be a loss. He is one of the few politicians, from either side of the house who actually behaves like an elected politician. He may be a figure of fun for lefties, but lefties could learn a lot from him. Regardless of political viewpoint, he is always thoughtful polite and respectful, unlike some of the chavs on the opposition benches who are an embarrassment. If the best thing that you can say about him is that he is polite, then I think we agree. I think that the country has had enough of the old Etonians. |
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Post by johnofgwent on Jan 29, 2023 16:17:07 GMT
Possibly, but it would be a loss. He is one of the few politicians, from either side of the house who actually behaves like an elected politician. He may be a figure of fun for lefties, but lefties could learn a lot from him. Regardless of political viewpoint, he is always thoughtful polite and respectful, unlike some of the chavs on the opposition benches who are an embarrassment. If the best thing that you can say about him is that he is polite, then I think we agree. I think that the country has had enough of the old Etonians. Well, no, I think it goes deeper than that. Even Tony Benn was known for his knowledge of, adherence to, and demand for respect for, parliamentary procedure. There is a way that things should be done and all that. |
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Post by Baron von Lotsov on Jan 30, 2023 12:09:04 GMT
Possibly, but it would be a loss. He is one of the few politicians, from either side of the house who actually behaves like an elected politician. He may be a figure of fun for lefties, but lefties could learn a lot from him. Regardless of political viewpoint, he is always thoughtful polite and respectful, unlike some of the chavs on the opposition benches who are an embarrassment. If the best thing that you can say about him is that he is polite, then I think we agree. I think that the country has had enough of the old Etonians. Red did not say it was the best thing. You are trying to alter the meaning of the point. Rather he said it as a 'thing'. |
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Post by andrewbrown on Jan 30, 2023 13:09:54 GMT
OK. What other "things" does JRM have to offer?
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