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Post by Baron von Lotsov on Feb 25, 2023 14:48:54 GMT
I've never been completely happy with the reaction of the capital markets when Truss came to power. If one were to look objectively at the reduction of tax as a percentage of all tax we pay, it was insignificant. I heard unreliable reports (BBC) saying the rout began in the Asian markets as they opened, but is this a red herring? Could it be like the ERM where Soros was financially attacking the British pound as a head of a consortium of undisclosed investors? Could this sell off be at the command of the US deep state to keep Britain from competing in world markets? Many countries set their corporation tax at 25%, but if we undercut them then it would encourage inward investment. The highest earners likewise would be attracted to the UK by top-rate reductions and bring their wealth with them and so on. They may have been politically unpopular things to do, but from a purely hard-headed financial perspective they were not nearly so bad.
One common prole error is to assume the number of rich people is similar to the number of poor people. Like they may believe if we halved the rich tax contributions we would have to double the poor tax contributions. Well in truth the money collected from the wealthiest is only a tiny fraction. The main revenue comes from taxing the average person. This is why cutting the top rate is insignificant in this regard. Another prole error is to think the rich are in many ways favoured by the tax system. Well some research shows that the higher your qualifications and abilities (i.e. the more you get paid) the higher the contribution you make to society financially compared to what it costs to keep you there. Like for the top 1% it is they create 6 pounds of wealth to the nation for ever pound the nation spends on them.
Anyway, back to the political. I heard that someone said that as soon as they saw Hunt appointed as chancellor this confirmed it to them that it was indeed a coup and Hunt is their man. What do your reckon?
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Post by dodgydave on Feb 26, 2023 1:51:46 GMT
I do wonder about your sometimes.
It is WELL DOCUMENTED what happened.
It was nothing to do with her policies, it was because she broke all norms and had a "mini-budget" without bothering to include the usual independent forecasts. This allowed traders / commentators / media / opposition parties to push a "uncertainty" narrative and make political capital / a shed loan of money!
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Post by steppenwolf on Feb 26, 2023 7:32:54 GMT
As I've said before Truss put a lot of noses out of joint by sidelining the OBR and the Treasury - and sacking Tom Scholar. These are all people who objected to Truss's ideas. The Tory party was also pissed off that their chosen candidate (Sunak) was overruled by the party membership. And Sunak was also pissed off and started briefing against Truss and mobilising his friends in the City to bet against Sterling. Truss's ideas were not that bad but she was politically inept in announcing them.
But the fact is that Truss's policies in the mini-budget were no more costly than those that Hunt and Sunak introduced after Truss had been ousted and Sterling had miraculously recovered. The abolition of the top tax rate cost £2 billion at most and the biggest cost was support for energy bills - which had to be done anyway. And the reduction in Corporation Tax was widely regarded as a good idea. Raising it, as Sunak, is doing is ridiculous.
My own opinion is that Boris was ousted mainly by Remoaners who thought (probably correctly) that, with Boris gone, they could reverse Brexit. When Truss was made PM (by the Brexit leaning Tory party membership) they threw a wobbly and decided to just appoint Sunak and Hunt anyway - regardless of how much damage it would do to the party's chances in the next election. Now Sunak is in the process of selling out to the EU.
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Post by Baron von Lotsov on Feb 26, 2023 12:36:44 GMT
As I've said before Truss put a lot of noses out of joint by sidelining the OBR and the Treasury - and sacking Tom Scholar. These are all people who objected to Truss's ideas. The Tory party was also pissed off that their chosen candidate (Sunak) was overruled by the party membership. And Sunak was also pissed off and started briefing against Truss and mobilising his friends in the City to bet against Sterling. Truss's ideas were not that bad but she was politically inept in announcing them. But the fact is that Truss's policies in the mini-budget were no more costly than those that Hunt and Sunak introduced after Truss had been ousted and Sterling had miraculously recovered. The abolition of the top tax rate cost £2 billion at most and the biggest cost was support for energy bills - which had to be done anyway. And the reduction in Corporation Tax was widely regarded as a good idea. Raising it, as Sunak, is doing is ridiculous. My own opinion is that Boris was ousted mainly by Remoaners who thought (probably correctly) that, with Boris gone, they could reverse Brexit. When Truss was made PM (by the Brexit leaning Tory party membership) they threw a wobbly and decided to just appoint Sunak and Hunt anyway - regardless of how much damage it would do to the party's chances in the next election. Now Sunak is in the process of selling out to the EU. Yes well I'm not so interested in the Westminster soap opera, but your point about the pound miraculously recovering due to Hunt is bewildering. The ignoring of certain people may well be because they were wronguns. They call it "treasury orthodoxy" and Truss might have picked up on the idea the OBR was about to rubbish her in a biased way. She's the only one we have had since Thatcher to pursue a capitalist agenda. I mean capitalism is the thing we must practice if we are to make a success of Brexit. Hunt is most likely their stooge. He seems the type. |
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Post by Deleted on Feb 26, 2023 12:57:03 GMT
Its simple really
Truss announced enormous tax cuts ( usual Tory dogma ) and the BIG BIG mistake was that this was to be funded by borrowing.
Even Infants School Economics tells you that you cant do that, and of course the markets were not only astonished, but gave a huge "Thumbs Down" which hit shares and the bond markets.
Many ordinary people are still reeling and suffering from her incompetence
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Post by Fairsociety on Feb 26, 2023 13:02:14 GMT
Its simple really Truss announced enormous tax cuts ( usual Tory dogma ) and the BIG BIG mistake was that this was to be funded by borrowing. Even Infants School Economics tells you that you cant do that, and of course the markets were not only astonished, but gave a huge "Thumbs Down" which hit shares and the bond markets. Many ordinary people are still reeling and suffering from her incompetence She went power crazy, it went to her head, she was renown for being a Thatcher type persona, it was always going to be her downfall. |
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Post by steppenwolf on Feb 26, 2023 13:23:35 GMT
Its simple really Truss announced enormous tax cuts ( usual Tory dogma ) and the BIG BIG mistake was that this was to be funded by borrowing. Even Infants School Economics tells you that you cant do that, and of course the markets were not only astonished, but gave a huge "Thumbs Down" which hit shares and the bond markets. Many ordinary people are still reeling and suffering from her incompetence Since our productivity has been going down for at least 20 years all tax cuts are funded by borrowing. But the point is that Truss's tax cuts were minimal - a rounding error. She just made a lot of enemies in the Civil Service and the City which is what led to the run on Sterling. If you want to talk about unfunded "borrowing" what about Sunak's borrowing of over £400 billion to finance furlough? And that was just the start - he also lent vast amounts of money to prop up non-existent companies during lockdown. That was crazy. That's why we're in debt to the tune of over £2 trillion. |
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Post by Orac on Feb 26, 2023 13:29:05 GMT
Yes
It was a massive victory for the blob (the UK soviet)
She left her flank open and the knife went in.
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Post by Baron von Lotsov on Feb 26, 2023 14:05:06 GMT
Its simple really Truss announced enormous tax cuts ( usual Tory dogma ) and the BIG BIG mistake was that this was to be funded by borrowing. Even Infants School Economics tells you that you cant do that, and of course the markets were not only astonished, but gave a huge "Thumbs Down" which hit shares and the bond markets. Many ordinary people are still reeling and suffering from her incompetence The tax cuts were small. It was overplayed. |
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Post by Baron von Lotsov on Feb 26, 2023 14:08:53 GMT
Its simple really Truss announced enormous tax cuts ( usual Tory dogma ) and the BIG BIG mistake was that this was to be funded by borrowing. Even Infants School Economics tells you that you cant do that, and of course the markets were not only astonished, but gave a huge "Thumbs Down" which hit shares and the bond markets. Many ordinary people are still reeling and suffering from her incompetence Since our productivity has been going down for at least 20 years all tax cuts are funded by borrowing. But the point is that Truss's tax cuts were minimal - a rounding error. She just made a lot of enemies in the Civil Service and the City which is what led to the run on Sterling. If you want to talk about unfunded "borrowing" what about Sunak's borrowing of over £400 billion to finance furlough? And that was just the start - he also lent vast amounts of money to prop up non-existent companies during lockdown. That was crazy. That's why we're in debt to the tune of over £2 trillion. So the markets acted irrationally then. Next we need to find out exactly who sold sterling and why. |
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Post by dodgydave on Feb 26, 2023 23:23:51 GMT
Since our productivity has been going down for at least 20 years all tax cuts are funded by borrowing. But the point is that Truss's tax cuts were minimal - a rounding error. She just made a lot of enemies in the Civil Service and the City which is what led to the run on Sterling. If you want to talk about unfunded "borrowing" what about Sunak's borrowing of over £400 billion to finance furlough? And that was just the start - he also lent vast amounts of money to prop up non-existent companies during lockdown. That was crazy. That's why we're in debt to the tune of over £2 trillion. So the markets acted irrationally then. Next we need to find out exactly who sold sterling and why. No... Two people have already told you what happened. She didn't follow established procedure which allowed people to push uncertainty narratives and make money / political capital. That is how markets work, there is nothing irrational about responding to two idiots that thought they didn't have to play by the rules. |
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Post by Baron von Lotsov on Feb 27, 2023 1:14:39 GMT
So the markets acted irrationally then. Next we need to find out exactly who sold sterling and why. No... Two people have already told you what happened. She didn't follow established procedure which allowed people to push uncertainty narratives and make money / political capital. That is how markets work, there is nothing irrational about responding to two idiots that thought they didn't have to play by the rules. I do understand that is the reason given to us. I just do not give it that much credibility. Yes I can see that if the markets were like an irrational bunch of blondes like on Mum's Net that would have a strong influence, but these people in the capital markets are damn well clued up. They have their own researchers. It's not exactly the case that Hunt is the best economist out there either. Neither has Treasury orthodoxy been a good economic performer. They printed a ton of money in 2019. This was the primary cause of the inflation we are suffering now coupled with the hair-brained scheme to sanction our main energy supplier. These investors have their own economic forecasting models so they would key in the fiscal changes and it would recompute the likely outcome. Low corporation tax is known to boost growth, although I was sceptical it would be as much as Truss reckoned, but that is typical of politicians of all kinds. |
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Post by dodgydave on Feb 27, 2023 2:15:37 GMT
No... Two people have already told you what happened. She didn't follow established procedure which allowed people to push uncertainty narratives and make money / political capital. That is how markets work, there is nothing irrational about responding to two idiots that thought they didn't have to play by the rules. I do understand that is the reason given to us. I just do not give it that much credibility. Yes I can see that if the markets were like an irrational bunch of blondes like on Mum's Net that would have a strong influence, but these people in the capital markets are damn well clued up. They have their own researchers. It's not exactly the case that Hunt is the best economist out there either. Neither has Treasury orthodoxy been a good economic performer. They printed a ton of money in 2019. This was the primary cause of the inflation we are suffering now coupled with the hair-brained scheme to sanction our main energy supplier. These investors have their own economic forecasting models so they would key in the fiscal changes and it would recompute the likely outcome. Low corporation tax is known to boost growth, although I was sceptical it would be as much as Truss reckoned, but that is typical of politicians of all kinds. You don't give credibility to the idea that a new PM with a new Chancellor, not following procedure on their first budget creates uncertainty? The primary cause of the inflation is the COVID lockdowns, not Putin invading Ukraine. Inflation was rocketing long before he set foot in Ukraine. If you are right then why is inflation slowing, and why are fuel prices coming down? The nuclear states said they would protect Ukraine if they gave up their nukes, only a coward would now break that promise. |
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