Today we have Fazi’s “The End of the World is Nigh” article and this “It will be alright on the night piece.”I’m afraid Fazi’s feels more grounded in reality. This piece completely ignores the flock of Black Swans appearing on the horizon.
The main thing Truss has going for her is that she has spelled out a clear direction. Probably the wrong one, but people do like leadership, which is conspicuously absent in the Labour Party.
Your last point, about the quality of the Opposition, is far more relevant than any of the points put forward in this article.
Mid-term polling is one thing, the stark reality of voting for Labour or other parties is another, not least since it’d be unlikely to lead to a clear majority for Labour which would then usher in all kinds of nonsense with the potential to destroy the fabric of the UK. The ‘silent majority’ of voters are, i believe, just too sensible for that but there’s always the danger of voter disengagement.
On the other hand, one factor in Truss’ favour not mentioned (there are plenty of others!) is the propensity of formerly disenchanted Tory voters in the Blue shires to re-engage with their traditional loyalties due to the very budget just announced, whatever the prevailing headwinds come election time. In short, there’s just too many factors overlooked or misunderstood by these articles, although as opinion-pieces they at least engender debate.
Aaron James
1 year ago
WTF??? Inflation, Green Energy, Growth all looking good?
Tea leaf reading or psychic reading? Because these conjuring good times out of the worst economic outlook in centuries is either by flipping a coin, or allowing your hope to decide outcomes.
What you need instead of that coin toss 50/50 is a six sided dice with bad written on 5 sides, and not so bad written on the sixth.
Truss will make everything worse (£ 5 Billion more in weapons to Ukraine? Doesn’t she think that would be more useful for creating a UK Gas system?) She is saved by the even worse other choice, but she is truly appalling.
She needs the £ 5 Billion for Fracking and gas storage and belt tightening, not for armaments to make the war keep on destroying the world. All the bad debt about to begin defaulting everywhere will be intensely painful – but it must be allowed to work its way out of the economy. Printing more debt is just bringing forward your children’s money so it can be spent now – leaving them impoverished.
This generation spent more than they made, and now it is time to pay the bills. Hard times – like the Great depression, all the Mal-Investment and bad debt need to be worked out of the economy in the form of very hard times to get sound again. You can not spend your way out of a vast debt you cannot afford to sustain. Time to give up the Keynesian and MMT wishful thinking.
We must hope that the mini budget will generate the growth the Chancellor anticipates as we will be in queer street if it doesn’t. However, it does not bode well.
During the PM election, Ms. Truss based her policies on Thatcherism, which has been pursued in government. But the situation for the Thatcherite government in the 1980s is quite different to that we are facing today.
For example, the Thatcherite government was able to sell our national industries to small shareholders at a very attractive price, with as little as 100 shares per person being the criteria. This boosted the Exchequer’s funds. The values increased when put on the market (even the industries that had been running at a loss) and the small shareholders either started an investment portfolio or sold their shares at a good profit to invest in a business or to buy their council house. The selling of Council Houses was another Thatcherite policy – the price being extremely low for those who were already resident in Local Government properties.
All the opposition parties in parliament oppose much of the mini budget, the contents of which must be laid at Ms. Truss’s door. It is impossible to judge if a majority of Tories back her policies because they were never allowed to endorse the decision taken by the very small number of Conservative voters.
I would also suggest that the difference in the make-up of the two governments is acute. Mrs. Thatcher and her cabinet had served four years in opposition and that experience, as well as Mrs. Thatcher’s political consistency throughout her career and a charisma that is lacking in the present PM, intensifies that difference. In my opinion, of course!
So, you are saying that Truss main policy – the ‘dash for growth’ will be a failure in the short and medium term, and will not make people better off even when it starts to work. We have of course the hope that growth will comer in the long term, but those of us who remember the great hopes of growth and riches that the Brexiteers promised us are somewhat sceptical. Still, you say, Truss might get re-elected anyway: Sacrificing the fight against climate change might, with a following wind, get her ‘credit for trying’, and she will benefit from the end of COVID and of the war in Ukraine, things that have nothing to do with her policies. It might help the Tories to keep their jobs, but what does it promise for people in Britain?
If this is the verdict of one of her fans, we do not really need to listen to her enemies.
I suspect there is actually a viable electoral coalition that would support a pause on net zero (and a very large group that would want more) and more realistic energy policies. Remember that this need not be a majority of the electorate in order to win under the UK system. And that no other party is taking, or would take this position. This is both – perhaps for different groups – an economic/cost of living and a “culture war” issue. I have anticipated for some time the Tories pursuing this line, but perhaps only when they’ve exhausted all the other alternatives.
…perhaps we should call it the “nuclear option” then? Though she and Biden (+Putin of course) seem to have one well on the way which will mean economics and climate won’t really matter at all!
Paul Walsh
1 year ago
In my general experience if everyone says it is going to go terribly, it probably wont be as bad as that. So just depends how good she is at spinning the things that aren’t as bad.
We seem to have a very large helping of debt, so she better go for a lot of growth.
Roll the dice and hope for the best.
…the cost of that debt is also rising as investors see the UK as a bad bet thanks to Truss’s mini budget: she is a disaster and likely to utterly ruin the UK economy I’m afraid.
Malcolm Webb
1 year ago
Government should be small, focussed and humble – a mixture of a good shepherd and the Good Samaritan. Unfortunately, too many of us and far too many of our politicians, have come to believe it should act like God Almighty. Accordingly, we have an overstretched, over indebted, over intrusive and grossly underperforming State. Cutting taxes is a good start but spending must also be cut – and that will be the difficult part, especially when the property bubble bursts. Messrs Truss and Kwarteng will need nerves of steel. I wish them well.
Justin French-Brooks
1 year ago
Clutching. At. Straws.
andrew harman
1 year ago
Raising interest rates are a knee-jerk reaction and an entirely blunt instrument in dealing with this kind of inflation. The MPC is merely trying to give the appearance of doing something.
Interest rates are governed by bond markets and associated derivatives, and are not wholly at the ” gift” of a central bank, as in past times: incredible how few people know, let alone understand this.
Ineffective in what sense ?
Regardless of “effect”, it is certainly necessary at times to maintain the exchange rate for the pound and the price of UK government debt for foreign investors (the people who have funded Britain living beyond its means for the last 25 or more years). We now face a period of paying back the unearned “wealth” we have been enjoying during this artificial period. AS do many other countries. Good.
Every country of size has and uses sovereign bond markets! They actually set rates and currency values- Do your research properly and try to educate yourself about fixed income, swaps, repos and derivatives, synths, and bond futures and options.
..definitely so with the govt pulling in the opppsite direction!
Liam O'Mahony
1 year ago
I’m keeping a copy of this as I find its positive predictions very difficult to believe.. but hey, what do I know? We shall see, or as we say in Irish: Feichimís..
Today we have Fazi’s “The End of the World is Nigh” article and this “It will be alright on the night piece.”I’m afraid Fazi’s feels more grounded in reality. This piece completely ignores the flock of Black Swans appearing on the horizon.
The main thing Truss has going for her is that she has spelled out a clear direction. Probably the wrong one, but people do like leadership, which is conspicuously absent in the Labour Party.
Your last point, about the quality of the Opposition, is far more relevant than any of the points put forward in this article.
Mid-term polling is one thing, the stark reality of voting for Labour or other parties is another, not least since it’d be unlikely to lead to a clear majority for Labour which would then usher in all kinds of nonsense with the potential to destroy the fabric of the UK. The ‘silent majority’ of voters are, i believe, just too sensible for that but there’s always the danger of voter disengagement.
On the other hand, one factor in Truss’ favour not mentioned (there are plenty of others!) is the propensity of formerly disenchanted Tory voters in the Blue shires to re-engage with their traditional loyalties due to the very budget just announced, whatever the prevailing headwinds come election time. In short, there’s just too many factors overlooked or misunderstood by these articles, although as opinion-pieces they at least engender debate.
WTF??? Inflation, Green Energy, Growth all looking good?
Tea leaf reading or psychic reading? Because these conjuring good times out of the worst economic outlook in centuries is either by flipping a coin, or allowing your hope to decide outcomes.
What you need instead of that coin toss 50/50 is a six sided dice with bad written on 5 sides, and not so bad written on the sixth.
Truss will make everything worse (£ 5 Billion more in weapons to Ukraine? Doesn’t she think that would be more useful for creating a UK Gas system?) She is saved by the even worse other choice, but she is truly appalling.
She needs the £ 5 Billion for Fracking and gas storage and belt tightening, not for armaments to make the war keep on destroying the world. All the bad debt about to begin defaulting everywhere will be intensely painful – but it must be allowed to work its way out of the economy. Printing more debt is just bringing forward your children’s money so it can be spent now – leaving them impoverished.
This generation spent more than they made, and now it is time to pay the bills. Hard times – like the Great depression, all the Mal-Investment and bad debt need to be worked out of the economy in the form of very hard times to get sound again. You can not spend your way out of a vast debt you cannot afford to sustain. Time to give up the Keynesian and MMT wishful thinking.
We must hope that the mini budget will generate the growth the Chancellor anticipates as we will be in queer street if it doesn’t. However, it does not bode well.
During the PM election, Ms. Truss based her policies on Thatcherism, which has been pursued in government. But the situation for the Thatcherite government in the 1980s is quite different to that we are facing today.
For example, the Thatcherite government was able to sell our national industries to small shareholders at a very attractive price, with as little as 100 shares per person being the criteria. This boosted the Exchequer’s funds. The values increased when put on the market (even the industries that had been running at a loss) and the small shareholders either started an investment portfolio or sold their shares at a good profit to invest in a business or to buy their council house. The selling of Council Houses was another Thatcherite policy – the price being extremely low for those who were already resident in Local Government properties.
All the opposition parties in parliament oppose much of the mini budget, the contents of which must be laid at Ms. Truss’s door. It is impossible to judge if a majority of Tories back her policies because they were never allowed to endorse the decision taken by the very small number of Conservative voters.
I would also suggest that the difference in the make-up of the two governments is acute. Mrs. Thatcher and her cabinet had served four years in opposition and that experience, as well as Mrs. Thatcher’s political consistency throughout her career and a charisma that is lacking in the present PM, intensifies that difference. In my opinion, of course!
I
So, you are saying that Truss main policy – the ‘dash for growth’ will be a failure in the short and medium term, and will not make people better off even when it starts to work. We have of course the hope that growth will comer in the long term, but those of us who remember the great hopes of growth and riches that the Brexiteers promised us are somewhat sceptical. Still, you say, Truss might get re-elected anyway: Sacrificing the fight against climate change might, with a following wind, get her ‘credit for trying’, and she will benefit from the end of COVID and of the war in Ukraine, things that have nothing to do with her policies. It might help the Tories to keep their jobs, but what does it promise for people in Britain?
If this is the verdict of one of her fans, we do not really need to listen to her enemies.
I suspect there is actually a viable electoral coalition that would support a pause on net zero (and a very large group that would want more) and more realistic energy policies. Remember that this need not be a majority of the electorate in order to win under the UK system. And that no other party is taking, or would take this position. This is both – perhaps for different groups – an economic/cost of living and a “culture war” issue. I have anticipated for some time the Tories pursuing this line, but perhaps only when they’ve exhausted all the other alternatives.
…perhaps we should call it the “nuclear option” then? Though she and Biden (+Putin of course) seem to have one well on the way which will mean economics and climate won’t really matter at all!
In my general experience if everyone says it is going to go terribly, it probably wont be as bad as that. So just depends how good she is at spinning the things that aren’t as bad.
We seem to have a very large helping of debt, so she better go for a lot of growth.
Roll the dice and hope for the best.
…the cost of that debt is also rising as investors see the UK as a bad bet thanks to Truss’s mini budget: she is a disaster and likely to utterly ruin the UK economy I’m afraid.
Government should be small, focussed and humble – a mixture of a good shepherd and the Good Samaritan. Unfortunately, too many of us and far too many of our politicians, have come to believe it should act like God Almighty. Accordingly, we have an overstretched, over indebted, over intrusive and grossly underperforming State. Cutting taxes is a good start but spending must also be cut – and that will be the difficult part, especially when the property bubble bursts. Messrs Truss and Kwarteng will need nerves of steel. I wish them well.
Clutching. At. Straws.
Raising interest rates are a knee-jerk reaction and an entirely blunt instrument in dealing with this kind of inflation. The MPC is merely trying to give the appearance of doing something.
Interest rates are governed by bond markets and associated derivatives, and are not wholly at the ” gift” of a central bank, as in past times: incredible how few people know, let alone understand this.
Hence hiking them is ineffective?
Ineffective in what sense ?
Regardless of “effect”, it is certainly necessary at times to maintain the exchange rate for the pound and the price of UK government debt for foreign investors (the people who have funded Britain living beyond its means for the last 25 or more years). We now face a period of paying back the unearned “wealth” we have been enjoying during this artificial period. AS do many other countries. Good.
Every country of size has and uses sovereign bond markets! They actually set rates and currency values- Do your research properly and try to educate yourself about fixed income, swaps, repos and derivatives, synths, and bond futures and options.
..definitely so with the govt pulling in the opppsite direction!
I’m keeping a copy of this as I find its positive predictions very difficult to believe.. but hey, what do I know? We shall see, or as we say in Irish: Feichimís..