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cambridgeshire canary

Rip pound sterling

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7 hours ago, Rock The Boat said:

No it isn't really. Interference in the currency markets would be what happened in the Major govt of the 90s where the Treasury spent £3B sterling to keep it in within the ERM, which was basically shadowing the Deutchmark. The markets understood that the rate that Chancellor Lamont was trying to hold sterling at was unsustainable and so traders shorted the pound. The message is Canutian, you cannot hold back the markets.

Also, check out the differences between fiscal policy and monetary policy if you want to properly understand economic policy.

You might call it partisan, ideological even, but the tax cutting measures just announced have been tried before and succeeded in the 80s and will doubtless succeed again. Further fiscal and monetary changes have been pencilled in for the months ahead - exactly the same strategy as was carried out in the early 80s. This time round we don't have to go through the whole privatisation process so in many ways we are better placed than forty years ago, even though the numbers involved this time round are quite alarming.

Oh and one other point. Cutting income tax is not a zero sum game. If the 45% top rate is removed it just means that some very important tax payers get to keep more of what is theirs. It doesn't take one penny away from those on lower incomes. It's not wealth distribution to the rich as some ridiculous commentators have claimed. We live in a country where anyone can work hard and be successful and those who do should be rewarded. Currently, we pay too many people to sit at home and do nothing. It's time for another reset to our culture same we had forty years ago. Friday, we saw the first baby steps towards that goal.

It's very clear I know the difference between fiscal and monetary policy so dont even bother with that. Any change to either are, by their nature, interference in an established market. Anyway, your initial point didn't actually specify currency markets.

As for your second point, that's ridiculous. Once the markets have decided the £ is overpriced you can actually hold them back. That's by an interest rate rise, which is of itself a problem. You can't do it by constantly selling reserves to make up for structural problems as was tried with the ERM.

The problem is not 'markets doing what they do' it's that government policy is has created instability and the new equilibrium will make most people worse off, this is a direct result of a budget that directly contradicts the direction of monetary policy and weakened UK public finances. This isn't some unpredictable event.

As for 'it will work again'. It probably won't. There's no slack in the labour markets like there was in the 1980s and no sign of a productivity boom. What it will do is bump inflation up by a few percentage point. 

As for the partisan nature of it. If an unfunded Labour budget had caused gilts to rise as fast as they have, the pound to drop as fast as it had, the BoE caught between 9% inflation and an economy on the verge of recession and remortgage and energy costs to become potentially ruinous. You would be rightly spitting feathers.

The last paragraph is just bizarre. We are not talking about the famous 'benefits street' residents being negatively impacted, though I have no doubt we would also differ on that subject. We are talking about anyone who has worked hard to save for a mortgage and is yet to pay it off.

 

 

Edited by 1902
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7 hours ago, Rock The Boat said:

You might call it partisan, ideological even, but the tax cutting measures just announced have been tried before and succeeded in the 80s and will doubtless succeed again. Further fiscal and monetary changes have been pencilled in for the months ahead - exactly the same strategy as was carried out in the early 80s. This time round we don't have to go through the whole privatisation process so in many ways we are better placed than forty years ago, even though the numbers involved this time round are quite alarming.

And yet again you show no shame whatsoever in displaying your alarming ignorance of the crucial difference between what happened under Thatcher and what is happening now. Thatcher DID NOT BORROW MONEY TO PAY FOR TAX CUTS. It is precisely because Truss is indeed recklessly funding tax cuts for the wealthy using borrowed money that has caused the markets to be so alarmed. That you can't grasp the importance of this major difference is truly astonishing. The reason why Thatcher engaged in selling off many of our assets in wide ranging privatisation was precisely to fund the tax cuts she believed would support further growth. She wasn't foolish enough to think she should fund such tax cuts using borrowed money.

Edited by horsefly
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27 minutes ago, horsefly said:

And yet again you show no shame whatsoever in displaying your alarming ignorance of the crucial difference between what happened under Thatcher and what is happening now. Thatcher DID NOT BORROW MONEY TO PAY FOR TAX CUTS. It is precisely because Truss is indeed recklessly funding tax cuts for the wealthy using borrowed money that has caused the markets to be so alarmed. That you can't grasp the importance of this major difference is truly astonishing. The reason why Thatcher engaged in selling off many of our assets in wide ranging privatisation was precisely to fund the tax cuts she believed would support further growth. She wasn't foolish enough to think she should fund such tax cuts using borrowed money.

Have to agree - Thatcher and Truss are polar opposites. Thatcher believed in 'sound money' and Truss is a 'buy now, pay later' fruit cake.

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1 hour ago, Yellow Fever said:

Have to agree - Thatcher and Truss are polar opposites. Thatcher believed in 'sound money' and Truss is a 'buy now, pay later' fruit cake.

Agreed.  It makes Labour's Magic Money Tree look like a model of fiscal prudence.

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2 hours ago, Yellow Fever said:

Have to agree - Thatcher and Truss are polar opposites. Thatcher believed in 'sound money' and Truss is a 'buy now, pay later' fruit cake.

Haha. The rumour is that traders have given Truss the name "Daggers" ...which is named after Dagenham, two stops from Barking (mad)😅

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Just been called up by my FEX broker (they know I have USD to sell). 

Being a bit of a chartist or as an observation I always suspect when they call me the to sell USD they suspect the old £ will drop a bit further but after we contract 😉. Just saying.

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19 minutes ago, sonyc said:

Haha. The rumour is that traders have given Truss the name "Daggers" ...which is named after Dagenham, two stops from Barking (mad)😅

Saw this one too you might like

Perkins, a former Treasury economist, has also argued that the UK is now suffering from a “Moron Risk Premium” (MRP).

Basically, because the markets think government policy is fundamentally incoherent, and don’t trust the Bank of England to step in, they downgrade UK assets across the board, from the pound to gilts.

 
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21 hours ago, Rock The Boat said:

In any case it is not just sterling falling against the dollar but also the Euro and the Yen.  There's no need to get all machi over the exchange rate, but to concentrate on fundamentals in the economy. Which is exactly what Kwasi is doing. 

Concentrating on fundamentals would be borrowing to invest, for example in renewable energy and insulation, which would benefit the whole country. Climate change AND energy bills would improve. Stuffing some more money in the pockets of wealthy bankers only benefits wealthy bankers, while loading up this country’s debt which we ALL eventually have to pay.

All Kami-Kwasi is achieving is increasing Labour’s majority at the next election. Sadly we all have to pay the price in the mean time.

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4 minutes ago, Nuff Said said:

Concentrating on fundamentals would be borrowing to invest, for example in renewable energy and insulation, which would benefit the whole country. Climate change AND energy bills would improve. Stuffing some more money in the pockets of wealthy bankers only benefits wealthy bankers, while loading up this country’s debt which we ALL eventually have to pay.

All Kami-Kwasi is achieving is increasing Labour’s majority at the next election. Sadly we all have to pay the price in the mean time.

Indeed! I know of no economic theory (right, left or centre) which regards borrowing money for tax cuts as a "fundamental". Unless, of course, he means fundamentally stupid (sadly he doesn't).

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What's a pound away. Scotland will have a glorious new currency comrades. It will be called the Salmon and will be decimal with 100 Sturgeons to the Salmon. We estimate a pint will be S2.30 and the min wage S12.85

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5 hours ago, KiwiScot said:

What's a pound away. Scotland will have a glorious new currency comrades. It will be called the Salmon and will be decimal with 100 Sturgeons to the Salmon. We estimate a pint will be S2.30 and the min wage S12.85

Scotland gets £41bn from the UK. However, the SNP say they have figures that show that per capita, Scotland subsidises the UK.

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9 hours ago, sonyc said:

Haha. The rumour is that traders have given Truss the name "Daggers" ...which is named after Dagenham, two stops from Barking (mad)😅

It is actually three stops and more to the point it is three stops BEYOND Barking…😜

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6 minutes ago, PurpleCanary said:

It is actually three stops and more to the point it is three stops BEYOND Barking…😜

Its two stops in the urban dictionary PC and in the "thick" dictionary 😂

https://www.urbandictionary.com/define.php?term=two stops from dagenham

 

https://thickdictionary.com/define/two stops from dagenham/

 

But we are all on the same page in the grand scheme of things.😃

# its Essex innit?

Edited by sonyc

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4 minutes ago, sonyc said:

Its two stops in the urban dictionary PC and in the "thick" dictionary 😂

https://www.urbandictionary.com/define.php?term=two stops from dagenham

 

https://thickdictionary.com/define/two stops from dagenham/

 

But we are all on the same page in the grand scheme of things.😃

# its Essex innit?

I was sadly unfamiliar with either work but am now much better informed!

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9 minutes ago, PurpleCanary said:

I was sadly unfamiliar with either work but am now much better informed!

Well so was I.....the thick dictionary is quite hilarious because it describes itself as giving "simple, to the point meanings". Try a few words and you'll get the drift ...it's the stuff of the street.

A kind of Occams Razor dictionary 🙂 - which is probably something I need to use far more often for my rambling posts in the future. I try and be tabloid too.

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7 minutes ago, sonyc said:

Well so was I.....the thick dictionary is quite hilarious because it describes itself as giving "simple, to the point meanings". Try a few words and you'll get the drift ...it's the stuff of the street.

A kind of Occams Razor dictionary 🙂 - which is probably something I need to use far more often for my rambling posts in the future. I try and be tabloid too.

I will dip in, but meanwhile if you don’t know it I recommend Ambrose Bierce’s Devil’s Dictionary. As a sample, it defines a referendum as a process to learn ‘’the nonsensus of public opinion.’’

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What I find ironic is that we had years of superficial comparisons between Trump and Johnson, which personally I never really bought into, but Truss' move is textbook Trump fiscal policy, but without the protection the dollar enjoys as the world's de facto reserve currency, without anyone seeing the similarity. 

Digressing slightly, she's also following Trump in talking about moving the UK embassy to Israel to Jerusalem. 

Edited by littleyellowbirdie

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43 minutes ago, littleyellowbirdie said:

What I find ironic is that we had years of superficial comparisons between Trump and Johnson, which personally I never really bought into, but Truss' move is textbook Trump fiscal policy, but without the protection the dollar enjoys as the world's de facto reserve currency, without anyone seeing the similarity. 

Digressing slightly, she's also following Trump in talking about moving the UK embassy to Israel to Jerusalem. 

You might be right. And I've never liked simplistic comparisons. Then, Johnson and Trump were populists and would avoid scrutiny by deflecting questions (or hiding in Johnson's case) but no-one comes close in being as ungracious as Trump. I think both are narcissists but who is the greater is one of those moot points.

I've always maintained Johnson is a puer aeternus par excellence. A child essentially.

Neither Trump or Johnson liked details. Johnson would switch off when talking with people as he had no attention span. Listening to Rory Stewart's stories then Johnson stopped learning after about the age of 15. He felt he didn't need to know much more.

Certainly Truss is seemingly going to be more unpopular than Johnson. And that is some feat! My take (for what it's worth and spending a decent while observing her, her micro facial movements, reactions etc) is that Truss is actually on the 'spectrum'. Which, if true, ought to give us greater understanding of how she behaves, acts, speaks.

But...we ought not to have her as our PM. Like Johnson, she is plainly psychologically unsuitable being a leader. Leaders sometimes are like her though. 

It might unravel very quickly. I felt she was someone even before she was voted in that was brittle and I would fear for her having a breakdown. Her defences are set so high, beyond what might be considered as necessary (we all have our own ways of protecting ourselves). Politicians maybe are more susceptible. May and Cameron even also had their faults. I guess, who doesn't!

Anyway, her behaviours so far have been odd, never a good sign.

As for Starmer, bring on good old boring. A sensible adult if ever I saw one.

Edited by sonyc
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46 minutes ago, sonyc said:

Digressing slightly, she's also following Trump in talking about moving the UK embassy to Israel to Jerusalem. 

I think Indy has pointed this out before - but Israel's annexation of parts of the West Bank and the Golan (are these 'historic' Jewish lands and even if so what ?) sits uneasily with what's going on in Ukraine right now.

The UK at least should uphold standards and not follow Trump. Don't move the embassy else I guess Putin might make a comparison.

Edited by Yellow Fever
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The comments from the IMF overnight and the BoE's intervention today are effectively a vote of no confidence in Truss and Kwarteng.

By screwing up so spectacularly after less than three weeks in office they're already beyond the point of no return.  They have to either resign or call a GE.  This won't blow over.

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Do you think Norman Lamont is running Kami-Kwasi a bath, and loaning him his copy of Edith Piaf singing Je ne Regrette Rien?

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Wow! It's now being reported on Sky News that the BOE intervened to buy up government bonds in order to prevent the mass insolvency of pension funds. That report was swiftly followed by a government minister who denied that Kami-Kwasi's "budget" has caused any of these problems and it's all the fault of the war in Ukraine. This bunch of incompetents and liars is a bigger threat to the UK than Russia.

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So after all the fun and games, ftse and quid up on the day.

Rum old do.

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2 minutes ago, ricardo said:

So after all the fun and games, ftse and quid up on the day.

Rum old do.

That is very misleading.

Lots of Pension funds, needed to be saved today and despite all the regulation ( which your mates wanted to get rid off ) at least one bank would have been pushed to the limit tonight. Other countries now getting involved as they are claiming the incompetence of our Government could effect them.

So basically after unprecedented intervention by the BOE we are in the s*** as no different to when they covered up about wallpaper, they learnt covering up how they were raising money is even worse.

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4 minutes ago, Well b back said:

That is very misleading.

Lots of Pension funds, needed to be saved today and despite all the regulation ( which your mates wanted to get rid off ) at least one bank would have been pushed to the limit tonight. Other countries now getting involved as they are claiming the incompetence of our Government could effect them.

So basically after unprecedented intervention by the BOE we are in the s*** as no different to when they covered up about wallpaper, they learnt covering up how they were raising money is even worse.

It's quite cool in the way though; turns out that UK PLC is too big to fail. 

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3 minutes ago, Well b back said:

Other countries now getting involved as they are claiming the incompetence of our Government could effect them.

 

Yes, USA 10 yr bond rate nearly 4% and 30 yr mortgages up to 6.5%

The Fed have got the Kwasi shakes by the look of things.

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Just now, littleyellowbirdie said:

It's quite cool in the way though; turns out that UK PLC is too big to fail. 

Lol indeed.
We had 862 billion of reserves, would be interesting to know how much we have left

 

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1 minute ago, Well b back said:

Lol indeed.
We had 862 billion of reserves, would be interesting to know how much we have left

 

We'll  never run out of printing ink and paper😉

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