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The Official Liz Truss no longer PM but still a Clusterfuck thread


Clown Job

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It is astonishing that an uncontested energy policy was seemingly fine until a load of borrowing was going to be made to pay for tax cuts, yet it is no longer fine once the majority of those tax cuts have been reversed and a whole load of cuts, even in addition to the energy package being scaled back, are now required. 

Higher cost of borrowing (well done Kwasi!) excepted, what else changed? 

Edited by Michael W
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38 minutes ago, Michael W said:

It is astonishing that an uncontested energy policy was seemingly fine until a load of borrowing was going to be made to pay for tax cuts, yet it is no longer fine once the majority of those tax cuts have been reversed and a whole load of cuts, even in addition to the energy package being scaled back, are now required. 

Higher cost of borrowing (well done Kwasi!) excepted, what else changed? 

Confidence.  Effectively, the UK now has less financial leeway than before the mini-budget as the markets have no confidence in those in charge.  Reversing the policies to the status quo is not enough.

A general election would be the best way to resolve this or, at the very least, the installation of a market friendly PM such as Sunak.  Rejoining the single market would also be a great help.

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3 hours ago, aDONisSheep said:

I can see the argument, but having a margin account in itself is not the issue, it may mean that the pension funds are more highly geared, but it's not that radically different to being self funded.  That said, it certainly didn't help, because it places even more immediate demand on the pension funds to repay the Investment Banks, but at their core margin accounts are a valid source of investment funding.

It still comes back to the fundamental problem,  that the rise in interest rates meant that their bond holdings were worth less, they needed cash for both pensions and to repay their investment banks (who were making margin calls).

 

They do trade in bonds all the time, bonds are just another investment vehicle, but issued by the government rather than being issued by a company (shares etc).  That's why the BoE stepped in and started buying up the bonds.  The other thing to remember is that although at issue they are seen as 'long term', every day that passes they become shorter term holdings.  If you think inflation is going to rise, why would you hold low yield bonds, over time their underlying value will be eaten away, and new bond issues will offer higher rates.

I thought this was quite a good take on it; https://www.investmentweek.co.uk/opinion/4057865/gilt-charged-pension-funds-margin-sophistication

One of my favourite podcasts is The Bunker and they had an episode; https://play.acast.com/s/the-bunker/c7b47f98-4bd1-11ed-a1b4-b713e67fec96

The problem with all investment markets, is that they are largely built on 'confidence' which is why they bloody spook and crash.  Intellectually and theoretically, the market are supposed to take take in all the information and make a judgement...  but if that worked, nobody would make or lose money on investments because we'd all make the same decisions.   

I'm not excusing the pension funds, they royally fucked up, but I can understand why they were caught out.

Yours

aDONis

You cannot seriously be suggesting that pension funds investing in gilts should be making leveraged trades.

As @coprolite posted and a sentiment that I share, gilts are supposed to be the bedrock of safe investment for pensions.  Leveraging this investment produces an entirely different risk from the underlying asset.

 

ETA:. I think I will have a look at my two gilt based funds in my pension and see how they invested as I am sure that there was no mention of leverage in the fund prospectus for either of them.

Edited by strichener
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She will turn up and in her robotic tone claim

1. it’s all Putin’s fault.(a lie)

2. She has saved millions from energy rises( another lie)

3. This was her plan all along(hat trick)

 

Wee Dougie three jobs will claim that he supports all of the new Chancellor’s programme ( a big fat lie)

Edited by CambieBud
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I know this might sound mad, but I can actually see them replace Liz Truss with Boris Johnson again.

He's the most popular amongst the membership and it doesn't look like the MP's have agreed on a replacement.

Would they be daft enough to put this to a vote to the membership? Or will it be a vote amongst MP's?

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51 minutes ago, David Fernández said:

I know this might sound mad, but I can actually see them replace Liz Truss with Boris Johnson again.

He's the most popular amongst the membership and it doesn't look like the MP's have agreed on a replacement.

Would they be daft enough to put this to a vote to the membership? Or will it be a vote amongst MP's?
 

Not nuts. Being seriously touted, most significantly by the Mail. 

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56 minutes ago, Clown Job said:

What an absolute failure of a government 

 

"Northern Ireland would be unaffected because its electricity grid is shared with the Republic of Ireland."

Jacksgranda on P&B:

Snow on the Sperrins!

Hello?

Anybody?

Am I on ignore?

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9 hours ago, Aladdin said:

Confidence.  Effectively, the UK now has less financial leeway than before the mini-budget as the markets have no confidence in those in charge.  Reversing the policies to the status quo is not enough.

A general election would be the best way to resolve this or, at the very least, the installation of a market friendly PM such as Sunak.  Rejoining the single market would also be a great help.

For all the f**k business bluster of the Boris government everyone knew that an adult was in charge of the purse strings.

The problem with Kwarteng and Liz is that they seem to have internalised and believed some of their red, white and blue / rule Britannia taglines.

Adam Curtis covered it in one of his excellent documentaries, the decades before black Monday was a power tug between markets and government - and black Monday proved markets were unequivocally on top.

And decades later that is even more the case, for all countries not just the UK. The view of financial markets is more important than the views of politicians or voters.

They are really in charge and have been for some time.

And tbf I would rather they were in charge than Liz / Kwarteng / Boris.

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17 minutes ago, btb said:

Regarding today's PMQs Truss has to turn up or resign but she doesn't have BJs chutzpah so it's hard to see things going well for her.

I hardly ever watch PMQs but will be tuning in today. I'm hoping for a spectacular meltdown but it'll probably just be inept and evasive. 

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It’ll be a load of fantasy island stuff about Labour being the reason people are striking, something about denying Brexit and possibly one about them being the reason people are gluing themselves to roads.

Combined with ‘we made mistakes but we’ve fixed them’ and other robotic cliches. She’s probably stupid enough to parrot her line about solving the energy crisis as well.

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