KwarTENGG!!.........into the Lamp Post.

[exchemist]

UK news:

Amazing that Truss and Kwartengg! have managed to cause a Sterling crisis within weeks of taking office. All the signs are government bonds will need a far higher rate of interest to get investors to buy them...which means higher interest rates in the UK all round. That will snuff out any hope that companies will borrow to invest, which is what you need to get growth going.

It's in any case a myth that tax cuts, from the modest level they were at, will stimulate growth. Businesses will invest when they see economic stability, so they can calculate a return without needing to add in a risk premium. Nobody in business was saying the key was lower tax. So it's a daft idea. But worse, Truss and Kwartengg! have suggested the Bank of England's mandate may be changed to promote growth (in some nebulous way), Kwartengg! has hinted he will have weekly meetings with the Governor, putting pressure on him, he has sacked the top civil servant in the Treasury, presumably because he was told his ideas won't work, and he has refused to submit his plans to review by the Office of Budget Responsibility, whose very purpose is stop politicians doing reckless things with the public finances. Truss and Kwartengg! have thereby undermined trust that the British government is acting responsibly - and destroyed their own economic credibility overnight.

This goes to show how deep the "We've had enough of experts" infection is within the UK Conservative party. Ever since Brexit, they have chosen to tell one another a series of fantasies about a world of sunlit uplands, when just about all economists agree Brexit (in the form they have chosen to implement it) is making the country poorer. Now, we seem to have entered a period of "Erdogan economics", in which the prime minister follows an eccentric personal ideology at odds with what almost all economists, the civil service professionals - and the financial markets - think. Pointless tax cuts, financed by huge borrowing, the costs of which have just gone up enormously due to their cack-handed management. Groundhog Day: at this rate we'll be on our knees to the IMF for a bail-out before long, just as we were in 1976.

 

[Estro Felino]

Britain has countless economic opportunities, trading with the Commonwealth countries, the Commonwealth realms in particular which are incredibly prosperous and rich in resources.
The future is very bright for the British people.

 

[Stevicus]

This goes to show how deep the "We've had enough of experts" infection is within the UK Conservative party.

the prime minister follows an eccentric personal ideology at odds with what almost all economists, the civil service professionals - and the financial markets - think.

I'm not sure about the experts in the UK, but the problem in many cases is that the "experts" can often be wrong. In the U.S., the past 50 years has seen nothing but economic stagnation and failure.

The experts have to at least demonstrate that their ideas can produce tangible, real world success, but they haven't been able to do that for decades. So, it should be understandable that some people would grow weary of the same old tired failed ideas from "experts" who turned the greatest economic power that ever existed into a debtor nation on the verge of collapse.

Their failures, along with the overall decline in quality of life, would indicate that whatever it is they've been "thinking" all these decades must obviously be wrong. That they still don't seem to understand this and continue to embrace the same old failed policies does even further discredit to their position.

 

[sun rise]

It's in any case a myth that tax cuts, from the modest level they were at, will stimulate growth.

The right in the US suffers from that same disease. What growth is stimulated is growth in debt.

"Erdogan economics",

Bingo. Just when I think we're reaching peak raving loony, my hope is dashed as ever greater lunacy is promoted as if it represents sanity.

 

[exchemist]

I'm not sure about the experts in the UK, but the problem in many cases is that the "experts" can often be wrong. In the U.S., the past 50 years has seen nothing but economic stagnation and failure.

The experts have to at least demonstrate that their ideas can produce tangible, real world success, but they haven't been able to do that for decades. So, it should be understandable that some people would grow weary of the same old tired failed ideas from "experts" who turned the greatest economic power that ever existed into a debtor nation on the verge of collapse.

Their failures, along with the overall decline in quality of life, would indicate that whatever it is they've been "thinking" all these decades must obviously be wrong. That they still don't seem to understand this and continue to embrace the same old failed policies does even further discredit to their position.

Really? Has the standard of living in the USA not improved since 1970? I find that very hard to believe.

Certainly in the UK things are better than in 1970 in terms of health, working conditions, creature comforts, leisure options and so forth.

 

[exchemist]

The right in the US suffers from that same disease. What growth is stimulated is growth in debt.



Bingo. Just when I think we're reaching peak raving loony, my hope is dashed as ever greater lunacy is promoted as if it represents sanity.

Yeah it's this discredited Laffer Curve bull****. The only examples of this being in any way true are in countries that had punitive rates of tax and chose to reduce these. But for the UK, reducing the top rate of personal tax from 45% to 40%, or corporation tax from 25% to 20% or whatever it is, makes F-all difference to investment intentions. Plenty of the UK's peers in Europe have far higher rates of both taxes and yet have better productivity and economic growth than we do. So the explanation must lie elsewhere.

 

[Stevicus]

Really? Has the standard of living in the USA not improved since 1970? I find that very hard to believe.

Certainly in the UK things are better than in 1970 in terms of health, working conditions, creature comforts, leisure options and so forth.

In terms of real wages, things have been pretty stagnant since the 70s. Homelessness is up, lack of affordable housing, the diminishing of the manufacturing base (due to outsourcing). Working conditions are worse due to union-busting by the Reaganites. There have been improvements in technology which might give us more gadgets and creature comforts, although most of that comes from Asia these days, not America or the West. China and Japan have been surpassing us in that department, so it seems their "experts" are far more intelligent than ours.

Then there's the trade deficit and national debt which have grown steadily worse in recent decades. That, too, is an indicator of mismanagement.

The only thing that anyone can say about Western economies in the past 40-50 years is that the rich have gotten richer. Yay for the rich! Other than that, there's not much for the West to crow about.

 

[exchemist]

In terms of real wages, things have been pretty stagnant since the 70s. Homelessness is up, lack of affordable housing, the diminishing of the manufacturing base (due to outsourcing). Working conditions are worse due to union-busting by the Reaganites. There have been improvements in technology which might give us more gadgets and creature comforts, although most of that comes from Asia these days, not America or the West. China and Japan have been surpassing us in that department, so it seems their "experts" are far more intelligent than ours.

Then there's the trade deficit and national debt which have grown steadily worse in recent decades. That, too, is an indicator of mismanagement.

The only thing that anyone can say about Western economies in the past 40-50 years is that the rich have gotten richer. Yay for the rich! Other than that, there's not much for the West to crow about.

I think you will find that the standard of living of most people is greatly improved since the 1970s, on almost any measure. What is undeniable however, if that the extremes have diverged more since then. (Where the gadgets are made is irrelevant, by the way. The point is they are affordable for most people.)

 

[muhammad_isa]

UK news:

Amazing that Truss and Kwartengg! have managed to cause a Sterling crisis within weeks of taking office.

It's complicated..
Devaluation of currency increases attraction to a country's exports. Since the currency decreased in value, it can compete more competitively in global markets.
It also attracts tourism.

..but I would agree that we are getting poorer. That is not necessarily a bad thing. It takes some of the heat off immigration issues. Why should the UK be much richer than other nations?

However, it is very disturbing that the treasury continues to borrow heavily.

 

[England my lionheart]

I think there are already rumours of an about turn by Kwartangg and Truss and also a vote of no confidence,Truss is about as good as a wet paper bag as a leader.

 

[Stevicus]

I think you will find that the standard of living of most people is greatly improved since the 1970s, on almost any measure. What is undeniable however, if that the extremes have diverged more since then. (Where the gadgets are made is irrelevant, by the way. The point is they are affordable for most people.)

It largely depends on which indicators one looks at, but here's some food for thought: Peter Turchin The End of Prosperity: Why Did Real Wages Stop Growing in the 1970s? - Peter Turchin

As you can see from this graph, there is a steady increase in real wages from 1930 up until about the mid to late 1970s, and then, no more steady growth in real wages.

For most Americans, real wages have barely budged for decades | Pew Research Center

And then, the trade balance:

Source: Historical U.S. Trade Deficits | St. Louis Fed (stlouisfed.org)

In the past few decades, we've seen huge deficits which America hasn't seen since the early 19th century.

And...affordable housing:

These are just a few key data points. There's probably much more to this story, but the main point I was trying to make is that I've been hearing all these economic "experts" and experts from other fields since the Reagan era. But the truth is, the kinds of policies and programs they've advocated for haven't really been the glowing successes that they thought it would be. Supply side economics, the so-called "trickle down" theory? That was put forth by experts, but obviously, not enough trickled down. Free trade, global economy, outsourcing - that's been the main cause of our trade deficit, but now we're learning that there are even deeper consequences as we face supply chain difficulties.

Oh, and I almost forgot about healthcare:

So, I think these experts are going to have to show some dramatic reversals in some of these trends and start producing better results which have a tangible and noticeable impact at street level.

 

[Altfish]

UK news:

Amazing that Truss and Kwartengg! have managed to cause a Sterling crisis within weeks of taking office. All the signs are government bonds will need a far higher rate of interest to get investors to buy them...which means higher interest rates in the UK all round. That will snuff out any hope that companies will borrow to invest, which is what you need to get growth going.

It's in any case a myth that tax cuts, from the modest level they were at, will stimulate growth. Businesses will invest when they see economic stability, so they can calculate a return without needing to add in a risk premium. Nobody in business was saying the key was lower tax. So it's a daft idea. But worse, Truss and Kwartengg! have suggested the Bank of England's mandate may be changed to promote growth (in some nebulous way), Kwartengg! has hinted he will have weekly meetings with the Governor, putting pressure on him, he has sacked the top civil servant in the Treasury, presumably because he was told his ideas won't work, and he has refused to submit his plans to review by the Office of Budget Responsibility, whose very purpose is stop politicians doing reckless things with the public finances. Truss and Kwartengg! have thereby undermined trust that the British government is acting responsibly - and destroyed their own economic credibility overnight.

This goes to show how deep the "We've had enough of experts" infection is within the UK Conservative party. Ever since Brexit, they have chosen to tell one another a series of fantasies about a world of sunlit uplands, when just about all economists agree Brexit (in the form they have chosen to implement it) is making the country poorer. Now, we seem to have entered a period of "Erdogan economics", in which the prime minister follows an eccentric personal ideology at odds with what almost all economists, the civil service professionals - and the financial markets - think. Pointless tax cuts, financed by huge borrowing, the costs of which have just gone up enormously due to their cack-handed management. Groundhog Day: at this rate we'll be on our knees to the IMF for a bail-out before long, just as we were in 1976.

12 -years of Tories, can anyone name one benefit of their time in office?

 

[Flankerl]

I think there are already rumours of an about turn by Kwartangg and Truss and also a vote of no confidence,Truss is about as good as a wet paper bag as a leader.

You won get over it.

 

[England my lionheart]

You won get over it.

Errrm won what?

 

[9-10ths_Penguin]

Britain has countless economic opportunities, trading with the Commonwealth countries, the Commonwealth realms in particular which are incredibly prosperous and rich in resources.
The future is very bright for the British people.

UK trade deals with Commonwealth countries aren't automatic. If the UK pursues them, they should expect the former colonies to bargain for their own advantage.

 

[Estro Felino]

UK trade deals with Commonwealth countries aren't automatic. If the UK pursues them, they should expect the former colonies to bargain for their own advantage.

It's a very delicate time for Europe. I think Britain did very well to exit the EU.

 

[England my lionheart]

It's a very delicate time for Europe. I think Britain did very well to exit the EU.

What impact do you expect from Meloni on Europe?.

 

[Estro Felino]

What impact do you expect from Meloni on Europe?.

She is a souverainist.
Her motto "yes to the nations' sovereignty, no to Brussels bureaucrats",
I guess it suffices.

 

[England my lionheart]

She is a souverainist.
Her motto "yes to the nations' sovereignty, no to Brussels bureaucrats",
I guess it suffices.

The EU certainly has lots of those.

 

[exchemist]

You won get over it.

Very funny. I think Truss has had it already.

It seems this daft notion of creating growth by just cutting tax for the rich has been her big idea for the last decade. And now, within 3 days of launching it, it has been panned by the bond markets and the IMF, with tangible -ve consequences for 60 million British citizens. What on earth she can talk about at next week's Tory party conference I struggle to imagine. It will be fascinating. If she supports the unfunded tax cut strategy, she will tank the pound and gilt yields will shoot up even further.

It comes to quite something when the Chief Economist at UBS describes the Tory Party as resembling a "doomsday cult". Jonestown? These people are not raging lefties, after all: they are bankers and financial traders. It's quite extraordinary.