Re: UK News and Discussions
Posted: Thu Sep 29, 2022 1:41 pm
This is Truss and Kwarteng’s crisis, not yours – but you’re already a lot poorer because of them
In 25 years of reporting, I have never seen a financial crisis so utterly avoidable, and dragging so much human misery in tow
Wed 28 Sep 2022 18.25 BST
British politics is being reshaped this week – but not because of Keir Starmer. After only 22 days as prime minister, Liz Truss is already facing her demise. Party conferences, those jamborees of suited choreography and confected excitement, look utterly irrelevant beside the financial meltdown engulfing the country. Yet politics and finance are, in this moment, deeply bound up with each other. This crisis was largely manufactured by our failing political class and it will now determine their terms of trade. For the rest of us, the result threatens to be austerity 3.0: the third big wave of spending cuts to follow the third crisis in the last 12 years, with even more social wreckage and human misery in tow.
I covered my first financial crisis 25 years ago, in 1997, and I have never before seen one so entirely avoidable as this is. It began with the Tory leadership election in the summer, when Liz Truss promised tax cuts of £30bn in order to win the keys to No 10. It picked up last Friday, as Kwasi Kwarteng unveiled his “plan for growth”, which turned out to be a further £15bn of handouts – and mainly to people who didn’t need them.
It wasn’t just bad economics, it was bad faith. And when it bombed in the next day’s papers, the chancellor promised yet more tax cuts. This was on top of the emergency support on energy bills, costing £60bn for just this winter. The difference being that the energy package was essential and temporary, while these permanent tax cuts were supposed to buy voters and influence party donors.
What was intended as mere bribery has turned out to be a gigantic financial bomb. The pound dived so far that it won a new name: shitcoin. (One wag mused on Reddit: “Apparently britbongs use it to purchase crumpets and tea, but other than that doesn’t have any usage.”) Lending rates in the markets soared, so Halifax and other big mortgage firms had to pull some of their products. The Bank of England essentially lost control over interest rates, while pension funds and other investors began scrabbling around for cash. Finally, today, the Bank started buying government bonds in a bid to quell panic.
A week is a long time in financial wreckage. Thanks to Kwarteng and Truss, you have just got a lot poorer. If you’re a homeowner on a standard variable mortgage or looking to renew, your bills have spiralled. If you have a money-purchase pension or a nest-egg Isa, you probably don’t want to check your balance. Prices for pretty much anything from overseas – from food to T-shirts to cars – have just gone up.
Institutionally, the Treasury’s credibility has been ruined and the Bank of England’s monetary policy destroyed.
Read more: https://www.theguardian.com/commentisfr ... sis-poorer
In 25 years of reporting, I have never seen a financial crisis so utterly avoidable, and dragging so much human misery in tow
Wed 28 Sep 2022 18.25 BST
British politics is being reshaped this week – but not because of Keir Starmer. After only 22 days as prime minister, Liz Truss is already facing her demise. Party conferences, those jamborees of suited choreography and confected excitement, look utterly irrelevant beside the financial meltdown engulfing the country. Yet politics and finance are, in this moment, deeply bound up with each other. This crisis was largely manufactured by our failing political class and it will now determine their terms of trade. For the rest of us, the result threatens to be austerity 3.0: the third big wave of spending cuts to follow the third crisis in the last 12 years, with even more social wreckage and human misery in tow.
I covered my first financial crisis 25 years ago, in 1997, and I have never before seen one so entirely avoidable as this is. It began with the Tory leadership election in the summer, when Liz Truss promised tax cuts of £30bn in order to win the keys to No 10. It picked up last Friday, as Kwasi Kwarteng unveiled his “plan for growth”, which turned out to be a further £15bn of handouts – and mainly to people who didn’t need them.
It wasn’t just bad economics, it was bad faith. And when it bombed in the next day’s papers, the chancellor promised yet more tax cuts. This was on top of the emergency support on energy bills, costing £60bn for just this winter. The difference being that the energy package was essential and temporary, while these permanent tax cuts were supposed to buy voters and influence party donors.
What was intended as mere bribery has turned out to be a gigantic financial bomb. The pound dived so far that it won a new name: shitcoin. (One wag mused on Reddit: “Apparently britbongs use it to purchase crumpets and tea, but other than that doesn’t have any usage.”) Lending rates in the markets soared, so Halifax and other big mortgage firms had to pull some of their products. The Bank of England essentially lost control over interest rates, while pension funds and other investors began scrabbling around for cash. Finally, today, the Bank started buying government bonds in a bid to quell panic.
A week is a long time in financial wreckage. Thanks to Kwarteng and Truss, you have just got a lot poorer. If you’re a homeowner on a standard variable mortgage or looking to renew, your bills have spiralled. If you have a money-purchase pension or a nest-egg Isa, you probably don’t want to check your balance. Prices for pretty much anything from overseas – from food to T-shirts to cars – have just gone up.
Institutionally, the Treasury’s credibility has been ruined and the Bank of England’s monetary policy destroyed.
Read more: https://www.theguardian.com/commentisfr ... sis-poorer
