| The Pound 13:57 - Sep 24 with 98002 views | Stanmiguel |
Well, the money markets didn't like the mini budget.
I met Liz Truss in a hotel in Monmouth a few years ago.
She said her solution to pensioner poverty would be to feed them on Pedigree Chum.
Not only would this save a lot of money, it would give them shiny coats and a nice cold nose. |  | | |  |
| The Pound on 11:37 - Sep 28 with 2623 views | Maggsinho |
The Bank of England has now intervened to try to restore some stability - the sort of thing they had to do after 9/11 or in the crash - except this is for a self inflicted financial disaster.
Referenced 'A material risk to UK financial stability' - apparently they were concerned about pensions making it through this. |  | | |
| The Pound on 11:42 - Sep 28 with 2608 views | JimmyR |
| The Pound on 11:24 - Sep 28 by Rs_Holy |
'Bank of England to buy government bonds to stabilise market' ... Any experts know what this means? Has it happened much before??? |
Yes it means they buy their own bond back from the large institutions that don't want to hold them anymore as the yields have turned negative. Yield & Price move in opposite directions, this increases liquidity so there is more money moving round the economy
It's been happening loads under the label quantitative easing tripped over 1 trillion a few months back - Its part of the reason inflation is so high. Too much cheap money sloshing around. QE was meant to be being scaled back as interest rates are increasing which makes sense
QE squeezes the other end of the balloon to interest rate rises. This is why the markets have had such a sh*t fit. It works at cross purposes & the BOE might stick 1% increase on the base rate followed by another to counteract the fiscal (borrow/spend) announced at this mini budget. Basically the government announced a load of measures that will work against what the BOE's mandate is whilst threatening to remove their independence. BOE has one job (-2% inflation) and one tool to do it (interest rates) [Post edited 28 Sep 2022 11:43]
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| The Pound on 11:42 - Sep 28 with 2601 views | Toast_R |
| The Pound on 11:23 - Sep 28 by Watford_Ranger |
Starmer has dealt with it severely and swiftly to send out a clear messages. When the Tories do similar we have a fortnight of circling the wagons before an embarrassing u-turn. It was a moronic thing to say, not least because it’s allowed right wing noddies to take some of the attention off this barbaric and intentional crashing of the economy by sixth formers masquerading as the latest government. |
I can't understand why she hasn't resigned to be honest. Surely there has to be a zero racism tolerance in the Labour party? |  | | |
| The Pound on 11:44 - Sep 28 with 2592 views | Watford_Ranger |
| The Pound on 11:42 - Sep 28 by Toast_R |
I can't understand why she hasn't resigned to be honest. Surely there has to be a zero racism tolerance in the Labour party? |
She’s had the whip removed. | | | |
| The Pound on 11:45 - Sep 28 with 2574 views | Watford_Ranger |
| The Pound on 11:29 - Sep 28 by SheffieldHoop |
It's pretty evident where Labour stands on it. Unacceptable. Rightly so.
Where does LFW stand on it? Valid comment? Unfortunate? Racist?
Sounds like your primary issue with the comment is that it's given "Right wing noddies" an opportunity to point out the hypocrisy of the left - Not the fact that a Labour MP is going around making racist comments about high-achieving black people. |
I think it was moronic rather than intentionally racist as opposed to the dog-whistling we get from the other side. | | | |
| The Pound on 11:47 - Sep 28 with 2559 views | Rs_Holy |
| The Pound on 11:42 - Sep 28 by JimmyR |
Yes it means they buy their own bond back from the large institutions that don't want to hold them anymore as the yields have turned negative. Yield & Price move in opposite directions, this increases liquidity so there is more money moving round the economy
It's been happening loads under the label quantitative easing tripped over 1 trillion a few months back - Its part of the reason inflation is so high. Too much cheap money sloshing around. QE was meant to be being scaled back as interest rates are increasing which makes sense
QE squeezes the other end of the balloon to interest rate rises. This is why the markets have had such a sh*t fit. It works at cross purposes & the BOE might stick 1% increase on the base rate followed by another to counteract the fiscal (borrow/spend) announced at this mini budget. Basically the government announced a load of measures that will work against what the BOE's mandate is whilst threatening to remove their independence. BOE has one job (-2% inflation) and one tool to do it (interest rates) [Post edited 28 Sep 2022 11:43]
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cheers Jimmy...very well explained |  | | |
| The Pound on 11:57 - Sep 28 with 2513 views | Phildo |
| The Pound on 11:24 - Sep 28 by Rs_Holy |
'Bank of England to buy government bonds to stabilise market' ... Any experts know what this means? Has it happened much before??? |
They are using reserves to try and stabilise the situation. The markets will bet against them. Black Thursday level events incoming. |  | | |
| The Pound on 12:02 - Sep 28 with 2481 views | Northernr |
Thread stays on topic or thread gets locked. |  | | |
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| The Pound on 12:06 - Sep 28 with 2459 views | swisscottage |
| The Pound on 11:57 - Sep 28 by Phildo |
They are using reserves to try and stabilise the situation. The markets will bet against them. Black Thursday level events incoming. |
There's a lot of doom mongering going on, and its a speculators dream/nightmare at the moment depending on whether they get things right or wrong.
However your statement is incomplete. Whilst they are dipping into 100billion of foreign currency reserves, most of this will be supported just by printing money(QE), which in turn will potentially fuel inflation, and has forced to BOE to act contrary to its main remit which is to bring inflation down by selling Gilts to get some of the money back out of circulation. | | | |
| The Pound on 12:07 - Sep 28 with 2461 views | JimmyR |
| The Pound on 11:57 - Sep 28 by Phildo |
They are using reserves to try and stabilise the situation. The markets will bet against them. Black Thursday level events incoming. |
that's unlikely because the banks are far better capitalised now due higher requirements and all this quantitative easing. There is no fix/peg as there was on black monday - assume that's what you meant?
There is no floor to how low the pound can sink. If the Bank of England put interest rates to 10% tomorrow - there would be plenty of demand for pounds | | | |
| The Pound on 12:48 - Sep 28 with 2182 views | Sakura |
| The Pound on 11:30 - Sep 28 by JimmyR |
Are you insane? Gordon Brown was chancellor 15 years ago.
The root cause is a lack of investment, lower productivity and a lack of technological innovation.
We have this current mess directly caused by the current government and you point at gordon brown?!? Keep voting tory mate and they'll have sold the NHS by the time you are old and they won't need to cut your pension as it will be worth f'all in about 5 years given the current current rate of inflation
But yay they've cut stamp duty so your house will be worth more |
Lack of technological innovation… I’m not sure about that one.
But anyway you don’t get to £2.4 trillion in debt overnight
We spent the money on unproductive uses. Gordon Brown borrowed money to pump up the public sector. It was dead money no productive use. But since one persons or in this case governments borrowing is another persons income this leads to increase spending. So other peoples incomes grow and their ability to borrow more grows and the cycle reinforces itself
Things seem rosy in the early days you get growth and everything seems good. Your spending more now than you can afford so in future you must spend less than you can afford. That’s fine if it’s on productive assets but it wasn’t and that spend on unproductive elements has continued since Blair.
You’re kidding yourself if you think it would have been any better with Labour in charge
We wasted the money. £2.4 trillion of debt and what have we got to show for it
Move today on QE in a country of double digit inflation is because the pension system is blowing up. Might not be the cosy retirement some hoped for [Post edited 28 Sep 2022 12:49]
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| The Pound on 12:55 - Sep 28 with 2141 views | BklynRanger |
| The Pound on 12:07 - Sep 28 by JimmyR |
that's unlikely because the banks are far better capitalised now due higher requirements and all this quantitative easing. There is no fix/peg as there was on black monday - assume that's what you meant?
There is no floor to how low the pound can sink. If the Bank of England put interest rates to 10% tomorrow - there would be plenty of demand for pounds |
Could you expand on that last sentence Jimmy, and is there a rate of interest you think were the demand for pounds might start to gather a bit of traction?
(This has actually been quite an educational discussion - obviously there's the odd flare-up of arrogance and obnoxiousness, but in between that quite a good read. ) |  | | |
| The Pound on 13:08 - Sep 28 with 2091 views | JimmyR |
| The Pound on 12:48 - Sep 28 by Sakura |
Lack of technological innovation… I’m not sure about that one.
But anyway you don’t get to £2.4 trillion in debt overnight
We spent the money on unproductive uses. Gordon Brown borrowed money to pump up the public sector. It was dead money no productive use. But since one persons or in this case governments borrowing is another persons income this leads to increase spending. So other peoples incomes grow and their ability to borrow more grows and the cycle reinforces itself
Things seem rosy in the early days you get growth and everything seems good. Your spending more now than you can afford so in future you must spend less than you can afford. That’s fine if it’s on productive assets but it wasn’t and that spend on unproductive elements has continued since Blair.
You’re kidding yourself if you think it would have been any better with Labour in charge
We wasted the money. £2.4 trillion of debt and what have we got to show for it
Move today on QE in a country of double digit inflation is because the pension system is blowing up. Might not be the cosy retirement some hoped for [Post edited 28 Sep 2022 12:49]
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Where have you got this information from? its seems to be a very fixed belief at a fixed point it time. I hope is everything is okay hun?
Some things are more profitable if they are financed through/with debt (education and healthcare excluded). People with lower incomes have a higher marginal propensity to consume.
2.4 trillion is just number that doesn't really mean much without looking at other factors i.e no problem if accompanied by a 10 trillion budget surplus. Also its in Great British Pounds which can only be redeemed via the British Government.
Here's a bit of info on what i'm talking about - I do hope you get your beef with Gordon Brown and 2007 sorted, it's not healthy to fixate single point/time when there are literally hundreds of thousands of variables that go into making up something as complex as the global economy x
https://en.wikipedia.org/wiki/Circular_flow_of_income
https://www.investopedia.com/articles/forex/07/forex_leverage.asp
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Interaction_o [Post edited 28 Sep 2022 13:30]
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| The Pound on 13:27 - Sep 28 with 2026 views | JimmyR |
| The Pound on 12:55 - Sep 28 by BklynRanger |
Could you expand on that last sentence Jimmy, and is there a rate of interest you think were the demand for pounds might start to gather a bit of traction?
(This has actually been quite an educational discussion - obviously there's the odd flare-up of arrogance and obnoxiousness, but in between that quite a good read. ) |
Any increase will increase demand so i suspect he BOE will add 0.75% or 1%, probs before november & then again the following month
It's got more to do with the perception. If you want credibility - you have present a credible plan. Saying we're going to cut all this tax and not reduce spending & balance it in 5 years time simply isn't credible/sustainable. In fact its F'ing ludicrous.
Tax cuts should increase consumption as this extra money get spent on holidays/cars/anything. But because of the uncredible plan put forward the market knows interest rates will have to increase (Quicker & by more in %) or the government will have to borrow more (probably both now) . The increase in borrowing costs the mini budget has created may wipe the benefit in extra consumption from the reduction in taxes. This could cause a big recession and many could have cars/homes repossessed.
Higher interest rates (Risk free rate) cause all assets to be revalued. Assets are generally valued on their future cash flows/economic benefits & a higher rates gives you a lower value today because the risk free rate is used to discount future cash flows back to today. this is why higher rates are bad for economic activity/investment/growth
But it's all relative to say the the USA & the fact pre 2008 interest rates of 5-6% were not doing anyone any harm. It used to be said 3% would be the 'new normal' but that sort of forecasting is incredibly difficult and can be thrown out completely with natural disasters/ politics | | | |
| The Pound on 13:28 - Sep 28 with 2024 views | NorthantsHoop |
There seems to be some major divergence between the Treasury and the Bank of England on how to deal with both the cost of living crisis and the mini budget from Kwasi Kwarteng and it is all being played out in the markets and worse of all causing major instability for the economy and the people of this country. Think we have all known for a long while that keeping very low interest rates is not sustainable to both tackle rising inflation and support a balanced economy, trouble is BoE are now being bounced into a major response to counter the government's ideological belief of growth through top/down wealth creation. This is all not helped domestically by a goverment in turmoil through the partygate crisis, electing a new tory leader and the mourning period for the Queen. The government has been in a state of paralysis for months now. [Post edited 28 Sep 2022 13:30]
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| The Pound on 13:54 - Sep 28 with 1935 views | Sonofpugwash |
Most of the bank shares are severely down today - reminds me of the Lehman Brothers collapse of 2008,even had arch scaremonger Robert Peston up on his hind legs.Frankly all the "experts" and "analysts" they've wheeled out you wouldn't trust to help you across the road.
Rostin Benham who controls silver and gold prices I would love to see melt down into a greasy puddle before our very eyes. |  |
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| The Pound on 14:27 - Sep 28 with 1861 views | JimmyR |
| The Pound on 12:48 - Sep 28 by Sakura |
Lack of technological innovation… I’m not sure about that one.
But anyway you don’t get to £2.4 trillion in debt overnight
We spent the money on unproductive uses. Gordon Brown borrowed money to pump up the public sector. It was dead money no productive use. But since one persons or in this case governments borrowing is another persons income this leads to increase spending. So other peoples incomes grow and their ability to borrow more grows and the cycle reinforces itself
Things seem rosy in the early days you get growth and everything seems good. Your spending more now than you can afford so in future you must spend less than you can afford. That’s fine if it’s on productive assets but it wasn’t and that spend on unproductive elements has continued since Blair.
You’re kidding yourself if you think it would have been any better with Labour in charge
We wasted the money. £2.4 trillion of debt and what have we got to show for it
Move today on QE in a country of double digit inflation is because the pension system is blowing up. Might not be the cosy retirement some hoped for [Post edited 28 Sep 2022 12:49]
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i'd been thinking where could you have possibly got this info from and then i thought probably the daily express, here we are, sure enough, 2nd article down:
https://www.express.co.uk/finance/personalfinance/1675372/Bank-of-England-pensio
Do you get that this is propaganda, like advertising but in reverse?
DB pension schemes are absolutely delighted with higher interest rates as it means they have to take less risk to pay out the same numerical amounts in pounds. Persistent high inflation will be a problem if it lasts for years and years. But the market knows that the BOE will increase rates to curb inflation
The massive fall in the pound reflects this as truss & kweatang say there going to strip if of its independence.
Blaming this on Gordon brown is like saying if QPR lose to Bristol City at the weekend then we should blame Luigi De Canio | | | |
| The Pound on 14:39 - Sep 28 with 1830 views | BrianMcCarthy |
Excellent thread. So much more awareness and understanding of economics on here than in the general citizenry. Every citizen should be able to debate this. I have never understood how Economics and Politics aren't compulsary school subjects. It would surely increase knoweldge and participation. |  |
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| The Pound on 14:42 - Sep 28 with 1812 views | BazzaInTheLoft |
| The Pound on 14:39 - Sep 28 by BrianMcCarthy |
Excellent thread. So much more awareness and understanding of economics on here than in the general citizenry. Every citizen should be able to debate this. I have never understood how Economics and Politics aren't compulsary school subjects. It would surely increase knoweldge and participation. |
https://www.pinterest.co.uk/pin/274015958566067722/ |  | | |
| The Pound on 14:50 - Sep 28 with 1793 views | BucksRanger |
My school offered Economics and Economic History at 'A' level. I took them both. I assume other schools did the same. |  | | |
| The Pound on 15:07 - Sep 28 with 1713 views | SheffieldHoop |
| The Pound on 11:45 - Sep 28 by Watford_Ranger |
I think it was moronic rather than intentionally racist as opposed to the dog-whistling we get from the other side. |
How do you people get through your day while being so dishonest, even to yourselves?
Labour MP says something clearly racist = Misjudged and unfortunate
Conservative MP says something that gets deliberately misinterpreted by people highly attuned to racism = Dog whistling
Perhaps you can give some examples to properly describe what you mean, because from where I'm sitting it just seems like you're deflecting and making excuses. I thought the good Libs of LFW didn't like racists? [Post edited 28 Sep 2022 15:12]
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| "Someone despises me. That's their problem." Marcus Aurelius |
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| The Pound on 15:09 - Sep 28 with 1725 views | plasmahoop |
| The Pound on 14:27 - Sep 28 by JimmyR |
i'd been thinking where could you have possibly got this info from and then i thought probably the daily express, here we are, sure enough, 2nd article down:
https://www.express.co.uk/finance/personalfinance/1675372/Bank-of-England-pensio
Do you get that this is propaganda, like advertising but in reverse?
DB pension schemes are absolutely delighted with higher interest rates as it means they have to take less risk to pay out the same numerical amounts in pounds. Persistent high inflation will be a problem if it lasts for years and years. But the market knows that the BOE will increase rates to curb inflation
The massive fall in the pound reflects this as truss & kweatang say there going to strip if of its independence.
Blaming this on Gordon brown is like saying if QPR lose to Bristol City at the weekend then we should blame Luigi De Canio |
Gordon brown played his part by borrowing unnecessarily in the good times. Then when the 2008 crisis hit he had no headroom. When they left office, the deficit for 2010 was 178 billion. After some progress from Cameron and osborne, Johnson and now even more spectacularly kwarteng and truss have done even more damage.
I would say Gordon brown is more like our mark Hughes. His impact is still felt | | | |
| The Pound on 15:11 - Sep 28 with 1712 views | Sonofpugwash |
| The Pound on 14:50 - Sep 28 by BucksRanger |
My school offered Economics and Economic History at 'A' level. I took them both. I assume other schools did the same. |
Yes,got both of those.Fat lot of good they did - still skint. | |
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| The Pound on 15:17 - Sep 28 with 1693 views | BrianMcCarthy |
| The Pound on 14:50 - Sep 28 by BucksRanger |
My school offered Economics and Economic History at 'A' level. I took them both. I assume other schools did the same. |
I did Economics A Level. Loved it, but it was like a morgue in there.
Would love it to be compulsory. | |
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| The Pound on 15:32 - Sep 28 with 1648 views | Phildo |
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