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The Premiership of Mary Elizabeth Truss.Sept 2022 - Oct 2022

Tony L said:
You’ve got to feel for the guy though. He co-authored a book espousing a new economic theory and has been dining out on it ever since, only to find it was total currency-collapsing arse-gravy within seventeen seconds of actually implementing it. That would drive anyone to cocaine.

PS I suspect Graham Brady is far from being without letters.
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Apparently he’s had a few already. Letters I mean.
 
mandryka said:
At the moment he’s saying « Trust me, we’ll grow big time, now lend us lots of money to make it happen. » But no one’s going to trust that! He’s got to say how he expects the growth to happen and when and how and why, and with a bit of detail, not just saying « we’ll cut taxes » and waving his arms. People need numbers and a plausible story backing up the numbers, a spreadsheet and notes, or it all looks half baked and very risky.

He’s saying that he’ll publish his plan Nov 23 - but my question is, why? Why not put an end to this kerfuffle and publish the plan now, so everyone can say « jolly good, we see you know what you’re doing, we’re on side. »

Imagine going to the bank and saying « lend me £10M so we can grow »and the bank say « excellent, how are you going to spend it and when can I expect to get it back? » and you say « well we’ll make lots of sales! And you can have it back soon. That’s the plan, to make lots of sales by hiring salesmen and an ad agency and selling.»

You’d be given the bums rush!
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I think there probably is a plan but it's sketchy, politically very highly charged, and will contradict not only Treasury orthodoxy but mainstream economic expertise. There's little upside in announcing stuff like that, especially now, having thrown a couple of hand grenades into the media/markets already: few people are going to be reassured.

My sketchy sense of what "the plan" might be for growth is based almost entirely on this Spectator article, which I've linked to before: despite the publication and the author it really is very helpful:

https://www.spectator.co.uk/article/trussonomics-a-beginners-guide

I'd say the plan involves, broadly, conventional supply side tax cuts to get everybody working hard; increased interest rates to encourage productivity; greater openness to the use of fiscal policy, including industrial strategies, and of course deregulation - specifically in data, biotech, care - and housebuilding. Oh, and NHS privatisation!

Now, some of that looks economically illiterate to me, from the little I know (deregulating childcare is not going to make it more productive), and politically difficult relative to the potential gains (data, NHS). The one exception as far as I can see is housebuilding. If they can actually get a programme of housebuilding going, at the same time as bringing prices down through increased interest rates, then that is potentially a very politically popular thing, and it seems reasonable to believe it could boost the economy in various ways, direct and indirect.
 
mandryka said:
@droodzilla will know much more about this than me, but I picked up somewhere that Plato, after he wrote the Republic, was invited by the King of Sardinia (maybe) to run the country according to his deeply intelligent ideas. The result was a TOTAL UNMITIGATED DISASTER.
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I think you might mean Dionysius I of Syracuse who ran a venal and corrupt regime based on lavish hedonism and greed. If you’re looking for parallels with modern politics it would be with the corruption and the greed rather that the Philosopher.

Kwarteng might be intelligent, but he is operating a system of corruption and greed and working from an economic ideology that is wholly immoral. Plato was driven by his philosophy, Kwarteng by a corrupt ideology
 
Simply massive YouGov poll lead for Labour (Twitter). All it took was for the Tories to totally destroy our currency and gilt markets. Who knew?!
 
Seanm said:
I think there probably is a plan but it's sketchy, politically very highly charged, and will contradict not only Treasury orthodoxy but mainstream economic expertise. There's little upside in announcing stuff like that, especially now, having thrown a couple of hand grenades into the media/markets already: few people are going to be reassured.

My sketchy sense of what "the plan" might be for growth is based almost entirely on this Spectator article, which I've linked to before: despite the publication and the author it really is very helpful:

https://www.spectator.co.uk/article/trussonomics-a-beginners-guide

I'd say the plan involves, broadly, conventional supply side tax cuts to get everybody working hard; increased interest rates to encourage productivity; greater openness to the use of fiscal policy, including industrial strategies, and of course deregulation - specifically in data, biotech, care - and housebuilding. Oh, and NHS privatisation!

Now, some of that looks economically illiterate to me, from the little I know (deregulating childcare is not going to make it more productive), and politically difficult relative to the potential gains (data, NHS). The one exception as far as I can see is housebuilding. If they can actually get a programme of housebuilding going, at the same time as bringing prices down through increased interest rates, then that is potentially a very politically popular thing, and it seems reasonable to believe it could boost the economy in various ways, direct and indirect.
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Yes I remember reading that when you posted it.

There has to be more planning than that for this reason: they have been specific about what they want to achieve. They've said 2.5% growth p.a. They've said that they can start to pay off the debt in three years. Truss has asserted that she can do this and make £30 billion of tax cuts. That sounds to me like a quantitative plan.

By the way, in writing this post I've noticed that Truss had been talking about £30bn of cuts and in the event it turned out to be £45bn. Is this market reaction about the excess £15bn?

And my question remains -- why don't they share the logic which leads them to these figures? Why this brinkmanship?

And another thing, the BOE doesn't seem spooked by today's events. And neither does Kwartung. Why not?
 
Tony L said:
Simply massive YouGov poll lead for Labour (Twitter). All it took was for the Tories to totally destroy our currency and guilt markets. Who knew?!
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I remember when CMD was viewed as a vacuous spiv and we all complained (while Mick still had the brass neck to defend them). Then we had Teresa the Human Swastika with letters falling off the stand and rendered silent by a coughing fit from god. Finally we thought Boris— the outright criminal who could make ladies in Clacton and the Red Wall laugh. Who could have imagined Liz and Kwarteng? Finally ****ing the economy then blowing up N.Ireland
 
mandryka said:
Good question. Answers please.
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It's currently down 21% from the beginning of the year, so it depends what you want it for. Whilst the dollar is so strong it doesn't make much sense to be in anything but dollars, whether it be gold, stocks or crypto.
 
matt j said:
It's currently down 21% from the beginning of the year, so it depends what you want it for. Whilst the dollar is so strong it doesn't make much sense to be in anything but dollars, whether it be gold, stocks or crypto.
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Sounds good to me actually, I want it as a long term investment. Years.
 
mandryka said:
Yes I remember reading that when you posted it.

There has to be more planning than that for this reason: they have been specific about what they want to achieve. They've said 2.5% growth p.a. They've said that they can start to pay off the debt in three years. Truss has asserted that she can do this and make £30 billion of tax cuts. That sounds to me like a quantitative plan.

By the way, in writing this post I've noticed that Truss had been talking about £30bn of cuts and in the event it turned out to be £45bn. Is this market reaction about the excess £15bn?

And my question remains -- why don't they share the logic which leads them to these figures? Why this brinkmanship?

And another thing, the BOE doesn't seem spooked by today's events. And neither does Kwartung. Why not?
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Well sure, they’re bound to have a few specific things in mind. They trailed some stuff this evening, pretty much in line with the Spectator article. I don’t see anything remarkable about the timing: now, later, what odds. As I say, if it were me I’d leave it a bit: give people some time to come to terms with Friday, take some time to manufacture a bit of consent, and wait for the media’s natural instinct to accommodate Tory radicalism to kick in. By November there’s a good chance that whatever they announced will have organically shifted from “completely unhinged” to “daring” without any mainstream journalists ever taking the trouble to understand or explain what’s actually going on.
 
matt j said:
You'll need many years I suspect, in which case go for it!

It's currently the same price as it was in 2011.
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If you price it in USD. Rather different priced in sterling. Which I guess is sort of the point - what to do with sterling if you suspect it's likely to rapidly depreciate in value.

I don't think anyone is expecting to see crypto-style 10,000% returns with any conventional asset class. Best you can hope for is probably a bit of wealth preservation over the long term.

Asset class most likely to achieve that? No idea. Answers on a postcard please.
 
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