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

Lots of people making out like bandits from Truss’ tax cuts will also have made out like bandits from shorting the pound. There are always opportunities, when one kind of awfulness makes way for another ( where *was* Ponty?) The question is what happens next. This *might* be the big one: one last orgy of asset stripping before they torch the place for the insurance and run for the escape pods. But I’ve been thinking that since 2010. Things just grind on, more shit, sometimes different kinds of shit, but grinding on. We’ll see.
I’ve been reading quite a bit about The East India Company recently and can’t help drawing parallels between the orgy of asset stripping by a private company in 18th century India that left the place devastated and required government bailouts, and the increasing asset stripping that seem to have unlimited potential with Charter Cities in the UK today.

It seems that this sort of shit has a long history, and although punctured by periods of more progressive ideas, we do keep returning to the shit.
 
Does this to any degree show how markets would be likely to react if a government deployed MMT-style spending plans? I know that’s a common criticism of MMT, and, governments bring governments, any application would be likely to be half-arsed (the spending without the job guarantee side, most likely), so perhaps what we’re seeing here is the likely outcome of markets spooked by what would be perceived as unwise profligacy?

I don’t think so. To my eyes this budget is entirely irresponsible as it is borrowing to fund tax cuts for the most wealthy in the blind hope some investment follows. MMT (or any other rational borrowing) would be for state infrastructure investment and the employment it would create, e.g. transport, health, power provision, education etc. Government spending where a long-term economic benefit could be predicted over a given timeframe. The Kwateng budget is pretty much the equivalent of buying a shit-ton of lottery tickets and hoping some numbers come up. It is entirely reckless. Entirely unpredictable. It is the most desperate last-ditch attempt by a government that refuses to accept their Brexit has destroyed the UK economy.
 
I was trying to imagine a world where Labour came to the HoC with an un-costed give away budget, with not even the suggestion of an independently verified set of assumptions or any details of it's basis and the reactions being "how brave" (Express), or "at last a proper budget" (Mail) - as it is in these Tory rags this morning.

What a sick joke it is. Well Red Wall voters, enjoy your "levelling up".
 
Does this to any degree show how markets would be likely to react if a government deployed MMT-style spending plans? I know that’s a common criticism of MMT, and, governments bring governments, any application would be likely to be half-arsed (the spending without the job guarantee side, most likely), so perhaps what we’re seeing here is the likely outcome of markets spooked by what would be perceived as unwise profligacy?

The irony of the right wing attacks on MMT is that they say that lots of government spending on things like the NHS, giving a job to everyone who wants one, and spending money on tackling climate change, will cause economic disaster. Yet when it comes to government spending going to the already rich - who will take that money out of the productive economy and put it into private savings, usually off-shore - that is a good thing. Even when, as has been amply demonstrated by the fall of the £, it is a very bad thing.

It is not the extra spending itself that is the problem. The problem is that it is targeted at the rich who will take money out of the productive economy that speculators have rightly identified as likely to weaken the economy.

If spending was aimed at the public end of the economy, it would benefit those people who would be more likely to spend that money back into the economy, rather than private savings, it would improve health, education, care and the sustainability of the planet, and therefore stimulate the economy.
 
But the market reaction and the plunge in the pound in reaction to a budget (and a mini one, at that) is seemingly unprecedented. Experienced financial commentators saying they've never seen anything like it. A mini budget became a self-inflicted financial crisis.

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What @Seanm said, basically. Markets are gonna market. An adverse market reaction is not in itself evidence of poor economic policy. Two recent examples...

Firstly, the fear of an adverse market reaction (along with with the loss of AAA credit rating) was used to motivate austerity, one of the most disastrous economic decisions ever taken in the UK (of course, it was really a political decision). Looking back, I'd take the adverse reaction of the markets and use economic policy to help people in need.

Secondly, the markets would probably have reacted badly to a John McDonnell budget that promised huge investment in infrastructure and a green new deal, even though those policies are exactly what the UK needs (other opinions available).

As for the mini-budget itself, the Torsten Bell thread Sean linked to is useful. From the point of view of the average voter, it offers a lot of help with fuel bills, and tax/NI cuts to further sweeten the deal. I don't see how this can be unpopular, and I doubt that people will care much about how the market reacts, or how the whole thing is "paid for".

Bell also makes clear that Kwarteng hasn't abandoned Treasury orthodoxy and commits to reducing debt as a proportion of GDP in the medium term. There is also a commitment to publish an OBR forecast by the end of the year. Bell sees both of these as good things but I'm not so sure - I mean, it's not as if Treasury orthodoxy has brought the UK to a good place economically, so far, is it?

I think the mini-budget is also correct to identify poor growth as a key issue but the easiest fix for that is to put money in the pockets of people who are not well off, not those who are already wealthy. Thus, the abolition of the top rate of tax is, by far, the worst aspect of the budget, as far as I'm concerned. It's hard to see it as anything other than a naked expression of class loyalty.

Overall, a curate's egg, but it's not as if Labour are offering anything better so... shrugs.
 
I was trying to imagine a world where Labour came to the HoC with an un-costed give away budget, with not even the suggestion of an independently verified set of assumptions or any details of it's basis and the reactions being "how brave" (Express), or "at last a proper budget" (Mail) - as it is in these Tory rags this morning.

What a sick joke it is. Well Red Wall voters, enjoy your "levelling up".
It’s also quite revolting reading the Twitter comments from Tory apologists complaining about ‘redistributive budgets’ in the past. This is the grand daddy of redistributive budgets- upwards.
 
And when the government announces in a few months that the suddenly much higher cost of borrowing means they have no choice but to slash public services?
Well, they've gotten away with that so far, haven't they? Standard tactic is to blame local councils. Maybe the Tories are running out of road though... we'll see.
 
And when the government announces in a few months that the suddenly much higher cost of borrowing means they have no choice but to slash public services?
…as sure as night follows day. Need a hip replacement?- start a Just Giving page and fly to Lithuania to get it done.
 
And when the government announces in a few months that the suddenly much higher cost of borrowing means they have no choice but to slash public services?
If we still believe the Tory argument that increased government spending has to be ‘paid for’ by cuts to public services (or tax increases), then the Tories will get away with it yet again.
 
RSPB England.
Make no mistake, we are angry. This Government has today launched an attack on nature. We don’t use the words that follow lightly. We are entering uncharted territory. Please read this thread.


https://twitter.com/RSPBEngland/status/1573366815568580613


The list of UK Cabinet Committees was updated yesterday on the QT, and the National Science and Technology Council is no longer on it… There's now only 6 committees from 20 so they don't want to discuss very much in any detail...
 
Although it is if the same policy has been tried before and always failed.
I'm not sure I follow the logic.

Don't get me wrong, I think the mini-budget will, at best, deliver anaemic growth because it gives money to the wrong people.

Still, I don't think the reaction of the market should be taken as decisive, and grounded in a rational appraisal of the real value of a policy.
 
I agree, but it does mean you’re swimming against the tide, somewhat, which makes failure (or at least, diminished success) more likely.
 
The collapse in the pound has already led to a £6 / tank increase in petrol costs - it's easy to see the inflationary pressure the budget has brought
 
Although it is if the same policy has been tried before and always failed.
Failed for who, though, and compared to what? And what policy? They can hedge and fudge to the point that the headline policy becomes almost meaningless. And the thing grinds on.
 
Feels like we've had a coup d'etat by a cabal of rabid Tory lobbyists and the Conservative party membership. Kamikaze economics during a global recession....All in plain sight. Just imagine if they'd funded the energy price crisis with nationalisation or windfall tax and borrowed the same amounts of money to invest in energy efficiency measures, house building and real levelling up. Cnuts.
 


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