Current Affairs

[Stephen]

It will be very difficult for many ordinary people to find several hundred pounds more each month.

Been there, done it, got the tee shirt(s).

Like others on here I remember well the time when interest rates were going up almost every day - we coped and survived. Some of these folk will have to do what we had to do and cut back on things that are not essential - iPhones, Netflix, etc.

[Kendhni]

It will be very difficult for many ordinary people to find several hundred pounds more each month.

Been there, done it, got the tee shirt(s).

Like others on here I remember well the time when interest rates were going up almost every day - we coped and survived. Some of these folk will have to do what we had to do and cut back on things that are not essential - iPhones, Netflix, etc.

I remember paying 14.5% interest and really having to pull in the purse strings to reach the next pay packet.
So it irks me when politicians on the radio yesterday were tripping over each other trying to champion the cause for those that are likely to feel hardship ... demanding funds be set up and increases in benefits ... we got no help beyond our own cutting back on expenditure. Maybe a bit of tough love would be good for society right across the board from the young to the elderly.

[Mervyn and Trish]

I agree about the Euro.

The headline news is always about the Dollar exchange rate, which I suppose is fair because so many international commodities are priced in Dollars. And in large part the current issue is caused by the strength of the Dollar as opposed to the weakness of the Pound.

Also we must remember the currency fluctuations are heavily influenced by gamblers on the markets making money. They only sell one currency planning to buy it back cheaper later. They are guessing about the future and often get it wrong.

So our government have to do what they think is right for the country, not to second guess the gamblers. I'm not an expert so I have no idea if they have it right.

Finally when talking about the Dollar never forget the financial crisis started in the US with banks there handing out Monopoly money like sweeties..

[Kendhni]

"Clueless amateurs doing stupid things" - Prof Blanchflower's assessment of the current governments mini budget.
An extraordinary intervention by the IMF stating the government needs to 're-evaluate' (shouldn't be a big issue since Truss, and the conservative party, are no strangers to embarrassing u-turns)
Poor performance in yesterdays bond auction ... so interest on government borrowing will rise.
A PM and cabinet that is too cowardly to give interviews to the media (that used to be Johnson's trick ... when the going gets tough, go into hiding).

Kwarteng needs to make his speech this week on how he is going to fund his budget that hands tens of thousands to millionaires and pence to the poorest ... and justify why he thinks the poorest are only fit to feed from the crumbs falling from the table of the richest. If that does not happen they are likely to have to face the additional embarrassment of the BoE stepping in again, within the next few days, with another interest rate rise.

[Gill W]

I was just watching the Armageddon news on BBC, with its dire warnings about the state of the UK economy and the weakness of the £ to the $, and I agree it is concerning.
So I just checked our status against the euro and find that sterling's current level is exactly the same as it was 5 years ago. But there was no mention on the news that the eurozone is in a very similar economic position to the UK, although the current ECB interest rate is 1.25%, as compared to out 2.25%.
Fortunately Liz does not need to call an election until January 2025, so there is time for the current lemming like rush towards the cliff edge to peeter out.

I’m not sure that’s the big win that you think it is. If you go back 7 years, the exchange rate was much higher against the Euro. It’s almost as if something happened in 2016 to cause the pound to slump against the Euro

[Gill W]

So our government have to do what they think is right for the country, not to second guess the gamblers. I'm not an expert so I have no idea if they have it right.

KamiKwasi has openly admitted to gambling on the country’s future, according to the recent headline, when he said he was ‘betting big’.

I prefer the old style chancellors who used words like ‘prudence’

[Manoverboard]

... but then sold off the gold reserves

[david63]

I cannot believe this:

• Head of Treasury sacked because he wanted to "balance the books".
• IMF issue warning.
• OBR not allowed to report on the "mini budget".
• Pound dropping like a lead balloon.
• Stock markets falling..
• BOE threatening to increase interest rates, not only in the normal course but sooner.
• Every economic think tank saying it is wrong.

and the Government saying all is well - I know which side my money [sic] is on.

It will be interesting in a few years time when the Cabinet minutes are released for the last 10 years to see which way Truss voted in the past. If she voted against all the economic policies that she has overturned then how did she manage to stay in the Cabinet so long - and if she voted in favour of the economic policies what has suddenly changed?

[Kendhni]

I’m not sure that’s the big win that you think it is. If you go back 7 years, the exchange rate was much higher against the Euro.

Which is exactly where it was tracking prior to the financial crisis after which the Euro almost reached parity with the pound before the coalition government brought it back down to 2007 levels.

It’s almost as if something happened in 2016 to cause the pound to slump against the Euro

[Kendhni]

It will be interesting in a few years time when the Cabinet minutes are released for the last 10 years to see which way Truss voted in the past. If she voted against all the economic policies that she has overturned then how did she manage to stay in the Cabinet so long - and if she voted in favour of the economic policies what has suddenly changed?

Going on her past record, I fully expect that if/when Labour takes over from the conservatives, Truss will immediately become left leaning again, change allegiance to the labour party with a view to taking over from Starmer.

[Mervyn and Trish]

... but then sold off the gold reserves

And raided pension funds to prop up his spending, which new retirees are still paying for today.

He also said no more boom and bust....... and then look what his government achieved!

[david63]

An amusing comment I read the other day about Truss "she would be out of her depth in a puddle!" - unfortunately it would only be amusing if it were not true.

[Kendhni]

An amusing comment I read the other day about Truss "she would be out of her depth in a puddle!" - unfortunately it would only be amusing if it were not true.

I have said from the beginning that history shows that she has been an underachiever and underdeliverer but she had a common trait with Johnson, always first in line to take credit for other peoples work. She also has a history of putting her mouth in gear before ascertaining reality.

I was/still am hoping that there is some logic behind what she is doing and she can deliver her objectives ... still a wait and see game.

I laughed at Lord Hannan's comment “What we have seen since Friday is partly a market adjustment to the increased probability that Sir Keir Starmer will win in 2024 or 2025 – leading to higher taxes, higher spending, and a weaker economy.” ... seriously is the man really that delusional?

[Gill W]

An amusing comment I read the other day about Truss "she would be out of her depth in a puddle!" - unfortunately it would only be amusing if it were not true.

I said the same on this very forum on 21st July. But I didn’t think things would get so bad so quickly.

I see that the Bank of England have now stepped in to try and steady the government created crisis. Truss seems to have disappeared off the face of the earth.

[Kendhni]

I see that the Bank of England have now stepped in to try and steady the government created crisis. Truss seems to have disappeared off the face of the earth.

The fact that she, her chancellor and rest of the cabinet have been noticeable by their absence pushes the bounds of incredulity.

[Bensham33]

Politicians of the past must be turning in their graves when they see what this lot are doing to our once great country. Where's all the talent gone? We once had great leaders Churchill, Thatcher, Blair. Now we have Muppets in charge compared to them. Where's it all going to end? I despair.

[towny44]

Politicians of the past must be turning in their graves when they see what this lot are doing to our once great country. Where's all the talent gone? We once had great leaders Churchill, Thatcher, Blair. Now we have Muppets in charge compared to them. Where's it all going to end? I despair.

Probably with a woodentop if Labour are elected

[Onelife]

While I apricate I’m probably in a better position than those more vulnerable to this economic/global downturn but I do think the governments long term strategy is the right way forward, that being said I do think all this market hysteria could have been avoided if the Government had staggered its tax cutting policies to that which the markets could have digested and adjusted over a longer period.

Far too much Squeak Squeaking going on at the moment.

Kier’s, father Christmas policies will have needed the same amount of borrowing as Kwarteng’s will cost (according to what I have read) it’s just that Keir gets Diana Abbott to do the wrapping and Angela Raynor to tell us how good they are.

[Mervyn and Trish]

I'm inclined to agree. I'm uneasy about some aspects of the policies but only time will tell.

It does irritate me when left wingers talk about the Tory Magic Money Tree, which they've only wheeled out in response to two major international crises - Covid and rapidly rising energy prices as a result of the Russian invasion.

They assume that we've forgotten Labour invented it and were ready to rattle it when there was neither crisis and times were relatively good.

They also hope we forget that Blair was a liar who dragged us into an illegal and damaging war.

One plus is that Sir Hindsight is now being forced to come up with some actual policies now that "I'm not Boris" doesn't hack it.

Another is that while I don't agree with everything said on this thread, at least we are now discussing policies and have moved on from cakes and parties.

[Kendhni]

While I apricate I’m probably in a better position than those more vulnerable to this economic/global downturn but I do think the governments long term strategy is the right way forward, that being said I do think all this market hysteria could have been avoided if the Government had staggered its tax cutting policies to that which the markets could have digested and adjusted over a longer period.

Quite possibly the right policies at the wrong time. I would have limited it to cost of living easing measures, along with a reversal of the flawed tax rise on workers (national insurance), and maybe hinted towards bringing forward the 1% tax cut Sunak announced earlier in the year (while leaving the decision until late). Give aways to the wealthy in relation to corporation tax, stamp duty, top level tax, banker bonuses etc. could have waited until the country could afford them.

The problem is that during the hustings Truss was running around the country telling everybody they could have what they asked for (this was pointed out on several occasions with people wondering how she was going to pay for her promises) ... she appears to have given no consideration towards balancing the books. So I am guessing she now has a lot of very very wealthy people with high expectations.

I don't think it is "market hysteria" ... it is plain and simple disrespect for the market (whether that was out of arrogance, incompetence or ignorance, I am not sure) ... this is the same market that the government comes to when it needs to raise money and provide the funds for its policies. The last few years of toryism had already quadrupled our interest payments on lending (the borrowing for brexit, covid and energy has been significant, along with a tory led country spending beyond its means and tax revenues) ... the amateurish behaviour of the last few days has put the cost of that borrowing up even more, requiring the BoE to intervene (costing even more).

[Onelife]

I take onboard what you are saying Ken which is why it matters not which side of the fence you sit on because it is clear that something had to be done…. it takes a strong leader and an innovative chancellor to break with an economic landscape that has seen this country stagnate through fear of taking a different path, a path which I hope will reap great benefits for the future of our country.

However, I do accept for the first time in my life I could be wrong about this …However, as Sir Merv has said. "Time will tell", but give it time we must… Imo

[oldbluefox]

I'm sitting on the 'time will tell' fence largely because I'm neither a politician nor an economist. I was rather surprised the chancellor did not bring down VAT which would have eased the cost of living, probably more than 1% off income tax which, to my mind, is neither here nor there and would have no impact on those who are 'vulnerable' (hate that word because it includes the feckless and ne'er do wells who have never done a day's work in their lives) but would/should certainly bring shopping bills down. I can understand why Truss wants to encourage investment by offering incentives to the money men but unless that trickles down outside London and to the man in the street it will not be popular.

I was listening to the radio at lunchtime and it seems economists can't agree amongst themselves whether these moves will produce the desired effect so what chance do I have? Arguments for and against are equally plausible. Time will tell who is right.

Things at the moment look pretty rocky for the Tories. Luckily for them the alternatives look worse and I hear tell the Labour Party have been considering a Lib/Lab pact. Are they really that desperate and so uncertain they can't overhaul a Tory government going through a bad patch?

[oldbluefox]

Meanwhile I detect a certain amount of hysteria amongst our media friends. Don't they just love to wind everybody up into a frenzy with their tales of doom and gloom? "Interest rates could go up as far as....." "The cost of living now stands at....and could go up as far as......"

I'm old enough to have seen financial crises many times over and never remember the cloud of despair which the media are creating. We just tightened our belts and got on with it. Low interest rates have not helped those who have stretched their borrowing leaving no wriggle room. Meanwhile those who have saved have seen little return so to some extent I can understand those who have spent to the limit since there was little incentive to save - good news for Sky Sports, Netflix, Spotify and all of the other media streaming services as well as tattoo parlours, nail bars, vaping outlets, beauty salons, fancy phone contracts etc. One lady was bemoaning the fact she could no longer afford frozen chips!!!
Time to reappraise our priorities and live within our means. Excuse me whilst I go and fill the hot water bottle.

[Gill W]

I take onboard what you are saying Ken which is why it matters not which side of the fence you sit on because it is clear that something had to be done…. it takes a strong leader and an innovative chancellor to break with an economic landscape that has seen this country stagnate through fear of taking a different path, a path which I hope will reap great benefits for the future of our country.

However, I do accept for the first time in my life I could be wrong about this …However, as Sir Merv has said. "Time will tell", but give it time we must… Imo

I think you may be wrong on this occasion, Keith.

Amongst other things it appears that the government action started a Northern Rock style run on pension funds.

Which is why the Bank of England had to step in this morning

https://news.sky.com/story/pound-slumps ... eblog-body

This is being reported elsewhere too, and the BofE don't just step in for any old reason.

Let's hope the Bof E stopped the rot, as we on this forum would be stuffed if pension funds fail.

Things at the moment look pretty rocky for the Tories. Luckily for them the alternatives look worse and I hear tell the Labour Party have been considering a Lib/Lab pact. Are they really that desperate and so uncertain they can't overhaul a Tory government going through a bad patch?

A bad patch - that's one way of putting it!

However, at this point, I genuinely don't know how anybody could think that the alternatives are worse than what we are currently experiencing.

The government have managed to melt down the economy and have now gone into hiding. They are not leading or governing. How much worse does it need to get?

I'm old enough to have seen financial crises many times over

However, the UK Government have previously not created the crisis!

[oldbluefox]

However, the UK Government have previously not created the crisis!

Perhaps you have forgotten the war in Ukraine, the pressure put on oil and gas supplies as a consequence of Putin's actions, the strength of the dollar against the pound and the Euro which are factors the current UK Government are having to deal with.