10 ms·

3 months into financial tightening and pension funds already facing margin calls. Very promising.

by seper8 4y ago

vasco 4y ago
This winter is going to be interesting.
isthisthingon99 4y ago
If you know the bigger your failure, the quicker you can get bailed out and if you are successful, you get to keep most of the profits, you will do whatever and never hedge properly or take losses on the books. This is the current system with central banks.
NovemberWhiskey 4y ago
What is going on in the UK is not, in any imaginable sense of the expression, "financial tightening": the "mini-budget" that prompted the response from the market is a $161bn tax-cut and spending plan funded by government borrowing. https://en.wikipedia.org/wiki/September_2022_United_Kingdom_mini-budget https://en.wikipedia.org/wiki/September_2022_United_Kingdom_...
- pooper 4y ago
  » The September 2022 United Kingdom mini-budget was a set of economic policies announced by the Chancellor of the Exchequer Kwasi Kwarteng on 23 September 2022. Although not an official budget statement, it was widely referred to by the media as a "mini-budget". Among the policies announced by Kwarteng were: bringing forward the planned cut in the basic rate of income tax from 20% to 19%; the abolition of the 45% higher rate of income tax in England, Wales and Northern Ireland; the reversal of the April 2022 increase in National Insurance; and the abolition of the proposed Health and Social Care Levy. » The budget, which was unveiled against the backdrop of a cost of living crisis, was immediately followed by a sharp fall in the value of pound sterling against the United States dollar as world markets reacted negatively to the increased borrowing that would be needed. By the next day of trading, the pound had hit an all time low against the US dollar. The statement drew widespread criticism from economists, some of whom feared its reliance on increased government borrowing to pay for the largest tax cuts in 50 years could lead to a situation like the 1976 sterling crisis when the UK was forced to ask the International Money Fund (IMF) for a financial bailout. The IMF took the unusual step of issuing an openly critical response to the budget, saying it would "likely increase inequality".[4] It urged the UK government to "re-evaluate" the proposed tax cuts.[5] The HM Treasury announced plans to outline how the proposals would be costed in November, alongside an independent forecast from the Office for Budget Responsibility. I don't get it. Why can't the government walk back these changes? Does the prime minister think they will get ousted if they reverse this nonsense?
  - YawningAngel 4y ago
    The prime minister is a lunatic beholden only to a selectorate of other lunatics
  - theplumber 4y ago
    Once the taxes are lowered and most of the EU regulation removed the UK will become global again. Golden years are ahead. Asia(which experiences biggest economic growth) will start trading like never before with the UK. The U.S will provide Tuss with a bespoke trading deal. Or so they said...
    - shapefrog 4y ago
      None of that will matter, the German car makers forced the German government to give the UK the finest deal in the history of deals.
      - badcppdev 4y ago
        I just wanted to point out that your comment is quite useless as unless someone already knows what you're talking about (I don't) then it's basically devoid of any useful.
  - benjaminwootton 4y ago
    Because they believe that tax cuts will ultimately stimulate the economy at a time when people are experiencing increased cost of living. If that is correct then they should hold on through market wobbles and some heat in the media as economic growth will ultimately pay for it. Im not defending the specific implementation and timing, but the theory is sound.
    - pooper 4y ago
      > Because they believe that tax cuts will ultimately stimulate the economy at a time when people are experiencing increased cost of living. It doesn't make any sense from what I understand because we are raising interest rates to cool down the economy and lowering taxes to heat up the economy. I am not an economist but I think we should be pushing in the same general direction.
- neilwilson 4y ago
  All government spending in the UK is funded by government borrowing. That's how the system has worked for 150 years or more. Every penny spent is initially borrowed. Then as it bounces around the economy tax is raised by the induced spending flow. It's only if people save rather than spend from that that the 'borrowing' shows up on the books. Whether there will be any more borrowing show up depends how much people spend and how much people save. The problem is the deliberate misunderstanding of what government borrowing is, put forward by those who want to see government spending stopped.
deleted 4y ago
[deleted]
collegeburner 4y ago
...borrowing more money and minting new bonds, and committing to do that indefinitely in the future, while your central bank is literally trying to QT at the same time, is not "financial tightening". they've had to go back to QE temporarily to stop a liquidity crunch because the midwit running fiscal policy decided to run literally the opposite direction. and worse, he didn't just do it for a year, he committed indefinitely into the future to keep doing it and keep printing more bonds. so yeah the gilt got hella whipsawed but there's a reason it happened in england when all the other countries are tightening as well.

3 months into financial tightening and pension funds already facing margin calls. Very promising.

by seper8 4y ago

3 months into financial tightening and pension funds already facing margin calls. Very promising.

vasco 4y ago

This winter is going to be interesting.

isthisthingon99 4y ago

If you know the bigger your failure, the quicker you can get bailed out and if you are successful, you get to keep most of the profits, you will do whatever and never hedge properly or take losses on the books. This is the current system with central banks.

NovemberWhiskey 4y ago

What is going on in the UK is not, in any imaginable sense of the expression, "financial tightening": the "mini-budget" that prompted the response from the market is a $161bn tax-cut and spending plan funded by government borrowing. https://en.wikipedia.org/wiki/September_2022_United_Kingdom_mini-budget https://en.wikipedia.org/wiki/September_2022_United_Kingdom_...

pooper 4y ago
» The September 2022 United Kingdom mini-budget was a set of economic policies announced by the Chancellor of the Exchequer Kwasi Kwarteng on 23 September 2022. Although not an official budget statement, it was widely referred to by the media as a "mini-budget". Among the policies announced by Kwarteng were: bringing forward the planned cut in the basic rate of income tax from 20% to 19%; the abolition of the 45% higher rate of income tax in England, Wales and Northern Ireland; the reversal of the April 2022 increase in National Insurance; and the abolition of the proposed Health and Social Care Levy. » The budget, which was unveiled against the backdrop of a cost of living crisis, was immediately followed by a sharp fall in the value of pound sterling against the United States dollar as world markets reacted negatively to the increased borrowing that would be needed. By the next day of trading, the pound had hit an all time low against the US dollar. The statement drew widespread criticism from economists, some of whom feared its reliance on increased government borrowing to pay for the largest tax cuts in 50 years could lead to a situation like the 1976 sterling crisis when the UK was forced to ask the International Money Fund (IMF) for a financial bailout. The IMF took the unusual step of issuing an openly critical response to the budget, saying it would "likely increase inequality".[4] It urged the UK government to "re-evaluate" the proposed tax cuts.[5] The HM Treasury announced plans to outline how the proposals would be costed in November, alongside an independent forecast from the Office for Budget Responsibility. I don't get it. Why can't the government walk back these changes? Does the prime minister think they will get ousted if they reverse this nonsense?
- YawningAngel 4y ago
  The prime minister is a lunatic beholden only to a selectorate of other lunatics
- theplumber 4y ago
  Once the taxes are lowered and most of the EU regulation removed the UK will become global again. Golden years are ahead. Asia(which experiences biggest economic growth) will start trading like never before with the UK. The U.S will provide Tuss with a bespoke trading deal. Or so they said...
  - shapefrog 4y ago
    None of that will matter, the German car makers forced the German government to give the UK the finest deal in the history of deals.
    - badcppdev 4y ago
      I just wanted to point out that your comment is quite useless as unless someone already knows what you're talking about (I don't) then it's basically devoid of any useful.
- benjaminwootton 4y ago
  Because they believe that tax cuts will ultimately stimulate the economy at a time when people are experiencing increased cost of living. If that is correct then they should hold on through market wobbles and some heat in the media as economic growth will ultimately pay for it. Im not defending the specific implementation and timing, but the theory is sound.
  - pooper 4y ago
    > Because they believe that tax cuts will ultimately stimulate the economy at a time when people are experiencing increased cost of living. It doesn't make any sense from what I understand because we are raising interest rates to cool down the economy and lowering taxes to heat up the economy. I am not an economist but I think we should be pushing in the same general direction.
neilwilson 4y ago
All government spending in the UK is funded by government borrowing. That's how the system has worked for 150 years or more. Every penny spent is initially borrowed. Then as it bounces around the economy tax is raised by the induced spending flow. It's only if people save rather than spend from that that the 'borrowing' shows up on the books. Whether there will be any more borrowing show up depends how much people spend and how much people save. The problem is the deliberate misunderstanding of what government borrowing is, put forward by those who want to see government spending stopped.

deleted 4y ago

[deleted]

collegeburner 4y ago

...borrowing more money and minting new bonds, and committing to do that indefinitely in the future, while your central bank is literally trying to QT at the same time, is not "financial tightening". they've had to go back to QE temporarily to stop a liquidity crunch because the midwit running fiscal policy decided to run literally the opposite direction. and worse, he didn't just do it for a year, he committed indefinitely into the future to keep doing it and keep printing more bonds. so yeah the gilt got hella whipsawed but there's a reason it happened in england when all the other countries are tightening as well.