4 ms·

The UK has a lot of problems, but taxing the rich too much isn’t one of them. This is a shallow analysis. If I had to pick one obvious economic problem with th

by foldr 1y ago

The UK has a lot of problems, but taxing the rich too much isn’t one of them. This is a shallow analysis. If I had to pick one obvious economic problem with the UK it would be the vast economic disparity between London and most of the rest of the country and the unwillingness of successive governments to invest any significant amount of money in tackling it. There is no cheap solution. Cutting taxes on the rich won’t magically grow the economy. That requires actual investment. However, as Liz Truss showed while trying to do something different, it’s very hard for the government to invest when any increase in borrowing leads to panic and a crash in the markets.

qcnguy 1y ago
The Truss event was due to crap regulation and bad moves by the BoE. The UK bond yield is now higher than it was during the Truss spike which according to Labour "crashed the economy". Actual cause of the problem was a 2008-style blowup in pension related securities.
- jurking_hoff 1y ago
  [dead]
  - qcnguy 1y ago
    I don't have a recommend read but a quick search showed this: https://www.pensions-expert.com/investment/ldi-and-the-liz-truss-mini-budget-one-year-on-what-if-anything-has-changed/65188.article https://www.pensions-expert.com/investment/ldi-and-the-liz-t...
- foldr 1y ago
  Fundamentally it was due to Liz Truss ignoring all the experts who told her exactly what was going to happen. However, I think the episode illustrates how economic policy can be overly constrained by the short term reactions of markets. Though I think Liz Truss's economic policy was stupid, she was PM and should have been able to execute it. It's good that the policy was reversed, but this happened for the wrong (undemocratic) reasons.
- exasperaited 1y ago
  This is flatly false. The Truss/Kwarteng event was plainly and simply that radically uncosted policies put forward by two fucking idiots terrified the market. But keep talking like this and maybe they will join Reform so you can try them out again.
  - qcnguy 1y ago
    And yet Labour have blown through all the spending and borrowing levels they proposed without "terrifying the market"? No, go read up on it. There was a chain reaction in the pensions market caused by over-leverage. Similar issue to 2008. Truss wasn't aware of it. Now that doesn't excuse over-spending. Of course she should have been cutting costs rather than just lowering taxes. But apparently there aren't any British political parties willing to lower costs. Eventually the IMF will have to force the issue.
    - foldr 1y ago
      Truss wasn’t ‘aware’ because she ignored the warnings that she received. Why hasn’t the same thing happened under Labour? For various reasons, (not least that their economic policy isn’t stark raving bonkers), but largely because they’ve taken very explicit care to reassure the markets and make sure that no-one is surprised or alarmed: https://www.theguardian.com/uk-news/2024/oct/18/infrastructure-taskforce-to-help-chancellor-avoid-financial-sector-turmoil https://www.theguardian.com/uk-news/2024/oct/18/infrastructu...
      - qcnguy 1y ago
        She wasn't given any warnings about the LDI crisis, by universal consensus. She has also written about how the the first thing anyone told her about the risk buildup in the pension sector was the moment it happened. Same thing hasn't happened under Labour because steps were quickly taken to end the crisis in the pensions sector. But the underlying problem remains that high spending isn't viable forever. FWIW, Labour's economic policy is much worse than Truss' ever was. UK is heading for a massive crisis that makes the mini-budget LDI blowup look like a storm in a teacup. Labour have not only not reassured the market, they are actively antagonizing it as can be seen in the yields that are now persistently higher than during Truss. Labour backbenchers won't let the UK cut spending and bondholders are starting to think they won't get their money back. They are right to worry.

by foldr 1y ago

qcnguy 1y ago

The Truss event was due to crap regulation and bad moves by the BoE. The UK bond yield is now higher than it was during the Truss spike which according to Labour "crashed the economy". Actual cause of the problem was a 2008-style blowup in pension related securities.

jurking_hoff 1y ago
[dead]
- qcnguy 1y ago
  I don't have a recommend read but a quick search showed this: https://www.pensions-expert.com/investment/ldi-and-the-liz-truss-mini-budget-one-year-on-what-if-anything-has-changed/65188.article https://www.pensions-expert.com/investment/ldi-and-the-liz-t...
foldr 1y ago
Fundamentally it was due to Liz Truss ignoring all the experts who told her exactly what was going to happen. However, I think the episode illustrates how economic policy can be overly constrained by the short term reactions of markets. Though I think Liz Truss's economic policy was stupid, she was PM and should have been able to execute it. It's good that the policy was reversed, but this happened for the wrong (undemocratic) reasons.
exasperaited 1y ago
This is flatly false. The Truss/Kwarteng event was plainly and simply that radically uncosted policies put forward by two fucking idiots terrified the market. But keep talking like this and maybe they will join Reform so you can try them out again.
- qcnguy 1y ago
  And yet Labour have blown through all the spending and borrowing levels they proposed without "terrifying the market"? No, go read up on it. There was a chain reaction in the pensions market caused by over-leverage. Similar issue to 2008. Truss wasn't aware of it. Now that doesn't excuse over-spending. Of course she should have been cutting costs rather than just lowering taxes. But apparently there aren't any British political parties willing to lower costs. Eventually the IMF will have to force the issue.
  - foldr 1y ago
    Truss wasn’t ‘aware’ because she ignored the warnings that she received. Why hasn’t the same thing happened under Labour? For various reasons, (not least that their economic policy isn’t stark raving bonkers), but largely because they’ve taken very explicit care to reassure the markets and make sure that no-one is surprised or alarmed: https://www.theguardian.com/uk-news/2024/oct/18/infrastructure-taskforce-to-help-chancellor-avoid-financial-sector-turmoil https://www.theguardian.com/uk-news/2024/oct/18/infrastructu...
    - qcnguy 1y ago
      She wasn't given any warnings about the LDI crisis, by universal consensus. She has also written about how the the first thing anyone told her about the risk buildup in the pension sector was the moment it happened. Same thing hasn't happened under Labour because steps were quickly taken to end the crisis in the pensions sector. But the underlying problem remains that high spending isn't viable forever. FWIW, Labour's economic policy is much worse than Truss' ever was. UK is heading for a massive crisis that makes the mini-budget LDI blowup look like a storm in a teacup. Labour have not only not reassured the market, they are actively antagonizing it as can be seen in the yields that are now persistently higher than during Truss. Labour backbenchers won't let the UK cut spending and bondholders are starting to think they won't get their money back. They are right to worry.