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Ask HN: What Is Happening in the UK?

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Re: Ask HN: What Is Happening in the UK?

#131

Post by bjornsing »

rgblambda wrote: post #110
bjornsing wrote: post #39

Earlier quoted context omitted.

I think the old adage “correlation is not causation” applies somewhat. It’s probably true that the market got worried about the UKs ability to service its long term debt, but Truss’ announcement came in the middle of the worst bear market in bonds for well over a decade. Also, e.g. the Swedish crown (SEK) has lost about as much against the US dollar as the pound has, completely unrelated to Truss and her announcement…

Is it not the case that while the Swedish Crown is not officially pegged to the Euro in the same way that the Danish Krone is, it's value is heavily influenced by the Euro? The Euro's decline in value is down to investors moving their money to safer shores in the anticipation of energy shortages in Europe in the coming months.

Not pegged no, but strongly correlated of course. SEK has depreciated significantly against the euro too over the last few weeks.

Re: Ask HN: What Is Happening in the UK?

#132

Post by bjornsing »

chimprich wrote: post #114
bjornsing wrote: post #39

Earlier quoted context omitted.

I think the old adage “correlation is not causation” applies somewhat. It’s probably true that the market got worried about the UKs ability to service its long term debt, but Truss’ announcement came in the middle of the worst bear market in bonds for well over a decade. Also, e.g. the Swedish crown (SEK) has lost about as much against the US dollar as the pound has, completely unrelated to Truss and her announcement…

Sorry, but that's nonsense. The market dropped spectacularly during the new chancellor's not-a-budget-honestly speech. You can't get a better smoking gun than that. > but Truss’ announcement came in the middle of the worst bear market in bonds for well over a decade Yes, and she chose to do that. It was amazingly irresponsible. The market response was entirely predictable.

I still think you attribute too much causality to Truss’ announcement. E.g. 1 GBP cost 12.25 SEK 5 days ago (before Truss’ announcement) and now costs 12.22 SEK.

(But sure, Truss’ announcement did cause a temporary slump even in the GBP/SEK exchange rate.)

Re: Ask HN: What Is Happening in the UK?

#133

Post by kypro »

icare_1er wrote: post #8

Genuine question: why are markets disapproving of the economics policy decided by a ... right-wing governement ? I though markets reacted negatively to socialist governments getting into power, not the opposite.

Markets don't care about politics, they care about risk and reward.

By fuelling growth in a period of high inflation with debt you basically add to the existing inflationary pressures and increase risk.

As an investor you want your investment to at least yield more than inflation so this is one reason why the market is demanding a higher interest rate (the market now excepts UK inflation could run hotter), but they're also worried about the risk of extra borrowing so are also demanding a higher risk premium because of the uncertainty of their investment.

Also, I'd argue this isn't really a "right-wing" fiscal policy. Cutting taxes might be "right-wing" but borrowing to do so certainly isn't something that's universally popular with those on the right. Most on the right probably want tax cuts to be funded by spending cuts.

Re: Ask HN: What Is Happening in the UK?

#134

Post by ceejayoz »

roenxi wrote: post #128
ceejayoz wrote: post #121

Earlier quoted context omitted.

The debt-to-GDP ratio the US currently carries has been seen before. The raw number is high, but so is the GDP. $1M in credit card debt would sink me. For Jeff Bezos, it doesn’t even rise to his personal attention. > Someone has lost a lot of money (presumably China and Japan). How could the US pay them back without resorting to fantasy? I can’t pay my mortgage in full right now. That doesn’t mean my bank loses money…

> The debt-to-GDP ratio the US currently carries has been seen before. In the middle of a world war, facing a level of emergency that left civilisations of more than one continent shattered and reordered the world as it was known. As an emergency spike that lasted for around 5 years before they started paying people back. And although the debt was staggering and the US economy was in its prime as a global manufacturi…

> In the middle of a world war

We're just getting out of a world pandemic.

> In that case you've defaulted on your mortgage.

No, I'm making the agreed-upon payments, just like the US is on their debt. I can't pay off the whole loan today, there's twenty years left on it. Similarly, the US can't pay off 108% of GDP today, but they can over the decades-long timespan of those debts.

Re: Ask HN: What Is Happening in the UK?

#135

Post by imdsm »

caoilte wrote: post #126
imdsm wrote: post #92

Earlier quoted context omitted.

Many people make this point, but very few are willing to defend their views with some good old pragmatism. In the nature of HN, let's have a go at that, shall we? 1. Who works harder, an office worker working for 7.5 hours or a nurse who works for 12+ hours? 2. Who works harder, a person who works 37.5 hours in an office, or someone who works 80 hours a week, founding a company? 3. Who has worked harder to get where…

> Who takes more risks, a person who works 37.5 hours in an office or a founder who puts their own capital in to try and create a company? Inherited capital in every startup I've worked at. And enough of it that they got several runs at success. It wasn't risky at all. > Which brings more value to a community, a person who is employed, or a person who employs people? Too vague a generalisation to have any value. What…

I feel slightly sad that I numbered the questions and you blew past that but then it seems you've not attempted to answer the actual questions.

> Inherited capital in every startup I've worked at. And enough of it that they got several runs at success. It wasn't risky at all.

In the event this was an attempt to answer, I have to say, feels like a non-answer. You do say "worked at" though, which makes me think not as a founder but as an employee, thus the capital risk wasn't yours so much.

> Too vague a generalisation to have any value. What matters is who does the work and the social value of that work.

It is vague, sure, a doctor probably has more value than someone who employs a cleaner to clean their home. So I suppose, a better question would be:

6. Which brings more value to a community, a person who works in an office doing menial admin work for 5 years, or a person who spends 5 years founding a new company that provides medical services to the community, employs 100 people, and produces tax receipts (direct and indirect) of 1000x the person who works in an office doing menial admin work?

If you're thinking "how can I possibly answer that question?" then you're right. You can't. The obvious answer is that the founder ultimately produces more value, and that's okay. You don't have to hate or dislike people for creating value — creating jobs and providing services is crucial to the economies around the world.

There seems to be a knee-jerk reaction to such a question of "well the office worker has value too", yes, nobody is saying people are value-less, but there is an objective reality that some people produce more value than others.

Ultimately, my purposefully crafted questions lead up to one thing: some people deserve to be paid more than others.

Re: Ask HN: What Is Happening in the UK?

#136

Post by kypro »

smt88 wrote: post #25
icare_1er wrote: post #8

Genuine question: why are markets disapproving of the economics policy decided by a ... right-wing governement ? I though markets reacted negatively to socialist governments getting into power, not the opposite.

You're starting with an assumption that right-wing governments are good for economies. Let's ignore that dubious assumption and instead look at the actual policy. Truss's administration is giving tax cuts to the wealthy and paying for it by borrowing. The markets know that trickle-down economics is nonsense and these tax cuts won't boost UK's economy enough to cover the enormous amount of debt required to pay for the…

It's probably not this. Part of the issue here is that markets do believe this will boost demand in the UK economy. It's just that this isn't good right now with inflation so hot. If anything you want to be increasing tax to lower demand.

As an investor you always want your investments to yield more than the rate of inflation and when government policy increases inflationary pressures by fuelling growth the market will demand higher interest rates. Of course there is also uncertainty about how the government will pay for the debt which is increasing the risk premium.

It's just dumb fiscal policy to boost growth at a time when central bankers are trying to do the opposite. It would probably work great during a deflationary period. Its just that's not where we are right now.

Re: Ask HN: What Is Happening in the UK?

#137

Post by Brakenshire »

tut-urut-utut wrote: post #125
Brakenshire wrote: post #106

Earlier quoted context omitted.

The most popular candidate with the party members was Kemi Badenoch, a black woman, so it doesn’t seem credible that people voted against Rishi Sunak mostly because of race.

Well, supposedly the most popular was a black woman, the most competent was an Asian man, and who gets the post in the end? The most incompetent of them all, whose only advantage is being white. If that is not racism, I don't know what it is.

The members weren’t allowed to choose Badenoch, she was eliminated at an early stage by the MP vote, probably because she was too radical and lacked ministerial experience.

Rishi Sunak was claiming to be resident in the US while Chancellor of the Exchequer, while his wife was claiming non dom status to avoid paying tax. He was also hated by the supporters of the previous PM because he wielded the knife.

It’s not a shock that elections are not won on competence.

Re: Ask HN: What Is Happening in the UK?

#138

Post by solumunus »

tomxor wrote: post #36
thewarrior wrote: post #16

The UK imports large amounts of energy and other things essential to its prosperity. The UK has a current account deficit which means it does not have enough of the dollar to cover for its imports. It has solved this problem over the years by borrowing and becoming a haven for investment to cover up the shortfall. Now we have a bat shit government that says we need to lower taxes and borrow a boat load of money to ti…

> One way to stop this is to raise interest rates and pull pounds out of circulation but the government is terrified of popping the real estate bubble. I'm pretty sure i'm being naive here but... why? House ownership has become a huge problem for recent generations in the UK, I still haven't engaged with the market because it's so hard to get a foot in the door unless you have masses of disposable income. Popping the…

It's a huge problem for poor people. Liz Truss and Kwasi's friends hold most of their wealth in property and those are the people that matter to these soulless lizards.

Re: Ask HN: What Is Happening in the UK?

#139

Post by solumunus »

cbeach wrote: post #3

The pound is low against the dollar, as is the Euro low against the dollar. The pound dropped in value a few days ago, but the price has recovered since then. The media chooses to focus on the drop rather than the recovery, because the drop coincided with a government announcement of some pro-growth economic policies that mainstream pundits disagree with. If you speak to people in the U.K. many would agree that payin…

Wow, what a silly comment. Enough people have already rebutted this nonsense so I don't need to, but it just shocks me to find such uninformed takes on a forum with these demographics.

Also, this isn't just the left, it's practically anyone with a brain. Any conservatives from David Cameron's administration (not far right ideologues) are horrified by this, as are most of the current MP's who overwhelmingly wanted Rishi Sunak, who is also horrified by this...

Re: Ask HN: What Is Happening in the UK?

#140

Post by roenxi »

ceejayoz wrote: post #134
roenxi wrote: post #128

Earlier quoted context omitted.

> The debt-to-GDP ratio the US currently carries has been seen before. In the middle of a world war, facing a level of emergency that left civilisations of more than one continent shattered and reordered the world as it was known. As an emergency spike that lasted for around 5 years before they started paying people back. And although the debt was staggering and the US economy was in its prime as a global manufacturi…

> In the middle of a world war We're just getting out of a world pandemic. > In that case you've defaulted on your mortgage. No, I'm making the agreed-upon payments, just like the US is on their debt. I can't pay off the whole loan today, there's twenty years left on it. Similarly, the US can't pay off 108% of GDP today , but they can over the decades-long timespan of those debts.

> We're just getting out of a world pandemic.

The US couldn't pay its debts before COVID either. The pandemic hasn't changed the US's long term prospects for servicing its debt even slightly. The future was default in 2019 and it remains default now in 2022. The only interesting questions are when and what form the default will take.

I mean, are you trying to be serious here? How do you think those debts will be payed down? Who do you think will be involved? What timeline?

What evidence?

> No, I'm making the agreed-upon payments

Oh ok, I thought you meant you weren't making them. Well, assuming you intend to keep that approach up there is no place for you in the halls of government. You are heading for a future where you might pay your debts in full!

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