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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?

#141

Post by ceejayoz »

roenxi wrote: post #140
ceejayoz wrote: post #134

Earlier quoted context omitted.

> 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 paye…

> How do you think those debts will be payed down?

The US debt-to-GDP ratio is a bit over 100%.

With my mortgage, mine's higher than that, and I don't have a central bank under my control to tinker with things. No one questions my ability to pay off my thirty year loans; current interest rates on US debt indicate no one seriously believes your assertion that a US default is at all likely, let alone probable.

(Argentina's bond rate is 75.00%, reflecting their history of default and likelihood it'll continue. The US borrows at 2.90% right now.)

When my mortgage is mostly paid down, I'm likely to refinance and take on additional debt, perhaps for home improvements or a newer house. Just like the US does as it makes its debt payments.

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

#142

Post by hgdfhgfdfds »

pyb wrote: post #2

In a few words, PM Truss's first economic measures indicate that she's ideologically-driven and has no idea what she's doing. Namely, cutting taxes for the rich in hope that maybe some economic boost will "trickle-down" to the middle class and the poor. This idea is utterly discredited in economic circles. The UK central bank, the BoE, is forced to take measures to counteract what Truss and her government are doing !…

"This idea is utterly discredited in economic circles."

I'm an economist and this is wrong. I usually see this line on on Reddit and not from any journal.

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

#143

Post by csdvrx »

candiodari wrote: post #113
scrlk wrote: post #58

The Bank of England's announcement that they will restart QE (a.k.a. money printer goes brrr) on a "temporary basis" was driven off the back of UK pension funds facing massive margin calls due to the spike in gilt yields. There's a good article in the Financial Times that explains the mechanics behind it ("LDI: the better mousetrap that almost broke the UK"): https://www.ft.com/content/f4a728a5-0179-48bd-b292-f48e30f…

A cynic would say this is by design. The government created those funds to avoid paying pensions, and spend the money themselves (pension funds are designed to let the government spend all the money they collect, increasing government debt. They do not have the choice what to invest in), and this is merely a continuation of that policy. That these funds are going to crash is a certainty, they're designed to delay it…

Very interesting comment, with mathematical analysis + simple explanation, ty!

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

#144

Post by ceejayoz »

Brakenshire wrote: post #137
tut-urut-utut wrote: post #125

Earlier quoted context omitted.

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 sh…

"Most popular" and "too radical" are kinda contradictory here. If she was "too radical", she wasn't popular, at least as a PM candidate.

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

#145

Post by roenxi »

ceejayoz wrote: post #141
roenxi wrote: post #140

Earlier quoted context omitted.

> 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 paye…

> How do you think those debts will be payed down? The US debt-to-GDP ratio is a bit over 100%. With my mortgage, mine's higher than that, and I don't have a central bank under my control to tinker with things. No one questions my ability to pay off my thirty year loans; current interest rates on US debt indicate no one seriously believes your assertion that a US default is at all likely, let alone probable. (Argenti…

You're a lovely bloke. I don't care about your mortgage.

Describe to me, in concrete terms, ideally using the names of the politicians you think might be involved, the voting demographics, the years and values, etc, how you think the US is going to make a start on paying down its debts in real terms.

We all know what is going to happen. They're taking in real resources, they're going to give a lot less back and pretend there is a meaningful difference between not paying off all the debt and defaulting on debt. Which there is not.

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

#146

Post by fnimick »

imdsm wrote: post #92
fnimick wrote: post #18

Earlier quoted context omitted.

How can you possibly justify keeping even more of your money that you earn from profiting from the work of others, when people in need are freezing and starving? I know HN runs libertarian but this is just abhorrent.

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…

The answer to all of these is "it depends", and quite frankly has nothing to do with how people should be taxed. If you're making more money, you should be paying a higher proportion of your income in taxes. This isn't revolutionary.

Also, I love how you glossed over that the founders you idealize are largely already from privileged backgrounds that give them the opportunity to fail. The vast majority of people will never get that chance.

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

#147

Post by tialaramex »

Al-Khwarizmi wrote: post #74

Related question: in what metrics is such a market meltdown visible? The FTSE 100 is down like 4% or so in the last two days, and the pound lost 2% to the euro, those don't look like scary figures to me compared to past volatility. I guess I'm looking at the wrong metrics, so what are the relevant ones?

Gilt yields. Truss' government will need to borrow lots of money since it intends to "grow" the economy by just giving the wealthy more money [a plan the market knows doesn't work]. This is done by auctioning bonds, which then trade on a secondary market. The UK's government bonds were once all issued as physical objects literally gilded with metal edges, hence "gilts".

In effect what is on offer in these auctions is a government promise to pay a certain amount of money at a set time in the future. Bidders say how much money they will pay now for that promise. For example maybe the government wants to pay £105 in 2050, and the auction just settled at £86 and I was a bidder, I pay £86 now, and I get a promise to pay £105 in 2050. The governments gets £86 now which it can spend, but needs to find £105 to pay me in 2050 (Hint: It will just issue more gilts).

Gilts are a bit more complicated because they have index linking and there's a whole coupon mechanism so you get a little bit of the money back periodically, but this gets the basic idea across.

The exchange rate stuff has a more immediate impact because it causes import prices to jump, but the gilt problem is actually what means you shouldn't ever do this. It's like using credit card debt to finance a fun ski holiday versus to buy a car so you can drive to work. One of these things is reasonable, albeit not ideal, the other is just throwing away money. Unfortunately it isn't Liz's money, it's the nation's money, increasingly it's the money of those least able to afford it.

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

#148

Post by ceejayoz »

roenxi wrote: post #145
ceejayoz wrote: post #141

Earlier quoted context omitted.

> How do you think those debts will be payed down? The US debt-to-GDP ratio is a bit over 100%. With my mortgage, mine's higher than that, and I don't have a central bank under my control to tinker with things. No one questions my ability to pay off my thirty year loans; current interest rates on US debt indicate no one seriously believes your assertion that a US default is at all likely, let alone probable. (Argenti…

You're a lovely bloke. I don't care about your mortgage. Describe to me, in concrete terms, ideally using the names of the politicians you think might be involved, the voting demographics, the years and values, etc, how you think the US is going to make a start on paying down its debts in real terms. We all know what is going to happen. They're taking in real resources, they're going to give a lot less back and prete…

> Describe to me, in concrete terms, ideally using the names of the politicians you think might be involved, the voting demographics, the years and values, etc, how you think the US is going to make a start on paying down its debts in real terms.

The US will continue to carry a debt load. With inflation and a sub-3% borrowing rate, it's essentially free money - we pay $400B a year in interest to access $30T. Again, we've done this for hundreds of years; it's not gonna suddenly stop being a functional bit of monetary policy.

By the end of my loan, my mortgage payments will be worth a lot less in real money, too - $1k ten years ago and $1k twenty years from now aren't the same. Creditors price this in from the beginning, whether it's my mortgage or a trillion dollars in US government bonds.

> pretend there is a meaningful difference between not paying off all the debt and defaulting on debt

This is just a silly statement. I don't think we can have a rational conversation about monetary policy if you think that.

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

#149

Post by wave_function »

tikkabhuna wrote: post #87
bigfudge wrote: post #64

Earlier quoted context omitted.

In what circumstances the does UK have a 60% marginal tax rate. I think the op is confused.

Between £100k and £125k your personal allowance is reduced to £0, so for every £1 you gain, you lose more of that allowance and that works out to a 20% reduction. That on top of the 40% rate equals 60%.

If I’m understanding correctly, that makes the effective marginal tax rate between 100k and 125k higher than after 125k? Feels kind of crazy

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

#150

Post by roenxi »

ceejayoz wrote: post #148
roenxi wrote: post #145

Earlier quoted context omitted.

You're a lovely bloke. I don't care about your mortgage. Describe to me, in concrete terms, ideally using the names of the politicians you think might be involved, the voting demographics, the years and values, etc, how you think the US is going to make a start on paying down its debts in real terms. We all know what is going to happen. They're taking in real resources, they're going to give a lot less back and prete…

> Describe to me, in concrete terms, ideally using the names of the politicians you think might be involved, the voting demographics, the years and values, etc, how you think the US is going to make a start on paying down its debts in real terms. The US will continue to carry a debt load. With inflation and a sub-3% borrowing rate, it's essentially free money - we pay $400B a year in interest to access $30T. Again, w…

> The US will continue to carry a debt load.

No, no, that part no contest.

How you think the debt load might shrink without the US defaulting. How do you think this will happen? When? Who? Real-world specifics, a plausible scenario that you think might play out. How does the debt get smaller? What is going to change that hasn't been the case since the 70s?

And why will the US not just default in preference to of attempting to do the impossible when those conditions change?

> This is just a silly statement. I don't think we can have a rational conversation about monetary policy if you think that.

Reason it out for me, I'm obviously struggling to understand you. What do you think the difference is between borrowing a large amount, returning a small amount and claiming it isn't a default? Why do we have the word default if that isn't a default?

If that is a better option than a default, why don't all the debtors do that instead of defaulting?

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