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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?

#151

Post by afavour »

Brakenshire wrote: post #75
hunglee2 wrote: post #24

In simple terms, the Bank of England and UK Gov are pursuing conflicting economic policies, BoE trying to take money out of circulation through hiking up interest rates, whilst UK Gov is putting money into circulation by proposing massive debt funded tax cuts. The obvious incoherency of this then led to the markets losing confidence in the UK economy, crashing the value of the pound, which in turn makes the planned U…

Yes, at a moment of inflation, they announce significant tax cuts which will have a big inflationary impact. The Bank of England was already behind on interest rate rises, and now the government is relying on them to not only counter global trends (high rates in the US causing devaluations basically everywhere), and also the inflationary effect of energy cost increases, but also extra inflationary tax cuts. That will…

> Apparently the PM wanted the announcement to feel radical to distance her from the previous government, so maybe the markets were responding to the feeling of the announcement

My understand is that it’s exactly this. So much of the markets comes down to vaguely defined “confidence” and the new leadership simply isn’t inspiring faith from those in charge.

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

#152

Post by notahacker »

ceejayoz wrote: post #144
Brakenshire wrote: post #137

Earlier quoted context omitted.

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.

Different selectorates, different priorities. MPs who voted for the final two to be on the ballot had more established personal and political relationships with other candidates and saw her as an inexperienced MP with a few strange ideas about organising the Cabinet who was obsessed with culture war bullshit. The Conservative Party membership that didn't get to see her on the ballot were impressed with her debate performances and loved the culture war bullshit.

(tbh I didn't see much indication she was the 'most popular', but there were definitely plenty of members of the party receptive to her message, doubtless including many of those most likely to espouse racist sentiments)

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

#153

Post by afavour »

ksaxena wrote: post #32
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 !…

The bigger problem is the energy-price guarantee that Truss has announced that will put a ceiling on fuel price for consumers, with the difference born by the UK treasury - estimated outflow is more than 100 Billion pounds. This outflow is planned to be funded by borrowing, which has resulted in a weaker pound.

I’m not sure that’s a bigger problem, it was announced some time ago without significant market movement. Seems the trigger is faith in new leadership or lack thereof.

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

#154

Post by piva00 »

bjornsing wrote: post #131
rgblambda wrote: post #110

Earlier quoted context omitted.

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.

Matching a change of government that's unproven. Having SD in power has no historical precedence so there's a definite lack of confidence in what the new government can achieve.

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

#155

Post by ceejayoz »

roenxi wrote: post #150
ceejayoz wrote: post #148

Earlier quoted context omitted.

> 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 atte…

The definition of default is to not be able to make loan payments. It's something the US has never done, and isn't considered likely to do in the forseeable future. The largest risk the US has in this regard is political; politicians occasionally use the routinely-raised statutory debt ceiling as a game of chicken.

> How you think the debt load might shrink without the US defaulting.

It won't, and it doesn't have to. We pay off a trillion on-time, we borrow another. As long as we make payments as required, no one gives a shit.

> And why will the US not just default...

Because then we stop being able to borrow when we want to, like Argentina.

> What do you think the difference is between borrowing a large amount, returning a small amount and claiming it isn't a default?

We borrow a large amount, and return a small amount lots of times, paying down both some principal and a little interest. Again, just like a mortgage.

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

#156

Post by roenxi »

ceejayoz wrote: post #155
roenxi wrote: post #150

Earlier quoted context omitted.

> 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 atte…

The definition of default is to not be able to make loan payments . It's something the US has never done, and isn't considered likely to do in the forseeable future. The largest risk the US has in this regard is political; politicians occasionally use the routinely-raised statutory debt ceiling as a game of chicken. > How you think the debt load might shrink without the US defaulting. It won't, and it doesn't have to…

Ah, so you are arguing that it is feasible the US will keep paying all the interest payments on its debt? If so I misunderstood. I thought you were arguing that the US debt levels might drop at some point.

Fair enough. I don't think it will play out that way, but do admit it is still arguably possible.

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

#157

Post by guilhas »

The banks/markets are in failing mode since 2012, with constant bailing out, quantitative easing. In USA, UE, UK... Causing banks addiction, and inflation

2020 was record money printing, causing inflation, so Liz Truss set a plan to reform quantitative easing to try reduce inflation, and the markets reacted bad

The age old question, are banks to big to fail? What will happen to saving, mortgages, pensions etc... if you start restricting bailouts? Maybe some will just take their money to EU where they still have a cushion, in the always win casino

But no doubt reform is needed

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

#158

Post by IshKebab »

hcayless wrote: post #97
ksaxena wrote: post #32

Earlier quoted context omitted.

The bigger problem is the energy-price guarantee that Truss has announced that will put a ceiling on fuel price for consumers, with the difference born by the UK treasury - estimated outflow is more than 100 Billion pounds. This outflow is planned to be funded by borrowing, which has resulted in a weaker pound.

They really had no choice about that part. The spike (beyond their control) in energy prices was set to bankrupt hundreds or even thousands of small businesses and put many people in a situation of deciding between heat and food. The tax breaks though, were totally an own goal.

They could have funded it by windfall taxes rather than borrowing.

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

#159

Post by Brakenshire »

ceejayoz wrote: post #144
Brakenshire wrote: post #137

Earlier quoted context omitted.

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.

Most popular with the membership but too radical for the MPs. It’s the same as Corbyn with Labour members and MPs.

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

#160

Post by bluehatbrit »

Brakenshire wrote: post #75
hunglee2 wrote: post #24

In simple terms, the Bank of England and UK Gov are pursuing conflicting economic policies, BoE trying to take money out of circulation through hiking up interest rates, whilst UK Gov is putting money into circulation by proposing massive debt funded tax cuts. The obvious incoherency of this then led to the markets losing confidence in the UK economy, crashing the value of the pound, which in turn makes the planned U…

Yes, at a moment of inflation, they announce significant tax cuts which will have a big inflationary impact. The Bank of England was already behind on interest rate rises, and now the government is relying on them to not only counter global trends (high rates in the US causing devaluations basically everywhere), and also the inflationary effect of energy cost increases, but also extra inflationary tax cuts. That will…

> The thing I am confused about is why this happened at the announcement. The big measures had already been announced [...]

I'm far from an expert, but to be totally honest I think most people didn't really expect it to happen this way. The media were all talking about how it's not possible and no one knew where the funding would come from. Everyone was mostly expecting it to not happen to be quite different and more complex.

It turns out we overestimated both the PM and the Chancellor.

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