The Bank of England decided this week to get rid of ÂŁ100bn of bonds over the next year, ÂŁ20bn more than last. I agree they should not buy more bonds to replace the ones that mature, like the ECB. I strongly disagree with their aggressive policy of selling bonds at big losses which would lose us less money if they held them to maturity. They have notched up ÂŁ24 bn of losses, all paid for by the Treasury , this year since April. They have provided no good reason why they do this.
Maybe they want to qualify as one of the worst bond managers in the world. They certainly paid sky high prices for the bonds when rates were near zero. They then hiked rates and sold bonds to force the prices down so they could make colossal losses. They defend the rate rises on the good grounds they needed to do that for monetary policy purposes, as their bond buying and low rates had proved very inflationary. They tell us selling the bonds has little impact on anything, so why do it?
It is difficult to believe what they say. They say buying the bonds at ultra high prices was essential to buttress the economy and help output, but apparently selling them does not do the opposite! Buying stimulates, selling does nothing!
They say their sales, large and low priced as they are, does not depress the market. Of course it does. They point out the prices do not particularly dip on the days of the sales. That is because the sales have been well heralded in advance and are carried out to a stated timetable, so they are in the price. Last autumn when they first announced a big ÂŁ80 bn bond reduction programme it was followed by bond meltdown, exacerbated by the LDI collapse it helped trigger. The Bank had to reverse policy and buy bonds again to stabilise the market. This showed Bank buying and selling has a big impact as they are the dominant presence in this market.
The public finances ex Bank of England are badly damaged by the extent of the losses, which the needless selling makes worse. As the Bank does not think the sales make any difference, why do them when their balance sheet will come down as the bonds mature? More likely these sales have raised longer term interest rates, have weakened bond prices further and very visibly have worsened the public spending and borrowing figures ex Bank of England. Why do other MPs ignore £24 bn of losses so far this year with so many more to come?
September 23, 2023
All very good questions Sir John.
Perhaps the Bank of England is doing what it has been told to do by international quangos, like the IMF or the WEF. Because it certainly doesn’t seem to be acting in the interests of the British economy or British taxpayer.
And that seems to be the case with every other Establishment/Governmental institution in the UK – they don’t work in OUR interests.
Reply The Bank of Japan,SwissCentral Bank and ECB are not doing this.
September 23, 2023
Sir J,
I think you know this so I don’t know why you are making an issue of it. The BoE is NOT a normal bond investor; it is the issuer of money, it created and eliminates money at a stroke, ‘losses’ don’t matter. All that the BoE is interested in is money in circulation, this is what they are managing. See this chart.
https://tradingeconomics.com/united-kingdom/money-supply-m2
Reply Its losses do matter and they are needless and damaging. The Bank denies the bond sales have any monetary effect which is also wrong
September 23, 2023
The Bank of England donât care. Bailey has not been sacked. Carney talks about the UK becoming like Argentina.
They are going beyond âmanaged declineâ now to a total breakdown of the UK economy.
September 23, 2023
Good morning.
If no ‘good reason’ then what reason ? I know you allude further down, but I want to read what they have said.
Firstly. It is not their money. Secondly. They do not either care or understand such important matters. Finally. Who wants to rock the boat and damage what little career prospects they have ?
Whatever the reason, it shows you how worthless these people are.
September 23, 2023
+++
So true!
I was just going to say that itâs not their blinking money!
But .I suppose historically they have always dipped into it.
Paying for their wars.
Paying for their barmy policies.
Devaluing it left, right and centre.
And selling the gold that backed it at a rock bottom price!
( Given all that I do wonder WHY they have always been so touchy about forgery and coin clipping).
September 23, 2023
Why has Hunt not acted ?? Does Hunt have a clue what he is doing?
Why do we have advice from ONS and OBR when they are not demanding action? Scrap the lot being BOE back under direct control of govt.
September 23, 2023
Indeed.
Charles Moore today is rather optimistic:- âRishi Sunakâs green policy shift is the beginning of the end for net zero. For the first time, a party leader is raising seriously the question of cost, but the plan is also unravelling across the worldâ
Let us hope his is right. But Sunak has done almost nothing so far, just a tiny brief dab on the brakes. He still seems to be a believer in this totally deluded, unscientific, economic vandalism religion. A bit more CO2 tree and plant food greens the planet nicely. Plus the things they push EV, heat pumps, ârenewablesâ do not even same any sig. CO2 they just export it.
September 23, 2023
I just saw on GB news that some appalling arm of that dreadful HS2 is being abandoned!
I hope no U turn on that and that it is as good as it sounds!
September 23, 2023
Is it true that the online safety bill bans providers from showing âpictures of illegal immigrationâ? I wonder who inserted this and why they did so? Also why was this supported? Was it to reduce support for anti-excessive illegal immigration political parties and to hide reality?
September 23, 2023
Iâve got a feeling that they have already stopped people from filming. There was someone who used to film every day at whatever landing place. But no more.
The whole thing is very covert but then they must have been hiding immigration figures for years.
And yesâŠso anti democratic. They hide the truth in order to keep power.
September 24, 2023
Well, yesterday on radio, a major supermarket CEO said they tried using photographs of known thieves being on display in their shops and were shut down from doing it on the grounds of offending the thieves ‘yuman rites’. We must be the stupidest softest touch on the planet, with sympathy for every perversion under the sun but with no regard for the paying public.
September 23, 2023
The Bank of England is run by incompetents, who have gravely damaged the economy.
Having them in charge of interest rates is an experiment which has failed, as with much of Brown’s stewardship as Chancellor.
Whilst “independence” sounds fine, it certainly does not entail competence, or, indeed, being unbiased. It merely means lack of accountability. Brown’s experiment shoukd be scrapped and control of interest rates returned to the Chancellor, who is accountable to Parliament, which itself is accountable to the electorate.
September 23, 2023
We need Merv back there.
September 23, 2023
The obvious answer which you cannot write Sir John is that we have a ruling elite in Parliament, the CS, the quangos, the educational establishment , the judiciary and the MSM who want to see the country destroyed.
Net Zero is far more damaging than the sale of bonds at big losses.
September 23, 2023
The BoE is co.plicit in the downfall of the Tory government. It’s just another tentacle of the blob.
Do all the damage before the election ti give sir kneelalot a fighting chance.
You’ve had 14 wasted years to sort the institutions out but being mainly limp dumb You’ve played along.
Serves you right.
September 23, 2023
Indeed. 14 years and even a totally wasted 80 seat majority and Cameronâs two majorities one in Coalition. Taxes through the roof, economic vandalism, public services dire, the moronic net zero, Brexit botched, QE caused inflation, gross incompetence of lockdowns, test and trace and the vast net harm of the new tech âvaccinesâ even given to young people who did not need them (even had they been safe and effective).
It seem that the vaccines were even transferred to babies in breast milk and with perhaps as many as 2.8% showing some post vaccine heart damage. Yet they are still pushing them even to the young in some countries over 65 in the UK it seems.
September 23, 2023
Do you walk around all day muttering this stuff under your breath? Do you chant it when relaxing. Because, seriously, you say exactly the same thing at least 5 times a day.
September 23, 2023
+1 O R
I know I am far from alone in the belief that their actions are at the behest of the WEF, IMF, UN and certain giant financial institutions.
September 23, 2023
For those of you who enjoy expanding and enriching your vocabularly,here is a (very) good candidate for inclusion-“Oblomovism”.
Derived from the titular character of a mid 19th century Russian novel by Ivan Goncharov (said to have been a literary hero to both Marx and Lenin) and defined as the indolent apathy of a superflous social class.
September 23, 2023
The elites could achieve the same result, deindustrialisation, impoverishment and control by just running hydrocarbon generated electrify intermittently and chaotically by following the wind and solar patterns. Forced misery and control through the electrification of heating and transport can still continue as planned. And the Net Zero implementation of the U.K. Fires report to close all airports apart from London, Edinburgh and Belfast , ban all shipping and convert to earth, rock and timber construction with re-use only of steel and glass can continue.
The advantage would be not destroying our land and seas with millions of tons of resource profligate concrete and steel wind turbines and toxic solar panels.
Plus energy security as not reliant on the Chinese for our energy infrastructure which needs replacing every 15 years.
The CO2 emissions saved in not building all these renewables wouldâbe enormous and anyway our global contribution to CO2 emissions is only 1% anyway.
Instead we could build nuclear plants which are low in CO2 emissions, not resource profligate (1000 times less than offshore wind), affordable, reliable and secure.
But this would defeat the whole object of Net Zero which is why there is no planning for nuclear providing more than a meagre 6% of our energy requirements.
September 23, 2023
Neil Oliver, “We’re talking loudly and honestly about less and less”,
“We’re not talking about . . . . . . . . . . . . . ”
Maybe we should talk . . . . .
September 23, 2023
Or as Red Riding Hoodâs âgrannyâ might have said..
âAll the better to de-grow us with my dear!â
September 23, 2023
So… aided and abetted by HM Treasury, the B of E is putting a question mark against its competence.
How does the B of E recruit its economists ?
As a matter of interest how many former HM Treasury employees now work for the B of E ?
There were question marks against HM Treasury as long ago as the mid 1970s when the then Chancellor blamed its incorrect forecasts for the.UK having to go cap in hand to the IMF for a loan. HM Treasury might be happy to now outsource forecasts to the OBR.
The OBR does not seem to be able to get it’s forecasts close to being accurate.
How does the OBR recruit its economists ?
As a matter of interest, how many former HM Treasury employees now work for the OBR ?
Do we need to find a new path ?
September 23, 2023
How many work from home?
September 23, 2023
++
Well apparently they are kicking up because they have been told to go back to the office ( what a cheek!).
The working from home scam started in the 90s with impromptu meetings ( during office hours) in coffee bars and SEOâs kitchens!
But as we all know the infiltration of left wing, dangerous bias has been going on for a very long time.
I believe that a letter ( from concerned civil servants) has been sent recently revealing just that!
September 23, 2023
Wasn’t Rachael Reeves a BoE economist? Is this what we have to look forward to thanks to Tory incompetence over the last 14 years? Had they governed properly we would not be where we are now, but then I guess I have been waiting for a competent government most of my life, but we almost always get second raters.
September 23, 2023
@Graham1946
According to Wikipedia “Reeves studied at New College, Oxford and the London School of Economics before working as an economist at the Bank of England, the British Embassy in Washington, D.C., and HBOS.”
Sadly, I think you are right.
September 23, 2023
Apparently the OBR has a large contingent of influential staff who worked for the same left wing think tank, the Resolution Foundation, according to reports at the Guido Fawkes website.
September 23, 2023
Sir John perhaps like me other MPs do not understand what Bonds are, thier purpose as an investment. Most people know what shares are and thier purpose. Like everything in Government/Civil Service/Public Instutions these days, those at the top do not seem skilled in the task they are suppose to be managaing in the interest of the tax payer.
How many MP’s are experts, or at least skiÄșled in a subject other than Politics ?
September 23, 2023
This is yet another instance of chumps in charge. It pervades too many UK public institutions.
September 23, 2023
Maybe they just don’t care – they certainly showed no interest when billions were flushed away on Test and Trace and even worse on fraud they know happened during Covid but are unwilling to chase down.
September 23, 2023
@John McDonald
It is suggested that the “LDI” (liability-driven investment) was instrumental in bring down the last PM, who had set out to tackle the out of control situations we have within the Collective âBlobâ. Way back I think in 2016, the FCA was tasked to address the situation of the imbalance in LDI â but nothing happened, it was ignored. So when it became the problem predicted, it would appear those in neglect previously, saw an opportunity to pass the buck â the FCA then and the BoE now are the same people. The Collective âBlobâ playing politics and fighting Democracy â surely not?
September 23, 2023
+1
September 23, 2023
Gambling disorder involves repeated, problem gambling behaviour, leading to problems for the individual, families, and society. Banks with the disorder have trouble controlling their gambling and continue even when it causes significant problems.
September 23, 2023
Did the British wonder why the Romans were using a particular battering ram?
Was it made of oak from the Jura mountains? If not, why?
No! The Brits knew what was happening.
We agonise about all these things but the sum total isâŠ
Our conquest and subjugation.
But then, fattened on consumerism, the gingerbread house of China,
We have become like dodos!
September 23, 2023
Bailey’s strengthening the balance sheet of the Bank. Why embrace QT with such gusto and pace? He’s clearing the decks for Labour’s EU big splurge expenditure package, financed of course by more debt and QE. Add in Starmer’s gargantuan spending promises (shameless bribe) to the dependent masses and voila, ‘ere comes No.10
Bailey’s a political animal and acts politically. Indeed central banks are no longer banks in the strictest sense but facilitators of the Socialist State that’s been under construction since 1997 and heartily embraced by immoral and shameless Tory leaders.
I see Boris Johnson continues to slime his way through life by supporting the EU’s HS2 pan-EU rail project and NZ agenda. Never trusted this snake.
I am intrigued by the timing and nature of Starmer’s visit to meet Macron in Paris. Surprise. surprise, two days later Charles appears in Paris as well. I smell a rat here. And why is Starmer rather than the PM of the UK meeting the President of France? That’s simply not protocol and should be condemned. It stinks
We really do need a proper Tory party that aggressively opposes fascist, racist woke progressive agenda before it takes complete control of our nation and the freedoms of its people. I can see trouble ahead. People are sick of being sidelined, slandered and demonised for simply existing
September 23, 2023
I wouldn’t worry too much about the royal visit to France;It’s just the vacuous elites of two decaying nations from a fading civilization dressing up and having a nice time at their subjects expense.
Late stage neo-feudalism in action.
September 23, 2023
The side benefit for Bailey is that undermining the present government might even provoke a second coup, and certainly go a long way towards ensuring it fails to get reelected. He may also be trying to influence wider policy. Amstel Rothschild’s dictum always applies.
Give me control of a nation’s money and I care not who makes its laws.
September 23, 2023
Sage comments Sir J and why indeed do BoE need to sell? Sadly we don’t have a current Chancellor or previous one (now PM) who a) value your advice and b) rather appear well out of their depth in terms in economic affairs.
One might wonder if there was a case for maladministration or misconduct in a public office, deliberately forcing ÂŁ24bn unnecessary losses on the Treasury (i.e the taxpayer) in my book warrants a robust combined political and judicial response…
September 23, 2023
One only thing missing from your piece today, Sir John: Cui bono? Who benefits from the BoE selling so much at a loss? ÂŁ24bn is huge. I believe it lost a similar amount back on Black Wednesday trying to defend the pound against Soros and the other hedge fund speculators.
September 23, 2023
First thing I thought too, who are buying the bonds low and who will gain financially from that poor selling?
All just adds to the current stick that the Tories canât manage the economy and are spendthrift.
If Sunak and Hunt are wanting to go down as incompetent as Brown at the end of his rein then what are they both promised when theyâve finished crushing the party.
September 23, 2023
Last autumn it was clearly investors who benefited from the bond sell-off at lower prices. From FT 3/10/22: ‘Bond prices have dropped sharply this year… This has juiced up the returns investors who buy into the bonds now can receive if they hold to maturity.’ The headline mentioned ‘retail investors’, who are not major institutional players. Then FT 23/12/22: ‘Big investors are wading back into the bond market after this yearâs historic sell-off.’ So the big boys are filling their pockets too. Still, another FT headline from 25th May this year says ‘UK retail investors piling into gilts’. So it looks as if the estimated 15% of the UK population who invest on the stock market may be doing well from the bond sell-offs. I wonder which party they tend to vote for.
September 24, 2023
Interesting thank you.
September 23, 2023
@Hat man – their personal friends, and those that manage the blind accounts come to mind either that or it is about destruction of a viable UK
September 23, 2023
The easy question is why other MPs donât question this foolish policy. Because they donât understand it. This will be particularly true of Labour MPs almost none of whom have any business or financial training or experience.
I guess itâs possible itâs the blob at work making sure there are sufficient handcuffs on the Govt to stop them doing anything really popular and successful, thus ensuring a blob / Labour-liberal victory at the election.
The odd thing is why ministers go along with it.
September 23, 2023
@Richard1 – surely you are not suggesting a Conservative Government with a Cabinet full off PPE graduates is any better equipped. The real fault line is the refusal of the Conservative Party, to not allow those that live up-to the election promises made to the Nation to get to do the job they were elected for. Only left wing acylates allowed at the upper table.
September 23, 2023
YES, we can all see that.
Why doesn’t HMG stop them?
The big question is just why is it happening at all, and the clear most obvious answer is that it is a deliberate attempt to impoverish the UK, along with other economic disasters, by draining our resources and literally throwing away what assets we have!
There can be no other reason.
September 23, 2023
@Bryan Harris +1
It clearly begs the question for whom is the Conservative Government working for. Hunt says he cant reduce taxes because of inflation, but who is it that caused the inflation? Hunt with his tax increases and the BoE refusing to manage inflation
September 23, 2023
Indeed, also blocking the roads is wrong, ULEZ is wrong, the net harm vaccines especially of the young were dangerously evil & wrong, the lockdowns were wrong, the inflation causing vast QE was wrong, HS2 was idiotic from the start, net zero is profoundly wrong, the soft loans for duff degrees is wrong, the Woke lunacy and Diversity over ability agenda is wrong, the state spending/wasting 46% of GDP is wrong, open door to illegal immigration is wrong, Windsor Agreement, the recent energy bill, the denial of the lab leak… all profoundly wrong – so why doesnât or didn’t Sunak/Boris try to stop these too?
They have in reality actually encouraged and/or funded all of them.
September 23, 2023
A rerun of Brown advertising the sale of our gold in advance then selling at bargain basement prices?
Is there a pattern here, encouraged by the BoE, is there no oversight committee?
September 23, 2023
@AncientPopeye Logic in a Democracy the oversite committee is the Government and in this instance that means our 2 Chancellors Sunak & Hunt. So you could easily suggest the BoE is doing their bidding, the Conservative Government appointed the BoE leadership and agreed as to bailout all loses.
September 23, 2023
“The public finances ex Bank of England are badly damaged by the extent of the losses, which the needless selling makes worse. As the Bank does not think the sales make any difference, why do them when their balance sheet will come down as the bonds mature?”
Why do them? Sir John is an expert in this field, but, since he asks the question, could the reason be simply that they want to redeem some capital to meet expenditure needs?
September 23, 2023
Why is the government allowing taxpayer money to be lost in this way?
Why haven’t the culprits been held to account?
Why have they not been dismissed?
September 23, 2023
Agreed Sir John. I rather wish I had such a sinecure job as those in the BOE evidently have (the “heads I win, tails you lose” touch).
September 23, 2023
It beggars belief that the BoE gets away with this without any challenge from Parliament. Presumably the Treasury is pulling strings, as usual?
September 23, 2023
There is a terrible lack of basic economic knowledge in the Government ; Sunak ought to be leading the way but , sadly, this is not happening . The BoE has made terrible errors for some considerable time and this must not be allowed to continue . The entire community is suffering from the impact of the few – surely in a democracy this is wrong .
September 23, 2023
Not just basic economic knowledge that MPs lack but knowledge on climate, energy, electricity generation, science, statistics, maths, medical knowledge, vaccine safety, logic, transport, construction, housing, farming, warfare, which experts to trust, QE & inflation, how much tax is too much⊠It seems they more you know the less change that you will be made a Minister.
September 23, 2023
So Councils can spend our rates on poor Icelandic bank investments and lose oodles on that. Buy up falling down shopping centres allowed to fall down because the sale agreements didnât specify a certain level of maintenance in the first place by poor council decisions. Build new shopping centres when old ones could have been refurbished. Spend on green projects solar and wind that have lost a fortune in several councils. Agree to pay structures that were unfair and unbalanced and continued with it for years afterwards (although how anyone can say a refuse collector should be paid the same hourly rate as an indoor cleaner I donât know, if the indoor cleaner wanted a higher hourly rate they should have gone on the bins – its ridiculous).
Then Hunt can collect in tonnes more tax with his frozen allowances, lots of lovely inheritance taxes that Labour have their eyes on increasing further, dropping dividend allowances to discourage risk taking enterprises and just generally look like the doesnât know what heâs doing with that vacant look in his eyes and patronising tone as though he is always speaking to small children. Then we are told he simply canât stop the BoE making silly loss making decisions! Really?
You know whatâs most troubling Sunak and Hunt are handing the next election on a plate to Labour when people donât want them either. Worse is yet to come and the hatches are starting to get battened down because of all the negativity. Labour are going too far with negativity because if they think they will be able to just pick people back up after their unions have destroyed our public/customer relationships they are kidding themselves.
September 23, 2023
Can no one at the BoE “Do the maths”? Investors and savvy businessmen only sell at a loss to “cut their losses”. Do the BoE expect more money horrors this year?
September 23, 2023
In the Telegraph yesterday JRM made an observation with regards the Civil Service and them ramping up their âDiscriminationâ staff and departments all at the Taxpayers expense.
In the comments section to the JRM item there were comments that suggested it was the Government needed to get a grip of the Civil Service. Incensed by the thought a commenter leapt in, clearly a Civil Servant, and said it is nothing to do with Government â the Civil Service works for the State and not the Government. Ordinarily it would be the type of thing to be taken as sarcasm, pointing a finger at a failing Government, however along with the writers other comments this was clearly a Civil Servant that had forgotten who pays the wages and who collects and administers them as the taxpayers representative.
Its the same with the BoE and in particular its leadership, there is no duty, no responsibility just the perpetual looking for others to try and hang their own long time proven failures on.
There is a deep âthem and usâ creating a divided country situation evolving and clearly someone has to get a grip. To most of us that means our elected representatives, the HoC and the excitative (the Government). Elsewhere in the world that come under the banner of Democracy
September 23, 2023
@Ian B
In a similar vain it was noted that the opposition parties have come out strongly suggesting the UK must ensure it takes EU rules going forward.
Or in other words the UKâs elected representatives are not fit to run the UK and must submit to running the UK for the benefit and on behalf of bureaucrats in other nations.
The UK Parliment just doesn’t understand Democracy
September 23, 2023
You ask “Why do other MPs ignore ÂŁ24 bn of losses so far this year with so many more to come?” – where does one start, mindful of the moderation process?
Worst is that those MPs will be asking for our votes soon enough, to sustain them in their myopia, neglect and wilful dereliction of duty and the people will grant them all they seek.
September 23, 2023
Maybe selling now at a loss is cheaper than selling new bonds at todayâs high interest rates for years to come?
September 23, 2023
I am not qualified to talk in detail on the subject of bond buying or selling, so I will refrain.
I have a general impression that the BOE, OBR, the Treasury and in large part the Whitehall Civil Service have a separate and quite different agenda from that of the Government. Stonewall and parallel agendas have infiltrated the Civil Service, Banking, Education, and large swathes of big business to the detriment of the population. This anarchy must be brought under control and eliminated etc ed. Not acting wilk destroy democracy. Devolution is one favoured route of infiltration, so take care at how much power you give away.
September 23, 2023
There are areas in the UK where totally determined action is needed to correct what is clear inadequacy, inefficiency and incompetence, or worse.
I don’t know what to do about the BoE, but elsewhere, let’s say with the OBR and the FCA, they should be dismantled and abolished. Neither can be said to be efficient or accurate or absolutely vital, and in the case of the latter they could be accused of a matter more serious.
The elites there think they are untouchable. They have grown themselves into monsters which they cannot recognise. But they are just examples of the way in which our country is being destroyed by the embedded establishment. Their views arise from a detachment and separation from the real human world.
September 24, 2023
2 days ago â Former Conservative Chancellor George Osborne has backed Labour’s plans to give more powers to Britain’s economic watchdog. The former chancellor wrote on Twitter: âWe created the OBR 13 years ago so Chancellors couldnât any longer fiddle the numbers. A year ago we saw the fiasco when one tried to bypass it.
âThese OBR reforms from (Rachel) Reeves are sensible, pragmatic improvements. If the Tories are smart theyâll adopt them.â Telegraph.
Yet when he was Chancellor:
19 Mar 2015 Chancellor dismisses Office for Budget Responsibilityâs assessment that he is planning deeper cuts in the next parliament⊠The chancellor dismissed an assessment by the independent watchdog, .. The rhetoric of the OBR has annoyed the Treasury as the budget was designed to slightly ease the pace of austeriâŠ
OBR hands lucky George Osborne a ÂŁ27bn get-out-of-jail-free card – the OBR now expects tax revenues to be more than ÂŁ4bn higher in 2016-17 than it thought four months ago, ÂŁ6.3bn higher in 2017-18 and ÂŁ5.4bn more in 2018-19⊠https://www.theguardian.com/business/2015/nov/25/obr-lucky-george-osborne-27bn-get-out-of-jail-free-card
September 23, 2023
“Last autumn when they first announced a big ÂŁ80 bn bond reduction programme it was followed by bond meltdown, exacerbated by the LDI collapse it helped trigger. The Bank had to reverse policy and buy bonds again to stabilise the market.”
That was during Truss’ brief premiership, I assume. Done to give Sunak and co. the ammunition to remove her?
September 23, 2023
First, Sir John, thank you for all you do. I think you can take some credit for the slight rollback on Net Zero. At least, it is the first sign of some common sense on the issue.
As for the BOE, Andrew Bailey is useless, but if he is not sacked when he blunders on, why would he change?
Equally, our idle Chancellor keeps telling us there is no room for tax cuts! He needs to get off his backside and make some room by cutting the massive waste in Government spending and questioning every penny of spending! If he can’t find ÂŁ100 billion of cuts, tell him to ring me because I can. If Sunak is a conservative PM, why does he not appoint a conservative Chancellor? Hunt costs thousands of votes every time he appears in the media!
September 23, 2023
âThey have provided no good reason why they do this.â
This does not mean they donât have good reasons, just that they cannot be made public.âWhat could their incentives be?âCentral banks obviously talk and coordinate actions.
‘More likely these sales have raised longer term interest rates, have weakened bond prices further and very visibly have worsened the public spending and borrowing figures ex Bank of England.’
Either some of these are the reasons they are doing it, or they at least donât matter as much as their private aims.
‘The Bank of Japan, Swiss Central Bank and ECB are not doing this.’
But the Fed are, arenât they?âHereâs a current view from across the pond:
‘Banks borrow short and lend long.âThey borrow in the form of deposits and oftentimes hold Treasuries as reserve assets.âThat means they need to sell US Treasuries and other assets in order to meet withdrawal requests, which have been frequent since Marchâs acute banking stress kicked off a slow-motion bank run, which is still underway.âHowever, when USTs lose value, banks may not have enough dollars to liquidate to meet the dollar amount of all the withdrawal requests.
‘This pushes banks to the brink of, and sometimes into insolvency and in need of a rescue by the FDIC and/or another often larger bank.âBanks are having to mark these losses to market and sell their US Treasuries in order to meet withdrawal requestsâbanksâ holdings of US Treasuries and agency MBS, also beholden to duration losses, have fallen $166 billion since the March crisis.
‘Banks are dumping their holdings to private credit and hedge funds which are now flooded with rate-sensitive assets as the Fed keeps rates higher for longer.âThis is a problem that will only get worse considering a deluge of UST issuance is slated to begin next week, bringing the dangerous scenario of even higher yields and more losses in the UST market.
‘They can and have also gone to the Fed for a handout instead of selling and locking in losses.âA total of $107.59 billion in emergency loans have been extended to banks through the Fedâs BTFP emergency loan program.’
Look to the Bank of Englandâs incentives, however improbable they seem.âWho would suffer if they werenât deliberately suppressing the gilt price?âWho is suffering because of it and will need ‘friendly’ assistance later?
September 23, 2023
“Last autumn when they first announced a big ÂŁ80 bn bond reduction programme it was followed by bond meltdown, exacerbated by the LDI collapse it helped trigger. The Bank had to reverse policy and buy bonds again to stabilise the market. ”
Yes. And it’s not at all well-publicised that at that time, the BoE’s own pension fund was 100% invested in LDI funds. The few people who knew this questioned just exactly what the Bank was trying to save with their interventions.
The fact that other countries have not done the same does not preclude the possibility of malign actors in the UK sphere – those other countries do not have Brexit as a factor.
It has seemed for some time that pro-EU actors have been deliberately holding back the UK economy to prevent it out-performing the EU, while also keeping UK regulation in lock step with the EU.
If it walks/quacks like a duck etc. What other explanation fits the known facts?
September 23, 2023
P.S. Even after the LDI meltdown, last I heard the BoE had only reduced its pension fund’s holdings in LDI funds to 82%.
The most basic financial advice is not to put all your eggs in one basket, so for the BoE to do exactly that suggests incompetence of biblical proportions.
September 23, 2023
Whatâs the downside for the BoE in selling the bonds ? The Treasury makes good all losses so why not ? Their only target (apart for some nebulous net zero one) is to reduce inflation and this type of quantitative tightening helps achieves it without the flak that is aimed at them when they raise interest rates directly. Why should they care if it damages the economy and the government and taxpayers ? They donât care, the inflation target is the only thing that matters to them.
September 23, 2023
The BoE is part of the central bank system. They follow and interpret the agenda of the Globalist Establishment. The people are irrelevant but come a GE the people will still go out and vote for these controlled oiks. Stockholm syndrome anyone!!!!!!
September 27, 2023
This cannot be put down to just mismanagement. Bailey should be removed, investigated & prosecuted if found negligent. Though the scale of these losses would appear to be premeditated as an attempt to destabilise the Government & country!