On 21 st Ā September 2022 on the eve of Kwarteng/Truss budget the Bank Ā announced a 0.5% hike in bank rate. This was designed to push up interest rates. Just to make sure it would mean higher mortgage rates on the same day they announced they would over the ensuing year sell Ā£80 billion of bonds at a loss Ā which they had bought at very elevated prices in the previous year. Selling bonds pushes their price down which automatically pushes up interest rates.
The bond market fell in the days before the mini budget because US bonds were falling and interest rates rising , and then because the Bank so clearly signalled it wanted rates higher. This was a bad background for the Kwarteng announcements.
On the following Monday it became clear in the market that a number of Ā pension funds had bought too many government bonds through levered funds. As bond prices fell they had to put up more money for bonds they owned but had not fully paid for. They did not have cash to pay for their losses so they had to sell bonds to raise money, on top of the planned massive sales by the Bank. No wonder the bond market tanked.
The Bank of England responsible for the overall solvency of the system at last realised their dreadful error of selling so many bonds when pension funds were so weak. They suspended the Ā sales and agreed to buy some. The market surged upwards, Pension funds had space to reduce their heavily overcommitted positions and the crisis past.Between 28 September and 14 October the Bank bought Ā£19.3 bn of bonds to correct its errors.
These were the special UK factors of autumn 2022 that temporarily increased volatility. The UK trend was the same as the US and EU. The higher mortgage rates that resulted were Ā caused by Bank of England policy.Todays higher rates have nothing to do with the long cancelled Truss budget.
March 18, 2024
The BoE is just another incompetent quango.
March 18, 2024
This was not incompetence, it was a deliberate move by the BoE designed to stymie Kwarteng’s budget.
Consider the pension fund crisis, the result of their pervious leveraged purchase of government bonds.
The BoE Governor later claimed it had been ‘unaware’ of the danger. Yet the original uncovered bond purchases by the pension funds had been given the blessing of the Financial Conduct Authority.
The Chief Executive of the FCA at that time (the period from 2016 to 2020) was Andrew Bailey.
March 18, 2024
They only got away with it because so very few MPs understood what was going on. Did Brown’s “independence for the Bank of England” lull politicians into financial and economic illiteracy?
March 18, 2024
@mancunius – it’s called covering your backside. It was Bailey’s job at the FCA, as the danger of LDI’s were known at the time while he was boss, to define their limits – he neglected his job. Then it was about to blow up in his face – Truss was hung out to dry
March 18, 2024
Regarding the FCA, why have they promoted another unqualified person within their ranks?
https://www.thetimes.co.uk/article/fca-hires-chief-internal-auditor-who-has-no-audit-qualifications-2zl2l3579
ā The City regulator is facing scrutiny after it hired a chief internal auditor who does not have audit qualifications.
MPs have been asked to scrutinise why Robin Jones was promoted to the role at the Financial Conduct Authority, which comes with an advertised salary of up to Ā£220,000, despite not appearing to have the āqualifications and experienceā associated with the job.ā
Patronage at the public expense with no regard to consequences? Or is there another reason?
March 18, 2024
Mickc
Again regarding the FCA appointment question :-
āI would be amazed if you can find a single chief internal auditor of a comparative organisation, public or private sector, who has no internal audit experience and is not a qualified internal auditor. Itās almost as if the intention is to appoint someone who wonāt find any inconvenient problems. This is not about criticising Mr Jones, but the organisational culture, leadership and governance that has led to this farce.ā
Similar situation in many public offices. Regulators who donāt regulate. Tax officials who let global companies get away without paying the full amounts due.
March 18, 2024
The BOE is guilty of deliberate political gerrymandering. This is unacceptable. Itās hamfisted interventions have cost each of us dearly.
Why are these vicious functionaries still employed? As Tony Benn said in his test of Democracy āhow do we get rid of them?ā
March 18, 2024
Well we certainly won’t get rid of them by voting for the WEF-supporting Westminster Uni-Party.
March 18, 2024
Indeed & even when they leave, like the dire Mark Carney (PPE yet again) he continues to do vast damage with his deluded climate alarmist con. agenda and is now helping Labour it seems. Tony Benn died before he had to see the full treachery of his dire son Hillary over Brexit.
A Tony Benn put it “If you cannot get rid of the people who govern you, you do not live in a democratic system” – which applies to the EU, the Lords, Bishops, the BoE, OBR etc.
March 18, 2024
BOE knew it deliberately altered markets on the eve of a mini budget to cause political upheaval, is this extremism under Goveās test? In any other world he would be sacked. However, if the actions were part of a bigger picture by remainers then of course their place man PM would not get rid of him? Why was the chancellor of the day leading up to these events not speaking to BOE? Would not that be normal leading up to any election?
A group of Labour and Tory MPs joined together to conspire and to overthrow a democratic EU referendum which they lost. This was deliberate, They even were happy to be pictured on their trip to a Brussellās to conspire/plan with Brussels how they could overthrow an election result- some in US call a similar situation insurrection. These traitors, it was beyond reasonable or heated debate, decided not to accept the democratic will of the people. Some on currently on the opposition benches wanted to a second referendum until they got their way, they now talk of a closer relationship with EU ie lock step and vassal state to EU. Why has the standards commissioner not investigated serving MPs involved in their treachery to overthrow democracy?
JR, you are clear minded to events and make the compelling case it was deliberate. Why do you think BOE took such action? Was it to help overthrow a govt.?
March 18, 2024
Thank you for confirming the part played by the Bank of England. The next questions are: Why did they do it? Did they act alone? Did they act at the behest of another central bank or the BIS?
There are those opposed to a revival of UK fortunes who are able to exert extreme financial pressure if they choose to and have no hesitation in doing so if they think it necessary. Do you think that such pressure was applied to the Bank of England to act the way it did?
Reply It clearly wasn’t under pressure from Ministers. I do not know if it was encouraged by officials
March 18, 2024
According to Reuters Nov 22, “the US and the Bank of Canada adopted similar policies, known as passive quantitative tightening”.
March 18, 2024
One possible explanation is that the calls for Miss Truss to sack Bailey were too audible. Another is that the Blob, including the Financial Blob, wanted to get rid of the Brexiteers. There has been success on both counts.
March 18, 2024
@David Andrews – the only thing that comes to mind is the blind following the blind, or they have become lemmings. the Fed, the ECB working in harmony and not for those they are supposed to support
March 19, 2024
The IMF certainly were on the BoE side as they published a scathing analysis of the budget, something I’m not aware of them doing before.
March 18, 2024
Yes, what we saw by Bailey was a carefully crafted act of politics designed to influence democracy and destroy confidence in a newly elected party leader. He hasn’t yet been publicly condemned no doubt for fear of undermining confidence in financial markets.
The question is why would Bailey act in such an incendiary manner? Is it his Europhile (Hunt, Cameron and Sunak) instincts, his WEF (Hunt and Sunak, Cameron) sympathies or his big state, Keynesian machine-mind? Either way, his actions were designed to bring down a PM who wanted to see lower incomes taxes and liberalisation, policies the establishment find unacceptable
As ever the public will vote at the next GE not truly understanding how the British political and governing class shape events to suit their own agenda irrespective of what democracy dishes up.
As an aside. The filibustering in Parliament designed to talk out Truss’s proposed bill on the now tedious transgender issue was a beyond pathetic. To see etc ed was a disgrace to
Parliament.
March 18, 2024
My refusal to vote (or others’ vote for Reform) is not in the expectation of change but to call it a day on the two-party system.
The extinction of the Tory Party.
Let’s be done with the pretence that we have a democracy.
We may as well be Putin’s Russia.
March 18, 2024
It is indeed galling to hear the BBC et al condemning the Russian election as undemocratic, and voicing their fears for democracy in the age of AI. Quite apart from the past topplings of democratically elected governments by the Americans who are trying the same trick in Israel at this very moment, we have had the rigging of the Americans’ own election in 2020, large question marks over their mid terms in states which did not vote with pencil and paper on the day, our own two coups d’etat on top of a three year attempt to overthrow the Referendum, the earlier elections in the EU on its Constitution which had to be held again until the little countries voted the right way (the highly literate French were not trusted to vote again, but had it parcelled up into a treaty and passed through their Parliament while they stood outside with their “Respectez Notre Non” placards, and we weren’t trusted to vote at all. The guilty Brown slipped off in the dark to sign the Lisbon Treaty so he wouldn’t be photographed doing it with the others.
“Saving Democracy” is the euphemism for all this skulduggery, of which there is more, and it was first coined by the American Democrats in 2020.
March 18, 2024
Sinister to see Obama going unheralded in at the front door of no 10. Have they no shame?
March 18, 2024
Oh there were 5 contesting the Presidential election in Russia, did uou not know, the official opposition – the Communist Party, came second. The west paid Navalny to pretend to be a contestant, he came second in the election for Moscow Mayor – a distant second.
Think of Putin as their Thatcher and you will understand why they run yo the polls across the world (at Russian Embassies) to vote for him.
Donāt believe the unelected EU Presidents, unelected Sunac, questionably elected Biden etc when they call Putin the dictator š¤£š¤£
March 19, 2024
what do you call him?
March 19, 2024
President Putin.
March 18, 2024
+1
March 18, 2024
Dom,
If you are correct there is a criminal offence of conspiracy to cause financial loss to overthrow a govt?
March 18, 2024
This is all a bit one-sided, you can’t call Truss and Kwarteng blameless; they had to be aware of the forces ranged against them but took little or no precautions.
If the speculation here is correct, that there is a ‘big state’ coalition of remainers, in political office and civil service, that wants EU membership and transnational bodies in control, rather than democracy, then there’s a whole lot more to worry about. This makes voting for either Tory or Labour a waste of time, since both espouse the big state philosophy and damn the ordinary voter.
March 18, 2024
Were you aware of the forces ranged against us in 2016? Did you realize they would stop at nothing to overthrow the largest democratic vote in our history? Did you understand they would subvert the historic institutions and the constitution itself to get their way, even the Monarchy itself? Perhaps you were wise, as Lady Hoey’s mother was when she said “Katie, they won’t let us leave.” I was innocent and thought it was just a matter of enough of us going peacefully to the polling stations in the time honoured fashion and coming away having voted to leave.
March 18, 2024
Truss may have been hasty and apparently secretive, but didn’t imagine the forces at play would so split the Tory party that the foundations are destroyed! In a few words starting a slow and painful death.
March 18, 2024
Question, was the BOE acting incompetently, out of its depth at a time when expertise was required. Alternatively, had they got wind of what Truss/Kwateng were planning, possibly from the Treasury as they must have been aware, disapproved of it, and deliberately set out to spike it.
That their actions undermined the Truss/Kwateng new approach to the economic challenges we faced is undoubtedly true. It is also true that their actions and those of the subsequent coupe derived goverment have done nothing to address those challenges.
Whatever government we return later this year will have to deal with the inherant weaknesses in both the BOE and the Treasury. The basic question will be, who governs the UK, the elected government or an entrenched civil service.
March 18, 2024
What was the existing chancellor doing, saying or directing BOE leading up to these events? Before any election and before it is known who will be in power it would be normal for the chancellor to make sure there is no market turmoil. What was Sunakās actions or directions to BOE prior to Truss taking up office?
I think JR previously blogged the former Treasury mandarin sacked by Truss would not be happy with her, did he exercise any influence over BOE actions?
March 18, 2024
The only thing the Blob and the Markets didn’t know about in advavance was the 5p off the top rate. Everything else had been revealed over the Summer, and the really big commitment, the gas bill package, had already been announced by the PM in Parliament before the late Queen died. That 5p off the top rate would have been cost beneficial or cost neutral. Even if you insist it would have been cost negative, you could not have put a price tag of more than Ā£2 billion p.a. on it, at a time when we had been spending Ā£2 billion a month on free Wuhan virus tests, and very shortly before Mr Sunak chucked another Ā£28 billion at COP with no reaction at all from the markets.
The great big gas package was indeed alarming, but the political and media class would have lynched Miss Truss if she hadn’t announced it first thing, which she did, well before Mr Kwartengs’s Growth Statement. And did the markets react then? The reptiles and Opposition had been clamouring for it all through the Summer and demanding she give its details before she had even been appointed. No, they did not react. In the end, gas prices fell, as predicted by some on Miss Truss’s side, and the weather was warmer than expected, so it all worked out less alarming.
March 18, 2024
You’re talking about the ejection of the previous Prime Minister. I understand quite a few of your colleagues are talking about the ejection of the present one. Apparently the only replacement who would give your party any chance in the polls is Penny Mordaunt. Or would it make better sense to wait until after the election, and make her leader of the Opposition?
I think the picture heading her Facebook page shows what she has in mind.
March 18, 2024
Indeed. Gross incompetence from Rishi as Chancellor and Andrew Bailey at the BoE, the net harm long lockdowns, net harm Covid Vaccines, the endless government waste, the mad Net Zero policy, the prospect for Labour to be in power shortly with a huge majorityā¦ all this helped to weaken the Ā£ too.
āLabourās private school tax raid ācould cost taxpayer Ā£1.6bn a yearā in the Telegraph today. Indeed it will certainly cost more than it raises. In what system of fail competition do some get free education and other have to pay 4 times over for theirs. They should be getting tax breaks to go private not VAT on top. Free and fair markets please. Indeed almost all schools should be private with state vouchers for parents to use ant schools of their choice and to top up if they wish. The evil politics of envy from the socialist dope Gove and Starmer.
March 18, 2024
So Transport Secretary Mark Harper (PPE) was left scrambling as he admits he has NO IDEA how many EV charging points are in place – ‘I don’t know’ or indeed how many will be needed.
Perhaps he should find out and also how much extra grid and extra generation capacity will be needed for the mad plan to move everyone onto EVs, Heatpumps, wind farmsā¦ Clue circa 10x and 20x. It will cost trillions & not even save CO2 when properly accounted for. He is an accountant it seems so should be able to do the simple sums. Not that a bit CO2 tree food is a problem anyway.
March 18, 2024
He also claimed that most EV owners charge their cars at home. But failed to address the point that if you can’t charge an EV at home, they are (a) very expensive to charge and (b) very inconvenient.
March 18, 2024
Sir Geoffrey Clifton-Brown (trying to defend Sunak) āUnited parties win elections divided parties lose themā
But a united party backing all Sunakās idiotic policies of tax, borrow, QE and waste, net zero, every more red tape, ever more often low skilled immigration, ever more government, ever more energy market rigging and EU alignmentā¦ is not worth having.
The election is still winnable as Labour have the same duff unpopular policies as Sunak and worse. Or it would be possible were Tory MPs actually remotely Conservative. Any new leader, even a stuffed teddy wearing a ditch net zeroand cut taxes T shirt would have more chance of winning than the soiled and dishonest Sunak/Hunt.
“Politicians and diapers must be changed often, and for the same reason.” -Mark Twain
March 18, 2024
So the CPC and Central Office should try yo unite with their voters!
March 18, 2024
Following the rigged Russian “election,” the war criminal Putin has declared himself the victor. What a surprise. He has used the occasion to impotently threaten NATO and the West with WW3, should anyone get directly involved in the third year of the Russian 3 day “special military operation” with boots on the ground. So now the world knows what terrifies Putin and his kleptocratic clique in the Kremlin – the French!
Donald Trump, Putin’s lackey in America, is still preventing the House of Representatives from even voting on the lethal aid for Ukraine Bill. Mr Trump is doing this despite the many mainstream GOP (non MAGA) Republicans who support the bipartisan Bill, which has successfully passed through the Senate. Mr Trump’s support and admiration for Putin now extends to frequent statements that he will “pull America out of NATO”
The Chief of the Defence Staff Admiral Sir Anthony Radakin’s assurances during his recent Chatham House speech that Britain was not under any threat – because of our membership of NATO – do not reflect the very real peril that we will be in should Mr Trump win the November election.
Time is short. We have got ourselves directly involved in a major European war, running down our stocks of ammunition, missiles, artillery etc. Hunt and Sunak need to find sufficient funds to re-arm this country NOW, before it’s too late.
March 19, 2024
Don’t 77th Brigade ever give you any leave time, SG?
March 19, 2024
Trump is not a Putin lucky. Obama drew a red line over chemical weapon use in Syria, they were used Obama did nothing. Trump made the same red line, he acted and despite threats from Putin stated they are smart, shiny and coming. He took action, weasel UK hating Obama did not.
Trump is right to call out Germany and others who are rich countries not prepared to pay a fair amount to protect themselves!
March 18, 2024
Totally agree…. Until BoE is bought back under control of the Treasury. Replacing the puppets who run it now. The BoE will continue to destabilise our economy & democracy!
March 18, 2024
@Jude +1 …and the Chancellor is capable of managing his department, the ‘Treasury’, for an on behalf of the UK as he is empowered and paid to do
March 18, 2024
A good explanation but did truss and kwarteng not factor in the BoEās actions? The bond sales and purchases would have required govt permission. Thereās no escaping it was a half-baked mess by truss and kwarteng and thatās whatās killed us in the opinion polls and has ensured – most likely – a Labour govt.
March 18, 2024
I’d like to hear Truss and Kwarteng interviewed together about this, have you ever seen anything like that done? We’re supposed to have balanced reporting were they given a right to respond?
March 19, 2024
They did not know what would happen, what was happening – why would they know now what happened?
March 20, 2024
Because the BoE had issued a āAsset Purchase Facility – Gilt sales – Market Noticeā on 01/09/2022 and a āAPF Bond sale will start on 26 Septemberā document on 09/09/2022.
So Liz Truss/Kwasi Kwarteng should have known.
All information available on bankofengland.co.uk
March 18, 2024
The man in the street has to trust the Bank of England to get things right. What say do we have if that doesn’t happen?
March 18, 2024
Reform?
March 18, 2024
A triumph of hope over many years of experience of BoE incompetence like Majorās ERM fiasco.
March 18, 2024
The ASA rule against Zero Emissions claims for EV cars.
Any associated āzero emissionsā claim needed to clarify that it referred to emissions while the vehicle was driven on the electric motor. It seems though even when being driven they produce far more tyre particulates as heavier. overall they produce far more CO2 and not less.
Perhaps they could now look at the bogus claims for buses and trains. Things like āThis bus can replace 75 carsā Compairing full buses with nearly empty cars when average bus occupancy can be fewer than 10 plus they talk longer routes, stop and start every few hundred yards and they need end connections too.
March 18, 2024
I am not a fan of Grant Shapps, the SOS Defence. However, expecting him to undertake his duties flying in an aircraft that has insufficient air defence and a lack of electronic countermeasures is yet another example of MoD/RAF incompetence. Like it or not, Britain is now effectively at war with Russia. Why present the war criminal Putin with a propaganda coup should they succeed in shooting down Shapps, who was accompanied by CDS Radakin and their entourage?
March 18, 2024
SG, a lack of understanding of modern navigation systems. Most commercial and military aircraft will have inertial navigation systems. Three spinning gyros set to the Lat/Long of the starting point with waypoints in transit. Totally independent of electronics. In my sailing days I used a sextant and AP 3270 which with practice could fix you within a mile of reality. GPS was looked upon as an aid to navigation.
At last resort in an aircraft there is a map and a device called the Mark 1 eyeball.
March 18, 2024
Why would they bother ?He has more identities than brain cells.
I said on here six/seven years ago when the MI6 involvement in the Navalny project was exposed by the Russians that “the capital that will,in a manner of speaking,be reduced to rubble following this manifestly failed march on Moscow will be London.”
I have no reason to change that.You have to hope that the rubble will only be “in a manner of speaking.”
The UK will be totally cut out from the new financial system that Russia,China,BRICS are putting together.
March 18, 2024
What are you suggesting instead, Mitchel, that Britain kowtows to Russia and China as the bigger bullies they are? Russia invaded the Ukraine, Britannica says “the covert invasion of the Ukrainian autonomous republic of Crimea by disguised Russian troops” started the war.
March 19, 2024
The UK has been kowtowing since 1941 and is no longer in a position even to choose to whom it kowtows.
March 19, 2024
Ukraine cut the water off to the 1 million people in Crimea when they had it. No wonder those people wanted to rejoin Russia, who shipped water to them in tankers!
March 18, 2024
Yes, itās catastrophic. And the Russians have the wherewithall to drop the complete U.K. digital system whenever they choose.
March 20, 2024
Oh yes, a āspecialistā from thirty years ago talking.
March 18, 2024
a manner of speaking, else mutually assured wasteland visited on numerous countries.
March 18, 2024
All our leaders live in a fantasy world, a world of pretence, of insane imagination.
Even the shooting down of one of our planes with a minister and civil servants in it would make no difference, and with woke armed forces, they would probably ask if there were enough minorities on the plane, and if not why not.
March 19, 2024
The Russians would never shoot Shapps down. They were tracking him to ensure he was NOT accidentally shot down.
He falls into the same category as Zelensky. And both Jewish marching to a very old German beat.
March 21, 2024
Ridiculous rubbish: Tracking (as e.g. the FlightRadar24 app does for all planes) does not need interfering with an individual planeās GPS.
March 18, 2024
“The Bank of England responsible for the overall solvency of the system at last realised their dreadful error of selling so many bonds when pension funds were so weak.”
You may say it was an error, Sir John but it really doesn’t look like it.
After defenestrating Johnson, the Globalists and their servants in the B of E hadn’t got “their man” in No.10, thanks to the very annoying Conservatively-inclined members of the Not-a-Conservative-Party. So it looks like they deliberately destabilised the Bond Market and engineered what was basically a coup.
That impression is reinforced by the fact that, despite failing dismally to meet the Bank’s target of 2% inflation for around two years, Bailey is still in a job and the Junta are still signing-off his loss-making (for taxpayers) Bond sales.
March 18, 2024
No matter the hiked mortgage rates cause all sorts of financial implications to mortgage holders’ families.
A foolish underhand political move worthy of a dictatorship!
March 18, 2024
+1
March 18, 2024
The globalists had their man in Downing Street. Johnson.
March 18, 2024
Given this background was (mostly) known about by Kwarteng (or should have been) he might have anticipated the effect his announcement of large spending increases (on the energy cap) would have and he should have announced big spending cuts at the same time. I assume the gambling by the pension funds, including the BoE’s own fund, wasn’t known by him.
One common factor links the BoE incompetence on setting interest rates, buying bonds, and the lack of supervision by the FCA which allowed pension funds to gear up to dangerous levels. That factor is Andrew Bailey who was in charge of both. But of course the Conservatives appointed him so ultimately it is their fault.
March 18, 2024
FCA also destroyed fair competition in personal overdraft facilities effectively forcing a 40% interest rate bank cartel racket. The very same banks charge 1/4 of this or less overseas.
March 18, 2024
Around 16% in most French subsidiaries of international banks, which BTW is also what is available in British banks (from Starling at 15% to Virgin at 19.90%).
Only LL gets his O/D at 40%. Or is that ācreative writingā?
March 18, 2024
Thanks, Sir John. As the general lay person in the matter you address, it comes across to me..and it most often comes across to me..that there is an ongoing ‘tinkering’ taking place within our System (whatever area of our British lives we inspect..and here too in the Banking sector. For sure, ‘experts’ (oo, ‘experts, eh?) need to have some special access to what they’re about or they wouldn’t be experts, would they? And yet, not one of these banking experts impresses us with his/her nous of what inspires people (the nation) to get up and out to work their b— off and acquire some satisfaction of a good day’s work, thereby making their contribution to the welfare of our nation. Can it be they ‘have no skin in the game’. (It’s all just a game of chess wiv ’em. It’s not ‘their money’ +no one gets the sack for making wrong decisions). It’s oh so sloppy and second rate. The regular person deserves much much better…
March 18, 2024
@Keith Murray-Jenkins – an expert, generally speaking is, is a leak that is now ex
March 18, 2024
Truss had to go. She wasn’t following the UN/WEF playboik.
Remember she announced the end of the ban on frackung, she wanted to reduce taxes.
Like Trump, she was a disrupter and had to go.
Now your in a mess of your own making with noises od woke in chief leading the party when she can’t even define a woman
March 18, 2024
@Ian wragg – it also begs the question of, is the UK a Democracy when the servants of the State have the power to brief against the elected administration and then force an uncollected cabal onto us.
We need and must get back to 4 years terms in office and having a Government that works first for the UK and its people.
March 18, 2024
Three years better?
March 18, 2024
I found the attacks on Liz Truss from the party disgusting at the time, and this hasn’t changed. Too few speak publicly in sympathy or support for her even when they believe she is right. They dare not upset the party and their position in it.
March 18, 2024
Their handling was the problem. Why no spending cuts announced, given that that interest rate increase would increase government borrowing costs even absenting any tax cuts? Very naive.
March 18, 2024
“It’s not our fault, it’s the woke bankers, it’s not our fault, it’s the lefty international money markets, we did everything right, it’s everyone else’s fault that it went wrong, vote for us and we’ll do the exact same things again”. Thank you, Mr Redwood, for this peek at the Conservative Manifesto for the General Election. I wish you well
March 18, 2024
Evidence shows that the āindependentā Bank of England can take actions that have more effect than even our own Government or HMās Opposition can control.
The power should be in the grip of the UKās Chancellor, if only we had a sensible one instead of a spooky glazed-eyed smile trying to conceal errors.
The sham of the BoEās āindependentā status allows it to enforce opposition to whatever action our democratic Government intends. It works against the will of our people, able to do whatever it likes.
We need an Iron Chancellor to straighten things out: Not this rusty failure; ridden with metal fatigue, attempting to support a weak leader with a paper tiger.
March 18, 2024
I too dislike Hunt, mainly because he lies that he has cut taxes when he clearly has not. His inflation increase for pensioners is also a real pay cut due to to fiscal drag. Hunt’s extraordinary claim that “the NHS is the biggest reason most of us are proud to be British” shows just how deluded the man is.
But Sunak also lies on taxes, fails on four of his 5 pledges and even assures us that “the Covid vaccines are unequivocally safe”. Either he simply has not looked or he is blatantly lying and misleading the house. Perhaps he should come back to the house correct the record.
March 18, 2024
LL,
Read Senator Rand Paulās book Deception. Very compelling that the US paid for the research of gain for function which caused the lab leak of Covid.
UK inquiry no where near the mark of how covid was caused, was it a bio weapon, who funded it and why was it allowed in US or UK of this type of work was banned by the governments funding the research?
So the UK has a half billion sham smoke screen called an inquiry.
March 18, 2024
@Bloke – correct. It is time for an elected, empowered and taxpayer paid Government to get to grips with reality and start working for the UK. The BoE cannot be independent and then have the Chancellor give them taxpayer money to bail out their mistakes, that’s a contradiction. The Chancellor is in control of the money he takes from the Taxpayer, he therefore chooses how it is spent
March 18, 2024
I agree with the historical timeline and the background explanations. Still there is a question, given this financial environment, how comes that Ms Truss who by that time had been a MP for 12 years, had been among other positions Chief Secretary to the Treasury for two years, International Trade Secretary for another two years, then Foreign Secretary, how could she have been (made?) so āunawareā of this environment to let her Chancellor announce temporary spending measures and permanent tax cuts even when some within the PCP (M.Gove, G.Schapps) appeared to have made clear the potential danger of doing so?
āOut of the Blue: The inside story of the unexpected rise and rapid fall of Liz Trussā, H.Cole & J.Heale, 2022, HarperCollins.
Do we have to expect further explanations/revelations when Ms Trussās book āTen years to save the West: Lessons from the only Conservative in the roomā (!) is published in April?
March 18, 2024
They should have announced spending cuts at the same time and gone for the win/win of cuts in red tape and vast tax simplification also her huge energy give away was a big error. Letting people economise & wear more jumpers was a better strategy.
March 18, 2024
Hef,
Good point. What was Sunak doing as chancellor to ensure stability in markets before leader change or election? It is reasonable to assume he spoke to chief mandarin of Treasury and BoE governor. Surely he would do this for his own self protection if he was elected to be PM? Why was the chancellor not all over the bond sales? Sunak (former banker) should have known the insides out of all what was happening and given a view to the two key players of his expectations if not he was and is totally unfit for office.
What do think Hef?
March 19, 2024
I had a comment about a BoE announcement on 01/09/2022 but it has not appeared (yet?).
March 18, 2024
She ought to be able to put together a thought provoking presentation for the speaking tour of USA, EU. Arab countries. Big bucks to be made.
March 18, 2024
Is it a colouring-in book?
March 19, 2024
Perhaps that applies more to Sunak/Hunt!
March 18, 2024
Liz Truss (another PPE Oxon LibDem) who was though belatedly coming round towards fairly sensible policies. Alas she lacked the skills to deliver. Her vast energy subsidies were a huge error as was not cutting government expenditure and the endless government waste first.
But she had no chance as it was clearly a coup planned even before she won the members vote.
March 18, 2024
She wants us to be on the losing side in WWIII. Nuff sed?
March 18, 2024
@hefner – someones personal opinion, created to earn them money doesn’t make it any more true than the argument that the Establishment, the ‘Blob’, even the BoE saw their jobs on the line so briefed and acted against the Government
March 18, 2024
Ian B, You might think they are personal opinion, but these two guys are journalists, Harry Cole political editor at The Sun, before at the Mail on Sunday, James Heale from The Spectator.
Are you telling me these two are dangerous left-wing extremists?
You should get out of your fish bowl a bit more often.
There are still a few public libraries around, use them before they all disappear ā¦
March 18, 2024
@Heffer – exactly, selling a story for profit. Seemingly no experience just a personal opinion. Story writers a the publications you mention are creators of click bait to do nothing other than exposed advertising.
March 18, 2024
Clearly Liz Truss and Kwasi K were inept in their handling of their budget but by far the largest expense (help with heating) had been well trailed and mostly accepted. It was the much smaller (in cost terms) cut in high income tax rate that really seemed to upset the media. The LDI problem had also been well known inside the pension industry for at least 18 months but nothing had been done by The Pensions Regulator – I suspect neither Truss nor Kwanteng were aware of LDI – but the BoE should have been (their entire staff pension pot was in LDI). Coupled to this Gilts had been sinking since the beginning of that year – Truss caused a blip but not the underlying problem. So a combination of naivety (on Trusses part) and perhaps incompetance (or bum covering) by the BoE & TPR – helped along by large doses of Hedge Funds seeing the chance to make some fast money.
Interest rate rises were certainly not down to Truss but that is the accepted ‘Narrative’ now and what Labour will keep repeating until it becomes undisputed “fact” (which it already is at the BBC)
March 18, 2024
@IanT – in his previous job aa the boss of the FCA Bailey highlighted the dangers of high commitments to LDI’s then failed to act. In effect he was covering his back
March 18, 2024
hefner
Just a thought, and not being aware of the facts, perhaps the simple explanation is:
Perhaps knowing time was limited, she simply got carried away with her own enthusiasm, and whilst clear in her own mind of what she wanted, she failed to explain and talk it through properly with others in advance, perhaps fearing the usual leaks, or briefings against her in advance.
Unfortunately she did not explain in more detail immediately during, or after the event.
March 18, 2024
Are you telling me that someone who had been a Minister for more than 10 years did not know how the system works. Furthermore from Johnsonās resignation (09/06) till her election (05/09) she had been campaigning and discussing her plans. I would hope she might have had a lot of people around her to help sharpen her arguments and possibly give her the pluses and minuses about what she projected to do and how to do it.
In another context I doubt she would have been selected and chosen to be a CEO of any sizeable company.
March 19, 2024
Hef,
I understand your point. Truss was a Secretary to Treasury and should have a broad understanding. Perhaps this is where she came to dislike the top Treasury mandarin.
However, what authority did she have to control or direct Treasury or BOE prior to coming to be PM. Sunak was in post and had authority to control both and direct both.
There should be an investigation because HMRC helpfully puts debt and debt interest on the itinerary of our tax bills. Why should we pay for BoE incompetence or deliberate rigging of markets to oust a PM?
March 18, 2024
To win the next election the Tories need a new leader with new policies – 180 degree U-turns on net zero, woke lunacy, immigration levels, tax levels… 1 out of five pledges Sunak really must go. No change, no chance (even worse than it was with John Major as post his ERM fiasco (still no apology from the dope) the economy was improving quite well by the time of the election). It is still getting worse under Sunak and Hunt and taxes are still rising. Yet these two lie that they have cut them.
March 18, 2024
I disagree. The Tories can’t change now; it would mean an immediate election; you can’t have another big payoff of people at the top and a merry-go-round of positions in the cabinet. The public elected at least Cameron, May, and Boris; it should have been the public removing Boris, not a trial by the media; he’d still have won.
I didn’t want Sunak; I warned them this would happen; people don’t like Snakes and backstabbers. I wrote to my MP and asked him not to vote for him.
March 19, 2024
Not May she required support from DUP to form a govt. May then acted against the DUP! May can now leave as EU lock step is secured whichever half of the Uni party is in power. Reform is the only way to get change.
March 19, 2024
Can Reform win more seats than the uni party? Because they will join together to defeat any Reform Government (should a miracle occur).
And we lose FPTP and forever lose the power to make politicians deliver a manifesto, or to sack a Government. Better to have Starmer for 5 years.
March 18, 2024
@Lifelogic – anyone not in this so-called Conservative Government, preferably the least experienced but a Conservative would walk the next election – just look how bad the alternatives in other parties are! As it stands this Socialist anti UK, anti the electorate party needs to be got rid of at any cost
March 18, 2024
Today the Express reports “UK taxpayers’ bill for keeping asylum seekers in hotels rockets to Ā£8.2m a day”
That’s only the start of the financial abuse the Not-a-Conservative-Party is inflicting on British taxpayers with its refusal to leave the ECHR and return the criminal migrants back to France, whence they came.
They have failed in their most basic responsibility: defence of the Realm.
March 18, 2024
Legislation last August made it clear they have no legal status or right to apply to stay here. Loughton asked Rycroft about this at the select committee. Rycroft kept repeating their applications were being processed. How can that be so after legislation last year? Cleverly was looking down thumbing his file to try to look busy. It was embarrassing.
JR, please tell us why boat people with no status and no right to apply to stay here are not deported.
March 18, 2024
Ā£8m a day and rising… Then when all allowed to stay what will be the costs of housing, general benefits, NHS and soon after hordes of family joining them.
March 18, 2024
And the inadequate provision of Health, dentistry, education, housing, congestion, welfare bills, our culture and heritage, ESG and EDI to put English men as second class citizens in their own Country by the import of 1.3 million legal foreigners each and every year. A total disaster but Tory policy. Illegals never turned back or deported…… ever. A deliberate policy, Rwanda is all smoke and mirrors. ECHR makes foreign criminals more important than English peoples safety. Fact. We need Reform.
March 18, 2024
“The Bank of England deliberately hiked mortgage rates”
Sir John
Of course they did, the BoE is a political organization that as with this Conservative Government is fighting the UK People. It is also why the work in unison to the FED & the ECB, again as with this Conservative Government they do not at anytime work with of for the UK, the greater good of the County.
If my thinking based on what is happening in evidence was wrong, this Conservative Government as our elected, empowered and paid for Government and as the ultimate managers of the BoE would have removed them years ago.
March 18, 2024
There are a lot of vested interests, who made a contribution to the pensions/bonds meltdown, who are more than happy all the blame has been heaped on Truss and Kwarteng .
Gordon Brown stripping Ā£100bn and counting from the pension funds.
Gordon Brown’s failed financial regulator.
Gordon Brown removing banking oversight from the BoE.
Gordon Brown (and George Osborne I think) instructing pension funds to hold a greater weight of Gilts.
Which was all not very helpful to pension funds when we got the banking collapse and Quantitative easing. This I gather led them to leverage their Gilt portfolios to get some returns , including the BoE’s pension fund . So when bailing out the pension funds with their emergency quantitative easing , they were bailing out their own pension fund. Conflict of interests anybody?
The Ā£80bn of quantitative tightening the BoE announced the day before the budget has not been explained. The MPC meeting the month before said in their minutes they would only do this if the financial markets were stable. In what definition of ‘stable’ could be applied to market conditions around the time of the budget?
I see letters exchanged between the BoE and Kwarteng are to be found on the Government/Treasury website, giving notification of the QT policy and Kwarteng accepting it . It would be interesting to find out from Kwarteng exactly what details he was told about it, and who advised him to accept the policy?
What is also hard to understand is why the Conservatives are happy to have Truss solely blamed for the melt down, or perhaps not as the current incumbent of No10 and the One Nation Tories got to profit from it , and they don’t mind the Conservatives losing their claim of economic management in the process , as long as it disses the other arm of the party that is fine by them, as we saw when shamefully even some Conservative MPs sought to filibuster out Truss’s bill last Friday, including the Minister.
March 18, 2024
Plus Ƨa change etc
Charles 2 had bankrupted the goldsmiths by not repaying his debts.
So that European, William, set up BoE ( he and wife main shareholders) with tempting interest rates on loans that undercut the poor goldsmiths.
Then the relatively rich sheeple of those days obliged by opening accounts.
Thus the king funded foreign wars and democratised debt ( before democracy even!)
The BoE took our gold. Then even our paper ( suddenly plastic was ok?) for our safety you understand!
Then they limited our access to our own money. ( I assume the BoE makes the rules?)
Next weāll only be allowed to keep Ā£20000 digitalā¦.
March 18, 2024
Yes, are you about to write the Ladybug version of the UK financial history for 4-7 year olds?
March 19, 2024
There actually is a series of LadyBIRD books for grown ups.
(Why on earth would you put Ladybug?)
But naturally grown up books would be of no interest to you.
March 18, 2024
Then AI will rob us all digitally…
March 18, 2024
I read somewhere that Liz, victim of a coup, said that despite the decades she had spent in politics she did not realise until reaching Number 10 that the PM had so little power.
Did she mean that the BoE is in total charge?
Looking at the present draconian messā¦if only she could have stayed.
March 18, 2024
Dont think Bailey has the brains to dream up such a scheme.
March 18, 2024
Putins Russia election result today is undemocratic, the war against its neighbours unjust and yet we still sit with them as one of the five permanent members of the UN security council ā¦.the UN needs reform, our membership needs review and our approach to Russia clarified
March 18, 2024
āThe Bank of England responsible for the overall solvency of the system at last realised their dreadful error of selling so many bonds when pension funds were so weak.ā
Why should we be challenging the establishment economistsā decisions?
Surely we should be accepting their expertise just as we must accept that the establishment scientists (the 97% on the tax-payer funded payroll with mortgages) agree that we have an existential threat from an imminent climate crisis/emergency caused by the UKās burning of hydrocarbon fuels requiring the unilateral economy destroying Net Zero Strategy enforced through fines , laws and ever stricter regulations on the amount of energy, food and travel we consume and turning us into a command economy communist state without any mandate.
It is time we had a referendum on whether or not to continue with this dreadful error.
March 18, 2024
Off topic, but current.
I note that Sainsbury’s and Tesco had ‘system problems’ recently. Most of their payment systems were out of service. It was notable that while the high technology systems had failed, both Sainsbury’s and Tesco were still accepting good old cash.
What guarantee do we have that when the Bank of England transitions to the ‘Digital pound’, their critical system won’t be subject to the same incompetence ?
Can you imagine? If the CBDC technology fails for two or three days, no one in the UK would be able to conduct a commercial transaction!
Given the record of the British government with technology projects, probably means it’s going to be an utter disaster!
March 18, 2024
I imagine several malign states have already prepared internet-enabled economic blitz on us when needed.
March 18, 2024
In August 2022, BoE said it would reduce guilt holdings by Ā£80bn, initially aiming to sell Ā£8.7bn of gilts, some with a maturity of 20 years.
Sep. 23rd 2022 Truss mini-budget.
Reuters wrote 1 Nov 2022 ā “The BoE sold 750 million pounds of British government bonds with a remaining maturity of three to seven years at its first gilt auction 27 Oct”,
How much did they sell altogether before they bought some back?
“2009-21 Bonds bought during successive quantitative easing (QE) = Ā£875 billion…
1.11.22. Holdings fell to Ā£838 billion.”
So, did they sell Ā£37bn, and at what average rate? There was a lot of demand, but it didn’t say from whom.
On Oct 13 at the PMs weekly audience with the King he said, “So you’ve come back again!” LT replied “It’s a great pleasure”, he responded, “Dear, oh Dear”.
Liz Truss was blamed for the chaotic sell-off in gilts for unfunded tax cuts. The article claims this “forced the BoE to buy back Ā£19 billion of long-dated and inflation-linked guilts until Oct 14”. Truss resigned on Oct 20th – job done.
I didn’t understand what the difference was between bonds and gilts. This article says British Gov Bonds have a longer average maturity than those issued by other Countries. The BoE has to sell Gilts to achieve the same pace of balance sheet reduction that other central banks would get by allowing their bonds to mature.
https://www.reuters.com/markets/europe/why-is-bank-england-selling-government-bonds-2022-11-01/
Reply Gilts (sic) is the name for UK government bonds. US govt bonds are known as Treasuries and German as bunds. UK had borrowed longer on average which gives greater stability to financing. QE created great instability by effectively financing govt by volatile commercial bank reserves held at B of E.
March 19, 2024
LT could have responded to Oh dear ,oh dear. by saying thats just what I was going to say!
March 19, 2024
Thank you. I tried to look a little more into it because I didn’t understand what they were selling, why they had to sell at a loss and why they repurchased them. If the UK borrowed ‘long’, does that mean they got a fixed interest rate on those longer-term loans? Were they repurchased to stabilise public sector pensions because those investment marketeers with LDLs had profited from the investment in the way it was? It’s frightening how much of a house of cards our financial sector depends on.
Yes they borrowed long at a fixed rate. The Ā£19 bn purchase was to stop the price falls the Bank had triggered
March 18, 2024
The (to me) very welcome rises in interest rates (even if insufficient to compensate for inflation) are lied about as to cause by Labour but truth is not essential to its message, being that the Conservatives have lost their reputation for adroit economic management.
March 18, 2024
So much incompetence and errors yet Bailey still reigns in the BoE ; how one man and his cohorts can still be in office is simply a reflection of the lack of judgement and leadership existing in 10 Downing Street ; no wonder that the cry is stronger than ever for change . A hole exists in Sunak’s priorities and his present cry for continuing support is ludicrous ; I want him OUT.
March 18, 2024
So much incompetence and errors yet Bailey still reigns in the BoE ; how one man and his cohorts can still be in office is simply a reflection of the lack of judgement and leadership existing in 10 Downing Street ; no wonder that the cry is stronger than ever for change . A hole exists in Sunak’s priorities and his present cry for continuing support is ludicrous ; I want him OUT. This is not a repeat – it is a despair from a long time Conservative voter .
March 18, 2024
How much more evidence do we need to have before it is clear to everyone that national institutions like the Bank and the Treasury are actively destroying the economy of the UK.
Incompetence is not the reason – We are being deliberately conned, with daily theatre to think these institutions are working for our best interests – BUT they are NOT!
How does wrecking an economy help us?
March 18, 2024
BH : āHow does wrecking an economy help us?ā
It doesnāt of course.
It is deliberate. Parliament, the Civil Service, the Judiciary, the educational establishment et al have been captured and are deliberately taking us back to the pre Industrial Revolution feudal Middle Ages using unreliable chaotically intermittent weather dependent energy sources and importing cheap labour with Medieval practices, laws, cultures and blasphemy.
March 18, 2024
Right from the first day that it appeared that the Truss government was under attack, I felt certain that it was a deliberate attempt to bring down a government determined to buck BofE and Treasury authodoxy.
As things developed, it became even more obvious that this was no less than an establishment coup to oust a PM elected by the party and replace her with Sunak who was the establishment’s preferred candidate but who had lost the election.
Truss and her Chancellor made a deliberate choice in bypassing the OBR. In this they were right. The OBR has grown too powerful and always sides with the Bank against ministers.
Liz Truss could not have foreseen the ruthless and unprecedented way that Bailey and his fellow conspirators would react.
Subsequent events have proved her right : There was room for modest tax cuts and the increase in corporation tax was a mistake.
Unfortunately the Establishment won on this occasion. It cannot be allowed to do so again. It also means that recovery has been delayed and any chance of winning the election has gone. Essentially, the conspirators have handed the election to Labour.
March 18, 2024
The narrative still being spun by much of the media and many politicians is that it was all the fault of Truss and Kwarteng.
Fake news from the BBC as usual.
March 18, 2024
This would be a great thing to put on sites like Facebook so that the general public know that it was the bank of England that caused the problem not Liz Truss’s policies which were never really implemented
March 18, 2024
From the Media
“Sunak urges Tories to āstick with the planā as leadership talk grows” – can some tell us what plan that is?
A Socialist UK, higher taxes now by by the backdoor in hope no one notices. Pensioners hammered, no NHS just a Whimsical promise. UK industry and business decimated – exported to fulfill the deception that is NetZero. Criminal entry into the UK with these people fully funded and cared for by the taxpayer that has to keep paying.
March 18, 2024
On Monday, Mr Sunak will deliver a major economic speech in Warwickshire, in which he will pledge to seize post-Brexit freedoms to slash red tape for firms. – more promises! Sunak has given the EU Control over UK Vat, that means the UK economy – so it will be just another promise to add to the bonfire of promises.
March 18, 2024
āThis isnāt a Government that is only interested in policies that are going to help our election process.ā Michelle Donelan, the Science Secretary, the Prime Minister āwill take us intoā the next election. He warned restless Tory MPs that āpolitics is a team gameā, telling Sky News: āIām going to be supporting him all the way through, and Iām confident that my colleagues will.ā
So why did this so-called Conservative Government lurch Left desert the center ground desert and kich all Conservatives in the teeth? 14 years of moving to the left of Labour and each promise consolidating the move to Socialism.
āpolitics is a team gameā and this Conservative Government to a man/woman has deserted the team
March 18, 2024
a team game until someone drops the ball, and they turn on the guilty.
March 18, 2024
“allies warn PM will call snap election if Tory MPs try to oust him”
What difference would it make either way? It would just show how petty this Government has become – they deserted the Countries Center so good riddance. They real punishment is this lot has had more than 4 years to wreck the UK. They join the BoE wreaking crew
March 18, 2024
Best reason I’ve heard yet for trying to get rid of him.
March 18, 2024
It can’t happen soon enough. We are suffering death by a thousand cuts.
March 18, 2024
But why did the BoE not know the perilous position of pension funds? Aren’t they supposed to know what is happening in the markets, and why did they not know?
Who is supervising pension funds if not the BoE?
Why had Andrew Bailey not been sacked for incompetence and gross misconduct?\
Oh, of course, we have an intellectually weak PM and Chancellor who don’t have a clue how to run the UK economy. Will they not change the tourist tax because the PM is vain and can’t accept that he made a bad mistake as Chancellor? Get your letter in, Sir John, because the next GE is lost if you tolerate Sunak, Hunt, and Cameron!
March 18, 2024
Because itās the role of the Pension Regulator, linked to DWP (gov.uk āThe Pension Regulatorā)ā¦
March 18, 2024
UK State of Play
UK PM Ā£75,440
UK Cabinet Minister 67,505
above is without the generous expenses
London Mayor Ā£171,587
Mayor’s team av Ā£144,958
March 18, 2024
PM and Ministers, on top of their Ā£86,584 as MP.
March 18, 2024
As prime minister, Rishi Sunak is entitled to an annual salary of Ā£167,391. The prime minister’s earnings are made up of Ā£80,807 for the role of Prime Minister, and an additional Ā£86,584 for being an MP.
He should not be earning less than the Mayor of London.
March 19, 2024
but looking at the encumbents – you get what you are paying for, and we are being ripped off!
March 18, 2024
The BoE is a defacto quango ā¦.if you canāt control it; disband its control of monetary policy and bring it back in-house to government
March 18, 2024
The BoE hike in rates a few hours before the Truss budget was announced was too suspicious to be coincidental.
I believe it was a deliberate attempt by the BoE, aided by the Treasury, to discredit Ms Truss and her Chancellor because they did not follow the establishment line with their tried and failed decrepit rules of economics. Sadly they got their way and got rid of these new interlopers.
Consequently, this country has suffered badly since the takeover of October 20th 2023 both economically and globally.
It’s beginning to sound like the 70s again, when another socialist government brought us to our knees.
And it’ll only get worse if the true socialists gain power again. Then it’s definitely dĆ©jĆ vu 1970s.
March 18, 2024
Tata Steel have closed down Port Talbot; but donāt worry, they can still source all the steel from India
March 18, 2024
@glen cullen – and Sunak gave them taxpayer money to do it. The UK now needs to import speciality steel from the Worlds greatest polluters, so as to save the World – bizarre. Tata they gain twice, money from the UK taxpayer, then the opportunity to supply the steel we are now no longer permitted to produce in the UK from Tata’s high polluting factories outside of this NetZero nonsense. Sunak has committed over Ā£1billion of taxpayer funding to the Worlds biggest polluters, and our taxes keep rising
March 19, 2024
You wont see that policy in their manifesto
March 19, 2024
Mostly the steel is of poorer quality than we need so it has to be remelted and have additional material.
March 18, 2024
Dear Sir John,
Thank you very much for setting the record straight. This is exactly how it appeared at the time, when most of us heard for the first time of this derivative wheeze used by closed pension funds and wondered if the Bank knew about it.
Every day, it seems some pundit or party apparatchik still trots out the cliche that Truss/Kwarteng “trashed the economy” and is never challenged. They should be presented with your accurate record of what happened.
We shall never know whether that Budget would have helped or made things worse if it had been enacted. As it was not, it is nonsense to say that Ms Truss “trashed the conomy”.
March 19, 2024
So basically the Banks are running this Country.
Who is controlling The Bank of England ?
March 19, 2024
the WEF?
March 19, 2024
While it is true that we would have had higher interest rates regardless of the Truss budget, due to the UK being a āvassal stateā to the USA, I donāt believe that you can let Truss off the hook. Her budget was tin eared and made too much change to quickly, even if her goals of increasing productivity were right.
The independence of the Bank of England was prevented government from bribing the voters with low interest rates to the detriment of the country in the long term.
March 19, 2024
The EU is to pay Egypt a large sum to curb illegal immigration. When Frau Merkel used to do the same with Turkey, she got Cameron to write out the cheque. I wonder if that is still happening, now he is in charge of the aid budget.
March 19, 2024
‘On the following Monday it became clear in the market that a number of pension funds had bought too many government bonds through levered funds.’
The market already knew this.āAs did the Bank of England.āBoth had read the Pension Regulator’s warnings of the danger LDIs posed to pension funds.āPR said afterwards that all they could do was warn as they didn’t have the powers to do more.āOne of their warnings is this blog post from August: https://blog.thepensionsregulator.gov.uk/2022/08/16/why-it-is-important-to-keep-asking-questions-about-investment-strategies/
Of course, the pensions were leveraging because yields have been so poor due to low rates to ‘fix’ the previous financial crash.āA crash caused by the previous ‘fix’ and so on…
March 20, 2024
All true but two factors not mentioned:
1. That the BoE’s own pension fund was 100% invested in LDI (leveraged) funds. Some time later they had reduced it, but only to 82%. Which begs the question – who were they saving?
2. The BoE governor must have known the effect his announcement would have on markets. He shouldn’t be in the role if he didn’t. So why make that announcement knowing that it would destabilise markets?
While we are talking about the facts, we might add that a Sunak-appointed governor’s actions led to a Sunak coronation. That is a fact, whether one believes it was coincidental, accidental or otherwise is a matter for conjecture and personal opinion. And there will be the usual mutterings about the WEF and their influence.
Note: LDI funds had been showing signs of problems for some time – and in fact they have been in far worse shape after Truss was conveniently despatched, without anyone mentioning of it. Go figure.
March 20, 2024
It is good to get confirmation that the BofE caused the Truss crisis. I always suspected she was unjustly treated.