The Bank of England announced again thisĀ week its plans to sell some of the bonds it bought at much higher prices. Lower bond prices mean higher interest rates. Ā When it last announced this it then was forced by the Ā market into wanting rates lower so it flip flopped and bought more. Now it wants rates even higher so it plans to sell them again. I think they are wrong to be selling at current levels. They should wait until they can lower rates again when the bonds will be much moreĀ valuable. Longer rates are quite high enough to curb inflation, as most forecasters see it coming down next year after a probable peak next month.
Mr Sunak as Chancellor approved Ā£450bn of bond buying and got the Treasury/taxpayers to underwrite Ā all the purchases. When the Bank does sell and takes a loss that loss has to be paid by the Treasury. All Chancellors from Darling onwards agreed to bond buying and agreed to pay any losses.Ā As the decision to buy was a joint one between the Chancellor of the day andĀ the Governor, and as the Treasury pays the losses, the Chancellor should tell the Governor he does not have the money to pay for taking losses now and the bonds should be held for better times. How much is the Bank planning to want the Treasury to find to cover losses over the next twelve months? Bloomberg suggests over Ā£11bn.
This week Mr Hunt signed off a Bank scheme to lend money to energy companies if they needed it. Once again the taxpayer through the Treasury is guaranteeing the Bank against loss. I think the government should be more careful about all these guarantees.
As Mr Hunt tells Ā us he needs spending cuts to reduce the deficit he should start with this one. He must tell The Bank he will not pay for losses on bonds they do not need to sell. That will save us billions. Sometimes saving money can be popular and easy.
October 23, 2022
Exactly right surely on all of the above.
Loads of other areas to save Ā£ billions from the government’s vastly wasteful and hugely misdirected expenditure too. Start with scrapping HS2, net zero, all diversity officers and net zero officers, the committee for climate change, all the woke lunacy, the soft loans for pointless degrees (about 75% of them), about 50% of what government does, the masses pointless and damaging red tape, the appalling waste in the NHS… see the excellent recent videos on the increases in Maternity Deaths by Dr John Campbell. (indeed see all of his excellent videos – the rather terrifying New Boston virus one for example.
Inflation will clearly fall as the energy price increases fall out of the annual figures after a few more months. Inflation could fall more quickly if they ditched net zero, energy market rigging, green “levies” and other sales taxes. Without these and this bonkers net zero religion electricity could easily be 10p per KWH and heat less than half of this. I KWh is sufficient to power an LED (equivalent to a 100W incandescent lamp) for over 40 hours so just 0.25p an hour. So one hours work at minimum wage gives you about 3000 hours of decent light.
October 23, 2022
JR,
So what are the MPs in your party going to do about Sunakās and Huntās economic mismanagement? Take BOE back under control? If not why not, we do not want Bailey and remainers playing roulette with our finances!
I do not want Bailey andāhis little helpersā acting against our national interest. ThT appears to be economic terrorism to get their remainer way.
October 23, 2022
+1
October 23, 2022
+1
October 23, 2022
Sunak is a busted flush and will not be able to get away from the eat out to help out stupidity economics or how he got our country in this financial mess in the first place. The BOE in side step with him!
To promote tax increases while at a 70 year high, in contrast to reneging on manifesto and will cause a recession while in Ā£2.3 trillion of debt over double what Labour had shows how stupid socialist Tory MPs are for voting for him. Public trust has gone and this is the best your left wing party can offer!
October 23, 2022
The BoE is anti tory and by and large anti Britain. The bank wants us back in the EU so is quite happy to rack up their level of debt.
We really do need a fiscally continent government and that doesn’t include the liblabcon.
Come back Nigel.
October 23, 2022
Please come back Nigel
October 23, 2022
You missed ending the taxi service, luxury hotels, free phones and spending money for illegal immigrants. I don’t think there is another country in the world that makes itself so attractive to migrants and then blames other countries for not blocking the inflow.
October 23, 2022
+ millions – one for each illegal immigrant that is treated better than LEGAL citizens. This government can’t pile ’em in quick enough.
October 23, 2022
Sunak was number 2, he knows how much these illegal immigrants cost each day, circa Ā£5 million. He knows morally that taxpayers are suffer through high taxation while he provides four star hotel accommodation to criminals! Rest assured Javid was proud to close detention centres to keep control of where they go and stop them entering crime. Javid knew the consequences but did not care. Sunak knows there was 1.2 million visas issued all against the dishonest manifesto to reduce immigration!
October 23, 2022
Sunak also likes that illegal immigration is an easy way to increase GDP
October 23, 2022
When I was a boy I lived in Brighton. To prevent illegal invasion, one pier was blown up in the middle and machine gun emplacements were all along the coast. This was in 1940. It is a pity we can’t do that now.
October 23, 2022
Yes but your govt did not want to cause the cultural destruction of the UK! Socialist Tories do, there is no other reasonable explanation left. They keep lying to the public because the public over 12 years stupidly kept voting for them!
October 23, 2022
If the rating system had not been abolished, then its income would have exceeded that raised by CT by almost exactly the amount being lamented as the budgetary shortfall.
October 23, 2022
That’s a big guess NHL
I’m surprised bill hasn’t demanded you provide proof.
October 24, 2022
NLH doesn’t do evidence – wild theory is his game.
October 23, 2022
As usual spot on. Sir John please note. Here lies the route to an unexpected re-election.
October 23, 2022
The bond selling is to achieve interest rate manipulation, is it not, with the Bank saying it will not include long-dated bonds in the sale as it does not wish to drive up the long end of the yield curve? So, instead of crystallizing book losses on its bond portfolio, why does it not just rely upon its MPC raising Bank Rate the week after next?
I miss the forward guidance of Governor Carney’s days, for that was a clear indication that something different would happen.
October 23, 2022
All this reminds me of when Brown blew our gold reserves, carefully having talked the market down. Incompetent politicians and civil servants can lose billions and the rest of us get the bill.
October 23, 2022
I think a lot of people would be very happy to buy gold at $275 today – as it’s currently over $1600 and drifting upwards. Gordon believed in MMT and that inflation was effectively dead. So obviously we didn’t need gold any more. Unfortunately, Putin and the Chinese don’t seem to share his views, they have thousands of tons of it.
October 23, 2022
But is it incompetence, Stred, or something more sinister?
October 23, 2022
Spivs who made a losing bet on a carry trade with money ‘borrowed’
from shorting bullion. Shorting should be criminalised the same as selling valueless
derivatives. What should banksters do then? Get proper jobs and stop assuming they are so special they can parasitise on the rest of us.
October 23, 2022
A lot of traders short to offset their long postions FH, it’s a useful way to help protect a position. This is just one form of ‘hedge’ and there is nothing intrinsically wrong with doing it. Of course some investment pools (known as ‘Hedge’ funds) do make ‘speculative’ bets using shorting but they are still speculative (e.g. high risk) and I suspect that fund managers don’t talk too much about the ones that backfire. However, the guys who run these funds are pretty bright and I’m sure they would have seen our recent LDI pension issue as a lucrative accident waiting to happen.
October 24, 2022
Let’s get back to basics, Ian. Stock markets exists to enable entrepreneurs and investors
to fund businesses to provide the goods and services that the market desires. They do not exist to enable spivs to use market manipulation to fund their lifestyles and much of their activity is detrimental. The fact that that is nevertheless legal demonstrates that such spivs have a overmighty influence over political parties through political funding. These spivs do not add value and they do precipitate financial crises from time to time which the taxpayer is expected to bail out through the central bank.
October 23, 2022
Proof positive of this is the Truss short tenure. She lost us 60 billion overnight and walks away with Ā£115,000 a year for life having just done a few weeks in office and a limo to take her anywhere she likes and we foot the bill for her stupidity. Presumably all the other losers appointed for a day or two get severance pay as well. It must stop. Politicians must have a limit on their enormous powers to lose us so much.
October 23, 2022
You are going after the wrong target, the victim of what went on that week. We are the victims too. We now face poverty and decline when it might have been independence and prosperity.
October 24, 2022
No, going after the perpetrator – Truss. She lost the money and wrecked what the Tories had left of the economy and should not profit from it. I don’t understand your position.
October 23, 2022
Well someone else is on the other end of that “bargain”. If they were uncovered shorts the actions above may well have bailed them out of large loss positions.
Seems similar to me of recent BOE bond action “benefiting the market” those with loss positions.
Those funds should re-imburse HMG for any subsequent losses on those.
October 23, 2022
Carney failed to keep to his rules. He never complied and changed each time it suited! This bunch of socialist have not changed the Brownās 45p rate over 12 years! Gutless socialists Halfon and the left wing dopes.
October 23, 2022
Both Sunak and Johnson have depressed our standard of living by their mass immigration policy and highest ever taxes without a mandate to do so, put us in danger from their open door policy allowing 18 million in from covid hotspots during the first stages of covid in stark contrast lock down the country, held unlawfully to send elderly people from hospital to care homes when Johnson made clear he thought covid attacked old crusties!, the exception to lockdown rules, BLM and Ex rebellion, allowed to tare down statues and cause economic harm by shutting main roads while the police danced to LBGT music, peaceful anti lock down gatherings forcefully arrested by police.
After printing an extra Ā£150 billion causing rampant inflation and debasing our currency we are told by JR that the BOE deliberately caused a run in the markets which helped oust the recent PM and chancellor!
No, the socialist Tory candidates from the socialist Tory party deserve being exiled from the country- encourage Sunak and Johnson to go to the US as they love it so much- not put in the highest public office as PM because both severely harmed our economy, way of life while also trying to destroy our culture when not having a mandate to so and lying to claim the opposite in their dishonest manifesto.
October 23, 2022
Indeed Osborne should have ditched Brownās delayed tax bomb of 45% and 50% the day he took office as Chancellor then we would not have had the problem now. He should also have kept his IHT promise of Ā£1 each we still have just Ā£325k.
October 23, 2022
“Mr Sunak as Chancellor approved Ā£450bn of bond buying and underwrote all the purchases.” – alas not Sunak personally but taxpayers were forced to underwrite this. Sunak (and now Hunt) vastly overtax them thus killing any growth, strangling productivity and reducing the tax base.
October 23, 2022
QE, and now QT, is not well understood. Not long ago our host was suggesting a NET figure, ie total gov’t debt less that bought by the BoE, be used as the real amount of government debt. If that were possible, then there’d be no problem, now it is clear that is not correct. The BoE has issued the Ā£ to the government, and the government has spent it. The BoE needs to get the Ā£ back in order to cancel the cash created/issued. Learn that lesson.
Until the BoE can cancel the Ā£ issued, and creates no more, we will have high inflation. If the economy shrinks, as predicted, inflation will be worse. We are heading for hard times, we need someone who understands that, and the fiscal machinery. Bunter Boris is NOT that person. He had a great opportunity and blew it. We now need someone economically and financially literate.
October 23, 2022
Good morning.
It’s the same old game being played as per the one in the financial crash of 2008 – Privatise the profits ans socialise the losses.
Or perhaps this payback for their help in getting rid of both Chancellor and the PM ?
October 23, 2022
Correct. They’ve already socialised the losses of the “futures-based” energy companies they encouraged ….. by ramping up everyone’s Gas/Electricity Standing Charge to pay for bailing them out, regardless of whether they were a customer or not.
October 23, 2022
Agreed Mar,
We read Hunt putting up taxes, again, by Ā£20 billion while guaranteeing energy companies! What idiot let Hunt anywhere near our cheque book! Oust the idiot before it is too late, cancel his remainer budget which will tie the hands to any sensible budget balance.
October 23, 2022
Unless you’re a small business, in which case your profits are socialised with tax and your losses you bear yourself.
Capital gains tax as well. There’s no capital loss tax relief.
October 23, 2022
Not quite correct Dave – you can claim losses on chargable assets upto four years back.
October 23, 2022
There is no personal responsibility. People can be as incompetent and stupid as possible, and lose taxpayers money hand over fist but they will still be rewarded, either with a golden handshake, massive pension, gong and possibly a lifetime of easy money (for doing nothing) in the Lords on top of everything else. The whole set up of public servants and the unelected is totally without merit or reason. There is no incentive to do the right thing, or do it well. The ‘failures and incompetents’ gravitate towards the civil service, because they know they have a job for life regardless of them being lazy, stupid, no work ethic and zero morals.
October 23, 2022
Absolutely Shirley.
There is no pride in doing a good job because there is no pride in the nation and its people any more.
Many in the civil service are of generations that have been put through an education and media campaign to destroy pride in our nation, its history (not the made up one we are seeing now e.g Sunaks coin) its culture and much more besides.
Importance is placed on how we can achieve for others.
Many have their own political agenda and it certainly isn’t a conservative view of the nation. Braverman noticed the appalling waste of money spent on this re-education programme. Her time was always limited the media alone would have seen to that.
October 23, 2022
+1
Cut back the state. Reduce taxes, get rid of red tape, radically change welfare as a helping hand not way of life, leave the EU in its entirety. Dump globalist agreements like WHO, UN pacts on migration, Paris Agreement etc etc.
October 23, 2022
Shirley M, +++
Can it be coincidence that the slowly advancing enmeshing of the workings of the country by layers and layers, blobs, and gobbets of Quangos throughout the institutions and regulatory bodies is paralleled by the growth of numbers of unaccountable though elected and advanced to position politicians and officials, all of whom relished the cover given by the foil of their ‘wizard wheeze’. Accountability and responsibility is passed off to the Quangos which are past masters of verbiage and obfuscation.
Result? Politicians and officials of low calibre, seldom accepting responsibility, massively overcomplicating whatever can be overcomplicated, N.I. Protocol, Health provision, immigration, etc., etc.
The CQC are currently castigating the NHS for being ‘Gridlocked’ when any enquiry by our politicians would show that so much of the sclerosis is caused by the great amount of extra paperwork, protocols, and procedure at every level, GPs, Dentists, Hospitals, whether Doctors, Nurses, Managers, porters, cleaners, etc., so much time and effort, distraction, distortion of priorities, worry, fear for jobs and position, even in the highest ranks of staff and management.
Cut the Quangos and let the Politicians, Civil Servants, and officials answer for their actions.
October 23, 2022
+1
October 23, 2022
There is not going to be “better times” not in our lifetime – we are screwed – we have become a backwater – mostly all because of this brexit madness and by our own hand – it’s a defeatist outlook I know but realistic – so we can also forget about ‘growth’ nonsense as well at least for another decade – first we have to stabilise things at home and that will take time.
October 23, 2022
It’s because of Brexit that we do actually have a chance to survive what’s coming Buttercup but we do have to re-discover our mercantile roots and get out there and start trading with the rest of the world again.
The EU is really a protectionist orgnisation and very inward looking (whatever the wonks in Brussels tell us). Whilst inside the EU, our balance of trade was very much in their favour, not ours. Our BoT with the US (even without a trade deal) was positive. We have to get back to basics and start ‘selling’ more than we ‘buy’ – simple to idea but very hard to do when we are off-shoring everything because of Net Zero. However, it’s essential to strive for if we want to stay solvent as a country.
I’m afraid it’s far too easy for the Remainer media to just focus on all that’s bad here (and ignore the good), whilst doing the exact opposite for Europe. All is far from well in the Euro zone and pressure is building there too. To be clear, I don’t want the EU to crash and burn, anymore than you would want your neighbours house to go up in flames but there are very real systemic risks in the Euro at the moment and I don’t think the ECB can manage them.
We are actually safer outside the EU, assuming we can find a good Captain to steer our economic ship which is our biggest problem at the moment.
October 23, 2022
Correct. I hate to think what our Target 2 imbalance would look like had we joined the Euro. Trade deficit, plus contributions to Brussels plus net remittances by EU workers in the UK against the small number of UK expat workers in the EU with those using their pensions abroad adding to the total, plus the outflow of dividends to EU owned companies.
October 23, 2022
Looks like the junior software developer forgot to program the link between demand, supply and profit into their computer model.
October 23, 2022
Good morning Sir John.
Thank you for this article. I know many on here are well versed in matters financial and economics but, many of us aren’t.
It strikes me that many policies and principles go against common sense and logic.
For example, how can putting the BoE interest rate up affect world energy prices?
Commonsense says that energy costs have become elevated due to more demand than supply and this is down to one of the biggest suppliers being shut out of the supply side.
Why is a growing economy so necessary? Is it to service an ever expanding population or is it because we no longer need so many low skilled manual workers due to mechanisation so their lost pay needs to be given to them by the still productive? Or is there another reason.?
If we reduced our population, would we need an ever expanding economy? If we reached a point where everyone had enough money to live a reasonable lifestyle, would we still need to grow the economy?
Perhaps you could recommend a good, easy to understand book about economics and public finances. Thank you in anticipation.
October 23, 2022
Don’t bother – no-one really knows economics, it is not a science. If after all the years of boom and bust and shafting the taxpayers continually, they understood it they would avoid the pitfalls and enhance the upsides. They never do. They don’t know how. No-one does.
October 23, 2022
Cliff I have several similar questions which I cannot voice due to an incomplete understanding of financial matters. We can all apply home economics to the bigger picture but I am told it is a completely different matter. Most don’t have as many Peters to pay Paul and reverse with interest and have investments in other goods called bonds . Myself I have ten pounds worth of premium bonds bought in the 1950’s ( I dont know what happened to those) We have had a reduction in growth as far as manufacturing is concerned , even though money is still spent, but it is wasted money surely as there is no solid base to work from and we are subject to the ebb and flow of markets . Why did we ever think that self sufficiency was not our thing ? Would you let someone come into your house and rule the roost financially … It all beats me!
October 23, 2022
Hello Margaret
I too have looked at the way we run our household budget and tried to draw parallels to government spending. This is why I said above that public economics go against commonsense.
I often wonder what my bank manager would be likely to say if I were to run my account deep in the Red and maxed out all cards and lines of credit, and then asked him for more unaffordable credit, just so I could give it away to people I don’t even know. I am sure he would speak Russian to me. (Well, it would likely end in off.)
I agree we need to be self sufficient in food, energy and military equipment at the very least.
Perhaps many Mps are ignorant in matters of economics but, unlike us two, they are too vain to ask for an explanation, in case they look stupid.
Perhaps Sir John could give them a brief introduction to economics during their induction when they first get elected to Parliament.
October 24, 2022
Growth is essentially āmoreā money coming into the country. This should be achieved by selling āstuffā for more than the sum of its parts. In the early 2000ās the treasury discovered a new wheeze. Increase the population. This artificially boosts gdp at the expense of gdp/ capita. More money again, as people bring money and spend it here. Inflation is basically the state reneging on its obligations, moving away from its debts. Itās very simple really.
October 23, 2022
Odd how this is not picked up in the media. The BBC and the FT have announced that the reason bond yields have risen is the chance that Boris Johnson might become PM again.
Despite it all Sunak is the most sensible choice for the Conservatives now.
October 23, 2022
You will vote until you get the right answer?
Where have we seen that before?
October 23, 2022
If the highest taxes for 75 years is the answer, what is the question?
October 23, 2022
How much can we rob tax payers of their money and hose it into our mates pockets or just piss it down the drain down the drain before the shit hits the fan or we get caught?
October 23, 2022
It looks to me like the B of E is deliberately manipulating and destabilising the Markets for reasons of its own.
Or maybe for the Globalist Institutions’ reasons.
After all, you can’t Build Back Better if you haven’t first destroyed everything.
October 23, 2022
+1
It struck me yesterday that maybe BBB and global digital ambitions prove that they arenāt actually aiming to destroy everything?
Destroy our poor little livesā¦yesā¦they already have.. but for their own ends they will need dependable power and suchlike.
Where would the Metaverse and Internet of Things (!) be without electricity?
The world will be HS2 and places like that city The Lineā¦serviced by robots.
And as for usā¦..
October 23, 2022
It would seem that all the conspiracy theories about crashing the worldās economies and the the global financial system is now being done openly; but giving rather unlikely and illogical reasons for their actions. The central banks seem to be the links to achieve it.
Next, will be the suggestion of digital currency to keep things afloat.
October 23, 2022
Yes, and that’s why they want Sunak in place. He has already signalled his intention to create a Digital Currency.
October 23, 2022
And that everyone must carry a smartphone with tracking app enabled, in order to administer said digital currency.
October 23, 2022
Brave New World
October 23, 2022
Sharon: Theories, global, domestic, present, future, reset etc., If you have not seen already, Neil Oliver’s opening opinion piece on his show last night 22/10 is well worth a listen. (GB News / YT ) So very well expressed and eloquent, if indeed glum and depressing….
October 23, 2022
Managed Decline. A policy drawn up long ago that has been implemented incrementally in every area of our lives.
The problem now is those put in charge to manage the decline are products of the decline, and so it’s spiralling out of control. Too fast and the people might notice!!!
They have, but have left it too late to do anything about it, it seems.
It has been on the cards that Sunak would eventually be crowned…..he ticks so many boxes in box ticking nation.
His part in the massive debt and misspend doesn’t matter one jot. He was the Guardian’s favourite for the last leadership contest which speaks volumes.
October 23, 2022
The opposition have suddenly started baffling the commentariat with unprepared attacks on non doms. The reptiles can’t work out why, as they think it all pretty small beer. (It isn’t: non doms pay Ā£7 billion in.) But this is why they want Mr Sunak returned. Think how easy it was to whip up all that class hatred and envy over the 5p cut in the top rate. It brought down an administration. Once they start in earnest on non doms, people will be wondering what that uneaten cake was all about.
October 23, 2022
And in other news, only the Tory desperate think that Boris will change. Leopards and spots spring to mind.
October 23, 2022
This is the same tactic used by Brown before becoming Chancellor – he gave notice, well in advance, to say that he’d be selling a good parcel of our gold off – How many Ā£Billions did that cost us?
The intention of the BoE is certainly to waste our resources and saddle the taxpayer with yet more debt, there is no other conclusion to be reached.
Like so many institutions, the BoE no longer works for the benefit of the UK taxpayer.
October 23, 2022
401 long tons at average $275/ounce, that’s now worth over $1600/oz – is a loss of over $19B (if my sums are right)
Maybe we should use Gordon’s state pension to off-set some of it? š
October 23, 2022
IanT – Thakyou for that – It sounds realistic
October 23, 2022
All what needs to be done is for enough mp’s to complain about. Its as easy as that.
October 23, 2022
+1
It definitely would be.
But they must (mostly) all be onside. Their stumness betrays them!
Inside the tent, as it were?
October 23, 2022
MP’s don’t know what they are talking about in the main. Did Sir John recently tell us he has to educate them in how finances etc. work? We have the lowest grade politicians we have ever had and that is the problem, more greasy pole climbing than doing any good.
October 23, 2022
If the Chancellor and the Governor of The Bank of England think and act along the lines that Sir John has describe itās no wonder we are in such a mess.
Time to take to the streets etc Ed
October 23, 2022
When Bailey can act in such a destructive manner without censure or named condemnation from elected officials (I believe they’re titled Members of Parl) then you know it’s game over for democratic accountability and that power now rests elsewhere away from where most people believe it is
October 23, 2022
+many
Democracyā¦as we viewed itā¦was always a con.
It was a shamā¦an illusion.
Perpetrated on us just like the fake Brexit.
They always pretend to give inā¦just a littleā¦when they feel threatened.
And their flock sighs a deep sigh of reliefā¦until the next time.
And this is probably the LAST time!
October 23, 2022
Your analysis is spot on
October 23, 2022
I don’t understand why “lower bond prices mean higher interest rates”. Isn’t it the other way round? If the BOE increases the base rate existing bonds become less attractive compared to other investments. Anyone who understands these things better than me please feel free to enlighten me.
October 23, 2022
Let’s take a step back and look at the bigger picture.
A Sunak victory would mean Jeremy Hunt remaining in No 11 and the economy being run on managed decline guidelines, for the benefit of a national and international elite, not us plebs.
A Johnson victory would at least give a glimmer of hope that we would thereby gain a Chancellor – one particular individual springs to mind, not a million miles away from this discussion – who would stand up to Treasury orthodoxy and do so in a more competent manner than Kwasi Kwarteng, and give us plebs some glimmer of hope.
Sir John did of course publish a considerable number of polite but firm denunciations of Sunak economic management over the summer.
October 23, 2022
Mr Sunak is the only Chancellor to have run a quarter of a trillion deficit for two years. What they would call safe, boring, and really grown up.
October 23, 2022
It’s being reported that Johnson’s said he’ll keep Hunt as Chancellor.
October 23, 2022
Oh Joy
October 23, 2022
Iāve just realised that theyāll probably keep Shapps at the home office ā¦more joy
October 23, 2022
Banks were such a good wheeze.
Give us your gold and we will take care of it.
Look, have this paper and metal to spendā¦your gold will be safe and sound in our vaults.
Oh no! Silly peopleā¦you donāt need gold. Weāve sold it anyway ( rock bottom prices).
Youāve still got this nice paper and metalā¦wellā¦mostly plastic now..for a little longer! Until you own nothing at all.
Who got Gaddafiās gold then? Somebody wanted that!!
October 23, 2022
‘He who pays the piper calls the tune’,
This Government makes the exception – we the paying public get shafted every time for horrendous mistakes – when will it all end?
Not with Johnson or Sunak it won’t.
October 23, 2022
Will you be attending the debate on covid vaccine safety in Parliament tomorrow?
October 23, 2022
Why are so many leading Tory MPs claiming that Boris got the mandate from the people ā¦do they welcome a presidential form of government or do they not realise that the people voted for a political party
Itās a complete stitch up if Boris, while under parliamentary review, is allowed to stand for high office ā what of democracy I hear you say ā Where not Boris & Sunak in charge of our economy for the last 3 years, weāre in this chaos because of them
October 23, 2022
I chose my ‘Name’ because of my ‘tongue in cheek’ cynicism but had no real idea that it would become so appropriate. The Bank of England, H.M. Treasury, all current MPs and the majority of those people who were members in the last decade or so have helped, wittingly or unwittingly, to bring about the parlous state we are currently in. Whether it be printing money, working to overturn democracy or conniving with foreign entities to undermine our sovereignty.
I cannot find the words to express how disappointed I am.
At the next GE, no candidate of any political party having a seat in this current Parliament will receive my vote. In fact if there is nothing refreshingly new on offer in my Constituency, I will abstain.
You can criticise my decision as much as you like but I am no longer going to be satisfied with supporting the least harmful option.
My vote is valuable and it will have to be earned.
October 23, 2022
Liam Halligan, The Telegraph today – āThe new PM must break Britain out of its low-growth doom loopā
Meanwhile the same paper reports The Chancellor is going to hit the Country with another Ā£20 billion of tax rises with a whole āsmorgasbordā of options.
Cutting Defence, we donāt need it appears top of the list, hitting pensioners they are a drain and wont be around long enough. And so on. Security and sustainability is āNot the job of Governmentā sarc
The points that come to mind is there is no suggestion of the State getting back into line with what we can afford, the opposite the Chancellor has already announced his extra āhiresā
There is no suggestion of cutting back on vanity projects – HS2 and the ājobs-for-the-boysā Quangoās. No we have to keep our friends sweat, I might need a job when I get kicked out of office.
Its all about hitting what is left of the UK with taxes, more taxes and more taxes. From were I am sitting that shows how thick those in the Establishment are, taxes equal a request for wage rises, a wage rise leads to higher prices, higher prices equals inflation. So the Establishment, the Chancellor instead of looking inwards and adjusting. Then we have a Bank that doesn’t understand inflation.
If any of these Guys had practical experience related to real commercial achievement they would realise that when money is tight you cut your own cloth accordingly and push to increase economic activity. No instead they take the lazy death spiral way, lets destroy those that achieve our prosperity.
October 23, 2022
I thought that HS2 had already been cut back on, with the northern part being cancelled/postponed. Why is it exactly that other countries can complete these infrastructure projects and we can’t?
October 23, 2022
Theyāre going to cut the north bit, the midlands bit and the south bit ā¦and its still going to cost Ā£150bn
October 23, 2022
I see there is now a concern that the telecoms and internet cable to Shetland may have been cut by a Russian ship maliciously. Patrolling cables including to and among windfarms, interconnectors and pipelines has now become essential defence.
October 23, 2022
Please would you attend the Parliamentary Debate on COVID 19 vaccines safety tomorrow.
October 23, 2022
What is the point of this whole charade as it will solve nothing?
Whoever becomes PM we will be left with a busted flush as the losing side will like with Truss clandestinely work away to undermine the PM’s position, the party, the country.
All this bad mouthing and back stabbing does this country no credit. Maybe it is the cunning plan orchestrated by the button and string pushers of the world change organisations coming out from under their stones to achieve their vision.
Drain the swamp that is running the party. Call an election. I along with thousands have had enough of the games these people play.
October 23, 2022
By all media accounts and lobbying there is a desire from within the Conservative party to return the Architects of the UK and the Parties demise. You couldnāt make it up.
October 23, 2022
Liz Truss’ approach was about right on many things, but the eagerness of her speed of action alarmed those who could not see more than a few weeks ahead. Further, had her Chancellor not presented the ‘Mini’ budget is so arrogant a way and without supporting rationale, she might then still be in office making good progress.
October 23, 2022
Seems like the Bank of England is part of the problem not the solution, a certain Mr Bailey does not have a good record in the financial services industry, who put him in charge, surely there were better options and people available.
We keep on hearing that the UK are great at finances and money management, and it forms a huge part of our economy, perhaps we have been hoodwinked for decades. I do wonder just how competent are these so called experts, we know they earn huge fees for management and advice, no matter if they win, lose, or draw.
The more I hear, the more risk and incompetence seems to come to the surface.
October 23, 2022
Sir John,
Perhaps this is all part of the plan.
The conservative member for Bournemouth East and Sunak backer Tobias Ellwood has stated quite clearly in a now deleted tweet: “The free mkt experiment is over…The reset begins.”
At least we know what to expect under a Sunak-led government.
October 23, 2022
If Sunak wins heāll say itās a mandate for higher taxation, and if Boris wins heāll say itās a mandate for more wind-turbines & net-zero ā¦.and if Hunt remains as Chancellor heāll promote a free trade deal with China ā¦.and theyāll all promote us joining the EU single market ā¦may god help us
October 23, 2022
With the news this morning, it looks like the conservative party, via the parliamentary party, are about to appoint a labour candidate as its next leader & PM in a coronation to high taxes, the glorification of the BoE & OBR and maintenance of the global elite ā¦well done the Tory MPs, history in the making
October 23, 2022
Dear Sir John,
Unwinding the Bank’s asset purchase company was always going to be tricky and more dangerous the bigger it became. As you say, more rounded thinking is needed .
Thee gilts need to be neutralised permanently. The way to do this is to transfer the holding company to a newly created government sector pension fund, so that at last we can start to build a fully funded scheme for the NHS , civil servants, MPs etc instead of passing the aibility to future taxpayers. The gilts would count as employer contributions at market value. Other state financial ssets could be added as required.
The fund trustees would have to be completely independent of theTreasury, which cannot be trusted to own any financial assets. It is like a family that prefers to burn the furniture to keep warm rather than put on a sweater. You will recall that it took on the assets and liabilities of Royal Mail staff and promptly sold the assets for current spending.
Pension guarantees would remain but employer and employee contributions would reflect the performance of the fund against laibilities, as theoretically happens now.
October 23, 2022
Outsider.
The government introduced a new individual persons workplace pension. āSince 2012, there has been a large increase of 8.7 million to 19.4 million eligible employees participating in a workplace pension (88%) in 2020, showing the positive impact of the workplace pension reforms to date. The driver for the overall increase is the private sector in which the largest increases have been seen.ā 21 Sept 21 gov.uk
8% of the wage bill from Ā£6500 pa. Isnāt this an additional government sector pension fund? So much new money invested since 2012. So many people with 8% of their wages tied up for thirty years. We were told the fund trustees are independent, but are they? How safe are those pensions? The returns seem low and are DC defined contribution – no guaranteed payouts. 90% of people in them are in the default funds, they forced us into a one size suits all system. Employerās arenāt pension experts they just took one of the 38 master trusts advised by the pensions regulator. What SME employer would want to be responsible for making an alternative wrong choice for people without the knowledge – none.
Mar 2020 ā In 2019, 77% of UK employees were members of a workplace pension scheme; this is up from 47% in 2012, when auto enrolment began, ONS
āA DC pension (also known as āmoney purchaseā) on the other hand, is a pot of savings built up over time from contributions you make (sometimes with additional contributions from your employer). These savings are invested in a fund of assets (e.g. equities and bonds) so that they grow over time.ā So if these are the investors in the BoE bonds what is the BoE doing selling them off cheap?
October 24, 2022
Dear a-t , As Sir John said, it is daft for the BofE to sell the government bonds it owns at this time ( or in my view at any time) because that boosts government borrowing costs and hits pension investors. QE was brought in to boost credit because Bank Rate was already so low, about 0.25 per cent, that there was no room to cut it any further. Few imagined that the Bank could end up owning about Ā£700 billion of gilts on the Treasury’s behalf. The original idea was that the Bank would sell back the gilts before it raised Bank Rate but now this massive sum overhangs the market and selling the lot would cause mayhem.
The Stakeholder and Masterplan pension schemes were brought in to ensure that far fewer people would qualify for welfare benefits in retirement, because many small firms had no employee pension arrangements. So far as I know, the only government involvement, beyond legislating the schemes, is the same tax relief on contributions available to all.
Like virtually all ongoing private sector schemes, these are DC, so that the pension depends on the size of the investment pot and the index annuity rates at time of retirement.
Public sector schemes, by contrast, give a defined and guaranteed pension as a proportion of earnings. Which is why no-one in government cares about the effects of policies on pension funds and continually messes them up.
Some public sector schemes, such as local authorities, invest contributions in a fund from which pensions are paid. But the NHS, Civil Service, MPs, Prime Minsters and various other central government organs do not have any funds, though for actuarial purposes they pretend they are invested in imaginary “notional gilts”. So pensions for past service are paid from current taxation and current employee contributions.
The system is ludicrous but seemed too hard to change. But there is now a wonderful opportunity to break this impasse by switching the QE bonds to a new fund that would be big enough to finance some existing schemes completely and cover all new state employees.
October 23, 2022
The Markets only make money when there is trading. Trading is based on rumour and automated electronic (AI). It has nothing to do with value, banks, economy etc. they are just the fodder that feeds the machine
The latest figure show that after the mini budget revenues jumped 16% and everyone trading made a lot of money.
October 23, 2022
While we are waiting for this weeks PM to draw the short straw, have a read of the latest from the National Loan Funds accounts.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1112371/E02795570_HC_668_National_Loans_Fund_Annual_Report_21-22_Accessible.pdf . Notes to the Accounts number 18 is enlightening; I quote:
“On Friday 23 September, the Chancellor of the Exchequer, the Rt Hon Kwasi Kwarteng MP, set out how the government would fulfil its commitment to cut taxes for people and businesses and announced wider supply side policies to grow the economy. On the same day a revision to the DMOās Net Financing Requirement was announced, increasing in-year borrowing by Ā£72.4 billion to Ā£234.1 billion, to be funded largely through gilt sales. This increase in gilt issuance will be reflected in liabilities recognised in the 2022-23 NLF accounts.” As far as supposed losses on QE Gilts goes:
“Financial market movements are determined by a wide range of international and domestic factors. Since 31 March 2022, there has been significant repricing across asset classes in global financial markets. Gilts are an example of one such asset that has been affected by this repricing. The fair value of the gilts held by the NLF is impacted by market movements but as gilts are held at amortised cost, repricing does not impact the value of gilts recognised in the Statement of Financial Position.”
You will read in “Statement of Cash Flows for the year ended 31 March 2022”, that the NLF “Net transfers to the Consolidated Fund” was Ā£134.2 bn this year, added to the Ā£371.9 bn from the previous Covid year. These figures turn up in the “Consolidated Fund Account 2021-22” (the government’s current account).
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1112369/E02795572_HC_667_Web_Accessible.pdf “Less Deficit funding from the NLF” on document page 3. Notice the NLF never gets paid back and it will never run out of Pounds Sterling to keep funding those deficits.
October 24, 2022
It’s just a coincidence that we have inflation at double figures says acorn.
Keep shaking the magic money tree.
October 24, 2022
Peter 2
He is saying nothing of the kind in his contribution. But you can’t help yourself coming up with unsubstantiated nonsense
October 24, 2022
Increasing money supply beyond reasonable levels leads to inflation billy.
As many of your EU members are realising.
Maybe do A level economics, as just a starter, get an A grade and then realise how ridiculous your comment is.
October 23, 2022
No need to do much about inflation, it will naturally fall back once the winter bills set in and now that people have all their money taxed away. Yesterday I went into my local market town, first time on a Saturday for years and at 11 o’clock I had a choice of hundreds of parking spaces and could have fired a canon in the town without hitting anyone. The recession has already started. The government will find out, as they usually do after the event with all their dodgy figures still saying we are still not in recession.
October 23, 2022
What had the poor cleric done to deserve dismissal, and would his disciplinary hearing have really called for corporal punishment to be inflicted on any of the witnesses?
PS. Excellent point as regards current lack of individual discretionary spending power, aggravated in many cases by local councils’ war on motorists alongside the exorbitant price of fuel. Thanks for everything you did over the two preceding years to bring this about, Mr Sunak.
October 23, 2022
It is clear that running a Government and having an independent B of E does not work out . The state of the economy can have and has had devastating effects on everyone – world affairs included . We must have an effective place at the world table for all sorts of reasons and this can only be done through an effective Government that is respected . At the moment we are a bit of a laughing stock and only valued strong political leadership can correct this . Boris is discredited , Penny is untried , Sunak does have more merit .
October 23, 2022
BBC 8 Apr 2022 ”Chancellor Rishi Sunak held a US green card – allowing permanent residence in that country – while he was chancellor, his spokeswoman has said.”
October 23, 2022
Thatās quite a big oversight ā¦not technically against the rules I understand
October 23, 2022
Thank you Sir John. It is quite clear the Bank has lost the plot. The Govenor is not only ”out to lunch” but also ”off his trolley”!
October 23, 2022
And the OBR isn’t far behind
October 23, 2022
So if the wind farms and solar farms are creaming in loads of cash thanks to exporting because the energy canāt be stored the uK, shouldnāt they be the companies that are required to fill the black hole with excess profits as they were subsidised in the first place?
October 23, 2022
What is the BoEās needs to sell these at a loss immediately if they are underwritten by long term investors looking for safe returns like UK pension funds, UK insurance funds, UK saving bonds? Which UK institutions have made the call on the loan/bonds?
Is it because USA are pushing interest rates up worldwide.
Can you please explain it to us John and how it got linked to Kwasi and Truss when they hadnāt actually done anything, nothing had changed at that point, they werenāt in control of interest rates and they hadnāt changed any taxes. If the bond market changed, why? What were they truly reacting to – who is pulling the UK choke chain?
October 23, 2022
+1
October 23, 2022
The Eliteās view of Democracy is rule by the mob.
October 23, 2022
The heaviest penalty for declining to rule is to be rules by someone inferior to yourself. – Plato
When will the British take this to heart?
October 23, 2022
Beatles ‘Taxman’ 1966.
Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman
Yeah, I’m the taxman
Should five percent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman
Yeah, I’m the taxman
I’ll tax the street
(If you try to sit, sit) I’ll tax your seat
(If you get too cold, cold) I’ll tax the heat
(If you take a walk, walk) I’ll tax your feet
(Taxman)
‘Cause I’m the taxman
Yeah, I’m the taxman
Don’t ask me what I want it for
(Ah, ah, Mr. Wilson) [ aka Truss]
If you don’t want to pay some more
(Ah, ah, Mr. Heath) [aka Kwarteng]
‘Cause I’m the taxman
Yeah, I’m the taxman
Now my advice for those who die (taxman)
Declare the pennies on your eyes (taxman)
‘Cause I’m the taxman
Yeah, I’m the taxman
And you’re working for no one but me (taxman)
October 23, 2022
What we are witnessing is a bunch of innumerate Arts graduates destroy the country. To save the planet according to these scientific illiterates we need to force what little remains of our industrial base to use wind power that powered the grinding of corn before the industrial revolution and to bribe our farmers to ‘rewild’ their land to ‘capture’ CO2. To get the economy going we need to import millions more from countries with very low GDP per capita incomes in Asia and Africa and preferably put them in the Cabinet.
They believe that one more re-organisation of the Arts graduate administrators will bring the NHS up to continental standards of healthcare.
They believe that sending millions to university to study Arts subjects and ensuring that each leave with a ‘degree’, makes them economically useful. These are the people that believe that in the human context, sex and gender have different meanings. They believe that throwing money at the education of foreigners and starving
schools with English catchments ‘proves’ that foreigners are cleverer.
October 23, 2022
The Tory majority Left group, with its globalists and elites, having ‘murdered’ Liz Truss and Kwasi Kwarteng who wanted freedoms are now going to continue with the destruction of England and its original population and cultures. In parallel and as part they will put us on our knees to EU rulers again.
October 23, 2022
In other words, the Bank is like a harlot. It has power without responsibility. So why not reduce its power?
October 23, 2022
I remember in 2009 when QE started and we were all trying to get our heads around it that I said here the only exit was for the BoE to hold the bonds it acquired to maturity.
If a mechanical engineer could grasp that then surely someone at the Bank or the Treasury could too?
Apparently holding to maturity would give a lumpy profile to their balance sheet reduction, but so what?
From a Treasury point of view it doesn’t matter who is holding the bonds when they mature, they just pay out the money to the holder at the time.
The fault in the Bank’s thinking all along has been to view QE as a continuation of interest rate policy. It’s a different tool and has to be managed separately.
October 23, 2022
Off topic, a very brief letter to our local newspaper:
“Without waiting to see who gets to lead the so-called “Conservative and Unionist” party, it is interesting to observe how many of its MPs support the man who put a trade barrier between Great Britain and Northern Ireland.”
October 23, 2022
Bert Young
The only thing that Sunak has got is baggage when the media exposed some of his public and private situations. They don’t go away and the media and his political enemies will pull them out of the woodwork just as they would do with Boris. Depending on your understanding and interest in the NHS Jeremy ain’t a lot better. What is needed is a person who can safely fight their corner for the country and not worry about what the media may or may not dig up.
In our real world Perception is all There Is. Rocket science it is not.
October 23, 2022
There are of course completely unavoidable capital losses on QE gilts, being the difference between acquisition cost and par redemption value. The Bank should return to publishing a full list of the gilts acquired by the BEAPFF and their cost so we can see what the unavoidable redemption schedule looks like, and also see the coupon income that is to be passed to the Treasury. The redemption schedule is also important in that it defines an automatic winding down of the fund, which can only be delayed by purchasing replacement gilts. The choice of replacement is not unimportant in affecting the shape of the yield curve.
October 23, 2022
Dear Mr. Redwood,
In his application to be Leader of the Conservative Party, Mr. Sunak tells us that ‘he wants to fix the economy’. Has he forgotten he was Chancellor of the Exchequer only 3 or 4 months ago?
October 23, 2022
His legacy is todayās economy
October 24, 2022
but that’s a whole era in politics !
October 23, 2022
Pension Credit
If you are Ā£1 over the threshold
for getting it ( which is Ā£182.60 per week)
you can’t apply for many things. Energy, internet, repairs etc, etc
For example social internet tariff.
You could get internet for Ā£10 a month instead of Ā£27 pcm if you’re on pension credit.
Could the gov create a grey band, not actually giving pension credit but enabling grey band pensioners
to access these offers ?
October 23, 2022
As the Cons are in danger of being obliterated it might help them to help the poor.
What doth it profit….
October 23, 2022
I have often wondered why in this age of instant computer algorithms some fair sliding scales cannot be worked out for things like tax bands (where only just tipping the marginal rate makes one’s entire savings subject to high taxes) and pension entitlements. I assume the Treasury/DWP doesn’t have the motivation to do so.
On the other hand, your weekly income means you actually earned your pension through your contributions – those on pension credit did not, and are totally dependent on the taxpayer.
Personally, I would remove all such discounts for the low-pensioned. If you look you will see that (whether water/utility charges or cheap cinema/concert tickets ) they are always subsidised by those who cannot claim them, and are unfair to those who made considerable personal sacrifices to fund their old age.
The poor are terribly popular with MPs, who are always talking about helping them, in return for their populous vote.
October 24, 2022
yes the MPs are always taking about helping them but actually don’t.
October 23, 2022
So the Bank could hang on to the bonds and the Chancellor could deliver Ā£11bn worth of tax cuts without breaking a sweat?
October 23, 2022
And they could cancel Ā£150bn HS2
October 23, 2022
“Mr Sunak as Chancellor approved Ā£450bn of bond buying and got the Treasury/taxpayers to underwrite all the purchases.”
This I believe is why Sunak knew he could not carry on as Chancellor, and why he was and is so desperate to be PM – he needs a Chancellor A.N.Other to conceal the results of Sunak’s profligacy at No. 11 and act as the fall guy, while Sunak himself smilingly dissasociates himself from the chaos and tax rises that are his direct fault. If awkward questions are ever asked, the mere phrase ‘the pandemic’ will shut up the questioners.
The EU and CBI will be ecstatic: big business moats will repel all boarders, and regulation will be always on the point of promised reform, but never actually reformed, while government departments will be ‘asked for’ savings that will never materialize.
October 23, 2022
So now we will be plunged into further instability from the media screaming for an election 24 hours a day.
October 23, 2022
Only for the next two years
October 23, 2022
Hush child! š
October 24, 2022
So all the conservative supporters I know are withdrawing their support. Nobody wants rishi.
What a mess the politicians have got the country into.
I don’t see a good way out.
What a complete shambles.
Blank cheque now for the Indian outsourcers to help them decimate our country some more.
I would rather have a 70s labour government, at least they were pro British.
Forget it John, WEF reset can get stuffed.
This is not democracy.