There is a myth about the bond meltdown of September that political spin doctors are busily propagating. To understand the market we need to see that as the price ofĀ bonds fall so interest rates rise. If a Central Bank wants to move the long term rate of interest up from 1% to 2%, the price of a bond with no repayment date halves. If you lent the government Ā£100 at 1% there would be a fixed promise to pay the bond holder Ā£1Ā interest every year. If people then want 2% interest they will only pay Ā£50 for the Ā£100 loan, so the Ā£1 of interest is 2% of the amount they pay for the bond.
The spinnersĀ claim the market fell away sharply owing to the KwasiĀ Kwarteng decision to announce tax cuts without forecasts. They do not mention the fact that the energy price package was far dearer than the estimated impact of the tax cuts.Ā They claim the Kwarteng strategy damaged the economy and put up mortgage rates. They need to understand that mortgage and other rates were deliberately driven up by the Bank over a period of many months, as it battled to correct its over lax money policy of 2021. The ten year interest rate started 2022 at 1% and was at 3.5% before the Chancellor spoke. It is at 3.55% today.
I agree the Chancellor should have put all three elements of his growth Plan together – tax cuts, spending proposals and the supply side measures. It would have been sensible to have some forecasts of borrowing and showĀ interest in keeping borrowing to realistic levels. I do not agree that this was the only orĀ theĀ main cause of the falls in the bond markets. The main causes of the rises in rates were the actions the Bank of England and the US Fed.
The bond market was falling well before the Mini budget thanks to the stated intentions of the Fed and the Bank of England to put up interest rates. On 21 September the market fell in response to a very hawkish Fed, where the US was leading advanced country markets down and rates up. On 22nd September the bond market fell again on the announcements from the Bank of England. The market was particularly worried when the Bank announced its plans to get rid of Ā£80 bn of its portfolio of UK government bonds, selling too many onto a falling market. On 23rd September concernsĀ about the mini budget led to further falls.
The falls were larger on 26th and 27th September . On those days the dominant conversation in markets and media was not the mini budget but the need for many pension funds to sell bonds or shares to find the cash to pay sums to LDI funds. These are funds bought by pension investors allowing them to own more bonds than the fund can pay for by buying bonds through the fund on margin. When bonds fall in price the funds demand more cash payments to cover the losses.
The Bank stepped in to reverse its position of selling bonds into a falling market and announced it would temporarily buy up bonds again to deal with the special selling pressures from the pension funds. the market rallied strongly on the news. By 27th October the interest rate on the 10 year bond was back below the level it had reached the day before the mini budget.
November 9, 2022
The bond markets fell because they felt the Government would no longer support its own crippling final salary pension scheme.
The Bank of England is known as the āFinal Salary Pension Guardian of the Last Resortā.
Nobody in Government or Civil Service wants to talk about it because itās their pension.
As they used to say about General Motors, āThis is not a Government, this is a Pension Scheme with a Government attached.ā
November 9, 2022
Then we had the mistaken pension gearing up issue. Listen to Rees Mogg on his recent podcast – The Moggcast: Episode Seventy Nine, Tuesday 8th November 2022.
November 9, 2022
Sunak and Hunt impoverishing the nation with highest tax burden to bring socialism to the world by showering it with our taxes!
Germany now expecting energy pact with UK, inter connector to pass Germany electricity and so we can give them any gas energy we can while being punished by EU! How vile was Germany towards UK under Merkel! Remind me JR what UK gets in return? A ticket back to EU or to make sure France retains all our fishing waters! Fishing linked to energy.
Johnson has handed in his Lord list set to cost us Ā£560,000 per year including two very young mates of his wife! Cost of living! Your party is having a laugh while having its hands firmly in our pockets!
No need to try to succeed at education. Oxbridge selection deliberately discriminating against private schools to make sure state school pupils with lower grades get accepted āon a contextual basisā! Tory quota system now in every aspect of public life.
November 9, 2022
It is fair to judge potential to a degree & someone with A*AB from a Bog Standard Comp. might well have more potential than someone with A*A*A from Eton but I suspect they are now pushing this too far. I got in from a decent northern state grammar school but these alas have all but disappeared.
November 9, 2022
A*A*A from Eton?
Why would you bother with all those connections?
November 10, 2022
I love Sir Francis Chichester, who came from an ‘old’ English family, public-school-educated (Marlborough or somewhere) and left England, aged 17 for New Zealand in a steamship, paying for the journey himself, by working as a stoker, and boxing the stokers in his free time for money!
Then, this young man, both with a silver spoon up his arse, worked for two years down the mines in NZ, notoriously hard work, and a real working-man’s job, boxed with the miners to make more money in his free time, then bought a plane (which he loved) and stared a business flying people around NZ for fun. Then being the first man to fly solo from Sydney to Tokyo then on to London.
Then failing to get into the RAF four times during WW2 because of his eyesight and then becoming the leading instructor of night-time navigation for English bombers in the RAF during WW2.
Then setting up his own map business in London.
And then aged 67, with cancer, the first to sail solo around the world – and the rest is history.
What a man!
November 10, 2022
LL,
Utter tosh for someone who believes in accurate scientific findings. Contextual context is subjective and varies between people it cannot be assessed equally or fairly. Exam results are equal and fair.
This also gives way for the govt. to continue in providing crap comprehensive education because contextual context will be given for the left wing state education system that brainwashed little Johnny to becoming a woman without the parents having a say! Johnny had so much to put up with in discovering his gender identity!
November 9, 2022
Pension apartheid.
Snivelling Serpents working against the country bur pocketing all the cash.
It’s unaffordable and unsustainable that 20% if the population receives such reward whilst the remainder are robbed blind.
November 9, 2022
It’s ironic that the government is again looking at robbing our private pension scheme to fund the largesse of the civil Serpents.
Vote tory, get shafted.
November 9, 2022
Indeed people often with no pensions at all beyond the state one paying taxes to fund people with index linked for life pensions worth perhaps Ā£2 million+ or so. The 20% often parasitically living off the backs of the 80% they have had enough! Money purchase pensions are capped at just circa Ā£1,070 K a pension that might only fund in index linked income of Ā£20K or so. Many of these people have done huge damage to the economy too. People like Andrew (39.9% overdraft rates for all) Bailey.
November 9, 2022
Can anyone tell me why council tax needs to rise after being given billions etc last year and a large proportion work- aka baby sit etc- at home! Where is that council tax freeze? Javid broke that promise but No improvement in service whatsoever just higher salaries.
Guido highlight over 500 NHS staff get over Ā£100,000 per year and a large number on Ā£260,000! Not one manager or head of NHS worth it. How does she get paid so much for the highest ever waiting list at 7,000,000! What does failure look like? Strikes me some of that massive pay could be distributed to higher nurse pay without cost to taxpayer for pay rises!
November 9, 2022
There might be “a” myth about many things.
However, in this instance, even if Sir John’s claim were true, it would be just one myth among many worrying truths.
Incidentally, I read that people with Smart Meters are being remotely switched to pre-payment if they ever get into arrears.
Merry Christmas from capitalism.
November 9, 2022
NLH
That is why many on here and Nationwide will not have Smart meters installed, we simply do not trust either the Suppliers, or the Government of the day, even though we have to pay for them anyway via our bills.
November 9, 2022
You won’t be able to participate in the ESO 4pm to 7 pm “demand flexibility service”, if you don’t have a smart meter with half hour logging. Only about half of premises have them so far. Ā£3 per kWh rebate slated for the test periods.
November 10, 2022
a-tracy
Of Course, but it is being reported they are putting people who have paid, onto a more expensive pre paid programme without following the correct protocols.
November 10, 2022
acorn
No, no benefits I agree, but how long will they last, remember the benefits/subsidies of purchasing an electric car now all being scrapped and road tax being talked about.
Likewise solar panels, good subsidies at the start then when you are sucked in forgotten.
November 9, 2022
Alan donāt you think they can cut you off anyway if you fell into arrears then force a meter on you to get reinstated.
November 9, 2022
I looked for a slot to stick a payment card in – no sign, then I looked for a slot to take Ā£coins – zilch.
Is the power company going to telephone (do they have the numbers?) and insist you read out your debit/credit card to buy more power. Not a chance.
November 9, 2022
Good Morning,
Thank you, but there are other questions:
1. What was the BoE’s knowledge and approval/acceptance of leveraged bond purchases by pension funds?
2. Given the amount of gilts owned by the BoE, about Ā£800 Billion, was there not a close liaison between the Treasury and BoE on ANY event that might affect the gilt market?
3. Why did the BoE and treasury not act sooner, by speaking to market participants to cool fears?
4. Who told Ms Truss she had to resign?
November 9, 2022
It seems one of the DB pension funds which was over-leveraged was the BoE’s own. The Treasury Select Committee needs to look into all aspects of the BoE bail-out of DB pension funds, some elements of it are being kept secret currently.
OAM, I see entirely predictably Hunt has leaked the news to the FT that the Truss investment zone plans are being scrapped. Labour continue to look more pro-growth than the Conservatives.
November 9, 2022
Peter/Roy. The BoE Pension Fund makes Gold plated ones look shabby. Have a look at the BoE Pension Fund Annual Report 2022 at https://www.bankofengland.co.uk/-/media/boe/files/about/human-resources/pensionreport.pdf You will see where many indexed linked Gilts/Bonds are, on pages 12 and 13. Then page 35 onwards.
Try to stay calm and make sure all sharp and heavy throwable objects are out of reach. š
November 9, 2022
Further Tory suicide intent; Hunt is planning an increase in inheritance tax. It seems the Sunak cabinet don’t have any idea who their voters are !
Reform Party here I come..
November 9, 2022
Peter
Certainly seems like they have a political death wish.
Have they forgotten we got in this mess because of their decisions, not ours !
November 9, 2022
Depends what is growing. ‘Friends’ bank accounts – quite possibly. Your everyday entrepreneur ‘s accounts? Most unlikely.
November 9, 2022
Indeed and what were the pension regulators doing about these leveraged bond purchases?
Who told/forced Truss to appoint Hunt?
November 9, 2022
Hi Folks.
This is ā off topicā but JR often mentions āthe elite(s)ā .
Hopefully it is possible for someone to name names or make it very clear who those elite people are.
If you think you know please educate this prole by passing on the knowledge by reply.
Cheers
November 9, 2022
Richard Smith,
Such a reply would be deleted.
Itās not too difficult to find out if you do your own research though.
November 9, 2022
Good morning.
So given your explanation, why didn’t Liz Trss MP and Kwasi Kwarteng MP say these things in their defence ?
Answer : Because neither of them had a clue.
And although the outcome with an ardent globalist in charge is not one I would have liked, in the end it just put another nail in your parties coffin.
November 9, 2022
It’s still a mystery as to why they thought they’s get away with not providing any information on spending cuts.
Unless they really thought that their growth plans would pay for an ever more bloated NHS/public sector/boat people ad infinitum? In which case their mini budget thing really was nuts.
November 9, 2022
I agree Mark. Moreover why did the party move against her, or the correct number of letters to Brady submitted, if it was known it was BOE and Treasury acting in cahoots?
Why oh why did she not have JR or someone else who knew their stuff to fight against the remainer coup?
I asked before who told her to appoint Hunt? Reported she told Kwertang ātheyā were coming after her. It was reported Casey and Treasury paid Truss a visit and plied pressure on her. Who are they and what did Brexiteer MPs do to fight against āthemā? Are we talking May and he cohort of remainers? Truss has not come clean yet.
Tory MPs then inserted backstabbing snake Sunak in a week ignoring their membership after a lengthy summer competition where Sunak was resoundingly rejected!
November 10, 2022
Who is Casey?
The right in the party went down without a wimper far less a fight.
November 11, 2022
Cabinet secretary.
November 9, 2022
Conservatives will regret joining the assault on Middle Englandās wealth
Treating savings as a cash cow for the Treasury will only result in more people reliant on the government
Philip Johnston today.
Indeed a massive assault it had been too, with even more reliant on other peopleās taxes, then less investment and a smaller tax base to going forwards to exploit. More wealth and high earners leaving the country being replaced by more low lower skilled earners or benefit dependents. A death spiral of positive feed backs giving a hugely negative outcome for all.
November 9, 2022
LL. Not for “all”. The Labour Party and globalists will benefit from a more government-dependent population.
November 9, 2022
+++++1
LL,
Which clearly demonstrates it is Not a Conservative party implementing conservative values through its policies. Pro EU Labour and Hunt are at one.
November 9, 2022
Off topic, the Belfast Telegraph expects a “major breakthrough” on the Northern Ireland protocol:
https://www.belfasttelegraph.co.uk/news/politics/major-breakthrough-on-northern-ireland-protocol-issue-close-reports-42128311.html
“A āmajor breakthroughā between the UK and European Union to resolve the row over the Northern Ireland Protocol is close, according to reports on Tuesday.
According to Bloomberg, Brussels has begun testing the UKās live database of goods crossing the Irish Sea into Northern Ireland … ”
What a pity that this detailed real time monitoring will be of the WRONG FLOW OF GOODS, those moving within the UK from Great Britain to Northern Ireland, rather than the only flow of goods in which the EU has a legitimate interest, those heading towards the border and across into the Irish Republic, EU territory.
Is there no way that you could explain this to the government, which seems to have a blind spot over it?
November 9, 2022
Denis I think you miss the point, under the protocol agreement the territory of NI remains part the EU SM for goods therefore goods moving from NI into the Republic are goods moving internally within the SM. What is not in the EU SM are goods moving from GB to NI or from anywhere else in the world to NI therefore as far as the EU is concerned these goods must be checked for all sorts of reasons otherwise there could be a breach in the rules of the EU/ movement of goods/ don’t forget that the EU Commission is answerable to the other 27 countries as well, and not only GB and NI for maintaining EU borders just like we are out to protect ours – this was all agreed by Lord Frost and Boris, signed off and passed by the Parliament and and the EU Parliament and so now it us up to us to make it work.
November 9, 2022
Thanks for explaining that … it will have to be unagreed.
November 9, 2022
Denis, what is so difficult in goods made or grown in the UK staying within the UK, what is costing Ā£35m in checks to do this, this is one tiny region just how much is going over each day to cause such a large daily charge?
I thought the only problem was in goods rogues could import from elsewhere in the world and pass through to the SM via Northern Ireland. The UK doesnāt seem to mind the EU passing all sorts into the UK freely. We need to apply the same rules both ways.
November 10, 2022
Dennis, you are too kind. J speaks utter tosh. ā¦.I am afraid international agreement is not allowed to be scrappedā¦., what utter rubbish.
The UK is allowed to put its own laws and regulations above any other international agreement. And, yes, agreements are allowed to be changed or scrapped. The protocol specifically allows it. Trump walked away from Parish Agreement nonsense, stopped funding WHO.
Germany has broke EU rules so many times we could not list here, state aid to name one. It has also acted unilaterally without reference to other EU countries ie inviting immigration from around the world. Germany now seeking an energy agreement with UK outside EU agreement.
Remainer propaganda.
November 9, 2022
Spot on Jamie. Boris, Lord Frost and the UK Parliament signed off on a major border for goods moving between GB and NI, and though Frost in particular now pretends he didn’t (while Boris never understood it in the first place) , facts are facts and international agreements are international agreements
November 9, 2022
A traitorous agreement, designed to separate NI from the union. The NI protocol is not fit for purpose and should be scrapped by our government (or what passes for government).
November 9, 2022
BOF – yes but am afraid that scrapping it is out of the question because it’s an international agreement – the protocol is there only to keep a check on goods entering NI from wherever – it is part of the overall package that was agreed going forward to allow for ease of trade in goods to that Irish part of UK – and nothing else – as a matter of interest at the same time there were other similar protocols signed for Gibraltar and Cyprus for which I don’t hear anyone complaining.
November 10, 2022
“agreed going forward to allow for ease of trade in goods to that Irish part of UK”
Hilarious.
November 10, 2022
J,
International agreements are allowed to be changed or scrapped. The world moves on. EU hostility has shown the protocol is not worth it. Article 16 invoked by EU to stop vaccines, stopped PPE contracted to come here, threats to cut electricity to Jersey, lorries held up at Dover to stop food supply unless UK locked down etc etc.
Article 16 is allowed by both parties, protocol was never intended to remain fixed but temporary with a view to change and both parties allowed to walk away.
The protocol breaks the act of union and GFA. Time to scrap it. Just because Johnson signed it and was stupid and liar does not change the fact national interest should be put first. EU decided to interpret in a totally hostile way instead of a friendly neighbour, per their leaving treaty, rules, laws and agreements.
November 10, 2022
Yes Denis the UK consists of the two parts ‘The United Kingdom of Great Britain and Northern Ireland’ – before 1922 it was called the UK of GB and Ireland – people who came from the island of Britain were British and people from Ireland were called Irish. then going back further before 1800 there were the two seperate kingdoms only GB inclusive of its parts and Ireland – Scotland being part of GB from 1707. Something like that but not so hilarious – as now we can see the cracks starting to appear again.
November 9, 2022
On May 18, 2022 Reuters reported that global debt had crossed $300 TRILLION – led by ‘advanced’ economies at 300% of GDP and China, with 260% of GDP
A moment’s reflection will show that this level of debt is unsustainable – as interest rates rise – because it can never be paid down. When this finally pops, it is going to cause the mother of all depressions. Holders of hard assets will survive, and even prosper. Those with mortgage and credit card debt will be scavenging in dustbins.
November 9, 2022
I’m waiting for a generation in Japan to arise who will say “not our debt” and dishonour their national debt. Expect contagion to travel quickly around the globe as the next generation everywhere say the same.
November 9, 2022
To dishonour their national debt ( about 260% of GDP), the Japanese would have to dishonour their own savings. Most Japanese government debt is owned by its own citizens. They save up to 40% of their income and invest it in their own government’s Bonds.
November 9, 2022
So, more lies and distortions from the establishment that takes us ever closer to economic ruin.
Are there any competent people in charge that know how to employ sense and integrity?
(Silly question)
November 9, 2022
Will get back to you on that one.
November 9, 2022
Integrity ! Now there’s a word I’ve heard lately.
– the quality of being honest and having strong moral principles.
– the state of being whole and undivided.
– you’re honest with everyone, and you always keep your word.
Stop laughing – you over there!
November 9, 2022
Your Posting today John shows once again that anyone appointed to be Chancellor, needs to have rather more experience of Economics, the Markets, Banking, Commerce, and Finance in general, than those who have been placed in position in the past.
They also need to be aware of Human Nature, as so many policies fail, because the people in charge do not take into account this very important aspect.
Put up capital gains tax too high, and people do not sell anything, but hold their position.
Income tax too high, people work less, because there is no point in flogging yourself just to have the government take the majority of the reward for your extra efforts.
Is Hunt the answer, or the problem, or he he simply a puppet.
November 9, 2022
It isn’t difficult to understand. Political bidding now govern all areas of life even the actions of the Governor of the BoE
November 9, 2022
More on topic:
https://euobserver.com/opinion/156393
“By focusing on achieving arbitrarily set low-debt objectives rather than responsible investment, the EU’s economic policy has damaged public services, living standards and our efforts to tackle the climate crisis.”
We no longer have any reason to go along with EU policy, even on the previous semi-voluntary basis, but we should nevertheless proceed carefully rather than recklessly. I have to admit that if Kwarsi Kwarteng had still been expected to submit his mini-budget for EU approval, as when the UK was a member state, then he would probably have taken some steps back and avoided spooking the markets. I suppose that after half a century of having things decided for us we are now on a bit of a learning curve as far as good self-government goes.
November 9, 2022
“We no longer have any reason to go along with EU policy”. Not quite, I suggest you read the Trade and Cooperation Agreement again.
November 10, 2022
I suggest you read it, and post again pinpointing the relevant provisions.
November 9, 2022
It’s almost like the B of E is deliberately causing a deep recession and it deliberately destabilised the Markets in order to get rid of a Prime Minister and Chancellor they didn’t want …… because they were trying to prevent/minimise a deep recession.
So now we have Sunak and Hunt, who have no mandate to govern, telling us the country is effectively bankrupt so they’ve got to raise taxes and cut spending. Whilst:
1. They shovel another Ā£80 million at France to NOT stop the invasion
2. They shovel Ā£8 million a day and rising just to accommodate the criminal invaders in luxury hotels. You can probably double that daily cost when you factor in all the other “free” things they get:
3. In addition to foreign aid, Sunak intends paying Ā£65.5 million in reparations to countries, like Pakistan who wrecked their own environment and spent their own money on nuclear weapons and a massive military instead of building flood defences.
4. And now, because British energy security has been wrecked by the lunatics in the Establishment, he’s going to pay the USA Ā£billions for imported LPG whilst our own energy reserves sit un-used under our feet.
We are governed by Globalist morons.
November 9, 2022
But just think how good and convenient it all is for Agenda 2030!
It is almost as if it were all long planned.
November 9, 2022
Globalist morons. No. Village idiots. Let’s import fracked gas, coal and export our manufacturing base. My contempt for them knows no bounds. We’re in serious trouble with these fools in charge. Let us pray.
November 9, 2022
Thank you for the explanation above Sir John. I can understand the motivation and pricing for buying the bond for Ā£50 when the interest rate changes but can you (or someone else) explain why the seller would take a 50% loss on the sale of such a bond? Surely when buying the bond the long term return has been priced in so why lose 50% (or a smaller but large percentage) on the value of that bond which will attract Ā£100 at maturity?
November 9, 2022
Probably because they thought they may be worth even less in the future with ever rising interest rates.
Thus they crystallised the loss now.
The bigger question is, why did they think it was a good idea to purchase them in the first place, given the historic interest rate was so very, very low, and a spread of other investments may have given a better return.
November 9, 2022
NS I didnāt understand that either.
November 9, 2022
In the August MPC statement the Bank of England said they would only go forward with the Quantitative Tightening depending on the market circumstance . In the intervening month when they unanimously voted for the Ā£80bn selling, as far as I can recollect, things had deteriorated on the financial situation , which suggests they were completely oblivious of the market state, and to do it one day before a financial statement, which was going to announce a chunky energy package , was down right irresponsible.
It begs the question do the Treasury and Bank of England actually talk to one another? If they do then one must wonder if they were out to destabilise the Government. Of course we are not allowed to be critical of these ‘institutions’ , questioning the Treasury orthodoxy or the Bank of England incompetence has been made a no go area, one of the results of this financial volatility, accountability doesn’t extend to them. Just like the Covid experts they can carry on laying waste to our country without any scrutiny.
November 9, 2022
1) The LDI distortion on the UK bond market compared with other economies, and the prediction of it reaching a peak by ~2021 was made in a Nomura report (‘The Age of Peak LDI’) in 2018 i.e. UK DB pension schemes would undergo a fundamental shift of how they invested.
2) BoE’s behaviour is essentially fiscal in part (i.e. with a growth focus and acting through transferring relative wealth) and is too biased towards creating inflation. This is a failure of UK Chancellors including Mr Sunak. It is clear from BoE’s own webpage describing QE which states “QE lowers the cost of borrowing throughout the economy, including for the government. … But thatās not why we do QE. We do it to support growth and jobs and help to hit our inflation target.”
The admission of wealth as a reward for owning assets rather than for entrepreneurship is blatant. E.g. the BoE states QE “tends to push up on the value of shares, making households and businesses holding those shares wealthier.” Correcting this gift of wealth to those who hold assets (rather than create) is easy to do via a one-off wealth tax. This would fill the black hole for several years.
November 9, 2022
The Kwarteng clumsy presentation of the Mini Budget recklessly expected markets to accept its changes without essential supportive substance. Commentators and financial market movers signalled exaggerated dangers and many followers reacted, spiralling into the damage caused. After many mistakes of its own the Bank of England tried to counteract the effect but flailed around like a schizophrenic gambler playing with someone elseās money at stake intent on loss.
The tax-cutting element of the Mini Budget was only a minor part of the total cost, but was seized upon by opponents as if it was the major risk. Liz Truss appeared to be correct in her policies and intent, and in some way she described the Kwarteng presentation as going beyond what she had approved. It did however result in ending her premiership well before any of the good actions she intended could even begin.
November 9, 2022
i’M 62. I wonder if I’ll ever see a balanced-budget again.
November 9, 2022
you could equally ponder ‘ will I ever get a State Pension?
November 9, 2022
All of this, plus the Williamson mess and the continual blaming of the Home Secretary for the overcrowding of Manson (which was certainly not her fault, as it was due to a huge surge in RIBs crossing the channel) is the work of the Remainers imbedded in Westminster who are determined to destroy this country as is both Sky News and the BBC.
Let’s have some truthful answers from the government and some positive actions to correct and circumvent the modern slavery act the UCHR and the NI protocol. Show some courage and kick these second-rate lawyers out of the way as we have far too many of them around Westminster.
November 9, 2022
Why do some MPs in Parliament get knighthoods (like certain ones given under Boris Johnson as PM – no, not talking about ones given under Theresa May as PM!) when people such as the GREAT English mountaineers Joe Brown and George Band, the first to climb, in 1955, Mount Kangchenjunga, the third highest mountain in the world, and much harder and more dangerous to climb than Everest, don’t get a knighthoods?
(And Joe, the first to climb the terrifying west summit of the Muztagh Tower mountain, in the same mountain range as K2, and perhaps even more technical than K2 – guy’s a HERO).
November 9, 2022
The right of the Conservative Party spent the whole summer assuring us Liz Truss was the answer, a bold new Maggie lookalike. We knew she was wooden and inarticulate. What we did not know was that she was (reportedly) obstinate, deaf to debate or criticism, so lacking in confidence that she felt a need to have only her own supporters in the cabinet, and as we now see cack-handedly incompetent.
The result is we are now 25 points behind in the polls, and in order to give an impression in the media of a restoration of stability the govt are looking at such idiotic moves as increasing corporation tax, increasing CGT, income tax and inheritance tax in order that they can keep funding HS2 and donāt have to make any big cuts in the loud and leftist quangocracy. All of this if it happens will be in direct contradiction to the 2019 manifesto and will of course prolong the recession. I do hope there is a degree of introspection and self-criticism amongst the ERG. If it had rallied round Sunak, obviously the more competent candidate, we would not now be in the political mess we are, and wouldnāt be facing such a dismal menu of policies.
November 10, 2022
Sunak wrecked the economy with his catastrophic support for Lockdowns and massive QE to pay for them.
Slick banker doesn’t = competent.
November 9, 2022
Sir John,
The other myth now being spun is that the Truss/Kwarteng leadership were a disaster for the country and a disaster for the economy. Even though they didn’t really have time to achieve anything substantial.
Now we have Sunak/Hunt who are our supposed saviours, although no-one voted for them. The members got it wrong the first time and that wasn’t going to be allowed to happen again.
November 9, 2022
Bonds are for bankers and governments, not for people on the 39 bus, except that their manipulation may ultimately effect said people. They are outside said peoples understanding and control, which is where government prefers to keep them.
I find the Liam Halligan / Lord Frost interview much more revealing. Lord Frost was the best choice for PM we were never offered last time around. I find he talks much greater sense than most politicians.
For instance Nett Zero by 2050 is a bridge too far. The steps to it with arbitrary target dates are unrealistic and not tecnology/ market based. The drive to forests of windmills has limited benefit until we can store the energy created. The importing of fracked gas from the USA with all its carbon costs is pure hypocricy when we sit on frackable gas in the UK. It only remaining untouched for political reasons/ weakness. However the people pay the price and know it.
November 9, 2022
Does Sir John believe that the BankĀ“s actions at the end of September were deliberately aimed at causing problems for the Truss government by creating market turmoil or was the timing just a coincidence? And do the BankĀ“s actions offer a sufficient explanation as to why sterling reached such low levels against the dollar, compared to the Euro which also fell against the dollar but not by as much?
November 9, 2022
And did Bailey’s talk, while in the US, of changing the policy of bond sales/purchase by the weekend and the pensions houses needing to sort out their problems themselves help to undermine Truss?
November 9, 2022
Well the media didn’t let the facts get in the way of their clear determination to pull her government down Sir John but then neither did many of your CPP collegues either. Liz was her own worst enemy in her rush to get things changed. She fell over her own feet and gave her enemies every chance to pull her down. Unfortunately, some good ideas went with her.
She also opened the door to the “Armagedon” narrative that Sunak and Hunt are using to propose new taxes and spending cuts, just as we dive into a global recession. But possibly worse are the other changes in direction of travel.
Apparently, we can’t frack here but it’s Ok to ship fracked gas from the US instead. At COP we didn’t immediately stomp on any suggestion of ‘reparation’, even though China has generated more carbon emmissions than we have since the Industrial Revolution began. We allow eco-cultists of ‘Just Stop Oil’ to completely disrupt the M25 and peoples lives (they must go to jail then, no fines!!). The French are seemingly so incompetent that we need to send UK Officers to ‘monitor’ them (and pay Ā£80M for the pleasure). We argue over whether Pensioners should get the triple lock but (by law) pay retired Civil Servants and MPs, RPI (12.4%?)
on their gold-plated, index linked final salary pensions (from HM Treasury’s petty cash account) that no ordinary UK employer can now afford.
Is it any wonder that peopke just dispair at the complete lack of common sense in Government or is it just a complete lack of backbone? I can’t make my mind up – but it could be both.
November 9, 2022
IanT
The British government machine is the most corrupt in the world, and there must be a cessation of index linking for all public worker pensions, including MPs. Never mind the so alled law that you refer to.
Pension conditions are routinely changed throughout the private sector.
November 9, 2022
‘the most corrupt in the world’ – absolutely NOT, but they are catching up pretty fast.
November 9, 2022
Sir John has referenced that the US Fed and the BoE link was the basic cause of the recent economic dilemma . There were other contributing factors ( China , Ukraine ) but I fully agree these regulating bodies should not be independent of their respective political systems .
November 9, 2022
Sir John is absolutely right Bert.
We’ve printed too much, for too long, turning our currency into monopoly money. We’ve kept interest rates artificially low, creating bubbles in housing, bonds and equities. Now all the bubbles have to deflate, which they will, at great cost to many ordinary people. Odds are that they’re going to try printing their way out of this black finacial hole again. A bankrupt system both in terms of fiscal/monetary policy and political leadership.
November 9, 2022
I think all the outstanding “undated” Gilts were redeemed in 2015 by Chancellor Osborne; including some issued in 1853. If you have a look at the DMO retail prices you will see that the Ā£100 “1Ā½% Green Gilt 2053 will cost you Ā£58.88, while the BoE base rate is 3.0% . The fact that it is not half the price of Ā£50 is because of “Convexity” look it up for how that works.
Then have a look at the long dated index-linked Gilt prices. “1Ā¼% Index-linked Treasury Gilt 2027” That will cost you Ā£109.30 for the standard coupon; or, Ā£195.91 if you want the accrued index linked coupon as well.
https://www.dmo.gov.uk/data/pdfdatareport?reportCode=D10B
Reply Why do you always want to make silly carping criticisms of what I write? Of course a 30 year bond price will also reflect repayment at par in 30 years time. The point of my article was to show the savage impact of duration in a falling market which is why I used an eternal bond to illustrate. The 50-70 year bonds we have did more than halve in the sell off when interest rates rose by more than 1%. If bonds had fallen as little as you imply the Bank would not have intervened to increase prices.
November 9, 2022
I just opened this site and saw a post from 2011 which featured Mr. Redwoodās contribution to a debate on having a referendum. His words fell on deaf ears. The noes had it. 483 I think. All the MPs were listed below the article so you could see how your MP voted.
Iām puzzled why I saw this article. I canāt see it now.
November 9, 2022
Someone has a working DELETE key.
November 9, 2022
Thank you Sir John for your analysis. There are copious levels of misleading information doing the rounds to support Sunak’s coup d’Ć©tat. It is about time that the closet remoaners were called out for what they are.
November 9, 2022
Atlas: We should start calling them democracy destroyers. It is more descriptive. Brexit isn’t the only thing they deliberately destroy!
November 9, 2022
Reported that the COP27 attendees will be chowing down on beef, chicken, and salmon as they make speeches saying that the proles should subsist on insects and seaweed for the ‘good of the planet’.
November 9, 2022
I believe the events were initiated by a desire of the ‘Establishment’ to bring down this new ‘Mrs T’ because she intended to return the then existing Tory administration into a proper Conservative Government and to get their man into place. People power is undesirable to them.
Recent speeches in Egypt demonstrate this new administration is now more inclined towards the Greens rather than True Blues.
So, ‘fings’ do not look good for a Conservative win come 2024 and surely, that MUST be borne in mind lest there is another wipe out a la 1997. Unwisely spending money we do not have has never been a vote getter.
Now it seems to me that what we are now witnessing in a deja vu visit to the incredible Tory win of 1992 v the catastrophic loss in 1997. For 1992 now read 2019 (Larger Tory 80 seat majority) and then 2024???
November 9, 2022
More MSM self Publicity from the team at the Bank of England
“Huw Pill, the Bank of Englandās chief economist, insisted its interest rate increases are not to blame for the recession, arguing that the downturn is being caused by a sharp drop in the size of the UKās workforce which is fuelling inflation.”
And the BoE main function is?
November 9, 2022
Except the number of people employed in the UK hasnāt dropped at all and is higher than it was at the time of the Brexit vote in 2016 (which I suppose is what heās hinting at). Inflation in Germany is 10% – has their workforce dropped ? USA ? Swiss inflation is 3% – has their workforce increased ? BoE will spout any old rubbish to deflect the blame.
November 9, 2022
yeah – brilliant – we’ve millions on zero hours and claiming benefits. An economic stride (get that?) forward.
November 9, 2022
I no longer recognise this government as a conservative government, as every policy & strategy is taken straight from the Blaire āhow to produce a socialist societyā handbook
November 9, 2022
BBC reporting on their news website that a man has been sentenced to 6 months in jail for serving mince pies during covid ā¦.utter madness
Straight from the Stalin āhow to control a societyā handbook
November 9, 2022
remind me – what was the punishment for the chaps in No10, filling a suitcase for booze and nibbles, joining a mass party, denying it over and over, finally the investigation ….Guilty as charged…
November 9, 2022
Some are indeed more equal than others
November 9, 2022
Apparently smart meters permit your electricity supply to be remotely disconnected from the street. Is it possible for these protesters who are trying to block measures to secure our energy supply to be the first to be disconnected this winter, surely they should be held accountable for the policies they espouse?
November 9, 2022
Only the foolish would agree to install them, only the foolish parliament would pass a law and endorse them and only a dictatorial state and government accept them ā¦tattoo barcodes next or maybe cut everyone’s energy to obtain that net-zero target
November 9, 2022
These governors of the Fed, ECB and BoE don’t seem to have much sense of reality. They are trying to enforce a maximum oil and gas price on the market, hoping that OPEC and the Russians will accept a price lower than the current highs. The population of China, India plus the other non western countries is 4x North America and Europe and they will trade with each other, buy oil at the price caused by lack of exploration and sell the West the surplus, including Russian, at a profit. Russia and the Saudis are not going to accept being told what price to accept by bankrup fiddlers.
November 9, 2022
OT. My earlier critical piece may not see the light of day but either way I’d like to say it was very pleasing to listen to Suella Braverman Home Secretary speaking on policing matters today.
We need more people with her moral, leadership and management courage.
November 9, 2022
The big disappointment about the upshot of Truss’ mini-budget was the panic wobbly markets and wobbly Conservative backbenchers (who should have been 3 line whipped as a confidence measure as Budgets would plainly be) inspired in Truss instead of some fine tuning to the package. She sacked her Chancellor and reversed the pro-growth tax-cutting measures when she should have kept all the tax changes and made some reductions to public expenditure. Quite likely the relatively painless expenditure reductions John Redwood has been advocating would have been enough but if not some further spending cuts should have been made. If she was going to replace her Chancellor it should have been with somebody who strongly believed in the tax cutting, growth strategy rather than with another panic-monger as Jeremy Hunt evidently is. The U-turn has done far more political damage to Truss and the Conservative Party than sticking to the lower tax, growth strategy ever would have.
November 9, 2022
Do away with enterprise zones and what is the point of your government now.
I wonder what Sunak and Hunt have been promised next. What you are MPs going to do to stop them, anything?
As Hancock said he knew his political days were numbered so might as well coin it in from a tv show. I hope people just ignore him, donāt put him on tests, donāt give him any publicity and just vote him out at the first chance.