Utopia Talk / Politics / Jergul

Seb Member	Fri Sep 23 12:40:34 Do you, by any chance, happen to work for Liz Truss? She seems to be working very very hard to make your prediction come true.
murder Member	Fri Sep 23 12:41:25 Which prediction is that?
Seb Member	Fri Sep 23 12:50:11 UK economy smaller than Russia in nominal terms by end of year.
Seb Member	Fri Sep 23 12:54:47 They've just done this absolutely insane budget. Massive tax cuts that predominantly favour the rich (cut 5% off the top rated of tax, 1% off the lower, axe social security payments) - all funded by massive borrowing. Pound has collapsed, gilts collapsed, cost of borrowing through the roof and interest rate forecasts shooting up.
Habebe Member	Fri Sep 23 12:57:01 It seems energy costs are driving much of the problem.
Pillz Member	Fri Sep 23 15:29:04 But Biden said gas prices are lower than in June! All Europe did with sanctions is ensure the economic pain of the pandemic never goes away. Seb doesn't care as he will spend winter in Spain though
Habebe Member	Fri Sep 23 15:38:44 The WH seemed short sighted om gas prices. I mean mentally, yes more ethanol makes it a little cheaper. I even support his move to have the government help moderate prices. But winter is coming and he has shot his load onnthe reserve, lowest it has been since lioe 1980. It did lower prices, bit now they are out. Opec+ is cutting production, demand is going up as it gets colder.... We could easily as $5/gallon gas before years end. PS. Oil Stocks are a bargain at the moment. NG as well.
Seb Member	Fri Sep 23 17:11:18 Habebe:
Seb Member	Fri Sep 23 17:13:35 Habebe: People earning 150k GBP a year will barely notice the energy spike. Yes, the energy price is driving inflation, and yes a bailout will require borrowing. The correct response would be to do that, apply a windfall tax on energy producers to counteract the inflationary effects of borrowing. But the massive unfunded tax cuts to the richest people in the country at a time of rising deficits is lunacy.
Habebe Member	Fri Sep 23 17:39:39 Seb, Oh, I didn't mean to imply any support for what looks like trickle down economics.From what I've read that's her plan. Just that Ive seen reports of small businesses, especially restuarants not being able to afford energy in the UK and it may lead to closings. Im a little curious why the UK seems to be have hit particularly hard on energy.
Seb Member	Sat Sep 24 02:03:24 Habebe: I did a thread on it before. Number of factors: 1. Almost no regulation on energy cos - we have one of the freest energy wholesale and retail markets in the world, so cost increases are passed through to prices relatively quickly when they rise, but when they go down retailers go bust quickly - and when they go bust their customers are transitioned to new suppliers and the costs of that spread across the system. 2. The way wholesale electricity pricing works is an auction system that sets the price benchmarked at the lowest cost producer for the highest costing fuel sector. So that means even if only 60% of our electricity comes from gas, it's all priced at gas. This made sense to get renewables going a decade ago but the Tories haven't had an energy policy for a decade (too busy with brexit). 3. While we have a better than average split of renewables to fossil fuels, almost all our fossil fuel consumption is gas, and we are well connected to Europe so if European demand goes up, the price goes up quickly. We sold off all our gas reserves to private companies so they sell to the highest bidder. That's no state gas producer with any obligation to sell preferentially to the UK. And even though we couldn't export all the domestically produced gas, because it's an efficient market it all ends up being sold benchmarked to the price the European market is willing to pay. 4. Our govt (Tories) shut down and sold off all the gas storage facilities so there is no buffer 5. No market interventions to soften the rises like the rest of Europe.
jergul large member	Sun Sep 25 13:33:18 "She seems to be working very very hard to make your prediction come true." Would that not mean she is working for me? :)
Habebe Member	Sun Sep 25 13:36:09 Jergul is clearly the puppet master of the UK.
Seb Member	Sun Sep 25 13:42:36 I would think you have higher standards in your choice of employees. I had in mind more a wyrmtounge type arrangement.
jergul large member	Sun Sep 25 13:50:48 hehe, probably :D. I will admit to factoring in Truss embarking on some undefined, damaging policy choice. It seemed quite likely.
Seb Member	Mon Sep 26 03:52:30 jergul: There's damaging and convincing the market that you are actually insane. Talking to some people in the finance industry - that is the general conclusion: not so much that any one measure is going to sink the economy; but the combination makes absolutely no political or economic sense - so the markets net reaction is "fuck, these guys have no strategy and no clue" rather than "Ok, well this will have a predictable outcome and we are moving our money accordingly".
Seb Member	Mon Sep 26 03:57:07 It does however fit with my general thesis about the conservative party in the UK (and the US): They don't actually understand the market or the economy or thatcherism or reaganism (or the difference between the two) and the underlying theory as to how it was all supposed to work and what underlying context is needed*. It is more like a cargo cult: you say the words, perform the rite, and surely the big metal bird will come. *Whether you think the theory is right or not, it had a level of intellectual coherence by which it can, in context and detail be explained as to why someone can think it might work - unlike "cut taxes = growth".
Seb Member	Mon Sep 26 06:08:56 Some extraordinary quotes coming out of senior finance folks. "Doomsday cult" "Tackling a supply side crisis by boosting demand" "Been taken into a corner and beaten up by the bond markets" "UK in a currency crisis"
jergul large member	Mon Sep 26 07:59:13 Seb I did not need her to embrace crazy that much for prediction to materialize.
Seb Member	Mon Sep 26 16:14:50 Disagree. After all the markets had weeks to respond negatively to the energy policy we were talking about and they were sanguine because it's a sensible way to address supply side inflation driven predominantly by spiking energy costs, and the inflationary effect of the extra borrowing can be moped up with interest rates, quantitative tightening the BoE is already doing, plus windfall taxes. Crazy pants massive tax cuts for the rich and a bunch of demand stimulus when all that will do is encourage bidding up of already tight supply on the other hand just makes the bond market think the country is being run by lunatics who understand nothing. And after the sacking of the most economically literate and experienced senior civil servant, they aren't wrong.
Habebe Member	Mon Sep 26 16:33:23 "the sacking of the most economically literate and experienced senior civil servant, they aren't wrong." Again, from what little I know of her tax cuts, I do agreenit will worsen things. However, how well was this civil servant doing?
Seb Member	Tue Sep 27 02:22:24 Habebe: The civil service is supposed to be independent. Different from how you do it. The idea is a professional independent civil service can provide long term institutional memory and advice to ministers but will always faithfully eject policy. The problems tend to be twofold: Policy/delivery divide. The top of the civil service is heavily focused on policy advice and development in support for ministers. It tends to attract very clever thinkers. But they also tend to be very infective managers and not great at execution. This is something of an intractable problem (pay peanuts and make leading executive agencies low status, get monkeys, and skill set for great policy makers isn't that of effective delivery). The other problem is that new ministers think that the job of the civil service is to unquestioningly do their bidding. However that's not how it goes. The minister *can* always get their way, but senior civil servants are accountable to parliament for how money is spent and whether it is good value. And they are required to give their advice to ministers. So on this budget, Scholar would almost have certainly (had he been involved) pointed out it was going to go down very badly and provided alternatives. He would of course have done what the minister ultimately wanted, but he may have asked for a letter of direction providing a paper trail to show the minister over-rode advice. Weak ministers take this as insubordination, and they have the idea of having to put their name against ideas that fail.
jergul large member	Tue Sep 27 02:29:55 http://gyazo.com/15698091c0f8b6acb2fde2641ea7c36b
Habebe Member	Tue Sep 27 02:30:20 ". It tends to attract very clever thinkers. But they also tend to be very infective managers and not great at execution." I'm well aware of the type. My point was the UK economy has been shit anyway, presumably while this person presided. So I doubt they would have been very effective all of a sudden.
Seb Member	Tue Sep 27 02:40:38 Habebe: You are being somewhat reductionist. The main drivers for economic performance aren't attributable to the chief advisor to the chancellor. Ultimately ministers set policy and destroying your main trade relationship (Plus a pandemic) isn't something a civil servant can do much about when ministers insist on pursuing it. BUT 1. Crisis response - probably good to have the guy that led the response to the last two around. He has credibility with stakeholders, he knows what to say to who in order to calm nerves. 2. Credibility - what does it say to markets about you as an incoming finance minister when your first action is to sack the person who is considered to be an effective and sensible policy maker for the UK macro economics and replace him with a yes man? For me it suggests: a. You are going to do stuff that is unorthodox (aka things me and my finance industry buddies think risky and possibly stupid. Or even likely very stupid especially if I've read the book of stupid ideas you published a few years back. b. You aren't interested in listening to alternative points of view, so there's little chance of policy corrections, nor any experienced crisis manager supporting you, so when you hit the buffers, you will be hitting them hard and fast and not trying to slow down. Probably a good time to cash out of UK exposure no?
Rugian Member	Tue Sep 27 06:30:18 I just hope that everyone keeps in mind that jergul's and Seb's fathers likely had an exact identical conversation to this one on May 5, 1979.
Nimatzo iChihuaha	Tue Sep 27 09:08:35 Now is a good time to short the UK. The Queen has died, governance is more incompetent than normal, BoE is intent on tightening into a recession. Someone needs to check Tower of London and see if feathers are ruffled or if the ravens are ok.
Habebe Member	Tue Sep 27 10:04:02 Seb, You have great faith than I do in the man. Clearly things have been shitty for a while, but they did take a recent plunge, my guess is that it would have been no different either way. Nimatzo, Short the fuck out them. Could be just rumors but I read talks of no confidence are afloat. Even if just rumors, that's bad.
Seb Member	Tue Sep 27 15:11:20 Habebe: Put it this way - they issued a statement to the markets intended to calm them and the pound immediately plunged again. I suspect having someone who had actually experienced two market crises would have helped work out how to do the crisis response better.
Seb Member	Tue Sep 27 16:07:03 http://twi...tatus/1574845729549520899?s=19 Lol.
jergul large member	Wed Sep 28 01:46:04 Norway just pushed a Salmon Baron tax aimed to raise about as much as the electricity subsidy to consumers costs.
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