Liz Truss PM - Gone Within a Year?

[MOIC]

I can't see her lasting the month.

 

[Bob Morgan]

It's P45 time for the whole bunch of them! However, I wonder how many of them know what a P45 is?

 

[MBE2017]

If you go round any middle level housing development (i.e. still fairly upmarket) there are loads of vans parked outside the houses.
That's got to tell you something #2

Yeah, it tells me most work for Amazon.

Inflation rampant, pensions on the brink, banks potentially failing around the world, the UK and everyone else is in a right mess.

Just goes to show, if you have a problem you shouldn’t ignore it and kick it down the road. All countries know what is coming, none of the Politicians feel able to talk like an adult to their electorate.

Feel sorry for some with what is coming, others, not so much. The world has to stop thinking about constant growth and start living within its means.

 

[thetiger2015]

Feel sorry for some with what is coming, others, not so much. The world has to stop thinking about constant growth and start living within its means.

...but the world is built on credit, not living with one's means. Also, most people cannot afford to live a normal life without using some form of credit. Cars, car repairs, mortgages, home improvement loans. You can't buy a fully fitted kitchen without credit these days.

So, if people start living within their means, what happens to all that credit? All those business loans? All those vehicle loans?

 

[WaveJumper]

Listening to the LBC this morning was a real eye opener (or maybe I should say ear opener) when various conservative party members phoned in trying to defend Truss. One was sitting in a car with her hazard lights obviously on and when asked what the background noise was had to describe then to Nick as she could not remember what they were called, she then went on to admit although she was a member who voted for truss she actually took advice from her husband a non party member ............No wonder we are in such a bloody mess.

 

[simon field]

So, if people start living within their means, what happens to all that credit? All those business loans? All those vehicle loans?

They won’t be needed anymore!

Whatever happened to saving up for something? This whole hilarious clusterf**k is, as always, caused by greedy people wanting more than they can afford. Individuals and governments.

The ‘everything now’ culture.

Have we not learned anything? Not been paying attention at the back?

 

[Newchodge]

...but the world is built on credit, not living with one's means. Also, most people cannot afford to live a normal life without using some form of credit. Cars, car repairs, mortgages, home improvement loans. You can't buy a fully fitted kitchen without credit these days.

So, if people start living within their means, what happens to all that credit? All those business loans? All those vehicle loans?

If you can't buy a fully fitted kitchen without credit, perhaps you should consider whether you can buy a fully fitted kitchen? When that happens, people will regain control of their finances, to some extent, and kitchen providers and fitters will go out of business. Multiply that out on a large scale and it is fairly clear that our current economic model is not fit.

 

[Karimbo]

She has no leadership capital left and will have been shorn of all her/Kwarteng/Raab's policy plans by the market wanting orthodoxy not experimentation

Talking about leadship capital, there was a bizarre moment in PMQs where kier was asking her about her policies and then Truss replied back with counter wanting to know what Starmer's policies were.

She was behaving like the opposition and it looks vague who was the actual PM.

 

[simon field]

If you can't buy a fully fitted kitchen without credit, perhaps you should consider whether you can buy a fully fitted kitchen? When that happens, people will regain control of their finances, to some extent, and kitchen providers and fitters will go out of business. Multiply that out on a large scale and it is fairly clear that our current economic model is not fit.

Why would they go out of business if people saved up - you know, like the good old days?

 

[Newchodge]

Why would they go out of business if people saved up - you know, like the good old days?

Because there would be fewer sold.They would lose the customers who could not really afford it or did not want it enough or who had an intervening financial need.

 

[UKSBD]

Why would they go out of business if people saved up - you know, like the good old days?

People would make do

Rather than replacing a perfectly OK kitchen every few years they would keep the same one twice as long.

 

[The Byre]

 

[MBE2017]

People would make do

Rather than replacing a perfectly OK kitchen every few years they would keep the same one twice as long.

Or replace the doors only, a cosmetic overhaul. Half the cost, fine for 90% of people.

So, if people start living within their means, what happens to all that credit? All those business loans? All those vehicle loans?

It gets reduced. Instead of buying a £50k car on credit, buy a £10k one for cash. Guess what happens? Many of those £50k cars get reduced in price, or the manufacture goes out of business.

Credit is made to charge you higher ticket prices, for what appears a low figure over as long as possible, to get the most money off you as possible.

Take it from someone who has only a small mortgage and no loans, no credit cards, no store cards, living this way is perfectly feasible. The fact people find THAT hard too imagine says everything really,

 

[Bob Morgan]

Just got my old sideboard refurbished -.Cleaned and Waxed ready for a coal delivery!

 

[UKSBD]

Or replace the doors only, a cosmetic overhaul. Half the cost, fine for 90% of people.


It gets reduced. Instead of buying a £50k car on credit, buy a £10k one for cash. Guess what happens? Many of those £50k cars get reduced in price, or the manufacture goes out of business.

Credit is made to charge you higher ticket prices, for what appears a low figure over as long as possible, to get the most money off you as possible.

Take it from someone who has only a small mortgage and no loans, no credit cards, no store cards, living this way is perfectly feasible. The fact people find THAT hard too imagine says everything really,

The problem is showy things are seen as a status symbol.

Shallow I know, but the person rolling up to an event in Brand new Merc, expensive suit is seen to be better than the person rolling up in 10-year-old car and cheap suit.

The fact the cheap suit and old car is paid for, but the New Merc is on a lease and expensive suit on a credit card is irrelevant.

 

[MBE2017]

The fact the cheap suit and old car is paid for, but the New Merc is on a lease and expensive suit on a credit card is irrelevant.

Still ways around it. I got a great new company car at a job interview by hiring a brand new Merc for the day, rather than rolling up in my Ford Orion.

End of the day down to individuals.

 

[IanSuth]

Or replace the doors only, a cosmetic overhaul. Half the cost, fine for 90% of people.


It gets reduced. Instead of buying a £50k car on credit, buy a £10k one for cash. Guess what happens? Many of those £50k cars get reduced in price, or the manufacture goes out of business.

Credit is made to charge you higher ticket prices, for what appears a low figure over as long as possible, to get the most money off you as possible.

Take it from someone who has only a small mortgage and no loans, no credit cards, no store cards, living this way is perfectly feasible. The fact people find THAT hard too imagine says everything really,

I have a credit card but it is set to pay off in full every month from the jnt account, that is my only personal debt and is transitory

The issue will be the transition phase from high credit consumers to low credit cash purchasers - people would have to stop buying for a couple of years whilst they started to pay off and instead saved up and that would tank the economy (even more than it already is) and cause mass unemployment.

Maybe it is a medicine we need to take but boy will it be hard

 

[MBE2017]

Maybe it is a medicine we need to take but boy will it be hard

Agreed.

Most people do not realise yet what is coming.

Interest rates for most going up to 6-7% on mortgages over the next 2-5years, doesn’t sound too bad at first. The trouble is, with the record debt most are already in, fuel increases, inflation etc, 7% mortgages today equate to the 14% rate back in the 80’s.

The real big problem is salaries for most have not increased anywhere as fast as house prices, most are over leveraged.

The worst tasting medicine is usually what gives the best results. If house prices correct 25-45% over the next two years, very possible, then things will get very nasty.

I’m not wishing any of this on anyone, the politicians needs to start fronting up to what an almighty mess is heading everyone’s way. It will be too late for most.

 

[simon field]

Because there would be fewer sold.They would lose the customers who could not really afford it or did not want it enough or who had an intervening financial

So a nett good thing then, if it means many more people are in far less debt.

 

[Newchodge]

So a nett good thing then, if it means many more people are in far less debt.

Apart from the debt of the people who lose their jobs and businesses because of it.

 

[IanSuth]

Agreed.

Most people do not realise yet what is coming.

Interest rates for most going up to 6-7% on mortgages over the next 2-5years, doesn’t sound too bad at first. The trouble is, with the record debt most are already in, fuel increases, inflation etc, 7% mortgages today equate to the 14% rate back in the 80’s.

The real big problem is salaries for most have not increased anywhere as fast as house prices, most are over leveraged.

The worst tasting medicine is usually what gives the best results. If house prices correct 25-45% over the next two years, very possible, then things will get very nasty.

I’m not wishing any of this on anyone, the politicians needs to start fronting up to what an almighty mess is heading everyone’s way. It will be too late for most.

i think it is 6 or maybe 6.5% they said is equivalent to 14% in the past due to leveraging

Personally i am happy for a 50% houseprice correction. I just took the 175k i paid for my house dec99 divided by the median salary at the time (18.8k) and multiplied it by the current median salary (£25.5k) and I come to £237k (salary figures from ONS) - I just looked on Rightmove and currently similar houses in my area are £600-650k !!

 

[IanSuth]

Apart from the debt of the people who lose their jobs and businesses because of it.

Those that lose their business won't gain as much debt as those made redundant (as long as their companies were LTD)

The debt mountain needs clearing and however you do that will be agonisingly painful but it can't keep growing ad infinitum

 

[simon field]

---

Apart from the debt of the people who lose their jobs and businesses because of it.

Plenty of jobs available currently.

 

[Jasondb]

I have to admit following COV-ID crashing the economy then having low tax Truss come in and then change Bojo's plan on tax and National Insurance mid term was not surprised to hear how unpopular she has become. I guess the Tory membership that voted her in were in favour of low taxes whereas Tory voting middle England is less concerned about low taxes and more concerned with a working economy.

To change again mid term would be dangerous unless they reverted to Bojos plan to stand a chance of winning again. Yet in doing this they may alienate a lot of paying Tory Party members.

 

[Newchodge]

I have to admit following COV-ID crashing the economy then having low tax Truss come in and then change Bojo's plan on tax and National Insurance mid term was not surprised to hear how unpopular she has become. I guess the Tory membership that voted her in were in favour of low taxes whereas Tory voting middle England is less concerned about low taxes and more concerned with a working economy.

To change again mid term would be dangerous unless they reverted to Bojos plan to stand a chance of winning again. Yet in doing this they may alienate a lot of paying Tory Party members.

I don't think there is a Johnson plan to revert to.

 

[simon field]

Let’s be honest here, there IS no plan whatsoever.

I mean, originally it was ‘Let’s all cut tax, we’ll show our working out sometime later’

The markets recoil in horror, and BOE bails govt out.

‘Ok then, we’ll show our working out a bit sooner’

The markets stay recoiled in horror, artificially less so due to the bailout.

Why don’t they admit what everyone can so obviously see?

They have no plan!

 

[Bob Morgan]

The only plan they seem to have is one of "Buy High, Sell Low!"

 

[IanSuth]

Not true

I have no faith in or believe it would work but they did have a plan

Cut taxes and costs (via regulation) in everything, the economy would take off in a wild west style bonanza, the increased tax take (a lesser % of a far larger amount being more in absolute terms) would easily pay for the smaller state (less regulation means smaller state) and the companies booming will pay more to their staff allowing them to pay for private xyz

It is just a plan that might work in SimEconomy but not in the real world

 

[MBE2017]

Well the Fed is making losses for the first time in over a decade, the next meeting is expected to increase interest rates by 0.75-1%. With other currencies struggling, the Australian dollar has lost almost 20% of its value in the last several months, unless others do the same everyone’s currency is going to be almost worth less than the plastic it is printed on.

Guys, expect much higher interest rates than currently being suggested atm, 6-9% is feaseable IMO. The World recession is like an enormous unstoppable train coasting atm, applying brakes via interest rates will eventually work, but it could take several years yet, if not longer.

I reckon many banks will go under, once the first big one goes you will see worldwide contagion.

 

[IanSuth]

Well the Fed is making losses for the first time in over a decade, the next meeting is expected to increase interest rates by 0.75-1%. With other currencies struggling, the Australian dollar has lost almost 20% of its value in the last several months, unless others do the same everyone’s currency is going to be almost worth less than the plastic it is printed on.

Guys, expect much higher interest rates than currently being suggested atm, 6-9% is feaseable IMO. The World recession is like an enormous unstoppable train coasting atm, applying brakes via interest rates will eventually work, but it could take several years yet, if not longer.

I reckon many banks will go under, once the first big one goes you will see worldwide contagion.

That is at least one thing we are in a better position on

The stress tests that our banks have had to undertake are stronger than those over the atlantic and in the east so hopefully they will go before ours

 

[webjaved]

It's time to call a general election now.

We've had enough of The Tories. They're crippling this country.

 

[MBE2017]

It's time to call a general election now.

We've had enough of The Tories. They're crippling this country.

Doesn’t matter who is in power, there are no easy answers. I think we have a minimum of 10 tough recession years compared to the recent past, whoever is in power.

Even then, that is if they repeat the same mistakes all over again. What will be will be, the only real tool at anyone’s disposal is interest rates, and no one wants to stick them up to high too quick.

The Fed will make a big increase shortly, followed by everyone else, a minimum 0.75-1% within the next week or two.

 

[The Byre]

 

[webjaved]

LOL! We really have become a laughing stock.

 

[The Byre]

Let's be quite clear about this - KK and the Lettice came up with their cockamamie scheme after two weeks in power. Untested by modeling or even discussed with leading monetary economists (one suspects that this vital step was left out for fear of what they would otherwise hear!) or even with the stamp of approval from the OBR, they were making up fiscal policy on the hoof. That mini-budget could have passed for a second-rate sixth-form economics essay.*

*2/5 - must try harder and show your calculations in the margin provided!

The Lettice models herself on Maggie - well, Her Magginess (of whom I hasten to add I am no fan!) at least had the sense to bring the country's affairs in order BEFORE she and her Chancellor began remodeling the economy - and bringing the country's affairs in order took nine years!

And not the nine days The Lettice and KK spent - if that!

There is a depression coming. It has been inevitable since the early 2000s - about 2005 or 6. Stupidly low interest rates caused the housing markets almost everywhere to become financialised. Denied decent yields on bonds, investors piled into CDOs and MBSs raised against houses (and other liabilities) that those buying them saw only as monthly payments and not as places to live.

When I heard that UK buyers could raise mortgages 30-times their income in some cases, I started digging. The retail banks were creating money by passing debt bundles around as securities for more and more loans. And not just in the US, but almost everywhere - it was the bankers' answer to The Wild West!

Something had to give!

And it did in 2007 when CDOs started to fail. By 2008, everybody was flapping and panicking. "Here it comes!" I thought. "Here comes the global crash that resets the entire world's economy and monetary systems!"

I was wrong! Central banks everywhere came riding to the rescue of their retail buddies by printing money. Since then, they kept on printing money and we got ever-more inflation. First house prices, then other assets such as shares kept on climbing and climbing and climbing - nobody cared anymore what they were buying! Any idiot could be a successful fund manager and many idiots were fund managers!

Punters started buying ETFs - why bother stock-picking when everything goes up? Just buy an S&P-500 tracker and call yourself an investing genius!

The inflation started to creep into consumer durables, cars in particular. Every year a couple of thousand more - over c.a. 12 years, prices doubled! All sorts of other things were creeping up in cost. But official figures put inflation at 2% - yer, pull the other one!

Inflation is a tax on the poor - remember!

Slowly the truth began to dawn on central bankers - only Pinocchio believed in a Magic Money Tree. Copernicus told us in 1517 that MV=PY - the quantity equation of money. Create more M and its purchasing power (value) and its velocity (V) have to fall! Stagflation - Simples!

That which should have been happening in 2004 (a tightening of the money supply, combined with rising interest rates) is now being done in 2022 - 18 years too late! What could have been merely painful in 2004 will prove deadly for many in 2023 when the music really stops dead.

Plunging headlong into this quagmire of debt, public and private, came two hopefuls, armed with a sixth-form essay all about paying yet another destructive visit to Pinocchio's Magic Money Tree - dancing into the spotlight came that brilliant comedy duo - KK and The Lettice!

To say that the bond markets were spooked is to put it mildly! 30-year gilts fell by 48% - £20bn from the BoE later, they have calmed down and the pound crawled from $1.04 back to $1.10.

But inflation is still with us and supermarket inflation is today running at about 40%. It is in danger of starting to go out of control.

One more stupid remark from The Lettice is all it would take!

 

[Justin Smith]

I cannot stand Jeremy Hunt, he was consistently supportive of longer and deeper suppression of society (and the economy) during the pandemic, so it's somewhat ironic he will have to pick up the pieces of the economic mess he was encouraging.
At least, again ironically, he is being honest about just how bad it really is :

Who is in charge? Liz Truss or Jeremy Hunt?

Who is in charge? Liz Truss or Jeremy Hunt?

The new chancellor has junked the prime minister's economic strategy in 24 hours, writes Laura Kuenssberg.

www.bbc.co.uk

He's made a virtue out of being candid about how bad things are - dangling the implication the prime minister has not levelled with the public about what comes next.

 

[WaveJumper]

On the wires tonight:

Oct 16 (Reuters) - British lawmakers will try to oust Prime Minister Liz Truss this week despite Downing Street's warning that it could trigger a general election, the Daily Mail reported.

More than 100 members of parliament (MPs) belonging to the governing Conservative Party are ready to submit letters of no confidence in Truss to Graham Brady, the head of the Conservative Party's committee which organises the leadership contest, the tabloid reported, quoting unnamed sources.

Interesting week ahead I think, but tonight pound hovering around 112 was slightly up on market open however currently tracking in a downward path. May see further (substantial)losses as Asian markets kick in, going to be a volatile night.

 

[MOIC]

Graham Brady (back in the UK today) has to hold a meeting with the 1922 Committee and oust the doughnut from office and decide on who's better to replace her. No-one in my opinion, even Rishi cannot help them at this point. They are no longer credible.

Time to see the error of their ways, get rid of the plank of wood, as well as ALL that backed her to become PM.

The Conservative Party have imploded. Time for a General Election.

Then the real fun begins!

 

[Jasondb]

If Truss can stick with Hunt satisfying the markets I think that would be better than another Tory party vote or general election. A GE will probably produce a hung parliament and sterling falls again and rates would need to rise. It would be better for them to vote on the next Tory leader as part of the next party conference in 2023 and then go to the election. That might still be Truss.
MPs can be a cut-throat bunch with pushing for better cabinet jobs and so baying for blood as change enhances their prospects.
The other option is to give it to Sunak as he came 2nd in the party vote and so the country does not have to wait again.
The markets initially liked what Hunt said though the test will be tonight and overnight as other markets react.

 

[Newchodge]

If Truss can stick with Hunt satisfying the markets I think that would be better than another Tory party vote or general election. A GE will probably produce a hung parliament

Better for what, or whom?

According to the polls (and I accept they are not always entirely accurate) a GE now would result in the annihilation of the Tory party, an outcome most would accept as justified.