Rishi Sunak and the Conservative Party.

[uglymonkey]

People haven't recovered from the 08 crash, never mind anything after. It's a slippery slope downhill.

 

[Pete_uk]

The bankers have

 

[uglymonkey]

And they are all that counts apparently. Sod everybody else.

 

[LateThanNever]

QE arguably has been inflationary over the past 10 years, but it's been acting against negative inflation. It's also been done by most of the large economies at the same time. You can't just confidently massively extend QE as a one-country solution in a different financial environment and hope for the best.

You appear to be taking a green/Marxian viewpoint that distribution is all that matters here, and that growing absolute production is a bad thing. In general I can get behind that, but the problem with that you haven't got any large-scale buy-in for that as a policy, and the shape of the demographics makes it highly unlikely that what the UK is able to produce as a society dominated by non-productive pensioners is likely to meet most peoples expectations of their needs.

Ignoring the economics for a second, think about how that society looks to you as a working person. If its a society where everybody is working hard and sharing the outputs equitably, but we were all poor and this is the best we could do, then I might be okay with that. If's a society where the minority of people are working, and most of my output is going to a group of pensioners who are still capable of work but are instead sitting in their owner-occupied houses treating their pensions like some kind of golden ticket, I'm not going to be okay with that. Not being okay with that suggests two options - emigrate to a country with a different system, thus worsening the problem in the UK, and further reinforcing the superiority of the country which has gone the different route, or work to change the situation in the UK.

I'm not particularly trying to make an argument for the inevitability of revolution, but I am pointing out that there are some pretty fundamental political forces at work which your touching faith in the non-inflationary nature of QE really won't be able to stand up to.

I broadly agree - but even you suggest that any QE inflation was well within the (arbitrary) 2%....
Buy-in for environmental cleanliness and stability is there for everyone I think I've ever spoken to - pensioners or youth!
The majority of your 'output', whatever that is! in any financial sense, will not be 'going to' pensioners, though they may be paid.
Do you not realise how many of them do voluntary work?
So they contribute to society without getting privately paid.
Don't get immured in the Thatcher dictum that government has no money of its own. That was either a misunderstanding or a lie.
The very essence of a sovereign state is its ability to create its own money.
I do agree however that we need sufficient resources be they human or environmental to be able to operate our society.
Clearly if you have 100 people bedridden and requiring care and only two people to care for them and nobody to farm or run a factory, then you have a problem - but fortunately we are not there yet!
What is not relevant is the money that government and its wholly owned bank may choose or not to create...
We need a revolution in thinking-rather than an actual revolution, I suggest!

The bankers have

Quite!

 

[Magdalia]

The majority of your 'output', whatever that is! in any financial sense, will not be 'going to' pensioners, though they may be paid.

Yes it does, the tax and benefit system does the redistribution. But it breaks down if there are not enough tax payers.

Clearly if you have 100 people bedridden and requiring care and only two people to care for them and nobody to farm or run a factory, then you have a problem - but fortunately we are not there yet!

Looking at the 2021 census it is about 20-30 years away.

 

[LateThanNever]

It has changed because the UK already has inflation triggered by supply side shocks. Of these the most important is the least recognised: tightening of the labour market due to the demographic changes that brought us here in the first place. In particular, during the last 2 years, QE would have reduced the impact on inflation of the UK's 14 interest rate rises.


Balance of payments is not just about trade. Japan benefits from a big surplus on overseas investment earnings, for example the profits from its factories in the UK making cars and trains. 40 years ago the UK was like that, but not now.


The forex traders are not using their own money. It belongs to commercial banks, deposited by the companies from which the UK has purchased its imports. And as I've already explained, the proportion held by foreigners is not small, particularly in the context of the market for issuing yet more debt.



I haven't asserted that, but you are right that the UK should get exporting, and green industries are one area where the UK has opportunities to do that. But, from my perspective here in the Fens, the best opportunity for high productivity growth and exports is what is already happening in Cambridge and Oxford in things like the life sciences. The government doesn't need borrowing or QE for that: it just needs to make sure that growth is not strangled. That means building houses and infrastructure, which can be privately financed.

I'm definitely not advocating more QE, which in the UK mainly fed through into inflation in asset prices. The UK GDP data since 2008 shows that QE didn't do much for real economic activity.

Interest rate rises were/are a complete con - the don't affect anyone except the UK economy and the inflation is caused outside the UK Sterling area so the Bank of England is working for bankers not the people - or indeed the economy. BoE interest rate rises just increase UK inflation.

The Labour market may be tighter but most of us earn no more than we did in 2010 - so not that tight.
What makes you think that the UK has no foreign earnings? None of them do I admire but the UK domiciles Shell, Unilever and BP for example so it, too has

"overseas investment earnings"

You suggest that the forex traders are using commercial banks - so how many of them are domiciled in the UK?

Government may not NEED QE for green development but why on earth not create it when it. and not private finance. is the sole and monopoly creator or £ Sterling?

Not creating Sterling will definitely ensure that UK growth is strangled - as indeed as we are now beginning to see with a recession looming...

 

[Magdalia]

Do you not realise how many of them do voluntary work?

But there is no tax income for the government from voluntary work (though it may save the government needing to spend).

 

[LateThanNever]

Yes it does, the tax and benefit system does the redistribution.


Looking at the 2021 census it is about 20-30 years away.

But you rather misunderstand I suggest.
Government creates the money - it is not 'yours' to redistribute, it is the government's.
It taxes back to prevent inflation.
If government spends into the economy on things that are available and beneficial, people will respond - and actually have more children.
But a large wave of immigration is likely to be coming our way as a result of climate change - so government needs to get creating money and investing in infrastructure and all our futures!

 

[Magdalia]

BoE interest rate rises just increase UK inflation.

No, they reduce inflation by taking spending power out of the economy.

The Labour market may be tighter but most of us earn no more than we did in 2010 - so not that tight.

The tightness in the labour market is very unevenly distributed, and the people earning a lot more money may not be shouting about it. But the labour market statistics have for a long time been showing how rapidly private sector wages have been rising.

What makes you think that the UK has no foreign earnings?

I didn't say that. But the net position is much less favourable than Japan. UK foreign investment earnings are much less significant than they were 40 years ago, and offset by what we pay out on the large amount of foreign direct investment in the UK.

You suggest that the forex traders are using commercial banks

You have that the wrong way round, the commercial banks are using the forex traders.

so how many of them are domiciled in the UK?

A significant amount of forex trading is in London, but also in other major global financial centres.

Government may not NEED QE for green development but why on earth not create it when it. and not private finance. is the sole and monopoly creator or £ Sterling?

That's not correct. Commercial banks create sterling every time they make a loan in sterling.

 

[LateThanNever]

But there is no tax income for the government from voluntary work (though it may save the government needing to spend).

Why would there need to be tax income?

No, they reduce inflation by taking spending power out of the economy.


The tightness in the labour market is very unevenly distributed, and the people earning a lot more money may not be shouting about it. But the labour market statistics have for a long time been showing how rapidly private sector wages have been rising.

I didn't say that. But the net position is much less favourable than Japan. UK foreign investment earnings are much less significant than they were 40 years ago, and offset by what we pay out on the large amount of foreign direct investment in the UK.

You have that the wrong way round, the commercial banks are using the forex traders.



A significant amount of forex trading is in London, but also in other major global financial centres.




That's not correct. Commercial banks create sterling every time they make a loan in sterling.

Just none of this is correct - I despair.

You say I'm not correct when I actually have already said that banks create Sterling!

Sorry I really fear for your mental understanding.

Do you know about Buxted chickens or Tufton Street?

 

[Enthusiast]

Be very careful what you wish for.

Population isn't just about the total: what matters particularly is, as the statisticians say, how it is broken down by age and sex.

I have said before, and I'll say it again. If you only ever look at one graph in your life it needs to be figure 4 here from the 2021 UK census:

Population and household estimates, England and Wales - Office for National Statistics

Census 2021 rounded population and household estimates for local authorities in England and Wales, by sex and five-year age group.

www.ons.gov.uk

The UK has an unfunded state pension system, and a bulge of people in the 50-59 age group, approaching retirement (the "baby boomers"). Without a birth rate above replacement rate, and/or some inward migration, the ratio of economically active population to economically inactive population will plummet. Allow that ratio to fall too much and the UK state pension system and all of UK public finances will become unsustainable.

Unless you would like to work until you are 75?


And with a declining population, who do you think is going to do this? I suggest that you take a look at what is happening in Japan and South Korea, where population is already declining.

What the graph shows is that the UK does not have enough people in two age groups: the under 5s and 15-24 year olds. Now is the time to rectify that with a higher birth rate and a bit of net inward migration, migrants predominantly being young adults. The UK population will start to decline naturally once the "baby boomer" generation starts to die in large numbers.

Figure 4 is usually called the population pyramid, and it needs to be shaped like that, with more people at the bottom than the top. When it starts to look more like a tree it is bad news.

An interesting post and thanks for taking the time.

But it overlooks one crucial factor: if you encourage the population to grow (whether by birth rate or immigration) in order, ostensibly, to improve the active:non-active ratio) all you are doing is creating a greater problem further down the road because the newcomers or newborn will eventually get old. Then, unless you encourage even greater population growth, the ratio will deteriorate further. The country (or the world) cannot accommodate an ever-increasing human population. It is simply unsustainable. Other species generally have their populations controlled by natural means (lack of food, prevalence of predators, etc). Humans in the developed world have overcome many of the problems which see them die early and so that balance has been lost.

All of the things you mention are problematic. The State pension problem, for example, has been known about for decades and it stems from it being set up as an unfunded scheme from the outset - a shortcoming which has never been addressed. But the answer is not to increase the population. To do so is rather like encouraging cats to have more kittens because many of them end up in a sack at the bottom of the canal. The answer is to address those problems properly and not continually kick the can down the road. For that we need politicians who will take bold and probably unpopular decisions, so I suppose we're stuffed really.

 

[birchesgreen]

For that we need politicians who will take bold and probably unpopular decisions, so I suppose we're stuffed really.

We also need an electorate who will let politicians take bold and short term unpopular decisions for the good of the medium and long term. But we don't do we?

 

[Magdalia]

Government may not NEED QE for green development but why on earth not create it when it. and not private finance. is the sole and monopoly creator or £ Sterling?

You say I'm not correct when I actually have already said that banks create Sterling!

So which of these two completely contradictory statements do you actually believe?

Do you know about Buxted chickens or Tufton Street?

Yes, I do know about Tufton Street, most of what emerges from there is nonsense.

I know less about Busted Chickens, here in the Fens we know more about Bernard Matthews.

But it overlooks one crucial factor: if you encourage the population to grow (whether by birth rate or immigration) in order, ostensibly, to improve the active:non-active ratio) all you are doing is creating a greater problem further down the road because the newcomers or newborn will eventually get old.

No I'm not overlooking that. What UK should be aiming for is about 600k new births per year, or 3m in each 5 year age group. If every yearly cohort has roughly that number of people then the total population will settle at 50-60m, once the baby boomers of 1955-73 have died off. And where the UK already doesn't have enough people to hit the 600k per yearly cohort target, for example the 15-24s, then a bit of inward migration makes sense. With migrants being predominantly young adults, now is the time to do that. But in cohorts where the UK already has 600k people per birth year/3m per 5 year age group, then you are right that net inward migration would create a problem for the future.

 

[Yew]

No need for inflation - you prevent inflation through taxation.

Domestic monetary policy does not impact the global oil price in any significant way. This current bout of inflation is caused by international politics, the Bank of England cannot influence the price the Saudis sell oil for.

We also need an electorate who will let politicians take bold and short term unpopular decisions for the good of the medium and long term. But we don't do we?

In the long run we're all dead, even if we happen to have made the right bets that eventually pay off.

Bold and unpopular decisions are also usually only bold and unpopular with ordinary working people due to causing them financial hardship.

 

[LateThanNever]

Domestic monetary policy does not impact the global oil price in any significant way. This current bout of inflation is caused by international politics, the Bank of England cannot influence the price the Saudis sell oil for.


In the long run we're all dead, even if we happen to have made the right bets that eventually pay off.

Bold and unpopular decisions are also usually only bold and unpopular with ordinary working people due to causing them financial hardship.

the Bank of England cannot influence the price the Saudis sell oil for.

Precisely!

 

[Magdalia]

This current bout of inflation is caused by international politics, the Bank of England cannot influence the price the Saudis sell oil for.

The current bout of UK inflation was started by supply side shocks in the price of food and fuel. But inflation has persisted in the UK because of domestic factors, in particular the tightness of the labour market. The labour market was a cork waiting to explode, and the supply side shocks triggered that explosion. This has resulted from these factors which were all predictable:

• demographic trends
• decline in workforce participation, mainly due to ill health
• ending of free movement from the EU
• large increases in the minimum wage/national living wage

The last two of these have been deliberate acts of UK government policy and there is no excuse for not recognising their inflationary implications.

 

[dangie]

We also need an electorate who will let politicians take bold and short term unpopular decisions for the good of the medium and long term. But we don't do we?

I think there’s a couple of points here.
How many would embrace unpopular decisions made for the medium and long term if they are of an age where they themselves won’t see the benefit? That may seem a selfish attitude but that’s human nature.

Would the electorate actually trust politicians to make those decisions? Before the electorate begin to trust politicians, the politicians need to rebuild trust with the electorate. I fear that is going to be very difficult.

 

[Wynd]

Its not credible, despite what the official figures say, to say that QE didnt cause inflation.
Look at the price of food, or houses, in 2008, and compare that to today.

Fiscal spending by the gov during covid has only accelerated inflation. supply side, leaving the EU, has entrenched it.

Asset price inflation will only continue due to the masive increases in the money supply. The money has to go somewhere. Have a look at how much the DMO are planning on issuing next year...

 

[Lost property]

I think there’s a couple of points here.
How many would embrace unpopular decisions made for the medium and long term if they are of an age where they themselves won’t see the benefit? That may seem a selfish attitude but that’s human nature.

Would the electorate actually trust politicians to make those decisions? Before the electorate begin to trust politicians, the politicians need to rebuild trust with the electorate. I fear that is going to be very difficult.

To a certain extent, you have a valid point concerning the restoration of trust....however, this remedial action will commence after the next GE with the removal of those in Gov't who, thanks to the revelations now emerging at the Covid inquiry, have proved even less trustworthy (and even by their "standards" this has taken some doing) than they have consistently demonstrated since they came to power....and abused this privilege thereafter.

 

[takno]

To a certain extent, you have a valid point concerning the restoration of trust....however, this remedial action will commence after the next GE with the removal of those in Gov't who, thanks to the revelations now emerging at the Covid inquiry, have proved even less trustworthy (and even by their "standards" this has taken some doing) than they have consistently demonstrated since they came to power....and abused this privilege thereafter.

It's an interesting position, but my reading of the way the evidence is going so far is that Cummings is a control freak who drove us into crazy overreactions based on a very specific reading of "the science", Boris expressed himself in some extremely undiplomatic ways while tearing his hair out trying to argue with him, and that Matt Hancock was exactly as awful as everybody already thinks he is. Simon Case is probably toast, but I'm not convinced that any politicians currently in government will be affected at all.

I don't see any reason to believe that the Covid enquiry will be any more effective than the Iraq enquiry in restoring any trust in anything or anybody.

 

[nw1]

No I'm not overlooking that. What UK should be aiming for is about 600k new births per year, or 3m in each 5 year age group. If every yearly cohort has roughly that number of people then the total population will settle at 50-60m, once the baby boomers of 1955-73 have died off.

I say again, someone born in say 1973, or even say 1966, is absolutely not a baby boomer, in the standard (cultural) use of the term!

Anyway, getting back on topic - is Sunak the hero to save us all from increased unemployment caused by AI, or, perhaps rather more likely, not?

 

[Gloster]

Anyway, getting back on topic - is Sunak the hero to save us all from increased unemployment caused by AI, or, perhaps rather more likely, not?

Probably not, as he he seems to have used the recent AI summit to butter up Elon Musk in the hope of getting a cushy little job, although not one with a little remuneration package, once he becomes redundant. Well, somebody took on Nick Clegg, so incompetence and breaking promises shouldn’t be a problem. ”Gizza job”.

 

[jon0844]

I'm not sure Rishi wants a job from Elon (Rishi seems smart when it comes to making money, so he would know Elon is a lousy boss and Tesla, Space X and X would all likely do better without him) but I do think he wants to get the support of Elon to help win the next election.

As we've seen from the coordination to have Tory MPs thank themselves for scrapping their plan to close ticket offices, there is going to be a very coordinated effort to bombard people with culture war themes ahead of the election, and while GB News will try hard to help, X offers a far wider audience and getting some likes and reposts from Elon is essential for the many people who still think he's a genius.

Plus it is just as good for Elon to say 'concerning' and similar to articles about the opposition.

 

[nw1]

I'm not sure Rishi wants a job from Elon (Rishi seems smart when it comes to making money, so he would know Elon is a lousy boss and Tesla, Space X and X would all likely do better without him) but I do think he wants to get the support of Elon to help win the next election.

As we've seen from the coordination to have Tory MPs thank themselves for scrapping their plan to close ticket offices, there is going to be a very coordinated effort to bombard people with culture war themes ahead of the election, and while GB News will try hard to help, X offers a far wider audience and getting some likes and reposts from Elon is essential for the many people who still think he's a genius.

Plus it is just as good for Elon to say 'concerning' and similar to articles about the opposition.

It would be very disturbing indeed if Musk attempted to do this.

I also doubt culture war themes would help the Tories in any way. Most are fed up of all that nonsense, I suspect.

 

[Merle Haggard]

I was reading articles such as https://www.which.co.uk/money/pensi...n/state-second-pension-and-serps-aBlEx9M8XXWY

A full basic state pension under the old system is £156.20/week. Adding on maximum SERPS gives £360.88/week

Maximum new state pension is £203.85/week.

It's going to take a while even at the current rates of the triple lock to overtake that figure, so I stand by my statement that you can be potentially better off under the old system.

What are the circumstances under which SERPS is paid?
I also have a railway pension so 'contracted out' but my state pension (old scheme) is little more than £156.20 per week. Another element I receive (might be SERPs, not sure) is about 12p a week. Perhaps that was from the G.P.S. contributions, though.

 

[JamesT]

What are the circumstances under which SERPS is paid?
I also have a railway pension so 'contracted out' but my state pension (old scheme) is little more than £156.20 per week. Another element I receive (might be SERPs, not sure) is about 12p a week. Perhaps that was from the G.P.S. contributions, though.

SERPS would be accrued if you paid employee NI above the lower earnings limit between 1978 and 2002 and weren’t contracted out. There was another scheme called S2P between 2002 and 2016 which did similar things before the current single tier state pension came in.
If you were contracted out, the additional contributions that would have gone into SERPS were instead paid into the occupational pension fund. There was then an obligation for the occupational pension to pay out a roughly equivalent sum as if you weren’t contracted out.

 

[jon0844]

It would be very disturbing indeed if Musk attempted to do this.

I also doubt culture war themes would help the Tories in any way. Most are fed up of all that nonsense, I suspect.

All you hear in the US is about the open border, with uncontrolled immigration and now claims that the next 9/11 is being planned by the people who have got in to the US.

With Rishi already giving his full backing to Israel, there's ZERO chance that similar rhetoric won't be used here to imply the people coming on the boats are somehow linked to Hamas.

It's already happening from other far right commentators and political candidates, and given a recent poll showed a fair few wavering Tory voters would more likely vote for Reform UK than Labour, I'm sure they're going to try and make out they're the most radical far right party out there.

Will it work? I hope not, but I think that's all they have. They need to create more fear just like for the Brexit referendum. Brexit will not be part of any election campaigning this time around.

Immigration also helps 'explain' why our schools are packed, hospitals can't cope, nobody can afford a home, and the police are overwhelmed. That's all those issues you now can't blame the Tories for.

 

[nw1]

All you hear in the US is about the open border, with uncontrolled immigration and now claims that the next 9/11 is being planned by the people who have got in to the US.

With Rishi already giving his full backing to Israel, there's ZERO chance that similar rhetoric won't be used here to imply the people coming on the boats are somehow linked to Hamas.

It's already happening from other far right commentators and political candidates, and given a recent poll showed a fair few wavering Tory voters would more likely vote for Reform UK than Labour, I'm sure they're going to try and make out they're the most radical far right party out there.

Will it work? I hope not, but I think that's all they have. They need to create more fear just like for the Brexit referendum. Brexit will not be part of any election campaigning this time around.

Immigration also helps 'explain' why our schools are packed, hospitals can't cope, nobody can afford a home, and the police are overwhelmed. That's all those issues you now can't blame the Tories for.

I still doubt it'll work. If the Tories market themselves as anything even close to a "radical far right party", they'll lose the votes of the centre.

They cannot win again simply by appealing to the populist, reactionary right. I get the impression that the obsession with immigration is going out of fashion and people are more annoyed about Useless Rishi letting the NHS go to rack and ruin.

This isn't Johnson vs Corbyn. There is no larger than life character to help the Tories win this time, and Starmer, while bland, doesn't have the "fear factor" of Corbyn. (For point of clarification I think the "fear factor" for Corbyn was unjustified and Boris was the real danger, but hopefully you see what I'm getting at...)

Bland versus reactionary right will surely be won by bland. And I doubt the Government's blatantly partisan support for Netanyahu in Gaza is doing them any favours, either.

 

[Busaholic]

What are the circumstances under which SERPS is paid?
I also have a railway pension so 'contracted out' but my state pension (old scheme) is little more than £156.20 per week. Another element I receive (might be SERPs, not sure) is about 12p a week. Perhaps that was from the G.P.S. contributions, though.

If you worked in the public sector you almost certainly would have been 'contracted out'. If this was the case and you retired before April 6th 2016 you might have received an additional payment. The maximum amount quoted is a massive red herring, maybe received by an ex-head of the NHS or somesuch, and I believe was being used to try to pretend that the U.K. doesn't pay significantly worse basic state pensions than other Western nations.After all, such Pensions Ministers as Steve Webb (Lib Dem) and Ros Altman (Conservative) who immersed themselves in the subject agreed that was so, and the proportion of our GDP spent on pensions relative to other nations is indicative.

Whatever the other element is that gives you 12p per week, be assured that a 1% increase p.a. means it'll never increase!

 

[jon0844]

I still doubt it'll work. If the Tories market themselves as anything even close to a "radical far right party", they'll lose the votes of the centre.

They cannot win again simply by appealing to the populist, reactionary right. I get the impression that the obsession with immigration is going out of fashion and people are more annoyed about Useless Rishi letting the NHS go to rack and ruin.

This isn't Johnson vs Corbyn. There is no larger than life character to help the Tories win this time, and Starmer, while bland, doesn't have the "fear factor" of Corbyn. (For point of clarification I think the "fear factor" for Corbyn was unjustified and Boris was the real danger, but hopefully you see what I'm getting at...)

Bland versus reactionary right will surely be won by bland. And I doubt the Government's blatantly partisan support for Netanyahu in Gaza is doing them any favours, either.

I totally agree and hope we're both right, but I don't see how they can't create more enemies and distractions. They're trying it now in the US, with the anti immigration stuff ramping up. The key difference is there's only two parties in the race.

Here it is going to be wavering voters that make a huge difference, as well as those who switched to support Boris to get Brexit done now realising it didn't get done or bring them the utopia they hoped for.

But they're not going to allow the party to be blamed for that.

Let's wait and see if Elon starts to get involved next year. He's already well on the way Stateside.