We can no longer afford the Tories

Well, this was interesting. From Murphy's blog yesterday.

He said that it was reported in the Daily Mail Finance section that Karteng is planning to scrap the BoE interest payments on the bank reserves held at the BoE. This could release up to £45billion.

The 'reserves' are the accounts through which all inter banking transactions are carried out, e.g when a person does a transfer from their bank account to someone else's bank account at t different bank, either by cheque, or electronically, the transaction is effected through the banks' reserve accounts. These are technically commercial bank's 'deposit accounts' with the BoE and the BoE pays interest on them. However, reserve accounts are huge, because of the post GFC pledge by the government that up to £85,000 of a person's commercial bank account would be guaranteed by the government in the event of a run on the banks. So reserves have to be large enough to cover that possibility and the money in them was created by the BoE. So why it has to pay interest on money that it put into the reserves to protect consumers against bank profligacy is a mystery. Cutting out the interest element would 'save' money for the BoE (i.e for the state). Banks wouldn't like it because it would cut their profits, but it wouldn't have any effect on banking transactions. Reserves themselves wouldn't be depleted.

www.taxresearch.org.uk/Blog/2022/10/10/kwarteng-is-planning-a-raid-on-the-central-bank-reserve-accounts-and-would-win-my-support-if-he-did/

GrannyGravy13

Perhaps they shouldn’t have jettisoned Mr.Johnson.

There was no option at all but to get rid of Boris Johnson based on his misdeeds. They should have replaced him with somebody competent. I do think Sunak would have avoided the current catastrophic economic woes, so in the short term at least he would have been a much safer pair of hands.

Can the King step in?

Perhaps they shouldn’t have jettisoned Mr.Johnson.

I’m beginning to get frightened now

Will Hutton
@williamnhutton
·
33m
The economic situation is profoundly grave. Up to £60bn of spending cuts now have to be found in 3 weeks say IFS.The Bank of England warns of dysfunction and material risk to financial stability. And a government who must reverse policy is politically unable to act. Incredible.

“The government is now in a situation of its own making, in which U turns will not calm the markets. They will instead be taken as a signal that the govt. is unstable, not in control, and is unable to make credible plans. This is going to get very rough.”

For once I'm inclined to agree. We're in a ruddy great hole and I fervently wish they'd stop digging!

As an aside

Insider trading?

According to last month's Private Eye
@KwasiKwarteng
has been working for Odey's hedge fund on the side as a paid 'political advisor' at £20k a month since he was elected as an MP in 2010.

They should have been got rid of and replaced by Sunak which at least is likely to calm the market.

Sunak wouldn't have been any better. He might have not spooked the markets, but he would have wopped us straight into austerity, which will have done nothing at all for growth, raised unemployment and made even more people very poor.

Bloomberg (I’m reading them this morning?) reckon that Truss has at least a £60bn gap in her budget.

This will mean cuts on a massive scale.

The budget was a fantasy of optimism created by incompetents. Now there is the mystery of how the Tories haven’t thrown them out and to hell with rules about change of PMs. While they gather in back rooms and others talk about giving her a chance the economy is sliding into a recession which is likely to end in a depression. They should have been got rid of and replaced by Sunak which at least is likely to calm the market. But the cohesion of the Party is more important than the Country. Respect for the Tories while they uphold the worst PM and her government in living memory is disappearing as fast as our economy is getting trashed.

Whitewavemark2

Bloomberg

"Investors say the UK is 'uninvestable'."

They can't have heard about abolishing the cap on banker's bonuses, then...

Because according to some posters that's going to attract lots of investment....

Whitewavemark2

Institute for Fiscal Studies

@TheIFS
·
3h
NEW: Getting government debt falling in the medium term with a weaker economy and without cancelling tax cuts could force @KwasiKwarteng into big and painful spending cuts.

God help us all. Spending cuts will finish us off.

State spending is the only thing we have left between us and irreparably shrinking the economy.

Bloomberg

"Investors say the UK is 'uninvestable'."

Institute for Fiscal Studies

@TheIFS
·
3h
NEW: Getting government debt falling in the medium term with a weaker economy and without cancelling tax cuts could force @KwasiKwarteng into big and painful spending cuts.

the markets simply do not believe that Kwarteng or Truss know what they’re doing

Neither do I.

Ilovecheese

Yes but at least they don't make jam or have an allotment!

?

Yes but at least they don't make jam or have an allotment!

Everything is getting too much to bear. I think I’ll go and live on Lundy Island..

And the Tories can no longer afford Truss and Kwarteng!

The Bank of England has warned of a material risk to the UK economy. How are these people still in power? Remember the dire warnings that the press bellowed when they thought that Corbyn might get in? In a matter of weeks this unelected shower are trashing the future of our children and grandchildren.

Un-funded