Brexit and the waning days of the United Kingdom

[Tamas]

Read on Twitter that even the IMF has come out against the UK's tax cut plan. Has that been reported over there?

Yeah the Guardian made a big deal out of it.

[The Larch]

Read on Twitter that even the IMF has come out against the UK's tax cut plan. Has that been reported over there?

Yeah the Guardian made a big deal out of it.

Thanks, I'll take a look at that.

[Josquius]

Some former prominent us financial guy was talking about it on newsnight last night too.

[Richard Hakluyt]

Some economists are openly talking about the "moron risk premium"; eg Paul Krugman :

https://twitter.com/paulkrugman/status/1573656086716071937

[Richard Hakluyt]

Read on Twitter that even the IMF has come out against the UK's tax cut plan. Has that been reported over there?

Extensively reported. The financial crisis is the top news story over at the BBC, for example, and the IMF is a big part of that reporting.

Oh dear, I used an Oxford comma...time to report for re-education.

[Tamas]

Am I wrong or the central bank buying government bonds is just straight-out money printing into the state budget?

So we are raising interest rates to decrease the money supply / liquidity while the same organisation is releasing extra money supply, to finance the state budget?

[mongers]

Am I wrong or the central bank buying government bonds is just straight-out money printing into the state budget?

So we are raising interest rates to decrease the money supply / liquidity while the same organisation is releasing extra money supply, to finance the state budget?

Banana republic?

[Tamas]

Rumour is that some pension funds were on the verge of being margin called because of the bond yields so the BoE had to step in.

[Tamas]

Rumour is that some pension funds were on the verge of being margin called because of the bond yields so the BoE had to step in.

Seems like rumour was true as the Guardian referenced it as well. Not a good sign.

[Syt]

[Josquius]

Masterful trolling.

[garbon]

 

[The Larch]

[Tamas]

From Ed Conway at Sky:

On the @bankofengland intervention:
Am told the BoE were responding to a "run dynamic" on pension funds - a wholesale equivalent of the run which destroyed Northern Rock.
Had they not intervened, there would have been mass insolvencies of pension funds by THIS AFTERNOON.

[Richard Hakluyt]

From the BBC :

"Bank intervention prompted by potential pension chaos

Faisal Islam

BBC Economics Editor

Today's Bank of England intervention was driven by the potential for chaos in a corner of the financial services industry that underpins pensions funds.

This was the specific threat to financial stability that prompted the Bank to act. It was a decision of an emergency special meeting of its Financial Policy Committee.

The speed and the scale of the collapse in the value of government bonds, known as gilts, which are required to be held because they are ordinarily so stable, put pressure on liability-driven investment funds.

They support defined benefit pension schemes, and would today have faced having to be revalued or marked at low prices. In turn, that could have forced the pensions schemes to liquidate other assets, for example stock market holdings in a forced sale. The move was to stop these "spillovers".

This explains why the Monetary Policy Committee, which normally authorises bond-buying, did not make this decision. Insiders are adamant that this decision does not signal anything about where interest rates might go, and is not a form of loosening monetary policy or "printing money", creating it out of thin air to help a troubled government with its funding.

But all of this is only required because of the violent turn against British government debts since the mini-budget. It is a dramatic emergency medicine. The risk still lingers. It does not solve the underlying problem."