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Rational behind Kwasi Kwateng’s budget

199 replies

UserOneSquillion · 28/09/2022 15:43

Genuine question, what is the rationale? On paper he is a extremely intelligent man with a background in economics. Was he following Truss’s orders? Is he trying to keep big business in the UK? If so wouldn’t it be better to lower business tax rather than income tax? Absolutely no one seems happy with this.

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lljkk · 29/09/2022 07:42

Have a quick look at the 4 main right wing newspapers, today's front pages, coverage of economic developments in last week:
DM very critical of govt, Telegraph moderately critical, Sun is close to neutral, downgrading the near-disaster-pensions story but still covering it as worrisome. Only the Express is digging in hard to stick with the angle of "Poor UK is always picked on by everybody who wants to ruin UK especially those scheming Remainers!"

On top of (Express) "Didn't Meghan do evil things at her wedding stories?!" coz you know, that's important to know about in 2022. <shrug>

Truss is stuffed if she loses the Telegraph readers.

ps: none of the 4 is covering Labour conference on front page. Their readers wouldn't know it's even happening.

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DillonPanthersTexas · 29/09/2022 07:48

The Express is basically a comic these days. It's ironic that their editorial line has been against Mick Lynch and strike action while their own journalists are going on strike over pay and conditions. The Telegraph over the last decade has basically morphed into the Express with longer words. You might have disagreed with its editorial line but you could still call it a newspaper, less so these days.

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Softplayhooray · 29/09/2022 07:52

I'm amazed at some of these responses going into the intricacies of what he's done and why.

He has no EXPERIENCE, inadequate KNOWLEDGE, and is INCOMPETENT. Those are the only reasons for this economy wrecking shit show. The B of E even had to intervene after the IMF. He's wrecking our economy because...he doesn't have a clue what he's doing. That's it.

Worse he doesn't even know what he doesn't know - so he isn't even aware of his own shortcomings. When you combine that with arrogance and groupthink you get this utter disaster.

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Cornettoninja · 29/09/2022 07:55

I'm amazed at some of these responses going into the intricacies of what he's done and why.

and don’t forget it’s largely speculation. There’s not been anything solid regarding plan or rationale as far as I’m aware.

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Miffee · 29/09/2022 07:58

TwoLeftSocksWithHoles · 28/09/2022 16:50

I had assumed it was just where the dart landed.

😂

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Cornettoninja · 29/09/2022 07:59

This reply has been withdrawn

This message has been withdrawn at the poster's request

Cornettoninja · 29/09/2022 07:59

F me that’s a link and a half Blush sorry

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Cornettoninja · 29/09/2022 08:54

I’ve reported - but try again!

This has aged well

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AKKview · 29/09/2022 08:54

IrisVersicolor · 29/09/2022 01:09

@AKKview one question - if Karteng fancies himself as a great brain, has he not noticed Truss and Patel aren’t very bright?

Of course. I don’t know much about PP but KK has known Truss for years. a) She shares most of his ideaology and b) she has been useful in that she was willing to make him chancellor. But good luck to her in trying to get him to listen to her now - he thinks he is a lot cleverer than her.

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Galvantula · 29/09/2022 09:00

VickyEadieofThigh · 28/09/2022 16:22

Tories can do anything they like to make themselves and their mega-rich donors even bigger piles of cash - even if it entirely plunges the country into a recession the like of which we cojuld never imagine, with terrifying consequences.

Next election: Almost ALL the press - "Vote Tory!" Significant numbers of people who have been hammered by this goverment: "I'm voting TORY!" Labour: "tranwomen are women!"

So much this. Fucking depressing.

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1dayatatime · 29/09/2022 09:09

Cornettoninja · 29/09/2022 07:55

I'm amazed at some of these responses going into the intricacies of what he's done and why.

and don’t forget it’s largely speculation. There’s not been anything solid regarding plan or rationale as far as I’m aware.

After Cameron, May and Johnson it is fair to say that in terms of quality we are now on the "D Team" of Government.

I don't believe in the conspiracy theories of some posters here that it is all an elaborate plan by Truss et all to make themselves and their hedge fund mates rich and anyway Truss and Kwarteng are not smart enough to come up with such a plan.

Instead it is a plain old cock up theory that Truss and Kwarteng are just simply not up to the job, don't understand economics, don't listen to advice and are way way out of their depth.

Or more simply its not malice or greed but simply incompetence.

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Yellowjacketforwinter · 29/09/2022 09:12

I never thought I'd say this on here....ever. I'm Scottish but a definite unionist, nothing has shaken my belief in the Union before. But OMG what Liz Truss done on Friday to reward herself, her donors, her tory backbench mates who voted for her, who all earn over £150k, at THIS point when ordinary working people are to the bone. Man! Nicola Sturgeon must be absolutely delighted as it won't just be me who will reconsider my vote if they secure IndyRef2. Shower of self serving, manipulative, cretins.

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WatchoRulo · 29/09/2022 09:14

Mumoblue · 28/09/2022 16:43

They don’t think they’ll get voted in again so they’re doing one last smash and grab.

^It's this one isn't it?

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AKKview · 29/09/2022 09:36

A few things to note

  • the energy solution isn’t “mad” - whoever was in power and whatever they did something had to be done and it was going to be extremely expensive. If the Govt had nationalised power that too would have been extraordinarily expensive and put us in hock for ever. Windfall taxes are a sticking plaster - dont’t solve the problem and also have consequences. I am sure Starmer is very happy he’s not the one who had to take that decision now.
  • It was not the energy solution which spooked the markets (already largely priced in) and it was not even the removal of the additional rate tax bracket per se (because it does not raise all that much money - only a tiny fraction of the total mini Budget)
  • What spooks the markets is unpredictability. Markets like things to be smoothly signalled beforehand (like the Fed Chair’s famous speeches) and communicated. They like to know adults are in charge of the playground. If you diss the BoE, OBR, HMT Perm Sec at the same time as making a series of unexpected announcements whose combined logic is not apparent (to put it mildly), they really don’t like it.
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IrisVersicolor · 29/09/2022 11:03

AKKview · 29/09/2022 08:54

Of course. I don’t know much about PP but KK has known Truss for years. a) She shares most of his ideaology and b) she has been useful in that she was willing to make him chancellor. But good luck to her in trying to get him to listen to her now - he thinks he is a lot cleverer than her.

And it didn’t it make him reflect that a. If the calibre of people he shares his ideology with are low there may be a problem with the ideology?
And b. That people who are not very bright seldom make really good politicians and that you do need to be reasonably competent at your job to succeed?

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Felixfeather223 · 29/09/2022 11:15

AKKview · 29/09/2022 00:30

NC for this as I knew KK for years. My old phone has his mobile on it (didn’t bother to copy it across to my current one as I was so fed up with him).

I will try to answer your question. My take is fairly similar to that of Rory Stewart who knew him at school and obvs was in Parliament at the same time - if you want to hear his view listen to the Rest is Politics podcast.

First thing to understand is KK is a bit weird. A bit of a loner, not one of the gang. Goes his own way. He never puts himself out to please other people, which is why the conspiracy theories that all this stuff is just trying to make his hedge fund mates rich and happy doesn’t stack up to me at all. At the same time, he always recognised that it you were a total outcast that wasn’t good for your future prospects, so throughout his life he’s always joined lots of all-mens clubs to give him the veneer of belonging - the Pitt at university, then the Carlton, and so we hear, more recently the Garrick and White’s.

Second thing is that he’s not actually all that wealthy - not like Rees Mogg or Rishi or even the entrepreneur types like Hunt and Shapps. Like Boris, KK was a scholarship boy at Eton. He wasn’t in banking long enough to make any serious money, the books he wrote were never bestsellers (we are not talking Jeffrey Archer thrillers here) and he was also on the backbenches for ages which doesn’t pay all that well. He was a shockingly cheap date. But unlike Boris, I have never had the feeling he was personally greedy for money - that is not what motivates him.

What REALLY motivates him is asserting his intellectual superiority. He HAS to be the cleverest person in the room, which is why Tom Scholar had to go. He is a very ideologically driven small state libertarian, who believes that taxes should be cut to make the country more attractive both to HNWs and corporations, which he believes should in turn foster growth. He not only disagrees with people who don’t share these views, but he doesn’t even want to listen to what they have to say, they are just dismissed as irrelevant because they aren’t as clever as him. He was the same about Brexit. Getting into Cabinet, and then into no11, was for him the ultimate opportunity to demonstrate his intellect (as he sees it), almost like a rematch of University Challenge. Right now, he’ll be telling himself that the bond markets and economists don’t really understand the genius of what he’s trying to do because he Kwasi has literally invented a new approach to fixing the economy that nobody else was clever enough to think of, and nobody else was bold enough to try.

@AKKview this rings true, and it does seem to match with RS’s experience with him in Eton. What was his catch phrase again? “That’s ridiculous”, he’s one of only a handful of government ministers who has a PhD so I’m not surprised his sense of intellectual superiority is playing a major role here. He’s a market devotee who thinks he’s cleverer than the market, that’s some confidence, maybe a dangerous level of confidence.

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Felixfeather223 · 29/09/2022 11:24

IrisVersicolor · 29/09/2022 11:03

And it didn’t it make him reflect that a. If the calibre of people he shares his ideology with are low there may be a problem with the ideology?
And b. That people who are not very bright seldom make really good politicians and that you do need to be reasonably competent at your job to succeed?

@IrisVersicolor to be fair to Truss, she’s odd but she is numerate, she did PPE, which has been a good enough qualification for a raft of previous PMs and chancellors. Her father is a maths professor who I imagine made sure his daughter had the basics down, so the odds of her being a total dum dum is low. The problem is not that they’re thick, the problem is one really very clever person is rarely smart enough to outperform the cumulative wisdom of a bunch of moderately intelligent but experienced people.
Some of the smartest people to ever live arguably lived in Ancient Greece, and there was so much they didn’t know and understand- intelligence has never been enough to reliably have the answers. KK and LT are too arrogant to get that.

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MarshaBradyo · 29/09/2022 11:33

AKKview · 29/09/2022 09:36

A few things to note

  • the energy solution isn’t “mad” - whoever was in power and whatever they did something had to be done and it was going to be extremely expensive. If the Govt had nationalised power that too would have been extraordinarily expensive and put us in hock for ever. Windfall taxes are a sticking plaster - dont’t solve the problem and also have consequences. I am sure Starmer is very happy he’s not the one who had to take that decision now.
  • It was not the energy solution which spooked the markets (already largely priced in) and it was not even the removal of the additional rate tax bracket per se (because it does not raise all that much money - only a tiny fraction of the total mini Budget)
  • What spooks the markets is unpredictability. Markets like things to be smoothly signalled beforehand (like the Fed Chair’s famous speeches) and communicated. They like to know adults are in charge of the playground. If you diss the BoE, OBR, HMT Perm Sec at the same time as making a series of unexpected announcements whose combined logic is not apparent (to put it mildly), they really don’t like it.

Someone on the radio likened it to a runway

He said people (markets) don’t care if it’s long or short just that they know beforehand

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IrisVersicolor · 29/09/2022 11:48

Felixfeather223 · 29/09/2022 11:24

@IrisVersicolor to be fair to Truss, she’s odd but she is numerate, she did PPE, which has been a good enough qualification for a raft of previous PMs and chancellors. Her father is a maths professor who I imagine made sure his daughter had the basics down, so the odds of her being a total dum dum is low. The problem is not that they’re thick, the problem is one really very clever person is rarely smart enough to outperform the cumulative wisdom of a bunch of moderately intelligent but experienced people.
Some of the smartest people to ever live arguably lived in Ancient Greece, and there was so much they didn’t know and understand- intelligence has never been enough to reliably have the answers. KK and LT are too arrogant to get that.

Cameron did PPE and he was a lightweight intellectually too.

I’m not saying she can’t count or that she can’t turn out perfectly respectable uni essays but that doesn’t equate to serious intellect or astute political judgement.

She’s been mildly incompetent in every political role I can remember her in.

And Priti Patel was in the group as well and is quite definitely stupid as well as obnoxious.

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AKKview · 29/09/2022 12:05

IrisVersicolor · 29/09/2022 11:03

And it didn’t it make him reflect that a. If the calibre of people he shares his ideology with are low there may be a problem with the ideology?
And b. That people who are not very bright seldom make really good politicians and that you do need to be reasonably competent at your job to succeed?

That’s not how ideaology and power work. Ideaologues need others to share their ideas or else they can’t get anything done. We’d have seven billion different ideaologies otherwise.

But in any case KK and LT’s ideaology isn’t new or unique to them. Ideas about low taxes and a smaller state have been kicking around for years, and are ever present in the US. They are supported by a very wide range of people over the years: presidents, prize winning economists and millions of ordinary people, and actually the ideas aren’t all bad. It has been proven over and over again around the world that if you let the state grow too big and taxes too high it doesn’t end well. The question people usually don’t agree on is how big is too big… someone like KK would say most countries haven’t gone far enough.

What is unique is that we have a collision of unusual circumstances:

  1. a very challenging economic situation to start with that anyone would struggle to deal with
  2. a person who believes that a small state is always the right prescription in any circumstance who is is power (and I am talking about KK here not LT)
  3. that person being a poor communicator, who doesn’t understand how human nature works, and doesn’t listen to anyone
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AKKview · 29/09/2022 12:21

@IrisVersicolor
“Cameron was a lightweight intellectually too”

I am not sure what you want here.

KK is more “intellectual” than any of the PMs in my lifetime, with the exception of possibly Brown. He (and Brown in many ways) are great examples of why intellectuals aren’t good in power. They are often arrogant and impatient, lack communication skills, lack adaptability and pragmatism, good at ideas but less good at getting things done and winning buy in.

The truth is you really don’t need a doctorate or even a degree to be a politician. The skill of reading and understanding huge amounts of information and quickly seeing what matters and what doesn’t is often found in people with degrees but not always - look at Trump and Johnson for example. It is just as important to know where your weaknesses are, and who to take advice from.

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BambinaJAS · 29/09/2022 12:29

AKKview · 29/09/2022 12:21

@IrisVersicolor
“Cameron was a lightweight intellectually too”

I am not sure what you want here.

KK is more “intellectual” than any of the PMs in my lifetime, with the exception of possibly Brown. He (and Brown in many ways) are great examples of why intellectuals aren’t good in power. They are often arrogant and impatient, lack communication skills, lack adaptability and pragmatism, good at ideas but less good at getting things done and winning buy in.

The truth is you really don’t need a doctorate or even a degree to be a politician. The skill of reading and understanding huge amounts of information and quickly seeing what matters and what doesn’t is often found in people with degrees but not always - look at Trump and Johnson for example. It is just as important to know where your weaknesses are, and who to take advice from.

KK is an Economic Historian.

He has zero hands on experience as a hands on economist in any capacity.

The current financial calamity was totally predictable.

Which is also precisely why hedge funds made so much money.

One conversation with KK...is all it takes to know he has no actual experience.

I am sure they shorted the pound even more after their initial meetings.

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BambinaJAS · 29/09/2022 12:33

AKKview · 29/09/2022 12:05

That’s not how ideaology and power work. Ideaologues need others to share their ideas or else they can’t get anything done. We’d have seven billion different ideaologies otherwise.

But in any case KK and LT’s ideaology isn’t new or unique to them. Ideas about low taxes and a smaller state have been kicking around for years, and are ever present in the US. They are supported by a very wide range of people over the years: presidents, prize winning economists and millions of ordinary people, and actually the ideas aren’t all bad. It has been proven over and over again around the world that if you let the state grow too big and taxes too high it doesn’t end well. The question people usually don’t agree on is how big is too big… someone like KK would say most countries haven’t gone far enough.

What is unique is that we have a collision of unusual circumstances:

  1. a very challenging economic situation to start with that anyone would struggle to deal with
  2. a person who believes that a small state is always the right prescription in any circumstance who is is power (and I am talking about KK here not LT)
  3. that person being a poor communicator, who doesn’t understand how human nature works, and doesn’t listen to anyone

KK and LT got their ideology from the US.

LT had been buttering up the conservative economic think tanks in the US for many years.

KK became a Libertarian after exposure to the same thinking in the US.

Intelligent people who are led by blind ideology...always have blind spots

Thats why its very important when making complex decisions to back-check your decision-making process with other people. These people provide valuable input, and its the way we make decisions in industry.

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IrisVersicolor · 29/09/2022 12:44

That’s not how ideaology and power work

I don’t agree with that. I agree ideologues need to share their ideas however, to be successful they need to surround themselves with people are reasonably competent. Otherwise they fail to gain power or they get it and lose it. The caveat to that is a totalitarian regime where force is used to get the job done in which case competence is not so important. However, top Nazis for example tended to be canny and dastardly operators even if they weren’t clever.

I agree about the principles of the low tax, low reg state being ubiquitous. I have already argued on this thread, Karteng and Truss are simply continuing the driving ideology behind the hard right vision of Brexit. They’re not original in any sense. But within the Tory camp of loons, they seem to have formed their own clique of twits. Naive enough to press ahead with principles that were not likely to be successful in the current economic situation, the clique was not likely to succeed politically. And so it has proved.

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IrisVersicolor · 29/09/2022 12:51

Thats why its very important when making complex decisions to back-check your decision-making process with other people. These people provide valuable input, and its the way we make decisions in industry

I totally agree.

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