Bond markets - is the shit hitting the fan?

[LawdAMercy]

People who know about these things - AIBU in crapping myself about the future of the UK and the possibility of global financial Armageddon?

The quiet transfer of gold bullion out of the US is a far more interesting phenomenon.

It's suggestive that a lot of very Grow Up People do not feel confident that Trump and the US won't steal it.

https://www.bbc.co.uk/news/articles/cvgy51xlz39o

and

What do you think printing money will do to inflation?

Do you think high inflation matters?

You really want people building anything they want anywhere they want? Lets build over all the parks and playgrounds and over all the beauty spots?

Growth in UK +0.6 first quarter, +0.4 second quarter Growth in France Minus 0.2 first quarter and zero second quarter this year. Most of Europe and even the US are also in trouble hence Trump buying back bonds from Japan.

@chirrupybird ”You really want people building anything they want anywhere they want? Lets build over all the parks and playgrounds and over all the beauty spots?”

Why leap to hysterics?

A government that sorts out employment and helps people back in to work and invests in public health?

It helps to remember that money really is madey uppy.

But if inflation means you can't afford to pay your bills, the ensuing lack of food, fuel or roof over your head is really real.

It costs 8.5 x as much to build a mile of high speed rail in the UK compared to France. It’s not just high speed rail. It’s factories, offices and houses that face this madness. That’s why companies don’t want to try to build a UK base and our house prices are too high. No one wants a data centre built on their nature reserve, but there’s a middle ground between extremes that we have to work out how to reach.

Money is a madey uppey alternative to bartering. Even bartering has ' inflation " Only one person in the village has chickens but loads of people have potatoes so you need a lot of potatoes to swap for a few eggs. then if the one person with potatoes can't buy eggs because the market is flooded with potatoes they can't have eggs and just have to eat their potatoes. ( I'm not an economist but in my mind I think that's how it works...) Unless you implement communism, take everyone's potatoes and eggs and share them out equally, which hasn't really worked in the past, because everyone just grows potatoes instead of rearing chickens because it's easier and they will still get the same amount of eggs, so then you have to force people to rear chickens, which also didn't work out well for approximately hundreds of millions of people in the past...

The markets hate governments that want to spend recklessly and then try to tax more to try and reduce the debts.

So, yes the markets are starting to react.

True. But then you realise that inflation is a function of more people than last year ...

See above 😀

Thoroughly agree about some of those.

Motability is an absolute piss take. Chap down the road from us has a brand new car and all he uses it for is dropping his daughter off to school a mile away. She can bloody well walk!

I’m quite happy for my taxes to be spent on bat tunnels and protecting newts tbh. And on green energy. These things are more important in the long run to the survival of humanity and what little of the environment can survive humanity.

My vastly unpopular opinions are that the nhs should not be free at the point of service as so many people take the piss and I don’t see hordes of people dying in the streets of any of the European counties I visit where you pay for healthcare; we should be limiting immigration far more and looking for different solutions to our problems than chucking cheap to employ people at them - this might also solve the housing crisis; cultural change about only having the children you can afford to bring up; cultural change around benefits and that they are only there for the majority to get you back on your feet and not forever; cultural change around being proud to pay tax and pay wages instead of evading and avoiding and paying fuck all or making everyone redundant every 5 mins.

I think wars, global disasters, AI and the rise of a post-truth rulership class have far more impact on the market than £2 bus fares but I am not an economist 😁

Inflation is a really insidious tax on those with less bargaining power and the asset poor.

If you pitch interest rates way below inflation and do QE with printed money, it becomes a tax on the poor to fund the rich.

Look at what has happened since 2008. Anyone with assets and asset-related jobs (banking, finance in general, city law, management consulting, estate agency etc) has done very well. OTOH, teachers and doctors and nurses have been hammered, as the value of their labour does not depend on how much a house or stock is nominally valued at.

And the problem with high debt is that inflation is one way to reduce it, so it is always tempting if you are in government.

Which is why a housing/wealth tax should be part of any solution. Ultimately left wing people only notice what I gave written above (and they have a point) but right wingers notice pension triple lock and PIP payments. But I see lots of very wealthy ex bankers who were bailed out in 2008 using government debt, not so many pensioners and PIP recipients with multimillion Mayfair houses, so I do wonder who has done better out of government subsidy and monetary policy (which is a subsidy by another name).

Many MNers have said "you don't know what they are going through"

So are laws and human rights. Nevertheless we consider them meaningful.

What is not madey-uppy? Food. Shelter. Medicine. Services. Physical goods. Human labour.

Our system is that we use money to exchange for the above, effectively a system of deferred exchanges or IOUs.

So, while money itself may be madey-uppy, the things it buys are not and you still need money to access them. So even though it's madey-uppy you still need it.

Where madey-uppyness really matters is in deciding what money is worth. Which is where inflation comes into it.

We tend to say "this bread costs £4" as if the £4 is fixed, when really it's "this £4 is worth one loaf of bread". It's the bread that is fixed not the £.

If everyone is given an extra £ to buy bread, but no one bakes more bread because we don't actually have more wheat or bakers or fuel for the ovens, all that happens is the same bread now coat £5. Now £5 is worth one loaf of bread. A pound is still worth £1 but it is also only worth 80% what it was in terms of what it buys you.

Which is why printing money "works" to pay off debt, but also means in the non-madey-uppy world people need more of it to actually buy anything. And the lenders knowing this ask for more interest on the next loan in case the £ is worth less when they get them back. Or lend their money to someone else instead.

Just to say, I'm not anti the madey-uppyness of money. Having a flexible common bartering layer which governments/central banks/protocols can expand and contract is helpful. But it also creates risks and abuses.

And we haven't even touched on commercial bank money, and leverage, and private debt.... oh my!

All the analysis I have read points to bond markets reacting to geopolitical uncertainty, largely due to the situation in the Gulf. There are very few oil and gas movements plus the regional financial powers are turning their attention inwards rather than focusing on global investment. The PO who flagged the Baltic Dry makes a good point about non hydrocarbon movements as a lead indicator of global trade. There is also a flight from dollars which is very unusual, usually in times of uncertainty the US strengthens because the dollar is seen as a safe haven currency. There is also uncertainty about Trump’s action post the mid terms being quietly built into markets. What the U.K. government does in its domestic sphere is pretty irrelevant compared to the scale of global market volatility caused by Trump’s actions in Iran.

The trouble is which spending? It’s never the spending that goes to the super rich is it? Those who took over the supply of public services and have made their billions charging the public purse triple what it would have cost in house, while providing much worse services with demoralised staff paid peanuts? It’s always the easy targets, the genuine public services that actually do some good.

People like these in housing are the ones who need their funds cut.

https://inews.co.uk/news/landlords-750m-profits-taxpayer-asylum-seelers-3745203

https://londondaily.com/uk-asylum-housing-firm-faces-backlash-over-187-million-profits-and-poor-living-conditions

Ditto Thames Water who’ve just awarded themselves £4 million in bonuses - bonuses! - and the exploitation of SEN education, not to mention the NHS.

If Thatcher was still alive she’d need shooting for all the privatization. Blair should take much of the blame too. Yet ‘we don’t hav ed the money’ to solve this? Well we certainly don’t have the money to continue as things are.

I was hearing that Trump is trying to force institutional investors (US and international) to buy up the falling-yield US bonds in order to prop up the US economy and stave off the tax rises that will be needed if it's going to remain viable.

Be prepared for more rhetoric and tariffs on countries that Trump declares have been ripping off the US.

Folk might want to make sure their pensions aren't in companies that could be exposed to Trumponomics.

Trump why was term 1 economy just so amazing until COVID?

Britain is dying on its arse. Importing mass poverty to "pay pensions". What a sick joke that has turned out to be.

Enjoy your Indian Pakistani African Arab future, it's the most expensive thing you will ever buy.

I wouldn't trust Burnham with anything. He clearly is full of good intentions but doesn't understand the markets

If they cannot survive on a state pension they should have made better plans for their retirement income shouldn’t they.

If people of working age can't survive on their salaries, with FT NMW being more then twice higher than state pension they should work more, shouldn't they?

And pensioners don't need clothing or transport apparently.

Oh irony...