Scrutable

dyqik wrote: Wed Oct 12, 2022 1:54 pm It's all about confidence. Once consumers and investors lose confidence in the government and then the economy, it craters hard.

plodder wrote: Wed Oct 12, 2022 2:08 pm

dyqik wrote: Wed Oct 12, 2022 1:54 pm It's all about confidence. Once consumers and investors lose confidence in the government and then the economy, it craters hard.

yes, that's the thrust of it. The wobbles get a life of their own and all of a sudden the actors are reacting to the thing they made.

plodder wrote: Wed Oct 12, 2022 3:32 pm The thread also highlights the BoE's flip flopping as being important.

This bit is silly though: "with the government effectively saying it intends to cut the real terms income of 40% or more of the population, there's no confidence in future economic activity"

plodder wrote: Wed Oct 12, 2022 3:32 pm The thread also highlights the BoE's flip flopping as being important.

This bit is silly though: "with the government effectively saying it intends to cut the real terms income of 40% or more of the population, there's no confidence in future economic activity"

plodder wrote: Wed Oct 12, 2022 7:18 pm Are you saying global pension funds are nervous about uk bond yields because large numbers of people on benefits will have slightly less no disposable income?

Opti wrote: Wed Oct 12, 2022 8:45 pm Oh this is glorious.

Watch to the very end.

dyqik wrote: Wed Oct 12, 2022 7:32 pm

plodder wrote: Wed Oct 12, 2022 7:18 pm Are you saying global pension funds are nervous about uk bond yields because large numbers of people on benefits will have slightly less no disposable income?

They're nervous about bond yields mostly because of the other factors. And how much worse those other factors would get in a general recession, particularly one caused by a collapse in consumer confidence.

Most people on benefits aren't in extreme poverty with zero disposable income. Most are in moderate relative poverty with little disposable income, but enough discretionary spending to be an active factor in the economy. Remember that we are talking about everyone from pensioners, to the disabled, parents who get child support, or housing benefit, to those who have zero non-benefit income.

dyqik wrote: Wed Oct 12, 2022 3:43 pm

plodder wrote: Wed Oct 12, 2022 3:32 pm The thread also highlights the BoE's flip flopping as being important.

This bit is silly though: "with the government effectively saying it intends to cut the real terms income of 40% or more of the population, there's no confidence in future economic activity"

Economic activity is significantly driven by consumer activity and consumer confidence. Cut the spending power of a large chunk of the population, and economic activity declines - not just because they spend less, but those sitting a bit above them in the economy also spend less, because they can see what's happening to those a bit less fortunate than themselves.

And that's what the government statements about real term benefits cuts were saying. Of course, they've U-turned today, but it still looks like that's what they are thinking about doing, and they've demonstrated that they are likely U-turn again and again.

plodder wrote: Wed Oct 12, 2022 9:10 pm

dyqik wrote: Wed Oct 12, 2022 7:32 pm

plodder wrote: Wed Oct 12, 2022 7:18 pm Are you saying global pension funds are nervous about uk bond yields because large numbers of people on benefits will have slightly less no disposable income?

They're nervous about bond yields mostly because of the other factors. And how much worse those other factors would get in a general recession, particularly one caused by a collapse in consumer confidence.

Most people on benefits aren't in extreme poverty with zero disposable income. Most are in moderate relative poverty with little disposable income, but enough discretionary spending to be an active factor in the economy. Remember that we are talking about everyone from pensioners, to the disabled, parents who get child support, or housing benefit, to those who have zero non-benefit income.

Yeah but a few % reduction in their disposable income is not the big ticking time bomb that sets off government bonds and almost brings down the pension sector forcing the BoE to flip flop between ending (and restarting, and ending, and restarting) £Bns of money printing to keep prices down. The thread in the OP is worth a read.

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.