Kwasi Kwarteng definitely had meetings with hedge fund managers – or at least with his old boss Crispin Odey – during the run-up to the Tory leadership election in September.
Nobody involved with these meetings will say he mentioned anything about plans for the economy if his preferred candidate – Liz Truss – were to win.
But several hedge funds made a huge amount of money betting against the Pound when Kwarteng made his financial statement on September 24.
So is it not possible that Kwarteng let something slip, even though he didn’t know whether he would even be the Chancellor at the time?
Here’s the discussion:
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Having sat through Kwasi Kwarteng’s speech as Chancellor of the Exchequer, I tend to agree with Professor Tim Wilson.
It was all excuses; there was no substance – no new policies, nothing to announce at all.
And the delivery was shocking.
Here’s the quick summary:
And now here’s the long-seeming speech itself:
One point I would add: “Getting Britain Moving” is a terrible slogan for a party – and a Chancellor – that has endangered the ownership of millions of homes across the country by his own economic incompetence.
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The grinning Kwarteng: he’ll be smiling on the other side of his face when the roar of protest against his attack on our health and education reaches him.
Your health and your children’s education are to suffer in order to make the rich richer, Kwasi Kwarteng has confirmed.
He didn’t say it in quite that way, of course – but he has announced that public services will lose up to £18 billion per year – and that is a result of his decision to cut taxes for the rich.
He – and prime minister Liz Truss – has claimed the non-existent “trickle-down” effect means these fat cats will spend the extra money into the economy, making other people richer too.
But this is not true. Instead, the money will most likely go to tax havens while you suffer due to the loss.
Here’s what has been announced:
CHANCELLOR Kwasi Kwarteng has confirmed that public services face further cuts of up to £18 billion per year.
This comes following his dramatic U-turn on the 45p tax rate.
Budgets will not be topped up in order to take account of soaring inflation, the Chancellor said.
The move has been described by economic experts as one which is likely to have an “extraordinary” impact on the NHS and schools.
Last week, head of the IFS Paul Johnson said: “It is pretty extraordinary. There’s a real problem for schools and hospitals. It’s going to be a real squeeze.”
Paul Johnson isn’t the only one saying there are real problems. Already the social media are filling with outrage:
BREAKING: Kwasi Kwarteng will offer no financial assistance to schools and hospitals that are struggling to afford their energy bills this winter. I guess the 5 year olds will have to freeze and the life support machines will have to power themselves x
— Laura Kuenssberg Translator (@BBCFLauraKT) October 3, 2022
We’ve gone from leaving the EU so we can give our NHS £350m per week instead…
To making cuts to our NHS so we can give to our richest instead.
In terms of the NHS, it’s murder by proxy – if you think about it.
Truss and Kwarteng used the fear that you wouldn’t be able to heat your home as an excuse to bring in changes that mean you may not even be able to afford to live in it.
Then, mindful of the effect of these changes on your health, they are now imposing changes that mean the National Health Service will have to turn you away to die – after you spent years paying for it with your taxes.
Remember: health and education are your right; you have paid for them and the Tories have a contractual obligation to provide them – up to the highest standard.
Kwarteng should be reminded of this. It might make him grin on the other side of his face.
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Liz Truss and Kwasi Kwarteng: 10 days ago, cutting the 45p tax rate was a proud announcement for them. Now it has become a millstone around their collective necks.
A plan to cut the 45p top tax rate for high earners has been scrapped by Chancelllor Kwasi Kwarteng just 10 days after he announced it.
Kwarteng reversed the decision after a weekend of growing controversy surrounding the policy in which his prime minister, Liz Truss, appeared to try to throw him “under a bus”:
Note that she initially tried to defend the policy using the language of her bosses in right-wing think tanks like the Institute for Economic Affairs, saying it was an attempt to simplify the tax system and lower the tax burden.
But then, realising that interviewer Laura Kuenssberg was saying the policy was hugely unpopular with the public, she backtracked, saying that it was a policy devised by Kwarteng, which was not properly discussed in Cabinet.
And now, as Kwarteng prepares to give his speech to the Tory Party Conference, we have this:
Apparently there was a rebellion within the Conservative Parliamentary Party over the “toxicity” of cutting the top rate of tax amid a cost-of-living crisis for the vast majority of people in the UK.
And Truss was afraid that the rebellion would dominate the conference.
It’s a huge u-turn for a prime minister who had claimed she was “prepared to be unpopular”. It seems she wasn’t prepared for it after all.
The BBC has reported that Kwarteng said the proposal
had become “a massive distraction on what was a strong package”.
“We just talked to people, we listened to people, I get it,” he added.
Mr Kwarteng told BBC Breakfast the proposal was “drowning out a strong package”, including support for energy bills, and cuts to the basic rate of income tax and corporation tax.
Asked whether he owed people an apology, he said: “We’ve listened to people. And yeah, there is humility and contrition in that. And I’m happy to own it.”
On how the decision was made, he said: “The prime minister decided not to proceed with the abolition of the rate.”
However, pressed on whether it was her U-turn, Mr Kwarteng added: “No, we talked together, I said this is what I was minded to do and we decided together, we were in agreement that we wouldn’t proceed with the abolition of the rate.”
Asked if he had considered resigning, he said: “Not at all.”
He is on his way out, though.
Remember, we’ve been told that the 45p tax rate doesn’t actually bring much money back into the Treasury; it isn’t the cause of the economic upheavals we have seen over the last week.
It didn’t crash the Pound.
It didn’t crash the pension funds.
It hasn’t put the cost of imports up beyond the benefit to ordinary people of the other tax cuts.
We are heading for worse problems over an autumn and winter that Truss and Kwarteng have deliberately turned into a waking nightmare for millions of us.
What will these two con tricksters blame next?
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Knife: is Liz Truss plunging one of these into Kwasi Kwarteng’s back – metaphorically, at least?
Wow. New UK prime minister Liz Truss is already showing her vicious side. Who knew she had one?
In what is the BBC’s headline report at the time of writing, Truss lays as much blame for the failure of the Tory ‘fiscal event’ of September 23 on Kwarteng:
She added a decision to cut the top earner tax rate was a “decision that the chancellor made”. And she revealed it was not discussed with the whole cabinet beforehand.
She added that the cut was a decision made by Chancellor Kwasi Kwarteng – prompting former cabinet minister and Boris Johnson loyalist Nadine Dorries to accuse her of throwing him “under a bus”.
Some commentators have picked up on this:
I’m not sure I want to envision Liz Truss “fingering” Kwasi Kwarteng, but I’m looking forward to his Tory conference speech tomorrow (October 3).
Will he retaliate?
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It turns out the Office for Budget Responsibility provided Kwasi Kwarteng with a report on his mini-budget plans on September 6, the day he took office as Chancellor.
The OBR offered to update it with any extra information before Kwarteng’s ‘fiscal event’ on September 23 – and would have been able to provide this – but was not asked to do so.
Instead, Kwarteng refused to issue any OBR report on that day – claiming there was not enough time. This appears to have been a lie:
Truss is still refusing to publish the OBR’s assessment of her plans until November 23 – nearly three months after it was written.
So Kwarteng has lied to the nation and Truss has compounded that lie by refusing to rectify it.
And the reason?
The OBR’s report would have damned the plans in the “fiscal event” as economic suicide. Truss and Kwarteng were told what their plans would do, and they produced them anyway. Shouldn’t they resign for deceiving us like this?
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Gaslighting: Liz Truss and Kwasi Kwarteng (and the rest of their government) are trying to feed you a lot of misleading lines about their policies. Don’t let them.
After crashing the UK economy with their ‘dumb and dumber’ mini-budget/’fiscal event’, Liz Truss, Kwasi Kwarteng and their Conservative government chums are trying to gaslight you into thinking the consequences are not their fault.
Don’t believe a word of it.
Let’s have a look at some of their claims:
First among them must be this nonsense that the mini-budget was economically sound. Here’s one very obvious indicator that it wasn’t:
Mel Stride -Tory Chair of Finance Select Committee #r4today confirms the OBR had produced forecasts based on KK's Fiscal Event, but KK had not released the info – because it didn't look good. Our Chancellor & his PM sidekick obviously believe they can operate beneath the radar.
On her round of radio interviews yesterday (September 29), Liz Truss tried to tell us all that she has capped energy bills at £2,500 per year – indicating that she doesn’t understand her own policy:
For the avoidance of any doubt, *there is no £2,500 cap on energy bills*. 2/
Pensioners and low-income households across the country will have heard her say this (she said it 4 or 5 times before adding the caveat that it was for average household use) and will think they can keep their heating on all winter and be protected by the £2,500 cap 6/
The key thing to remember is that – even with the government intervention – prices are still 4x higher for gas and 3x higher for electricity than they were 18 months ago. Households will feel the pain of that, particularly when the cost of living is increasing so dramatically 8/
Please share this thread with anybody you think would benefit from the clarification that the energy price cap is not in fact… a cap… Also remember to take a meter reading and submit it to your energy supplier today or tomorrow to make sure your account is up to date! 🧵ENDS
The Treasury is trying to tell us changes to stamp duty mean a saving of £11,250 for first-time buyers – but the mortgage would cost people who earn £30,000 a total of £38,000 per year:
I really don't think you've thought this through
1. A stamp duty saving of £11,250 indicates a purchase price of £600k
2. You're talking about someone on a salary of £30,000
3. A 25-year mortgage of £600k @ 4% interest would cost £3167 per month, so £38,000 per year
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— Linda🐟🌻🏴#Notmybrexshit #JohnsonOut (@lindaarella) September 29, 2022
But a Labour landslide would not be a necessarily good thing – especially under Keir Starmer’s leadership.
Economist Richard Murphy sets out the case for proportional representation here:
Just because we can get rid of the Tories without proportional representation doesn’t mean we don’t need it https://t.co/fMbPVdkMtA A Labour landslide would not be good for democracy, good government or governance. We really do need a proper democracy
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Economist Richard Murphy has given his verdict on the result of Liz Truss and Kwasi Kwarteng’s new economic direction for the UK – and it is damning.
But he has also done something far more important; he has suggested ways forward for the UK. Principal among those is making sure the Conservative Party is never allowed into power on its own again, so it can never again ruin the finances of millions of people for the benefit of a few spoilt rich kids.
It’s the first positive series of suggestions This Writer has seen.
See what you think – and be sure to send those thoughts in via the comments section:
Six days after Kwarteng gave the worst budget in living memory, where are we? A summary thread…
The UK’s final salary pension funds nearly failed yesterday. It has cost £65 billion to bail them out, much of that going to people who are better off, overall.
Official interest rates are set to rise to 6% if market expectation is followed, meaning mortgage rates of 7.5%. I suspect half of all those with mortgages will not be able to pay anything like that. Rents are going to skyrocket as well. A housing crisis is likely.
Rising interest costs on top of massively increased energy costs and a collapse in consumer demand are going to hit hundreds of thousands of businesses very hard. Maybe that many will fail, and with that unemployment is going to increase, a lot.
Pensioners and those on benefits are not going to get the inflation-linked rises that were expected next April, even though their financial positions are profoundly perilous.
Second, because we cannot afford a general election as yet, having already had months without a government this year, a cross-party coalition will need to stabilise the country. I sincerely hope this can be achieved.
It will have to commit to higher public spending – knowing that much of this will pay for itself by delivering tax paid, improved productivity and positive multiplier effects as state employees spend their wages.
There will be a need for higher taxes on the well-off. Wealth will need to be taxed considerably more. This is not for revenue: it is time to reorder British society so that it is no longer structured to serve an elite, but everyone.
The Bank of England will have to be instructed to reduce interest rates as fast as is possible to save the domestic economy from ruin: again, if inflation is the consequence, so be it. We cannot afford the devastation of mortgage failures.
The financial markets will need a quiet revolution: the use of savings for speculation has to end if state subsidy for pensions and other savings is to be enjoyed.
And we need to rethink what is valuable. The idea that markets are good and the state is bad is nonsense. We have to create an economy where there is a genuine partnership.
Truss and Kwarteng have proved that yesterday was a very long time ago. We’re not going back there. We should not want to. But it will need big vision and courage to go forward. I hope some politician has it.
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Proved correct: this was an accurate prediction, as we can see from the revelation about who is advising Liz Truss – and the reactions of economists to what they have done together.
The Tory government led by Liz Truss is being advised by shady right-wing think tanks like the Institute for Economic Affairs, which seems to exist purely to eliminate so-called ‘big’ government and remove restrictions on business like workers’ rights and environmental protections.
Nobody knows everything about who funds the IEA. But one of its lunatics – I mean representatives – appeared on ITV’s Good Morning Britain to show us all how crazy his organisation is. Take a look:
Meanwhile, professional economists are going absolutely crazy about the disaster that Kwasi Kwarteng has triggered, on the advice of these far-right think tanks (apparently).
Have a listen to what they have to say:
There is a lesson to learn from this:
The Conservatives are NOT the party to trust with the UK economy.
Not now, and never again.
It’s no wonder that Truss and Kwarteng seem to have given up on trying to run the country and are instead abusing their position to funnel money to their richest friends – presumably in the hope that this will give them an escape route when the whole house of cards collapses.
Let’s hope some more Tory MPs grow a backbone and eject them before the damage becomes irreversible.
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