IT'S ONLY TWO BILLION POUNDS

A couple of items were pointed out to me by Ernie Eban. The first is from the Register of MP’s financial interests:

The Register of Members' Financial Interests: Part 1
As at 28th March 2011

KWARTENG, Kwasi (Spelthorne)…

2. Remunerated employment, office, profession etc

Author. Address of publisher: Bloomsbury Publishing plc, 36 Soho Square, London W1D 3Q7.

Consultant to Odey Asset Management, 12 Upper Grosvenor Street, London W1K 2 N D; giving political advice to asset managers in relation to international and domestic affairs. I shall be paid £10,000 on a half-yearly basis. 

 

The second is an article from Reuters:

 

            Odey's hedge fund soars 145% on bets against UK bonds - 

            By Nell Mackenzie

LONDON, Sept 22 (Reuters) - Crispin Odey, one of Britain's best-known hedge fund managers, has made a killing this year by wagering against British government bonds, with his firm's main fund up 145% in 2022 after shorting long-dated UK debt, sources said on Thursday.

Betting against the price of, or shorting, government bonds has been one of the trades of the year as soaring inflation forces central banks to hike interest rates more aggressively than was predicted even a few months ago, and investors dump bonds...

 

The entry on the Register quoted is eleven years old, and I do not know if and when Mr Kwarteng ceased his association with Odey Asset Management, but he was clearly benefitting form the company by £20,000 per annum, and may well have had investments with the company, which he might still maintain to this day.  If that is the case, what share of the 145% increase in funds does he have? One could legitimately ask the question, was he profiting largely from his own proposed fiscal event?  It would seem that what he outlined in the House was not a mini-budget, but a fiscal event, prior to any actual budget he may propose in November; but, perhaps that too will be classified as a fiscal event. 

 

Whatever the circumstances, either Mr Odey was made fully aware of the terms of the event and consequently made his move on government bonds, or, knowing the ‘value’ of his former consultant’s advice and (in)competence in financial matters, took the gamble which was clearly an odds on favourite. 

 

I am not suggesting that any corrupt practice is involved, or any conspiracy between Mr Odey and Mr Kwarteng to obtain pecuniary advantage, but the association between them does make one pause. I leave it with the reader to ponder.

 

I have also been looking at some of the 'benefits' of the fiscal event. The current budget absolves first time buyers from Stamp Duty on properties costing up to £425,000.00. Where are the young people who can afford these properties? One would need a deposit of £42,500.oo, a loan of £382,500.oo, and, in order to qualify for a mortgage of that amount, one's salary would have to be in the region of £127,500.oo per annum, or £2,451.92 per week,which is nearly 4 times the alleged average wage. That would put that person in the upper 5% of earners in the UK. So the benefits for young, already well off people, are great; except, for the most part, those potential first time buyers in that bracket are almost nonexistent. The other 95% cannot afford to buy property at all and are barely able to scrape together any rent for housing, as well as being wholly or partially dependent of Universal Credit. There is clearly a grand canyon between the supposed average earner and that 5% who can affod to live that much better life.

The highest mortgage the average earner would qualify for would be between £90,000 and £100,000. With the average price of housing in the UK being around £285,496.00 that first time buyer would still have to find an additional £185,000 plus, in order to make the purchase. The average savings in the UK being £6,757.oo, where do they find the additional £180k ?

There is a line from the film Jerry Maquire:

Rey (Dorothy's son) What's wrong mom? - Dorothy: First class is what's wrong. It used to be a better meal, now it's a better life.

 

This current conservative government is not about catering to the 95%. It values only the 5%, some of whom, even with an income of £50k per annum, claim they find it difficult to sustain that better life, but still manage to do so. I am also astonished to hear people question the value of keeping the 45% higher rate tax for those whose income exceeds £150,000. Sarah Montague, on the World at One, asked a labour politician about reinstating the 45% stating "That's only 2 billion pounds, what else are you going to do?" as if to infer "what difference will it make?". Only 2 billion pounds? I suppose for someone on over £245,000 per annum, using phrases like "only 2 billion pounds" is not surprising considering she benefits by some £4,750 per annum from Mr Kwarteng's fiscal event. It convers the utility bill. She is in the top 1% as are a great many BBC presenters:

Gary Lineker, Zoe Ball, Steve Wright, Huw Edwards, Fiona Bruce, Stephen Nolan, Lauren Laverne, Vanessa Feltz, Alan Shearer, Scott Mills, Ken Bruce, Andrew Marr, Emily Maitlis, George Alagiah, Greg James, Jeremy Vine, Nicky Campbell, Dan Walker, Sophie Raworth, Mishal Husain, Jo Whiley, Sara Cox, Nick Robinson, Evan Davis, Jason Mohammad, Laura Kuenssberg, Naga Munchetty, Justin Webb, Mark Chapman, Sarah Montague, Nick Grimshaw, Emma Barnett, Amol Rajan, Jon Sopel, Trevor Nelson, Tina Daheley, Jeremy Bowen, Katya Adler, Mary Berry, Kirsty Wark, Clive Myrie, Fergal Keane, Faisal Islam, Rachel Burden, Louis Theroux, Jermaine Jenas, Mark Easton, Simon Jack, Charlie Stayt, Louise Minchin, Sarah Smith, Jonathan Agnew. Reeta Chakrabarti, Michael Vaughan, Ben Brown, Victoria Derbyshire, Annie Mac, James Naughtie, Clara Amfo, Gabby Logan, Orla Guerin, Shaun Keaveny, Simon McCoy, Joanna Gosling, Steve Lamacq, Graham Norton, Nihal Arthanayake, Isa Guha, Mary-Anne Hobbs, Carolyn Quinn, Winifred Robinson.

All of the above earn over £150k per annum, and some much much more. The first fifteen names earn from £300k plus. (The top two, over one million each). Those people will be benefiting by over £1,000,000 between them. So bear this in mind when they are interviewing pensioners, people relying on state benefit, and ordinary members of the public, presenting their stories with great sympathy. They may very well feel sympathy and compassion with the plight of the 95% but they are well shielded from their situation, and sometimes come out with questions like “That’s only 2 billion pounds, what else are you going to do?”

The amount they will receive from the tax cuts could provide the salary for 50 junior nurses starting work in the NHS, or 25 paramedics on ambulances.  I know that’s only one million pounds, what difference will that make?  Indeed, the 2 billion pounds, so cavalierly mentioned, could provide salaries for over 13,000 medical staff on £150,000 per annum, or 25,000 staff on £80,000 a year, bringing them all into the 5%. Think how many more on actual current NHS salaries. So do not speak slightingly of 2 billion pounds.

Clearly some perspective is needed. The cost of living is more than a crisis about bills. It’s about a better life, safer, more productive and healthier, both physically and mentally. It seems, at present, to be unobtainable for all but a few.  This conservative government is about keeping it for the few and those who support them. If they can gaslight some of the 95% to add their support, then they will remain in power to do as they please. They are not bothered about being unpopular, they are popular enough under the present electoral system to carry on regardless. This is a government that has usurped the right to govern through deceit and lies, hiding behind a cloak of patriotism and claiming the honour to be selected to serve.  Their claims are meritless. They do not serve, they take. They hide from and obfuscate any attempt to question their competence and character. Their chief culprit, now waiting in the fields like Cincinnatus behind his plough, eagerly anticipating his recall, still hovers over them, a mendacious menacing cloud on the horizon.

Virtually the whole of the financial world has reacted with disbelief at the declared mini budget by Truss and Kwarteng. The warning signs had been well posted prior to the event, but they went ahead regardless, and still they are not deterred and intend to carry on. The devalued currency has dramatically increased inflation by causing higher costs on imported goods and services, with commensurate higher interest payments on debts.  Result, right? As to their competence, one can only guess that if it were raining soup outside they’d go out with a fork.

I know very little, probably nothing, about economics and related sciences, but it is clear that the mindset of Ms Truss and Mr Kwarteng about such matters, is seriously flawed. Perhaps the events engendered by their fiscal event may teach them an appropriate lesson, perhaps not. In any case I hope the continuing pressure on them to change tack or do something useful, like resigning and calling for an immediate general election, will have some effect.