Have we learned nothing?

 Hi All,

It is of course zero surprise that the left is gloating over the current shambles of a government we have in the UK. A government which isn't conservative, but libertarian, which I guess is a post for another day.

Anyway, one thing is quite clear: the current government's tax cuts are going to have to be balanced with cuts to the public purse, despite the u-turn on the 45p higher tax rate. Liz Truss today said in Parliament that she wasn't going to do any cuts and she wants to continue with the 'growth strategy'. Good luck with that. In fact good luck would be that we don't have a full blown sovereign debt crisis and IMF bailout with the way these clowns are running the country. We've not learned that we in the UK are a middle of the road power and that means we have to have borrowing within a certain range and limit, even if the preference would be to balance the budget at 0 surplus or borrowing.

What the government should really be focusing on is not tax cuts for rich people and companies, but how our debt is going to be managed and at least the deficit reduced. Unfortunately for the past couple of years we believed we could go on borrowing like we are America. But we are not America and we cannot keep borrowing £100 billion a year and add billions more  as a long term strategic choice, via tax cuts or for that matter billions to public services without finding the money first. It is true during Covid we borrowed 3 x that amount, but that was acceptable as it was an emergency situation, wherein the economy was shut down, with the Bank of England supplying most of the cash for this, something which it can no longer do if it is to get inflation back under control.

Just like people say the energy price cap is an 'emergency response'. Which it is, but it could have been handled better, for example subsidies for a national insulation scheme and at the very least a public awareness campaign on how to cut down energy usage, without freezing this winter (which has been vetoed by Libertarian Truss as 'the nanny state', although it seems to me there is a difference between advise and compulsion, there was no suggestion of doing a Germany where there's a lot of measures now in place where you have to keep doors shut and lights off at certain times etc). 

Adding to this, the political left is gloating about all of this, but here is the rub: the market has turned against Truss because of the continual deficit and adding to that deficit, without signalling that it will cut elsewhere to reduce, if not balance, the budget. By the same token, the market will not tolerate the left's wish list of vastly increased public expenditure, unless it admits it will have to come with a price, that is if you want to increase public expenditure it will have to come with extra and increased taxes, which go beyond the usual stealth and indirect taxes. If we do get a labour government will we all be paying more tax. 

So the left are welcome to enjoy their brief bit of pleasure and gloating at what is an utterly insane government. But what comes around, turns around and when it is their turn, they will also be facing a lot of difficult and unpleasant choices. It may well be they inhereit a situation in which Liz Truss has been forced out , with a caretaker politician (Gove?) in power for 2 years, who has been forced to do severe austerity by the IMF, with any incoming government being expected to keep going with it, regardless of democracy (see Eurozone crisis). 

One final thought is that all of this may be a mute point because if the crisis in the pension fund world (these are the 'gold plated' final, but not totally funded, salary schemes now closed to most people) continues the government may have to do a 2008 and bail them out.  Younger Taxpayers bailing out those rich pensioners, while they themselves don't have final salaries. That would be another intergenerational mess. And what made this crisis? The Truss government's budget may have been the trigger, but the explosives were, like 2008, financial derivatives. Have we learned nothing?