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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day – coup d’état edition

The brutal demise of the Truss administration following the mini-budget has been widely attributed to the market’s reaction to the expectation of unfunded borrowing occasioned by tax cuts and the fuel price cap. To the contrary: the market’s behaviour was quite clearly a response to the actions — and inactions — of the Bank of England, before, during and after the mini-budget.

One part of, but not all of, the case against the Bank has been cogently made by Narayana Kocherlakota, a well-respected economist and former president of the Federal Reserve Bank of Minneapolis, in a Washington Post piece entitled “Markets didn’t oust Truss — the Bank of England did”. Kocherlakota’s view was that the Bank of England was responsible for the crisis, through “poor financial regulation and highly subjective crisis management”. Outside the UK chatterati, this view is widely supported.

Jon Moynihan

15 comments to Samizdata quote of the day – coup d’état edition

  • Johnathan Pearce

    It was a coup.

  • Fred Z

    A “conservative”politician too stupid to understand that ALL government institutions utterly loathe him or her, or to plan accordingly, deserves to be ousted.

    She brought a paring knife to an artillery duel.

    She was an idiot, probably still is.

  • It was a coup.

    Rishi Sunak the snake couldn’t win a fair election, so forced the elected leader out with political machinations.

    Pretty much the dictionary definition of a coup. Not that it will do them any good, they’ll be out at the next election anyway and we’ll be stuck with the horrors of Labour OR WORSE a Labour / SNP coalition.

    Can’t help but feel the Conservatives (in name only) deserve it for their failure to conserve anything of value other than their own jobs (albeit for a short time only), the country as a whole, less so.

    Hanging is too good for them. Need to be drawn and quartered as well.

  • Hanging is too good for them. Need to be drawn and quartered as well.

    By horse…

  • Jim

    When Andrew Bailey made his speech on Tuesday 11th Oct at the Washington conference which basically told the gilt market that it was on its own after his cut off date for the QE scheme for pension funds closed that Friday, I knew then that it was a stitch-up. Central Bank Governors don’t go around putting guns to the head of the markets like that unless they are trying to make something happen. The usual soft soap schtick would have gone something like ‘The current facility closes on Friday, however the Bank stands ready to step in and do what is necessary in the event of future market turmoil’, something of that ilk. No, the ‘get it while its good chaps’ speech was a nakedly political act – as others have said, an effective coup against the Truss government. In other more just times he would have lost his head for it.

  • Tom Carver

    Are we seeing a myth becoming established, that most of our current economic problems are a result of the mini-budget?
    Although it wasn’t enacted, the ideas proposed in the ‘disastrous’ mini-budget apparently cost us billions of pounds and seriously damaged Britain’s economic credibility.
    Is this what actually happened?

  • Are we seeing a myth becoming established, that most of our current economic problems are a result of the mini-budget?

    The traitors leading this little coup d’état would love for that to happen, but the truth is a bit too sticky for that to come into effect. This is not some Reichstag fire moment that required immediate action by the executive, just a feeble justification for a grubby little backroom coup.

    The fact that the supposedly independent Governor of the Bank of England supported and enabled this illegitimate transfer of power should be enough for his immediate dismissal along with legal action.

    However, I suspect that nothing will happen short of the next election and when Labour get in because of this they’re hardly likely to complain.

  • Michael Taylor

    Yes it was a coup. Moreover, almost a carbon-copy of the ‘Frankfurt group’ coup which parachuted Mario Monti back into ruling Italy.

    Democracy will be restored.

  • Martin

    Central bank independence was always a mistake, even if it was presented at times as a supposed pro-free market measure. Of course, the ideal position would be no central banks. But if we must have them, while I don’t trust elected politicians, I distrust unelected bankers even less.

    Truss was way out of her league and no matter of dressing like Margaret Thatcher was going to make up for the fact that she never had the latter’s strength of will and political intelligence (I say that as someone who isn’t uncritical of Thatcher, but recognise her as easily the most impressive post-WW2 PM). But it was pretty much a coup just as ‘the markets’ brought down Berlusconi in Italy in 2011 or how ‘the markets’ kept trying to topple the Syriza government in Greece. And it is instructive. The ‘City of London’ is effectively a public-private partnership. They don’t want a ‘free market’. Hence they crushed even a milquetoast free marketeer like Truss.

  • Ben david

    Can someone explain this thread and the historic examples, or link to background material?

  • Paul Marks

    We need to remember what “the markets” now are – they are NOT really the vast number of independent traders that Adman Smith, or even Milton Friedman, defined as “the market”.

    When one has a vast number of independent buyers and sellers it is possible to talk of an “invisible hand” (Adam Smith – although the metaphor goes back to Descartes or even the Schoolmen Scholastics) – individual human minds are still making the decisions, but there are so many of them that talking of an “invisible hand” of “market forces” makes sense.

    But what we have is a few vast corporate players (in the United States BlackRock, State Street and Vanguard “the Great Woke Three” control some Twenty Trillion Trillion-with-a-T worth of investments) – this is partly due to tax policy (because of such things as Inheritance Tax and Capital Gains Tax the last time a majority of shares were owned by individuals in the United Kingdom was way back in 1965), partly regulation policy – the tidal wave of government regulations that are, ironically, known as the “Big Bang of deregulation” of the mid 1980s), but mostly the utterly vast amount of Credit Money creation by the Bank of England and the other Central Banks – and the Credit Bubble pet Commercial Banks that follow them and depend on the Central Banks.

    Most of us are now familiar with the “Cantillon Effect” named after Richard Cantillon (an Irish economist of some three centuries ago), but the scale of the modern Cantillon Effect is still hard for the human mind (at least my old brain) to grasp. Money is created, from nothing, by the Central Banks and the pet Credit Bubble commercial banks (who are NOT honest money lenders mostly dealing with Real Savings – the actual sacrifice of consumption) and it goes to the connected (such as BlackRock in the United States) who use this money (money from nothing) to buy real assets (such as homes) before the value of the money-created-from-nothing drops – to be blunt the modern economy is CRIME (yes crime – as an ordinary person would understand criminality) on a truly epic scale.

    The degree of concentration of capital makes talking of “the invisible hand” or “market forces” or “the free market” essentially nonsense – the “hand” is only too visible (on the currency markets as well as the stock markets – indeed on all markets) and it is the hand of a few vast corporate entities (controlled by a few “Woke” people obsessed with their “ESG” scores and other such international agendas) backed, yes, by the Central Banks – such as the Bank of England (and the Central Banks are also obsessed with various international “Woke” agendas).

    This new system will not end well, it will end in utter disaster.

    Those who survive that disaster (and they will not include me – I will be dead), must do all they can to try and prevent this nightmare system being replaced by an even worse one – “digital currency”, “international agreements”, “international governance” and all the rest of it.

  • Paul Marks

    Ben david – look up the “Cantillon Effect” and then start your reading from there.

  • Jon Eds

    Are we seeing a myth becoming established, that most of our current economic problems are a result of the mini-budget?

    I’ve heard a few of my colleagues tell our clients this at least 3-4 times, so this seems quite likely. I do point out o my colleagues and clients that the contents of the budget had been flagged months in advance but it falls on deaf ears.

  • Nicholas (Unlicensed Joker) Gray

    So if we buy lots of metals, such as gold, or silver, etc., then we’ll be able to start our own banks after the collapse. Should we restart Fractional reserves, or insist on a one-to-one ratio?

  • Alex

    I notice in the last few days a concerted effort to undermine “Brexit”. After neutralising the Conservative party completely, the narrative is now being pushed that the UK economy has been destroyed by “Brexit”. Coup complete, I think.

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