The Daily Parker

Guys, you really need to go to the country now. You're making Jeremy Corbyn's Labour Party look like a model of competence:

Liz Truss started her premiership with a mad dash for growth. She continues to insist that boosting Britain’s growth rate is her mission. But whatever remains of her time in office is now focused on a different goal: restoring the faith of the bond markets in Britain.

Ms Truss’s reversal is a humiliation. She had spent the Conservative Party leadership campaign promising to abandon the planned rise in corporation tax. She brushed aside warnings from Rishi Sunak, her rival, that her plans for unfunded tax cuts represented a dangerous “fairy tale” which would stoke inflation. In the end the fiscal statement on September 23rd included cuts worth £45bn ($50bn), an even more lavish giveaway than the one she had dangled during the contest.

Much of her party is determined to get rid of her. Her project of deficit-funded tax cuts and a smaller state always had shallow support in a party that combines a new-found taste for state intervention with an old liking of sound money. Even those Tories who backed her project now have little reason to keep her in place, save for the embarrassment of installing its third leader in a year. The question preoccupying MPs is not “if” but “when”: should they move against her now or wait until after the fiscal plan on October 31st?

In a public letter thanking Mr Kwarteng for his 39 days as chancellor, Ms Truss declared that he had “set in train” structural reforms to planning law, as part of her mission of lifting Britain’s parlous productivity. In truth, those reforms exist only on paper and face a difficult battle through Parliament. “We share the same vision for our country and the same firm conviction to go for growth,” she wrote. Convictions are all she has left.

Labour Party leader Sir Keir Starmer didn't hold back:

In an interview with the Guardian, the Labour leader said Truss had driven the economy “into a wall” while “trashing our institutions”, and changing the prime minister again without allowing the country to vote would not be acceptable.

However, Starmer said he had told his shadow cabinet not to be complacent about the party’s 30 points-plus poll lead, and that Labour was “not going to sit back” but fight for every vote.

He said people were “looking to Labour for the answers to the next election” and the party needed to carry on putting in the work to win the contest, rather than assuming the government’s incompetence would cause the Tories to lose.

Asked if a general election was necessary immediately, or if Truss is replaced, Starmer said: “Yes … We are in the absurd situation where we are on the third, fourth prime minister in six years and within weeks we have a got a prime minister who has the worst reputational ratings of any prime minister pretty well in history. Their party is completely exhausted and clapped out. It has got no ideas, it can’t face the future and it has left the UK in a defensive crouch where we are not facing the challenges of the future because we haven’t got a government that could lead us to the future. For the good of the country we need a general election.”

Of course, the Tories have no requirement to call an election until 2025, so I expect we're about to see which bozo comes out of their Mini Cooper to move into Number 10 before Christmas. Maybe Jeremy Hunt?

UK Chancellor of the Exchequer Kwasi Kwarteng is out on his ass so that PM Liz Truss (who also holds the title First Lord of the Treasury) can put off going to the country for just a little longer:

Jeremy Hunt has been appointed as Liz Truss’s new chancellor, in a stunning reversal of political fortune and a sign that the beleaguered prime minister wants to reach out to other sections of the Conservative party.

Hunt, the former foreign secretary and health secretary, who has twice tried unsuccessfully to become Conservative leader, was named chancellor after Kwasi Kwarteng, in the job for just over five weeks, was sacked by Truss ahead of another U-turn over tax cuts.

Both Labour and the Liberal Democrats said Truss now needed to stand down. Rachel Reeves, the shadow chancellor, said: “We don’t just need a change in chancellor, we need a change in government.”

Kwarteng now holds the record for the shortest-serving Chancellor ever to survive the office:

Mr Kwarteng, formerly Ms Truss’s close political ally, is carrying the can for the financial and political turmoil unleashed by his mini-budget on September 23rd. His tenure of just 39 days in a job that dates back to the Middle Ages is not the shortest. But it’s not far off....

Mr Kwarteng’s chancellorship is the second shortest of modern times. Only Iain Macleod, who died on his 31st day in office, in 1970, spent less time in 11 Downing Street. Mr Kwarteng’s immediate predecessor, Nadim Zahawi, was chancellor for just 64 days. His tenure, it turns out, was not even the shortest of the year.

Mr Kwarteng’s successor, Jeremy Hunt, is the sixth chancellor in just over three years. Philip Hammond gave way to Sajid Javid when Boris Johnson replaced Theresa May as prime minister in July 2019. Mr Javid fell out with Mr Johnson after less than seven months. Rishi Sunak quit this year to force Mr Johnson from office. Mr Zahawi kept the seat warm while the Tories chose a new leader. And now Ms Truss’s catastrophic start has cost her ally his job. It may yet cost her hers.

The parliamentary system means that the government doesn't have to call an election if they don't want to, though an act passed earlier this year will force Parliament to dissolve five years after its opening. As that won't happen until January 2025, the Conservative Party could continue to drag the country through chaos until just after the end of President Biden's first term. Let's all hope they just get out of the way next spring.

The Registrar General for Scotland finally released a death certificate that raised more questions than it answered:

Queen Elizabeth II’s cause of death is described as “old age” in the register of deaths released on Thursday.

The registrar general for Scotland, Paul Lowe, confirmed that the Queen’s death was registered in Aberdeenshire on 16 September.

Suspicious, innit? She survived in power for 70 years and this is the best you've got? Apparently Scottish law allows this sort of obfuscation:

Old age is acceptable if the doctor certifying death has cared for the patient for a long time, was not aware of any disease or injury that contributed to death and had observed a gradual decline in the person’s general health and functioning.

The Queen had been experiencing sporadic mobility problems during the final period of her life and used a walking stick regularly in public. Her use of a walking stick came after she was admitted to a private London hospital for “preliminary investigations” in October last year – her first overnight admission for eight years.

Oh? The People deserve a full investigation! A similar fate could befall the current heads of state of not just the UK, but Cameroon, Lebanon, Norway—or even the United States.

We demand the truth!

After Chancellor Kwasi Kwarteng's shocking mini-budget announcement last week, worldwide markets (and the IMF) have clobbered Sterling and the Conservative government in general. Today the Bank of England intervened in bond markets to try undoing the worst damage:

The Bank will start buying government bonds at an "urgent pace" to help restore "orderly market conditions".

So called Liability Driven Investment funds - which support defined benefit pensions schemes - were facing a collapse in the value of the bonds they hold, which in turn could have forced them to rush to sell other assets, sparking yet more market panic.

The Bank has already said it will "not hesitate" to hike interest rates to try and protect the pound and try and stem surging prices. Some economists have predicted the Bank of England will raise the interest rate from the current 2.25% to 5.8% by next spring.

Despite the Bank's action, the pound continued to fall with some analysts warning it could even reach parity with the dollar.

"What today shows us, is that the market doesn't see this as a problem that just the Bank of England can clean up," said Jane Foley, a currency strategist at Rabobank. "This is just firefighting".

Economist Tony Yates, formerly of the Bank, believes the markets expect a reversal to the Tories' new policy, either as a volte-face soon or at the next election:

The combination of falling sterling and rising rates is particularly damning. Normally a country embarking on a monetary-policy contraction to combat an inflationary surge—imparted by a fiscal loosening—might be expected to see a rise in its exchange rate. But the government’s move has shaken markets’ faith in its fiscal competence and its grasp of macroeconomic realities. That loss of confidence produced the exchange-rate fall.

Mr Kwarteng’s delusions will come to an end. The worst return to reality would see Britain slide into a full-blown financial crisis. In this regard the fall in sterling is less important than the rise in the cost of government finances. That is partly because investors are demanding a premium: they expect to compensate themselves for the upheavals of recent days and the uncertainty they have introduced. (The economists Paul Krugman and Dario Perkins have called this a “moron risk premium”.) In a doomsday scenario this premium generates a self-fulfilling vicious cycle. It raises spending (on interest payments on existing government debt) and lowers revenues (a dearth of confidence will lead to less economic activity). This will raise the “moron premium” further, worsening the funding gap. And so on.

Ironically the fiscal plans of a prospective left-wing government are providing the confidence anchor for the right-wing government it is expected to defeat in the next election. And the more this is expected to happen, and the sterner and clearer Labour’s plans become, the less awful the crisis will be in the meantime. The stupidity of Mr Kwarteng’s policy and its unpopularity are helping to limit the damage done by it. Markets believe that things won’t carry on as they are indefinitely.

Of particular concern, most mortgages in the UK have floating rates, unlike here in the US where fixed rates are most common. So the rising interest rates and declining pound will start hitting mortgage borrowers hard, just when gas prices blow up later this autumn.

I only wish I had a few extra bucks right now for a trip to the Ancestral Homeland. Given the current Tory resistance to change in the face of direct evidence, though, I suspect the exchange rate will remain pretty favorable to Americans through the winter.

The pound fell to $1.033 in early trading this morning before rebounding to the still-ahistorical $1.08 by mid-day:

Chancellor of the Exchequer Rishi Sunak hasn't had the job for three weeks and he's already tanked British currency markets. The Guardian's economics editor Larry Elliott calls the mini-budget that started this catastrophe a "schoolboy error:"

Part of the story of the pound’s weakness is a function of dollar strength but that does not explain why sterling has fallen so rapidly since the end of last week. There are three UK-related factors behind the fall.

First, once a currency hits the skids it is hard to stop it. Momentum trading took over in the aftermath of Kwasi Kwarteng’s mini-budget and it has proved hard to halt.

Second, Kwarteng committed a schoolboy error by pledging further tax cuts in a full budget planned for later this year. If the markets are worried about the state of the government’s finances and the increase in borrowing needed to fund your plans, it is not the wisest course of action to add to those concerns. Kwarteng’s inexperience has been exposed.

Third, the financial markets don’t really know how the Bank of England will respond to the events of the past three days. Threadneedle Street raised interest rates by half a point last Thursday but there has been speculation of an emergency meeting of the Bank’s monetary policy committee as early as Monday.

The Economist expands:

Five-year British yields have risen from 1.5% at the beginning of August to above 4.5% now: an increase of about one percentage point in just two days.

That combination of rising yields and a falling currency has prompted discussions of a broader crisis of confidence in Britain’s economy and its assets. The government’s tax cuts will mean a growing budget deficit and higher public-debt levels in the future. Britain’s current-account deficit reached 8.3% of gdp in the first three months of the year, the deepest in modern history, driven by surging energy prices. A gaping current-account deficit is something that often worries those who invest in developing economies.

But in other ways Britain is an unusual candidate for a currency crisis. Its exchange rate is flexible, meaning that there is no link to another currency, as was the case when Britain was forced out of the European Exchange Rate Mechanism in 1992. Its financial markets are deep and sophisticated. It has minimal debt denominated in foreign currencies, and its central bank is independent from the government.

The most simple explanation for the sell-off, then, is that investors do not believe that the government’s tax cuts will lead to the real economic growth Mr Kwarteng wants. Instead, they foresee higher inflation that the Bank of England will be unwilling to fully offset with interest-rate increases. Currency analysts at the Bank of America suggest that a combination of Britain’s changing fiscal stance and the long-running effects of its decision to leave the European Union have led to a profound rethink of the pound by investors. That leaves the currency more vulnerable in the years ahead.

I was joking with friends that I should hop over there to finally get a pint and a bap for under $10, until one of them pointed out that it would be a $1210 pint and bap given airfares and hotel costs. Ah, well. It doesn't look like the pound will recover before the end of the year, so maybe Christmas in London again? Any bets on whether PM Liz Truss will have to call an election before then?

UK Chancellor of the Exchequer (equivalent to the US Treasury Secretary) Kwasi Kwarteng (Cons.) announced significant tax cuts along with £72 billion in new spending to forestall higher energy bills this winter. Unfortunately, this massive stimulus comes during some of the highest inflation the UK has seen in a generation, estimated to be nearly 10% annualized as of this week.

Consequence? This, as of just a few minutes ago:

Sterling hasn't gone below $1.10 since 1985, and it probably won't again during my lifetime.

The Economist has no confidence in the scheme:

[Prime Minister Liz] Truss’s attempt to emulate the Gipper’s success is doomed. To see why, consider the currency markets. Reaganomics was accompanied by a strengthening dollar. So were Donald Trump’s tax cuts in 2018, which also happened alongside monetary tightening.

In Britain, though, the pound has slumped by 16% against the dollar in 2022.

As a result, the BOE will get no help from currency markets as it offsets Ms Truss’s fiscal stimulus with tighter monetary policy. Instead more expensive imports are boosting inflation. That is a big headache for an economy that depends on trade as much as Britain’s does.

Ms Truss’s cheerleaders seem to have read only the first chapter of the history of Reaganomics. The programme’s early record was mixed. The tax cuts did not stop a deep recession, yet by March 1984 annual inflation had risen back to 4.8% and America’s ten-year bond yield was over 12%, reflecting fears of another upward spiral in prices. Inflation was anchored only after Congress had raised taxes. By 1987 America’s budget, excluding interest payments, was nearly balanced. By 1993 Congress had raised taxes by almost as much as it had cut them in 1981. If Britain’s government does not correct its course in the same way, the result will be more conflict between monetary and fiscal policies—and a risk that inflation becomes entrenched.

On the other hand, lower costs in the UK combined with the usual slowdown in tourism across the Atlantic in autumn have made this possible on a 21-day advance purchase:

If only I weren't moving or performing in an opera in the next eight weeks, I'd buy a ticket to London right now.

It happens every September in the mid-latitudes: one day you've got over 13 hours of daylight and sunsets around 7:30, and two weeks later you wake up in twilight and the sun sets before dinnertime. In fact, Chicago loses 50 minutes of evening daylight and an hour-twenty overall from the 1st to the 30th. We get it all back in March, though. Can't wait.

Speaking of waiting:

• Buckingham Palace just warned people that the queue to see Queen Elizabeth's coffin has a 24-hour wait at the moment, so...dress warmly!
• Drivers on the New Jersey Turnpike will have to wait even longer to get into the Holland Tunnel after a planned $4.7-billion project adds even more induced demand.
• Via Bruce Schneier, Uber has had a data breach. No, scratch that—Uber lost control of its entire computing universe, because the company culture of cheapness and bullshittery extends to their IT security as well.
• Ronald Brownstein finds this year's election...really weird.
• David Brooks asks, why do we not have a strategy to defeat the XPOTUS?
• Matt Ford points to Florida governor Ron DeSantis (R) as the future of Republican campaigning: trolling the libs.
• The Cook County State's Attorney has charged two Chicago cops with multiple felonies after they shot an unarmed man in Pilsen and lied about it.

Finally, Fareed Zakaria visited Kyiv, Ukraine, to learn the secret of the country's success against Russia.

Just a few before I take a brick to my laptop for taking a damned half-hour to reformat a JSON file:

• The King has a long history of meddling in architecture and urban planning, with the divisive planned community of Poundbury, Dorset, his largest project to date.
• Meanwhile, in the US, architect Adam Paul Susaneck argues that cities need to remove highways that segregate communities. (Plus they're ugly and they cause the traffic they're built to alleviate, but that's another argument.)
• The Queen's death has gotten a lot of people's Irish up over the colonial history she oversaw as monarch. (I even decided to pause someone on Facebook for a month for dancing on her grave.)
• Developers found three time capsules while redeveloping Chicago's Tribune Tower this past year, one of which apparently contained a ball from the 1919 World Series.
• In a case that will make school administrators think thrice about joining student protests, Oberlin College in Ohio has agreed to pay a local bakery $37 million after a jury found the college had endorsed students labeling the bakery "racist."

Oh, good. My laptop has finished parsing the file. (In fairness it's 400,000 lines of JSON, but still, that's only 22 megabytes uncompressed.) I will now continue with my coding.

With the death of Queen Elizabeth II, the British National Anthem has changed back to "God Save the King" for the third time in 185 years. In other news:

• The Guardian explains Elizabeth's funeral and other events that will take place over the next 10 days.
• James Fallows takes a second look at President Biden's speech from last week, in the context of the predictable reaction cycle about anything he does.
• Dana Milbank doesn't worry the MAGA folks want a Mussolini, since some of them keep going on about having a Caesar instead.
• Tina Nguyen wonders what Liz Cheney actually plans to do now.
• Matt Ford says, welp, "there are 'Trump Judges' after all."
• The Economist projects that the Democratic Party will keep its majority in the Senate come January, and probably even pick up a seat.
• Why is the United States the deadliest country in the OECD?
• Via Schneier, Facebook admitted it has no earthly idea what data it has on anyone.

By the way, the UK has a vacancy for the post of Prince of Wales, in case anyone would care to apply. I think we can bet on nepotism, though.

Her Majesty Queen Elizabeth II has died aged 96:

Queen Elizabeth II, the longest-reigning monarch in British history, has died.

Prince Charles, heir to the throne since the age of three, is now king, and will be officially proclaimed at St James’s Palace in London as soon as practicably possible.

Flags on landmark buildings in Britain and across the Commonwealth were being lowered to half mast as a period of official mourning was announced.

As Queen of the UK and 15 other realms, and head of the 54-nation Commonwealth, Elizabeth II was easily the world’s most recognisable head of state during an extraordinarily long reign.

What a week in the UK.