YouTuber Not Just Bikes shows how North American traffic engineers prioritize the convenience and speed of drivers in ways that make our streets the most dangerous in the developed world for pedestrians:
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?
Wow, yesterday went on a bit. From getting on the bus to Peoria to getting off the bus back in Chicago, I spent 18 hours and 20 minutes doing something connected with the Peoria Symphony's performance of Beethoven's 9th yesterday. I think it went quite well, and I expect they'll ask us back the next time they do a huge symphonic choral work.
Right now, Cassie has plotzed completely after two nights in boarding, and I need to figure out what I'm eating this week. So I'll post something more interesting later today.
In the meantime, enjoy this Saturday Night Live bit that will challenge even the most attentive English speakers throughout the former colonies:
We're performing with the Peoria Symphony Orchestra tonight, which means we need to get our butts to Peoria this morning. Which means I woke up way too early.
Normal posting resumes tomorrow, assuming I recover by then.
The local alderman's office sent me an update this afternoon on Metra's and the Union Pacific Railroad's stupefying 9-year mission to construct a single station platform that thousands of commuters per day would like to start using:
I spoke to the foreman this week who, unfortunately, informed me of further delays on this project. The project is still awaiting a delivery of tiles from the manufacturer who, due to one person catching Covid recently, has informed them that the tiles won't be ready until the end of the year. This is on par which many of the delays on this project, which have been due to supply chain issues.
This pushes final completion of the project closer to March of next year. We are in communication with Metra to see if they might be able to reopen a portion of the station to commuters before that date, as most of it is complete by now.
Yes, of course: the tiles. It took me a moment to realize that the foreman meant the tiles that will cover the walls of the stairwells and ramps from the street to the platform, which I expect will reduce maintenance costs. All things equal, tiles are probably easier to clean than concrete.
Looking across Lawrence Avenue at the yet-to-open platform, though, I would say it just needs guardrails so people don't fall onto the street below.
But when I'm standing on the "temporary" 10-year-old platform across the street in a snowstorm some Monday morning this winter, I'll comfort myself knowing I'm doing it for the tiles.
CNBC released a 35-minute documentary earlier this month that fairly discusses the value of cities relative to suburbs and exurbs:
A lot of this is old hat to people who follow Strong Towns or other urbanist sources. It's a good backgrounder for people though.
In related news, California just passed legislation mandating an end to local parking requirements within walking distance of transit stations. It's a start.
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.
I'm movin' out. A lovely young couple have offered to buy Inner Drive World Headquarters v5.0, and the rest of the place along with it. I've already gotten through the attorney-review period for IDTWHQ v6.0, so this means I'm now more likely than not to move house next month.
Which means I have even less time to read stuff like this:
Finally, American Airlines plans to get rid of its First Class offerings, replacing them with high-tech Business Class and more premium coach seats. I'd better use my miles soon.
I don't usually post anything too personal here, but in this case, I have a financial incentive to do so.
For sale: one 18th-century armoire. Measures 82" H, 59" W, 20" D. Disassembles into four pieces. I believe it's walnut or similar European hardwood. $1500 or best offer.
Also for sale: one mid-20th-century drop-leaf table. 27½" H, 42" W, 24" L leaves down and 47" W leaves up. Also walnut or similar (I'm not sure.) $150.
If you're interested, leave a comment. You pick them up from the Uptown neighborhood of Chicago. You'll need three people for the armoire, but it does come apart into four sections weighing between 80 and 120 lbs (35-55 kg).
I've had two parallel tasks today, one of them involving feeding 72 people on Saturday. The other one involved finishing a major feature for work. Both seem successful right now but need testing with real users.
Meanwhile, outside my little world:
- The XPOTUS seems to have backed himself into a corner by lying about "declassifying" things psychically, after the Special Master that he asked for called bullshit. Greg Sargent has thoughts.
- Pro Publica reported on Colorado's halfway-house system that sends more people back to prison than it rehabilitates.
- The Navy has begun its court-martial of Seaman Recruit Ryan Mays, accused of lighting the fire that destroyed the USS Bonhomme Richard in 2020.
Finally, Ian Bogost (and I) laments the disappearance of the manual transmission.