The Daily Parker

Politics, Weather, Photography, and the Dog

Mystery of 96-year-old woman's death deepens with new revelations

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!

Bank of England fights "moron risk premium"

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.

If you won't buy my gas, you can't have it anyway

Someone—who, pray, could it be?—apparently blew up two parts of the Nord Stream 1 pipeline that brings gas from Russia to Europe:

European officials on Tuesday launched investigations into possible “sabotage” following three mysterious leaks in the Nord Stream pipelines, built to carry Russian natural gas to Europe, after the system operator reported “unprecedented” damage to the lines in the Baltic Sea.

The damage — which seismic authorities registered as two significant underwater explosions — drew immediate accusations from European leaders that Russia was to blame. They offered no immediate evidence. But some officials suggested it might be revenge for Europe’s efforts to find alternatives to Russian natural gas or a threat that other gas pipelines that crisscross the Baltic Sea were vulnerable — including one inaugurated on Tuesday.

The leaks had no immediate impact on energy supplies to the European Union, since Russia had already cut off gas flows. But gas had remained in the pipes, raising concerns about possible environmental harm from leaking methane — the main component of natural gas and, when in the atmosphere, a major contributor to climate change. Images supplied by the Danish military showed gas bubbles reaching the surface of the water.

A senior European defense official and a European environmental official said that the primary, most obvious suspect behind the leaks was Russia. Russian officials had a motivation: sending a message to Europeans about the consequences of getting gas via the new Baltic pipeline. They also have the capability: a robust submersible program.

“No one on the European side of the ocean is thinking this is anything other than Russian sabotage,” the environmental official said, speaking on the condition of anonymity to discuss internal thinking about the leak.

I expect that the US Navy knows exactly what happened, and the Russian Navy probably knows we know, but it'll take some time for declassified reports filter out to the public. That said, if our navy knows, then we would have shared that info with the UK and most of NATO by now. I'm going to watch what the diplomats say for the next week on this.

Sterling drops to lowest price ever

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?

The value of cities

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.

We heard a loud crash in the Chancellor's office

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.

Anthony's Song

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.

How is it 5:30?

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.

Happy Friday, with its 7pm sunset

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:

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