But rising rates are going to prevail
Next time George the Idiot Draper tells you everything is just fine and dandy, I suggest you read this post here, which I shall now bowdlerise and summarise below for those in a hurry.
The Bank of England Asset Purchase Fund Facility Ltd is a ‘vehicle’ set up to Quantitatively Ease Britain’s ‘economy’, aka save banks, inflate dividends and keep stock prices up in order to give an entirely false impression of what’s really going on. If you like, this £100 company (I’m serious, that’s what it cost the Treasury to set it up) trades in UK gilts while buying up toxic sh*t.
The simple maths are these: for every 1/100th basepoint rise in gilt yields, the fund doling out QE willy-nilly aka you and me the taxpayer loses £373.6 million in value.
Since the end of February, rates have increased by around 120 basis points. That’s £45 billion…..gone. And for the time being, gone and forgotten: rates are not going to go down, because (a) the confidence has now evaporated (b) the Japanese have gone mad and (c) the Bernankes and Draghis have taken away almost every means of making debt bonds pay. The Slog has been predicting this now for ten months.
£45bn in almost double what Draper Osborne has ‘saved’ in government spending cuts.
Meanwhile, the above stark reality explains why Mark Carnute’s wish fulfilment at the Bank of England continues: the Canuck insist that rates will be kept down. How exactly this is to be done he has not, as yet, elucidated. But the way you can become absolutely certain the situation is disastrous is to check out Jeremy Warner’s column in the Telegraph. Asking himself (because nobody else bothers to ask him anything any more) if the rate rises matter, Jezzer says, “the answer is not at all; this is in fact a very welcome development”.
‘Almost everywhere,’ he continues – my italics – ‘rates have been rising for some months now, a phenomenon which is generally dated to the US Federal Reserve’s threat to start easing back on its asset purchase programme. But, in fact, this shift in the interest rate cycle pre-dates the Fed’s announcement by some little while; both are reactions to a more positive economic environment, including abatement in the eurozone debt storm and improvements in business confidence.’
Meanwhile, outside the asylum walls, three-year yields on US Treasury Bills were almost double their average over the past year as the U.S. prepared to sell $31 billion of debt today. Ten-year rates approached 3% after reaching that level last week for the first time since 2011….amid speculation the Federal Reserve will trim its $85 billion-a-month stimulus next week.
In WarnerWorld, every drop of rain that falls brings pennies from Heaven, the mountains are made of rock candy, and every neoliberal globalist is a softie really. But in Camerlot, every dollop of rainbow-gold bullsh*t is one brainless voter closer to victory in 2015. However, there are growing signs that the entire Coalition strategy is going to come badly unstuck before then.
The 30th British Social Attitudes report, published today, records that only 18% of the population trust governments to put the nation’s needs above those of those of a political party – down from 38% in 1986. And in the 26 years since 1987′s BSA study, the proportion of UK adults saying they’re not strong supporters of any party (or not supporting any party at all) has risen from 48% to 69%. With the Help to Buy scheme very clearly using bribes that are positively disadvantageous to economic recovery, such cynicism can only worsen. And once the profundity of lies being put out at the moment becomes clearer during 2014, support will rapidly move away from this neo-Conservative government.
The question remains, where will it go? I’d be happy for it to drift over to a more community/vulnerable folks/social weal Party with some new ideas, but that isn’t the Labour Party any more, and hasn’t been for decades: the Ed Miller Band are about as fresh as Venizelos and PASOK are to Greece. And the coming tendency as represented by Tom Watson is miles away from real power. The majority of support, I suspect, will go to UKIP: and after UKIP’s support costs Cameron his head, the nastier folks behind Camerlot will do a deal with Nige the Pacifist to cobble together something hitherto unknown since around 1830 in British politics.