British pound hits record low against the dollar
cnbc.com
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Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I moved house. Next year I'm likely going to need to fix at 7%. This will take my monthly payments from around £1300 to around £2600. I budgeted very conservatively when taking out my mortgage (at least I thought I did) stress testing my current finances to a rate of 5% - which was actually above my lenders standard variable rate at the time. Obviously with energy bills and the cost of living crisis my previous assumptions were already wonky, but rates going up this fast was something I would have never of predicted. I believe this is actually the fastest rise in rates ever. I don't have time to save to pay down my mortgage loan so I guess now I'm screwed lol.
I'm reading online that I was stupid for buying a house in a bubble and that rates need to go up and house prices need to fall. I do understand this is my fault, but it sucks because I've also let my family down big time by deciding to buy a house. I'm not sure of the exact numbers, but I believe around 500,000 people are in a similar position to me.
Also if had brought my house several decades ago I'm sure I wouldn't be in this position right now. It's lose, lose for my generation. You either rent at stupid prices and own nothing, or you take a gamble and buy a house. I understand why people blame me for this, I just don't know what more I could have done. I didn't buy a house at the limits of my affordability unlike some do (and are basically forced to do). I'm also quite well read on financial markets so for me to make this mistake I think probably says something about how easy such a mistake was to make.
I like to take a stoic approach to my decision making when I’m in a situation like yours. If you need to sell your house and move into a flat for a few years before you repurchase a house, no big deal. As long as you’re trying your best, I’m quite confident that someone like you can give your family what they need. That’s all that matters.
I've been paying 'over the odds' if you look at how interest rates have since turned out, as you mention most people paying around 1.5->1.7% for many years, and so I've often seen myself as 'losing out'.
However, I fixed the rate to ensure I had a known amount of expenses that I could afford.
Neither is 'stupid' - they just have different volatility and risk.
The issue with fixes is that you pay a premium for fixing longer term and you also risk interest rates being lower going forward than you fixed for. A lot of the fixes also have early repayment charges and the longer-term fixes can have very large early repayment charges (5%+). This introduces a new risk because if you need to sell your house for some reason during that fixed period you would have to pay a large fee just to exit the deal which isn't great if you've only just brought your house and don't have much equity to fall back on.
So given this I was fine with taking something closer to a market price on the assumption that rates wouldn't sky rocket over the course of the next couple of years. That why I'd have the ability to get out of my mortgage if I ever needed to.
> Neither is 'stupid' - they just have different volatility and risk.
I agree. What upsets me a little is that I don't think I was making a reckless move. We've been thinking about moving away from the city for some time so a longer-term fix was quite risky for us, although if you're sure you're going to stay in your house for 10+ years that's obviously the way to go if you want to reduce the risk of rate rises.
I believe in the US there is no early repayment charge on mortgage in which case it probably always makes most sense to take a longer-term fix.
this is the essence of the interest rate swap (which is what you're actually buying when you "fix")
the person on the other side of the transaction is betting that the rates will rise, and you're betting that they won't
> A lot of the fixes also have early repayment charges and the longer-term fixes can have very large early repayment charges (5%+).
this is the fee for exiting the swap early, which has to exist otherwise person who bought the other side would never be able to make a profit on it (and hence no-one would ever write one)
That's not to say fix deals are always bad, it really just depends on circumstances. There's no free lunch here and those suggesting everyone should be taking 10 year fixes (where they're available) are suffering from recency bias. There's now a huge risk that those taking 10 year fixes will be locked into much higher rates should they come down over the next few years, which is very possible.
That's just the UK market though. I believe in the US long-term fix rates make much more sense because you can refinance without incurring fees so if rates do drop you can just refinance.
There's really no good options. The right answer would have been to try to find a 10 year fix when I took out the mortgage but as I've explained in another comment they're very unfavourable for many reasons in the UK. You basically pay a premium on current market expectations for the fix and have early repayment fees were you to want to sell your home.
I suspect if you calculate the expected average interest rate over the length of your ownership and the fixes (2-3, 5, 10) you'll get a similar number even with higher volatility in the specific rates. But you'd have to run the numbers/math.
This of course does nothing for the many 12-24 months of higher payments even if it evens out over time.
Do not despair; watch for hints of a coming bailout. Bankrupting half a million voters has to look like poison to elected officials.
One more economically rational option in future, for example, would be imposing a principal "haircut" on lenders, down to some assessment of the by that time reduced market prices of comparable homes.
This rise in rent stops as soon as unemployment starts increasing, which in the US it already has.
You (UK) keeps using that word (fixed). I don't think it means what you think it means.
Also, I'm really sorry you're in this position. One of these days we'll figure out something better than Capitalism.
As I understand it, what the US considers a fixed rate mortgage simply doesn't exist in most countries, so it makes some amount of sense that the term "fixed" gets used for the next closest thing.
The best option you have in the UK is generally a 2 year fix because the fees and premiums are more reasonable. If I could take a US style mortgage I would have obviously. We just don't have that option here unfortunately.
It's hilarious though because you see so many articles written by "experts" here in the UK suggesting people take out fixes to protect themselves from rate moves, but a 2-5 year fix basically offers no meaningful protection. I'm not against people taking fixes, but I just wish they weren't sold in the way they are. They're barely safer than trackers and depending on your circumstances, you might actually be better with a tracker in many cases. As I said in another comment, people fixing for longer periods today may not realise they're locking themselves in to much higher rates for years and will be unable to switch to a better deal or sell their home without incurring large fees. The price you pay for that marginal safety really needs to be considered carefully.
I was very happy to get a <2% fix for five years last year. I don't consider myself "locked into a high rate" because the rates are asymmetric: interest rates get weird towards zero and you're never going to see a negative nominal mortgage rate.
(as rates tend towards zero, house prices would tend towards infinity)
Everyone looks "stupid" afterwards when something "everyone knew would happen" actually happens. The problem is that NO MATTER WHAT, there's someone who predicted this exact case and everyone forgets that wider consensus, etc was the other way moments ago. Even the "inflation is going to explode" people thought this was going to happen 2+ years ago (like myself) so it's easy to be right eventually.
> I do understand this is my fault, but it sucks because I've also let my family down big time by deciding to buy a house.
Cut that out. You haven't.
Tell your closest family members your concerns. They're not as close to the specifics and may have different perspective or at minimum can help you emotionally. Try to get help now - even if it's just moral, not financial - before things get ugly.
The political consequences should not be underestimated. Parent is actually taking responsibility, something I doubt many in the same position will. There will be scapegoats.
Would you rather have perpetually increasing housing prices?
Wouldn’t that be even worse for your younger and future family members?
I don’t think you’re stupid, but this does seem like shortsighted thinking.
(I do hope you manage to get through this as unscathed as possible)
Well that's the problem. What do you do? Rent and wait for a crash that might never happen or just buy and hope it works out? Both are a huge risk. Those who waited in recent years now have to buy at much much higher prices.
> Wouldn’t that be even worse for your younger and future family members?
I want rates to rise and for housing affordability to come down. I even planned for that. What I didn't expect was for rates to rise 6% in a year or for there to potentially be a housing crash so soon after I brought. My house not decreasing in value with a slow increase in rates would have been fine.
> I don’t think you’re stupid, but this does seem like shortsighted thinking.
Yeah, perhaps. I just wish everyone who knew this was going to happen was around a couple of years ago to talk me out of it. Honestly it seemed like everyone was of the opinion that buying a house was generally a good financial decision until a few months ago. Now everyone is telling I made a stupid decision and should have rented. I don't know what to think anymore.
I did try to calculate affordability under reasonable circumstances. Most people two years ago would have recommended checking that you could afford interest rates to normalise to 5%. I could (with a bit of a buffer) and if they were to go higher over say 5 years that would have been fine because I would have time to pay down my mortgage and hopefully would be making more by then. What I didn't account for was the huge increase in energy bills, cost of living plus interest rates going above 6% in a year. I know I should of and apparently people did, but I'm still not clear how I was meant to predict the largest affordability crisis in UK history.
Not making excuses though, I feel upset and annoyed at the timing. But ultimately I just feel like a failure for letting everyone who relies on me down, and that's my doing.
Hope this doesn't come off as me making excuses, I'm just trying to explain my perspective. I wasn't trying to gamble on house prices going up or knowingly making a risky bet as a lot of people have been suggesting to me recently. I was just trying to buy a house for my family.
Why do you believe that?
https://www.propertyinvestmentproject.co.uk/property-statist...
Also, none of these stats ever adjust for affordability. People like to cite rates in the 70s but forget that people borrowed much less on their homes back then so the impact of rate moves wasn't so extreme. When adjusted for affordability this is without a doubt the largest move ever. You have to consider that first time buyers today frequently take out mortgages with just a 5% deposit, and often use all of their savings to do so. They have no buffer.
The sad thing about all of this is that I'm probably in a relatively good position compared to most buyers given I have some savings and didn't take out a 95% debt/equity mortgage.
Also, for a long time, 100% and even 105% mortgages were common. I remember that when property prices nose-dived, we had people on TV being interviewed and complaining that they were "now in negative equity" as though that were something that had been done to them. These people started in negative equity by taking out a loan for more than the value of the property at the time of purchase.
With all that said, you're 100% correct that higher rates are going to cause real pain now, just as it did then. I don't accept that it's going to cause unprecedented pain, because to do so is to dismiss the very real problems that many many people had back then.
PS. Your strongest "unprecedented" argument would have been that the percentage increase in rates is bigger than ever before. 5% is 250% of 2%, whereas 15% is "only" 200% of 7.5%. But then it's easy to grow hugely when starting from a very small baseline.
I don't think you're stupid. You couldn't have foreseen the sequence of events that has produced this situation. For what it's worth I did a very similar stress test, with similar assumptions, when I bought my home. I feel like this volatility is something of a rude awakening for our generation.
What does the 500,000 figure represent? There will be many people whose fixed-term mortgage rates expire in a now much higher-rate environment, including those on longer-term fixes negotiated before the pandemic.
Thanks man. At the end of the day a mortgage is always a risk and you can only be so conservative with your expectations. People have been predicting rates will move up for years, but I'm not sure anyone predicted rates would move up 6% in a year and a half even if in theory it was possible.
> What does the 500,000 figure represent? There will be many people whose fixed-term mortgage rates expire in a now much higher-rate environment, including those on longer-term fixes negotiated before the pandemic.
There's a lot of people who will need to fix at a higher rate in the coming years, but most I suspect are at little risk. If you owned your home for 10 years you've already paid down a lot of the mortgage and you were probably used to modestly higher rates anyway.
Here's a chart: https://pbs.twimg.com/media/FdlyDZhWAAI95pl?format=jpg&name=...
Where the risk would be is new buyers with a high percentage of debt / equity who brought over the last couple of years who now need to move to a much higher rate. I believe that number is around 500,000, but I've not seen an exact figure for that. It's somewhere around that though from the numbers I've seen.
Higher mortgage rates generally obviously aren't great for anyone though. Even if you can afford it your mortgage payments going up it will still mean you have less to spend elsewhere.
Having lived through, and lost all my shit, in the last financial crisis as a young man I'd also like to say something more directly to you. You did not let your family down. You thought you were making a good financial decision to help secure their future. Nobody, no matter what they tell you, can say they can predict bubbles. More aptly put, your nations economics, and predictions thereof, do not rest on your shoulders.
The governments of the world will have to step in. Pay attention to government run programs to protect you during a recession. If you do default or get foreclosed on keep all of your records. I fled real life and joined the military after defaulting on my debts. In my last year of service I challenged the total of my debt as reported by creditors and won because they couldn't prove custody or the amounts.
There's a long wind between "oh shit, things look they can be bad" and "oh shit, I'm fucked". Don't jump on the latter outlook just yet, try to ride this out and look for opportunities that will help you safely navigate these times.
But yes, ARMs are basically the entire UK market. We don't have long-term fixes like in the US. The longest fix we have here is 10 years and they're quite rare. Overwhelmingly borrowers go with 2, 3 or 5 year fixes. I believe the US is a huge outlier in that the majority of your mortgages since the GFC have been 30 year fixes.
Things are very bad right now, but I'm still exploring options. It's possible at this point that we might still get through this if we're extremely careful with money (as in beans and rice every day for the next two years) and rates don't go any higher. It also assumes I don't lose my job which is at risk because of the recession. I'd like to say it's 50/50, but realistically there's probably a 20-30% chance I'll be okay at this point which isn't ideal, but it's still a hand worth playing.
I would bet against the government stepping in because here in the UK you have renters who hate homeowners, and boomers who typically own there homes outright and therefore tend to blame people struggling with mortgages because in their day rates were 10% (obviously this is never adjusted for affordability, but still). Either way there is close to zero political incentive to help millennials who brough homes in the last two years. Nor is there any precedent to helping home owners in my position. Our new PM is also a bit of a Thatcherite and may actually be trying to raise rates with her economic policies which I think is part of the recent the market is reacting as it is.
Honestly I doubt there's really a way out if things go against me any more. I'll have to declare bankruptcy and take it from there I suppose. I'm trying to stay strong, but I don't deal with stuff like this well. I don't even know if I want to deal with it. There's no reward at the end, it's just more suffering.
Generally selling your home every time you fear that rates and house prices might move against you isn't a good idea. I mean you could have argued the same thing earlier this year when rates started to move up, so where you set the limit is hard to know. That's just the risk of homeownership I suppose. Unless you're in a very fortunate financial position for the first few years you just need to hope the market doesn't move against you enough that you become a forced seller.
I still think our best bet at this point is to just hope that this move in rates is temporary or that we'll just about manage through if they stay where they are right now. My plan at the moment is to see how things play out over the next couple of weeks. If rates continue to move higher over the next several days then, yes, I think we'll probably need to sell. But realistically it might already be too late. Given the panic right now realistically we may not be able to sell our house in this environment and in the state our house is currently in. Most lenders have withdrawn all mortgage deals because of what's happening in markets.
The thing people are not talking about yet is that it's not just mortgage borrowers at risk here, it would be very hard for rates to go much higher without it bankrupting the UK economy. Government borrowing costs are going through the roof right now so realistically higher rates would present a systemic economic threat when public debt is this high. The government themselves simply couldn't afford rates going to say 10%. The only way out if rates go much higher is massive currency devaluation which would be good thing for borrowers.
But that's just the rational part of my head thinking about this situation. The problem is this was caused by extremely naive fiscal policy that the markets are now punishing. Assuming the government is a rational actor isn't a bet I really want to take. Especially when the current tory leadership seems to be ideologically in favour of higher rates and lower taxes which simply can't work right now.
I realize selling now and taking a huge loss is not something that seems feasible but it’s worth trying to understand what adverse scenarios look like. If you truly can’t pay and the house gets reposesed what is the process? What are the consequences? Can you delay it for long enough that the system gets bogged down with other people getting foreclosed before you? Try to think of this like you are a corporate CEO. You need to position yourself into such a scenario that you limit your losses if things go against you and know when you walk away.
I don't mean for that to seem harsh, but it's just wrong to expect government help all the time. Especially for a readership on Hacker News, we should be pitching financial literacy.
What you're describing is known here as an ARM (Adjustable Rate Mortgage) and they are a very scary thing because you never know for sure what the macro economic situation will look like.
The interesting thing this week is that the most fragile and indebted country that the EU has bailed out for 30 years straight (Italy) has elected a govt that doesn't like the EU. Good times ahead.
If the UK travel industry does benefit from the cheap pound, it probably won’t have any effect until next summer.
London weather gets bad rep but I find it pretty good. Rarely goes below zero degrees Celsius and is rarely so hot that you struggle. I actually prefer London weather to central/south European one for example. More consistent, pleasant all year round. This is all personal though...
When I was in Paris a local informed me that Paris gets more rain than London. I suspect though London rain is more spread out throughout the year.
Maybe it's for the best: hiking trails not being extremely crowded during the warm seasons makes tourism more enjoyable.
The NHS is also using private clinics to help clear backlogs - so even private insurance can lead to a long time to see a consultant.
Ambulances also do not have good response times.
[1]https://www.kingsfund.org.uk/projects/urgent-emergency-care/...
I always hear and read complaints that the US doesn't have a single player public option for health insurance, and that it makes our country one of the worst.
Other nations with "good health care" seem to pay their workers less, have higher taxes, have long wait times at the ER, weak militaries, etc. Something always seems to give.
How would you rank and quantify the various medical systems of the world? Where does the US fall? Why, and how could we make it better?
I'd like to be better informed about healthcare as a matter of policy and how it fits into the bigger scope of government spending.
Germany for example had pretty decent healthcare 10 yrs ago, then a few regulations were passed and it's been doing downhill at a staggering pace.
Nowadays hospitals prefer amputations over simple treatments in diabetes cases as a pretty well known example, as it's me profitable.
There's always going to be some trade-off of course, because resources are never infinite. But preventative healthcare is a lot cheaper and better for quality of life than waiting until limbs need to be lopped off.
But in recent years, it's been struggling, certainly it wasn't high on the conservative govt funding list, and COVID caused extra burnout. Winters we're always tough, and this one is thought to be especially so.
It is unclear to me if it is a lack of money or poor spending.
Are these conclusions based upon some sort of systematic analysis of yours?
There is also a believe that the NHS is a single national entity, which is not the case. Both Wales and Scottish have a national trust whereas England has 100's, totally 217 trusts as of April 2020 [1]. This does not allow for combined purchasing power, shared resources and causes duplicate effort in almost every area.
How about dentistry? Seems odd that for the most part that's not covered under the NHS. It wasn't until adulthood I understood all the jokes about British peoples teeth!
My hope is that we can move to another model that is directly free to the end user, reduce the eye watering waiting times and put the almost £200B annual funding to good use.
For anyone who's spent a significant amount of time in the US this shouldn't be too much of a surprise. Middle and upper class Americans have access to excellent dental care, but if you spend some time in the poorer parts of town, you'll see plenty of people with missing teeth and other severe dental problems. NHS dentistry is poor, but it's better than nothing (which is what a lot of poor Americans effectively get).
There's also the aesthetic aspect of it. Europeans in generally tend to be culturally less interested in tooth straightening and whitening.
> does someone have a good read
The question is complicated enough that any writings on it will inherently have a bias since there are so many details that are easy to ignore in your favor
It bears repeating for the zillionth time that the US spends more public money on healthcare as a proportion of GDP than the UK.
What is a "weak" military for you, and what does it have to do with healthcare? The UK has aircraft carriers and nuclear submarines (including 24/7 nuclear intercontinental ballistic missile patrols). Only an ignorant American (and maybe Russian) would consider that to be "weak", because they're so used to the militarised culture and massive spends that everything below blowing half the budget on tanks is "weak".
As has been said many times, the US spends more public money on healthcare, per capita and as % of GDP than everyone else, and had some of the worst outcomes (infant mortality, birth mortality, life expectancy, etc.) of all the developed world.
It's not a matter of how much, but how. The US system has middlemen to manage the middlemen and mind boggling prices and practices. Other systems are underfunded or with corruption here and there.
Would you prefer to wait 2 months to see a non-urgent specialist doctor for "free" or have it in a few days, but billed $60k hoping your insurance covers it? I know that most people prefer not being bankrupt over speedy non-urgent treatment. And US nurses are still paid shit for terrible working conditions, so it's not like it's them getting the extra money, it's mostly at middlemen and to a lesser extent doctors.
The solution to the problems exhibited in systems such as the NHS are more funding and focus (e.g. helping more students get to doctor/nurse positions to ease the burden).
How are you measuring wait times? How are you defining Emergency Departments?
In England there's a 4 hour target for people to be seen, treated and then discharged (or for a decision to admit to be made). Currently the English NHS is meeting that target for 75% of all attendances. This has declined from a 95% rate a few years ago, and it's seen as a massive problem.
https://www.england.nhs.uk/statistics/statistical-work-areas...
Best explanation I ever heard for that phenomenon
At the same time it was made much easier (at lower interest rates) for southern European countries to borrow money from northern European countries and other markets, as creditors would feel more secure that they'd get their money back. Creditors would assume the northern European countries would bail-out southern European countries in case of problems.
And that caused southern European countries to lend more which might benefit a country like Germany again. These countries could lend more easily to buy luxury cars, for example.
Generally speaking, access to cheap debt is seen as a uniformly good thing.
But this is the same as drug dealer saying their dead customer was not responsible enough. Yeah it true, but some people just are not responsible for their own actions and the dealer was happily benefiting all the time from him
I'm not pointing the "overspending" finger either, just saying, countries should take responsibility for their actions, not complain at the enablers.
What am I missing?
Except that the dead customer still owes 590 billion to (mostly) the drug dealer mentioned above and won't be able to pay it.
And the goods delivered were not drugs but things that usually don't alter your way of thinking (like cars, machines, ...), even less if we're talking about a group of people (like the government or a country of 60mn people)
Oh and there was also trading (i.e. delivering goods back), so Italy is not only consumer but also producer.
Which is why the weaker currencies were a much better fit for Southern European countries. Creditors would expect a high interest, due to high inflation, thus limiting the politician's ability to borrow money.
I do feel northern Europe (especially Germany) is partially to blame, since they were very much interesting in increasing their exports and the Euro was the enabler.
This does not absolve the politicians, nor the electorate.
They both share the blame. If a bank clerk keeps giving loans to a drug addict something is definitely off. Especially if it suggest settling the debts via organ sale (austerity).
But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.
You can google for longer explanations of why a weak currency is excellent for exporters, this is well established.
When a country's currency appreciates in relation to foreign currencies, foreign goods become cheaper in the domestic market and there is overall downward pressure on domestic prices. In contrast, the prices of domestic goods paid by foreigners go up, which tends to decrease foreign demand for domestic products.
A depreciation of the home currency has the opposite effects.
It contradicts directly your claim that exports don't get cheaper. You're saying exports remain the same (because they don't get any cheaper), and that the only change is an increase of corporate profits at the expense of wages.
[1] https://en.wikipedia.org/wiki/Currency_appreciation_and_depr...
> Export dependent nations may actively encourage a weak currency in order to boost their exports.
> A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets
Where does it support your claim that a weakened currency does not affect the price of exports?
It says the exact opposite. Exports increase because they become less expensive:
> A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets
>But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.
Another thing is that if production costs go down (although you don't say why they're going down, it seems a random assumption on your part), then competition among exporters will drive the price of exports down. I mean, this is Economics 101.
I spent 5 minutes googling this out of curiosity and could only find published claims in favor of the orthodox "weak currency boosts exports" idea, for example "Export dependent nations may actively encourage a weak currency in order to boost their exports." [0] or "Exports become cheaper when the currency of a nation is weak."[1]
[0] https://www.investopedia.com/terms/s/weak-currency.asp [1] https://thebusinessprofessor.com/en_US/economic-analysis-mon...
If there are published claims to the contrary, I would be interested in reading them.
Lira pesante Due to the lira's low value after the war economic calculations and price displays became unwieldy because of the large number of zeroes. As early as the 1950s suggestions were made to redenominate the lira but no serious efforts were made at that time. In the 1970s a plan known as lira pesante [it] (English: hard lira) or lira nuova (new lira) was proposed. The lira pesante would have redenominated the currency at 1,000:1, removing 3 zeroes. However the project went dormant for several years before being revived in 1984. Ongoing heavy inflation saw the lira pesante pushed back until it was permanently abandoned in 1991 because of plans for a single European currency.
They had large pension and state-payroll obligations, and they couldn't cut that spending and stay in power. Greece tried to cut it's spending, and the government was ejected. The new socialist government was then destroyed by German bankers and politicians.
[0] https://www.xe.com/currencycharts/?from=GBP&to=USD&view=10Y
If someone has more up-to-date numbers I'd like to read them, but I don't think describing Italy as getting "bailed out for 30 years straight" is accurate unless I'm missing something here.
I'm pretty sure we are in a phase where corporations and authoritarians have coopted the political engagement of lower socioeconomic classes thru identity and economic issues vs the traditional labor base of unions which is a threat to personal safety and democracy world wide.
https://www.xe.com/currencycharts/?from=EUR&to=GBP&view=5Y
The Chinese yuan and Japanease yen are also both at their lowest value vs the dollar in recent years, and moving faster than they normally do.
For each of these (UK, EU, China, Japan) there are local conditions you can blame the currency depreciation on, but given the number of major currencies depreciating rapidly vs the $ I think it makes more sense to look at what the US is doing as the simplest explanation.
It's mostly the ECB and BoE - and local pension funds mandated by local governments - so foreign investors are irrelevant.
General investors usually prefer low rates because they want their asset prices to be inflated.
But for investors choosing between a basket of interest bearing sovereigns, they will choose the bond that has the largest risk adjusted rate of return 101% of the time.
This is what you are seeing in exchange rates, the exchange rates are swinging to normalize this risk. (ie. There is an appropriate amount of premium in investing in USD that balances the currency exchange rate risk of the exchange rates swinging back on you.)
The percentage of bonds bought by this type of investor is so small that the ECB, BoE, BoJ, and FED aren't even giving them consideration.
The only reason anyone in their right mind would buy a 10-year treasury from the BoJ at negative interest rates is if they feel like the BoJ will eventually buy back the worthless bond from them for even more money than they bought it for originally.
Traditionally, this has been a pretty safe bet - because the entire economy of Japan is dependent upon the BoJ paying people endlessly more money for the same worthless garbage...
They’ve specifically weakened their currency to juice their economy (and they are lowering rates).
Basically, nobody thinks that Kwarteng's extreme tax changes make any sense. Not even in his own party, apart from a tiny gang of nutters. He's planning an enormous increase in government debt, so he can give money to people who already have too much. His tax-cut plans are inflationary.
Meanwhile, the Bank Of England has a mandate to keep inflation within a window that it's already moved out of. So the Bank is required to increase interest rates. Kwarteng and the Bank are therefore pushing in opposite directions; Kwarteng's moves will tend to heat the economy up, interest rate rises will try to cool it down. I wouldn't be surprised if rates rise to 15%.
So the rich people who benefit from these tax cuts will invest their loot overseas (or in property); and overseas investors will steer clear, until we've got rid of these fanatics.
Truss/Kwarteng have no mandate for this nonsense; the only mandate they have is to "Get Brexit Done", and it's done. So the government is now skiing off-piste. It's disgraceful that this gang of crazies have managed to take over the government on the strength of the votes of about 80,000 Tory party members, without ever presenting a manifesto to the nation.
100% this, it’s utter madness. I had the same thought this morning, both acting in opposing directions.
If it keeps going for weeks at this rate, then it is a big deal, of course.
I think that the last five years have been bad for sterling, and the last five days are a big part of that.
For the UK the consideration is that this basically happened as the Chancellor announced his intent to fund huge tax cuts for the wealthy by borrowing. You don't need a whole lot of specialist knowledge to figure out that means the government has to sell more bonds and isn't in a position to reject higher prices for those bonds, which puts a downward pressure on Sterling.
Not lower? Or am I misreading it?
https://tradingeconomics.com/commodity/eu-natural-gas
And yes, removing the higher income tax band will have little impact on the economy overall.
In the current volatility, which is lasting since a year now, a trend of a couple of weeks means absolutely nothing in my view…
How much worse would it have been if there was no intervention in energy and we had riots on the freezing streets this winter?
As Macron said 'we are at the end of abundance'
To future readers; the last days of abundance were great!
On Monday 26th September 2022 we could buy a £25.00 Raspberry Pi for only £49.00 on eBay. A 250g tub of Lurpak (butter) was only £2.50 and you could buy it in lots of 'shops' just using 'money' without a ration card and gold level social credit score.
The iron law of Krugman strikes again. I really need to start trading on this.
But he is wrong? No one expects an economic argument to call the exact bottom to the date. If the sterling keeps weakening for two weeks more, I'll call him wrong. The other things he said, about the foreign debts and the likelihood of not paying, seem obviously correct to me.
But you can just feel his ego through his tweets "I'm supposed to know something about currency crises — I did invent the academic field!"
It doesn't follow that he can make money trading it.
He's saying that a devaluation won't kill the country because the debt is denominated in Pounds.
That seems like a strange clarification. If he's predicting the Pound wouldn't decline - he'd say that.
Not say that if it does decline, it won't be a problem...
That implies it's a possibility. It just won't cause a crisis if it happens.
https://twitter.com/paulkrugman/status/1573656086716071937
"The moron risk premium has now been priced in". That is, he believes the currency depreciation is substantially over.
He is also saying the thing you're reading him as saying too though.
It's not a crisis to have a devaluation.
Taleb loves making fun of economists. One of his jokes:
Trader comes to manager and told him he lost 10 mil because he bought treasuries since the bank economist said they would go up. Manager fires him. Trader asks why, is he required to always win? Manager says no, I didn't fire you because you lost money, I fired you because you listened to the bank economist.
Judged by peers he's still quite valued eg by this ranking: https://ideas.repec.org/top/top.person.all.html (rank 36/3255) - but of course in academic research you don't necessarily aim to be right as often as possible, it's a search and exploration of ideas and testing what works.
That seems only fair to me. If he doesn’t want his predictions to be judged by lay people, he can do what most academics do and stick to writing for their peers.
Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?
Corruption.
I've heard rumours about Kwarteng being involved with Hedge Funds that have now made a fortune by shorting the pound and to be honest, that makes more sense than any other explanation.
(There was some stated nonsense about reducing tax bills increasing growth, but trickle-down economics has never been proven to work and they weren't interested in that)
No government with morals could do the sort of borrowing + tax cuts that the Tories are doing. That means down the line a moral government has to be austere and have higher taxes, and so the people will just vote in the Tories again. Only complete societal collapse will stop that cycle ...
Ergo having a climate change denier in charge of business and energy is a good thing! /s
My guess is scorched earth. BoJo is such a disaster that his own party had to remove him - and even that turned out to be a struggle (getting rid of leaders with challenged hair seems to have been a struggle lately on both sides of the pond). He became that unpopular.
The crew that have replaced him have no chance of winning the next General Election; Truss has even said that she knows she's unpopular, and doesn't care. So by running up the debts, they set a minefield for the next Labour government, which will have no alternative but more austerity. So I guess the Tories are planning to win an election in 7 years time.
Oh, it was tested: in 1972 the Conservative government tried this, and it didn't go well.
The dollar is extremely strong, but the bank has been sleeping on the job a bit as well. They're going to have to raise rates sharply because it's become such a no brainer short now. But hey, at least UK interest rates are returning to trend now.
It's almost as if you can't run Reagan-style deficit spending when you don't control the world's reserve currency.
Not necessarily saying I agree, but useful to have an alternative perspective
The US is experiencing inflation because, across a number of categories, there is not enough supply of goods and services to match demand. This is due to things like “we built hotels for normal business travelers but now we have digital nomads” and “we are not really utilizing public transit anymore so more people want cars” etc.
Other countries are facing the same problems but worse (partly due to the war in Ukraine, among other idiosyncrasies) so the dollar becomes stronger relative to those currencies.
Keep in mind, the value of a currency in forex is usually “I need to buy a Euro because I want to buy something from someone who only accepts Euro.” So a factory shutting down in Germany (in a round about way) makes the Euro less valuable.
The problem is the damage Jerome Powell is intentionally doing to the economy in the name of fighting inflation.
Goods production is down.
It turns out the bitcoin theory of inflation is wrong.
But I agree with the above sentiment anyway, same could be said for the Soviet Union and in many ways, Russia today.
Despite relying on them being willing to sell us energy, as non-single-market countries have no guarantee of access?
The USD is strong, but that's only half the story here. Just look at EUR vs GBP since Brexit: down 20%. We're doing 20% worse than Europe, an economy with the same issues around energy as ours, plus no real decisive government and which just finished dealing with a debt crisis and a migrant crisis.
We weren't on the Euro when we were in the EU.
If you're just saying that it is not possible to know for sure whether Brexit is the cause of the 20% decline, well, you're right. Seems like a reasonable hypothesis though.
[1] https://www.google.com/search?q=gbp+to+euro (and set it to 5 years)
While your core conclusion may not change, you shouldn't do that; strength of currency is not a straight number you can use to measure the strength of an economy like that. GDP change would be better and I still think that one stinks too. Despite the use of the word "strong" it is definitely not the case that economies want their currencies to just be as "strong" as possible as you might think from the connotations of the word "strong".
In this specific case it's not really a "strong dollar/energy crisis" story – the proximate cause is a massive overnight shift in UK government fiscal policy to "let's cut taxes and not spending, and it will all work out" that's obviously spooked everyone.
However, I'm from the UK and don't include myself in your "massive arrogance" statement. It just appears inflammatory.
It took a hit from Brexit of course, but peaked shortly before that.
The plunging pound does not help the financial services sector, it hurts it. Then there is Brexit which seriously hurts both the manufacturing and financial services sectors.
So the UK can increase manufacturing but it will be a long hard slog after they intentionally and continuously gutted the sector for the last 30 years.
Blame loss of manufacturing on globalization and the rise on China more than anything else
Its time for a Land to the Tiller type manifesto.
So the last government that was elected with a proper programme had exactly the opposite economic policies to the present unelected shower of deadbeats.
Is it just that war in Ukraine have made investors ignore the huge inflation in the dollar?
Maybe after the midterms the dollar could have a crash if the democrats lose?
If you look at St Louis' Fed plot charts, you see that if the relation was as prominent as it's made up to be, we would have had inflation for the past decade. This hasn't been true.
A wide majority of the money printed has actually gone to institutional investors and the financial markets, which have experienced a so-called inflation (in a sense, because by definition inflation is only concerned with consumer goods).
The dollar is winning against the euro and pound because the dollar still remains the world reserve money, a very important role the US government has defended since the end of world war 2.
Inflation in Europe is in a large part a supply shock with deep industrial ramifications. Since there is no russian gas anymore, there's been a scramble to buy it wherever else, often at a premium, which debases the currency and leads to inflation as gas is key to energy generation and important industrial processes, notably in germany.
The US enjoys a relative self-reliance energy-wise, which is important for domestic stability, but also allows the US government to sell energy abroad, reinforcing its currency comparatively.
Anybody talking about 'M1 money' know this btw, and just try to bullshit around to fit their narrative.
Having a country's money devaluate mean that investors aren't confident of the future value of the production of said country. You can devaluate by having high inflation compared to your neighbors, but in this case I'd bet on a confidence crisis. I didn't follow UK politic too closely but they recently ousted their PM? And the Ukraine war doesn't help with confidence. Also the trade numbers seems to not have recovered from COVID-19, unlike most EU countries, which cannot help.
Edit: Ahh, tax cuts and concern of larger deficit.
My understanding is that they never intended to leave the common market but to gain a trade deal that would leave market access substantially the same. However, the EU wouldn’t let them keep access in the divorce if for no reason other than as a cautionary tale for other member states. So, it turned ugly and there they are.
Now introducing any level friction of trade quickly moves trade to somewhere else if price is competitive and there is less friction.
From my outsider’s perspective, the EU’s justification is far stronger than a “cautionary tale”: a Union means a Union. No other country or state structure in the world allows its constituent members to carve out only the bits that they themselves like; that would subvert the entire point of the Union.
The EU more or less does exactly that with Norway, a non-EU country with common market access and freedom of movement etc. That was the model I recall being promoted for a UK/EU relationship. They never intended to leave the common market or eschew all regulatory commonality.
The UK also regularly complains that the EU won't let them opt-out of ECJ jurisdiction in any trade deal negotiations, which is pretty basic as far as a deal goes. US trade deals demand ISDS processes which are arguably worse, and the WTO has its own court jurisdiction for trade disputes under its treaties. All global trade requires an agreement as to who can sue where for what, which means surrendering some sovereignty.
Britain is too proud to agree to that. It would have been very hard to explain to voters why UK resigned all its influence in the EU but still has to follow all the rules. And anything else meant losing access to the common market. This was explained many times during the Brexit campaign and subsequent years of confusion, but somehow the idea persisted that UK would eventually get an exception that breaks the fundamental design of the common market by allowing one country to produce goods and services that don’t follow the common market’s rules.
They refused, because that would effectively mean they still have to follow all the same rules, but now without any say in how they're decided.
But turns out you can't just demand all the benefits of a club without following any of the obligations and now the UK is where it is.
People were being sold a lie and they believed it. The optimum relationship with the EU was always the one they already had, membership with a few extra carve-outs.
That is how some people advertised it to yes voters, but from the start May's and then Johnson's government were clear that they would not accept freedom of movement or the jurisdiction of the ECJ (both of which Norway has). And even if the EU was willing to do another Switzerland (unlikely), that _still_ has to accept freedom of movement and, well, something that, while not the ECJ, could easily be mistaken for it in a dark alley.
And the EU did offer the UK various flavours of "a non-EU country with common market access and freedom of movement etc.", according to the news in the UK at the time.
Those were all turned down by the UK government. What you're describing was called by many a "soft Brexit".
As you may recall, there were many voices demanding a "hard Brexit" instead. In the end, the hard-Brexiters won by political strategy. I don't think they were even in the majority.
So I don't think it can be said correctly that "they never intended to leave the common market". The UK wanted some trade benefits of the common market, but they also wanted something they could sell politically as a "hard Brexit". That meant a lot of things had to be seen to be changed, and also it required "freedom of movement will end" - that is, the UK in the end insisted that it be nothing like the Norway or Switzerland models.
Pretty much every sticking point of the UK/EU negotiations boiled down this. And the stated reasoning was an "I'm Me" argument. The UK deserved sovereignty because I'm me. The UK deserved market access because I'm me. The UK should not lose access to their cake just because they ate it because I'm me. The UK deserved no border in the Irish sea and no border in Ireland because I'm me. Absolutely no effort was spent on meeting the EU halfway or, at the very least, trying to adopt a negotiating position that was not immediately poked full of holes by random Internet commenters.
And, for what it's worth... the UK never intended to leave the EU at all. Brexit was a sham vote intended to go the same way as the Scottish independence referendum. When it blew up in David Cameron's face he basically jumped ship and handed UKIP the keys to the country.
This is the problem with antiglobalism: it has yet to suggest a viable alternative to the thing it is fighting. Putting up borders and trade barriers everywhere means rolling back everyone's living standards to the 1970s; but it does not matter because the antiglobalists would become richer in the process. In a sense, the UK's negotiating position was less "we want market access and a trade deal" and more "we want you to unconditionally surrender and join the new British Empire".
As the UK is demonstrating, it was always possible to leave simply by giving notice, and it's possible to negotiate a new arrangement.
The "I'm me" refers to the UK wanting its cake and eating it - by not meeting the EU half way in the trade relationship, of course the UK does not get the benefits either, but they assumed they would get similar benefits.
Sucks for those of us who live in the UK. We've basically lost a bunch of rights and privileges. For the individual person in the UK I would say we have less personal sovereignty now than we did before, just because there's less we are free to do with our lives than before. For UK businesses that trade with the EU - and this includes IT contractors - there are considerable barriers to trade now as well, which are causing customers in the EU to be increasing disinclined to bother with UK suppliers.
Much of the talk about the EU is about trade, but there were a lot of personal freedoms enshrined in the EU treaty granted to all EU member citizens as a condition of membership as well, which we UK citizens have now lost. For many of us it's a severe and painful loss. You can probably tell, I care much less about the trade, and much more about what personal rights and freedoms individuals (and families etc) have to be free to enjoy their lives.
I think individual persons have been harmed by Brexit much more than a "global elite", who can manage their assets just fine and aren't really affected.
Y'know what we call countries who think their right to self-determination overrides others? We call them paraiahs, or war criminals if they really push the issue.
This is an internet myth. The EU common market has four pillars of freeeom and one of them is free immigration between EU countries.
The Free Movement of Goods
The Free Movement of People
The Freedom of Services
The Freedom of Movement of Capital
The UK left the EU because it wanted to limit migration and they thought that somehow they could get a special deal even though there are some very carefully chosen reasons why they have these four freedoms in one package.
For example, trading between countries requires people to cross borders and if they need a visa to trade, there is no more free trade as the government could introduce policies to prevent people from trading by denying visas to transportation companies.
If you compromise on the four freedoms, the entire concept of the EU will collapse not because other member states will leave the EU to get concessions, rather because there are plenty of loop holes to reduce 3 freedoms to two freedoms and two freedoms to one freedom to zero freedoms effectively eliminating the EU entirely without having a single member leave.
The problem is that the Leave campaign had promised the impossible: to stay in the common market for goods and services, but leave the common market for labour (free movement), and not pay for anything anymore. The world just doesn't work that way.
I won't get into a discussion about who is to blame for the breakdown in negotiations, as those discussions tend to get ugly fast.
> However, the EU wouldn’t let them keep access in the divorce if for no reason other than as a cautionary tale for other member states.
How would you propose that this access would work, given that the UK refused to accept EU regulation?
My understanding from the news during the negotations was that something similar to common market access under substantially similar terms was on the table from the EU, as were several variations of it. But these were all rejected, because they were viewed by some _in the UK_ as "too soft, soft Brexit, Brexit in name only". Enough politicans and, how shall we say, "influencers", wanted a "hard Brexit", and that meant something bold, symbolic and rejecting things too similar to what had been in place before (including much that was on the table from the EU).
Many little things were on the table from the EU as well, regardless of the main deal, that were seemingly rejected by the UK for no convincing reason.
The ability for performing artists such as musicians, DJs, etc to do tours of Europe as they did before, for example, was on the table from the EU, but the UK turned it away, because of course we would not want EU citizen artists able to do the same reciprocally. So that wiped out a large part of those UK artists' businesses and lifestyles for no obvious reason.
The Erasmus program, also, which allowed students to travel on exchange programs through many of the countries, swapping with their counterpants coming to the UK.
I think both of those suffered from ideology, because in virtually every speech by Theresa May that I heard with regard to the negotiations when she was PM, one of the most up-front and prominent sentences seemed to be in the prelude over and over: "Freedom of movement will end". It sounded more important than anything else. She has also been the architect of the "hostile environment" too, which is frankly legislated evil and still ruining lives. She was reportedly upset at the Brexit vote initially, but saw immigration control and removal of the UK from the European Court of Human Rights as a silver lining, so everything bolsters my view that it was a major motivation for her.
The famous "oven ready deal" which Boris Johnson said he would get through if he was elected in 2019, won him an election, and then he got it signed and ratified, and then within about 6 months he was already publically committing to breaching the terms. One wonders if the UK gov't ever intended to honour the terms or if it was a bait and switch at the time it was signed.
It's because of how that was done (and still is being) that the UK's access to the Horizon science & technology Europe-wide collaborative R&D funding pool has not been renewed. That too, is something the EU had kept on the table, if the deal treaty was honoued.
That one's a particular shame because the UK was a net beneficiary and had many top quality R&D groups depending on that funding. The UK gov't says it has its own R&D funding pool to replace it, but nobody believes it will really roll out matching anywhere near the previous level, nor with the previous quality of international collaboration.
Unlike the US, however, the UK was previously in the EU common market. As a result, the global economy is now correcting for the UK's newly diminished trade efficiencies with the EU, whereas nothing has substantially changed for the US.
Nose was in the trough 3 days into her premiership when the top treasury official got fired, to make way for these tax cuts. Guess the Conservatives figure they are going to lose the next election...
You’re right. She’s a parody of Thatcher. Thatcher at least had a long-term strategy (London becoming the economic centre of Europe, even if it means hell for the rest of the country). She’s Thatcher with all the greed and none of the vision.
But 40 years on it's just frog mouthed cargo culting to double down on those policies.
https://finance.yahoo.com/quote/GBPUSD%3DX/chart?p=GBPUSD%3D...
This is a distraction to pile pressure on a new Government.
Technically true, but also LoLs
Edit: I highly recommend the podcast “Eurodollar University” on the subject.
Unless large institutions decided to sell their pounds, but that has to be a huge supply of pounds to make such an impact.
Big props to Jeff and Emil for their generous freely available teachings. I further recommend their paid subscription too. It's well worth it.
These times are easy to see coming if you had the right monetary lens on.
Most likely all of it. No decision is made in a vacuum, and all of them are compounding factor. In retrospect, the timing for Brexit was pretty bad (on top of it being a stupid idea badly implemented).
> As far as I know, not a single doomsaying Brexit prediction has come to pass.
Funny thing is, I have a hard time thinking of a prediction that did not materialise, from the fall in both imports and exports, the divergence in standards to ensure that trade will never be smooth again, the increase in red tape and bureaucracy, the government openly discussing tearing down the Good Friday agreement, the relaxing of environment protections, to the lorries queuing in Dover.
The Bank of England monetary policy committee deciding on Thursday to show “restraint” in only putting the interest rate up by 0.5%, because they want to wait and see what the Chancellor’s “mini-budget” would bring on Friday.
That mini budget being a clusterfuck of unfunded tax giveaways to the already high-earning and wealthy.
https://www.cbc.ca/news/world/uk-energy-costs-inflation-1.65...
However, the steep rise in the value of oil & gas stocks, as well as defense contractor stocks, has no doubt enriched a certain strata of British society, much as it has done in the USA. War is quite profitable if you position yourself correctly...
https://www.investopedia.com/top-defense-stocks-5079150
> "Russia's ongoing invasion of Ukraine beginning in February sparked a rally in selected large defense stocks, including Lockheed Martin Corp., Northrop Grumman Corp., and Raytheon Technologies Corp."
https://www.investopedia.com/investing/oil-stocks/
> "Russia's invasion of Ukraine in February has significantly disrupted the global oil market. European Union leaders moved to ban most Russian crude oil imports in May a oil prices spiked in March. The Biden administration has released record volumes of oil from the U.S. strategic reserve...The oil and gas industry is best represented by the Energy Select Sector SPDR ETF (XLE). The exchange-traded fund produced a total return of 59.8% over the past year, dramatically outperforming the Russell 1000’s -12.9% total return."
Do you have a source for this claim? I heard this argument before from an acquaintance and it completely contradicts my reading of the situation in April.
In Ukraine's Pravda, which is not the same as the former Soviet Pravda, it was reported that in April -- after Bucha, and everything else -- Johnson warned Zelensky that Putin could not be negotiated with.
https://responsiblestatecraft.org/2022/09/02/diplomacy-watch...
Apparently reported on in an article on Foreign Affairs:
https://www.foreignaffairs.com/russian-federation/world-puti...
I would like some evidence for this, especially the idea that Johnson could dictate US foreign policy.
But, seems a lot of western leadership is blind.
If the laws and regulations of the nation are such that the citizens can’t make money, then the government has no choice but to cut taxes and regulations until private business can flourish again. Otherwise it’s a never ending strangling of business, lower revenues, lower tax takes, and so on in a downward spiral.
I can’t think of any other way out of the problem except enhanced productivity and trade. The government can’t tax what the citizens don’t make. Post-brexit and at the total end of the empire, Britain needs to become something like Singapore or Dubai - a hyper-capitalist free-trade haven.
Of course this will only happen after 10+ years of failure, leading to an erosion of living standards and endless finger pointing and blame. You are already seeing the collapse of the NHS and the FTSE lacking any global relevance.
There needs to be a balance on taxation as too low can limit the ability of the govt to invest when needed.
Also your point assumes money will fairly transfer from private business to citizens when businesses have lower taxes? I don't think that is necessarily true.
I don't know much about the British tax system so can't say if the announced change is good or bad. The market however appears to be worried.
Her policies are the result of an ideological adherence to Reaganomics trickle down economics instead of any pragmatic economic policy.
I live here and your proposed hyper capitalistic haven sounds like a nightmare. You even preempted any possible failure this type of policy can have for 10 years.
I guess the question is, is there any event or outcome that would disprove that this is the best way forward?
The left worships monopolies in education - all education must go through the government and indoctrinate children accordingly.
I am fine with the government investing in education. But the government should give tax money directly to parents to allocate to the schools of their choosing. Otherwise monopoly takes hold
Singapore has a progressive personal tax system with top personal tax rate of 22% (i have not looked at Dubai).
The UK also has a progressive personal tax system, they just cut their top rate of tax from 45% to 40%
Corporate tax is 17% in Singapore, and 19% in the UK.
Also factor in, Ireland has a corporate tax rate of 12.5% and progressive tax rate up to 40%.
This cut seems meaningful from a market confidence perspective, it is unclear how the UK intends to fund these tax cuts in tandem with energy bailouts. Economists have taken a view that the books do not balance here. The UK has suggested that economic "growth" will solve the problem. In terms of attracting talent and businesses (and now possibly investment) to drive that growth as an alternative to the likes of Singapore or Ireland it seems unlikely.
with zero evidence that their tax cuts will have any such consequences.
So to reiterate my question: At what point would you have to call that off and write off the privatization as a failure? Or would you keep going until you hit absolute rock bottom, then call any upward momentum a success?
The solution is more privatization, not less. The UK needs to do everything it possibly can to help entrepreneurs - let all the Hong Kong exiles in to start new businesses and move their capital in. Free trade agreements with the US but ultimately as many countries as possible.
You can look to Venezuela and Argentina for the alternative.
And you saying the NHS is a failure because it's not private enough is absurd, because there are plenty of private health institutions throughout the world that don't have this issue. It's almost like the NHS has been slowly being strangled through the way classical privatization works: Remove funding, make it worse over time so that the populace things privatization works better and then gut it and replace.
You're in luck. Current UK government believes in privatisation of public services, massive tax cuts, and funding those tax cuts by massive cuts in public spending.
They've released one mini-budget, and that was so bad they crashed the UK economy. The pound is at the lowest it's been in decades; the Bank of England is taking emergency measures to try to stabilise the economy
Almost everyone describes this as a disaster, and even traditionally right wing fiscal sources are saying we need to adequately fund public services and those need to be paid for by some kind of taxation.
There's a reason you don't hear much about purely private healthcare: where ever it's tried it fails. In England we have private provision of private services, and these serve a very narrow niche where people are either treated for minor things, or treatment is begun and then they're discharged back to the NHS when their money runs out; we also have private provision of NHS services and that fails because they can't provide the service for the money available or because they're just terrible (see countless CQC reports).
Capitalism, flawed as it is, is the one economic system that helped move billions people out of poverty.
But really, there is no real reason for the GBP to be worth more than the dollar in the last few decades.
The UK is a bit of a **hole, except for London. Guess things finally coming into balance now.
Where have you been in the UK to have this opinion?
Trading positive alpha from that information
I've never heard anybody who lives in the UK ever say something like this, so your comment is comical at best. I encourage you to visit more places! :)