Autumn Budget: We have all become victims of market forces

This has been a budget for the market, by the market, on approval of the market.

If Liz Truss’s historically short tenure as prime minister showed us anything, it showed the power of the markets. That power was so great that within minutes of her appointed chancellor, Kwasi Kwarteng’s mini-budget statement being announced, outside influences’ flexed their muscles and a series of events were put in place that would inevitably see yet another prime minister removed with not one public vote cast.

It was the market’s swift and withering verdict on Truss’s tax-cutting agenda that came with a response that degraded Britain’s reputation with investors, drove up home mortgage rates, pushed the pound down to near parity with the American dollar, and forced the Bank of England to intervene to prop up British bonds.

The Bank of England was forced to intervene, promising to buy up to £65 billion in government bonds, but the International Monetary Fund issued an uncharacteristically scathing statement about the measures, noting that they would “likely increase inequality” and urging the British government to rethink their plan.

The reality was Truss hoped to disrupt the market and attract foreign investment into the UK with the lure of low taxes and Thatcherite policies, unfortunately for Truss, the markets could not afford the distraction while trying to keep afloat in the face of the undeclared economic warfare being waged on China and Russia.

It was only after a bruising three-week battle with bond markets, Liz Truss admitted defeat, in a vain hope of survival she fired her chancellor and gutted her own economic program by promising to reinstate a big tax hike on corporations.

In doing so, Truss stated she had acted in the national interest to ensure economic stability and to “reassure the markets of our fiscal discipline.” however, what really happened behind the scenes was a capitulation, a surrender of democracy and power.

This surrender came with Jeremy Hunt’s appointment as chancellor who with immediate effect, he announced a new economic council. This council made up of market experts, employed by the leading financial Banks and investment companies is a group of outside experts that now had oversight of UK budgets and policy, fundamentally the UK had been put under special measures.

Ironically Truss lasted less than a week after sacking Kwasi Kwarteng, however, Jeremy Hunt and his economic council survived and continued under the tenure of Rishi Sunak the Banker’s choice for the prime minister.

In only 45 days Truss’s tenure was the shortest in UK history but for many reasons, it will have the longest-lasting and most devastating influence on our democracy.

It was acting as Sunak’s Chancellor of the Exchequer that with all the seriousness the position and title could muster, Hunt stood at the dispatch box yesterday feeding the nation the news of hard times, sighting global pressure as the root cause of high inflation and high-interest rates, his remedy, more austerity.

People should be under no illusion the crumbs pushed onto the masses came with a very high price. Not one policy or budget announcement was made without it being run past Hunt’s new economic council.

For every policy and budget statement, the chancellor made, he had to have permission from the new economic council, and the global market’s representatives in Westminster.

Like The Remembrancer who sits in the house of commons safeguarding the city of London’s interests against the interest of the people, these agents of the markets now scrutinise fiscal policy and budgets.

This new economic council’s mandate is to provide the government with ‘expert advice’, basically, they will decide what will or will not affect the market.

The strength of the council doesn’t lay in what they know or the advice they can give, it lies in who they report back to and what their bosses demand from the government, after all, they have shown beyond doubt that ‘market forces’ have the power to remove primine ministers and governments without even having the inconvenience of a general election.

This council of unelected financial experts that represent the market interest includes Rupert Harrison of BlackRock who was also chief of staff to former chancellor George Osbourne during the austerity era of 2010-2015, and Karen Ward, who advised former chancellor Philip Hammond after Brexit, and now works for investment bank JP Morgan.

The panel also feature two former members of the Bank of England’s monetary policy committee: Gertjan Vlieghe, who is now chief economist at US hedge fund Element Capital, and Sushil Wadhwani, chief investment officer for asset management company PGIM Wadhwani.

The government website states The Council acts as a consultative forum for the government to be advised on UK and international economies and financial markets. 

The Council will act as a consultative forum for the government to be advised on UK and international economies and financial markets. The Council will consist of leading and respected economists and will be attended by the Chancellor and the Treasury’s Chief Economic Adviser.

It just so happens that Blackrock the company that pays Rupert Harrison an extremely lucrative salary is also the largest shareholder in BP and one of the biggest shareholders in Shell, this is a blatant conflict of interest when giving (or rather telling the chancellor what to do) advice.

This is the government conceding all policies to the markets, nothing will pass without first having the market’s approval, again our democratic system has been sidelined, and the markets are blatantly running the show.

Hunt casually blamed the war in Ukraine for high energy bills while ignoring the fact the UK only ever received 4% of its gas from Russia but worst, omitting energy prices rose to their extortionate rates not in 2022 but in December 2021, the start of the cost of living crisis cause through oligarchy greed, not a war in Ukraine or an invasion that didn’t take place till 24th Feb 2022.

Hunt forgot to mention 93 percent of our electricity is generated on our shores. According to the National Grid, in October, the vast majority of the electricity used was produced in the UK from nine different sources, including wind and solar power.

Hunt forgets to mention the outlandish profits energy companies are making but tries to smooth the bitter medicine of cold winters to come by suggesting a higher windfall tax on these racketeering companies.

Hunt then slides over the fact he has allowed the cap to rise from £2500 to £3000 a year.

The energy price guarantee – which limits how much energy firms can charge per unit of energy – will continue for a further 12 months after April, but at a reduced level. At present, a household in England, Scotland and Wales using a typical amount of energy currently should pay £2,500 a year – although households which use more energy or those not on direct debit could end up paying more.
From April that “typical” bill will rise to £3,000.

Neither does he mention the Treasury to pay £133bn to the Bank of England to cover QE losses.

UK faces £133 billion bill from BOE QE, wiping out last decade of income https://t.co/R64UtEH0kC via @_DavidGoodman pic.twitter.com/yCB4QwdMdk

— Zoe Schneeweiss (@ZSchneeweiss) November 17, 2022

The market wants their share.

Here’s a jaw-dropping forecast: The Treasury is expected to pay £133bn to the Bank of England over the next few years to cover losses on the central bank’s quantitative easing (QE) programme.

For many years, QE was profitable – because the Bank was bringing in more money through interest payments on those bonds than it was paying out to commercial banks for reserves they kept at the BoE.

So profitable, in fact, that former chancellor George Osborne decided in 2012 that the government should get the profits, in return for covering any losses.

This is why public services will be cut once again…

The Treasury has reaped more than £120bn of profit from QE so far, in a short-term boost to taxpayers, but now it needs to pay the BoE back for losses on its Asset Purchase Facility (APF).

There are two reasons why.

First, the Bank bought those bonds with newly created electronic money – which it used to buy bonds from commercial banks. Those banks receive interest on those reserves, while the Bank gets interest (called a coupon) on the gilts which it holds.

Recent interest rate rises mean that Bank Rate has now risen above the average interest rate which the Bank earns on those coupons.

Second, the Bank is expected to crystallise losses on its QE programme. It has begun selling off some of its gilts – and will receive lower prices than it paid for them.

That, the Office for Budget Responsibility says, “will mean cash starts flowing from the Treasury to the APF”.

“The OBR said the losses would mean a £61 billion contribution to debt, revised up by £90 billion from March. The terms of the BOE’s buying means the Treasury, and ultimately taxpayers, are on the hook to cover the losses.

That’s a stunning turnaround and a real headache for politicians who have to explain why billions of pounds of taxpayers’ money is being sent to the BOE.”

There is nothing new under the sun, market forces have been the vampires drinking from the arteries of public wealth for decades.

This is not new, however, what is new is the audacious move by the markets to place their agents in Westminster and scrutinising democratic governments’ fiscal policies before they are presented in the commons, the reasons many voted to leave the EU were for more accountability and to break free from the grip the bankers and markets dominating the EU.

With amazing foresight, Tony Benn’s predictions and warnings are not only stark but as true today as they were then. Unfortunately, rather than take heed, both the Tories and the Labour Party have doubled down on the policies that have seen us all subject to ‘market forces’ leaving us to pay the price of their cowardice and betrayal of the people.

This 30-year-old speech would be as fresh today as the day it was spoken, Benn states:

On the 22^nd of November 1990, almost 30 years to the day, Tony Benn made one of his magnificent speeches in the commons, his speech detailed the economic policies of Thatcher that had seen the birth of neoliberalism take form in Britain.

Today through a malaise of ideas that same neoliberalism has become the economic backbone of all mainstream parties, none of whom have the courage to carry out either Conservative or Democratic socialist economic ideologies.

“I do not believe in scapegoats and it is important that we should understand that every present and former member of the Cabinet, every Conservative Member of Parliament who has trooped through the Lobby night after night after night in support of those policies, every newspaper that has supported the Government and every voter who voted for them share responsibility for the current situation.

So much has been said about the past that I want to speak about the future, but it would be wrong to let the motion of censure go by without touching on some of the damage that has been done in the past decade. I must admit that the mechanical recitation of statistics does not get near the real world.”

“One important point about which we rarely hear is that Britain has spent far too much money on defence and not enough on its industrial development. There is the illusion that the only reason for change in eastern Europe is Britain’s possession of a nuclear weapon. Is it honestly believed by any serious person that there would have been no demand for liberty in Poland, Hungary and the Soviet Union unless we had had a nuclear weapon from the United States? But the price we paid for that high defence expenditure has crippled our capacity to make and sell what is needed.

Despite the fact that we have been told that this is an entrepreneurial society, Britain has an utter contempt for skill. If one talks to people who dig coal and drive trains, or to doctors, nurses, dentists or toolmakers, one discovers that no one in Britain is interested in them. The whole of the so-called entrepreneurial society is focused on the City news that we get in every bulletin which tells us what has happened to the pound sterling to three decimal points against the basket of European currencies. Skill is what built this country’s strength, but it has been treated with contempt.

I must confess that the auctioning of public assets, particularly the latest disgusting Frankenstein advertisement, told me more about the mentality of the Ministers who devised those schemes than the sales themselves. Those assets were built up by the labour of those who work in the electricity industry and by the taxpayer who invested in the equipment. Those assets are now to be auctioned at half their value to make a profit for a tax cut for the rich before the next general election.

If Ministers were local councillors they would be before the courts for wilful misconduct, but because they are Ministers and because some of them later go on to the boards of the companies they privatised; they are treated as businessmen who know better how to handle those companies as members of the board of directors than allegedly, they did as the Ministers responsible.”  

He goes on to say:” When we look back at the 1980s, we see many victims of market forces. I do not share the general view that market forces are the basis of political liberty. Every time I see a homeless person living in a cardboard box in London, I see that person as a victim of market forces. Every time I see a pensioner who cannot manage, I know that he is a victim of market forces. The sick who are waiting for medical treatment that they could receive quicker through private insurance are victims of those same market forces.

The Prime Minister is a great ideologue. Her strength was that she understood a certain view of life, and when she goes there will be a great ideological vacuum. It is no good saying that we shall run market forces better than she did because her whole philosophy was that one should measure the price of everything, but the value of nothing. We must replace that philosophy.

“To put it in language that will be familiar to Conservative Members, the Labour party believes in the traditional values of society–in the idea that we have responsibilities one to another and that we are not just greedy all the time, looking out only for ourselves. Without being personal, the philosophy that has been propagated over the past 10 years has been wicked and evil. I am not talking about the qualities of the people who advocated those policies. But to set man against man, woman against woman and country against country and to build on nationalism and racism–we remember the warning about how we would be “swamped” by immigrants–and all the damage that has been done by the Conservatives has been disgraceful.”

Of course, the Labour Party was a different Party in 1990 so when Benn speaks of Labour values these were the values before the rot of the liberal elite set in before the centre killed the ideology of the Left and socialism.

Benn suggest he would create a repeal bill to turn back Thatcherite policies, however as we now know Tony Blair had other ideas, he even had the audacity to publicly state he thought it his duty to build on Thatcher’s policies, those same policies that ripped the guts out of the working class

Benn said: “All that will have to be dealt with. It would be easy to repeal all their legislation. I have a measure called the Margaret Thatcher (Global Repeal) Bill which, if we got a majority, could go through both Houses in 24 hours. It would be easy to reverse the policies and replace the personalities–the process has begun–but the rotten values that have been propagated from the platform of political power in Britain during the past 10 years will be an infection–a virulent strain of right-wing capitalist thinking which it will take time to overcome.”

We must now look to the 1990s and beyond. Most people have modest aspirations. They want useful work and a home to live in, and they would like good education for themselves and their children, with proper health care, decent pensions and peace and dignity when they are old. In a rich country–we are often told how rich we are–that should be available if the distribution of wealth were correct.

With that in mind, let us look at the world today. America, which has 2 per cent. of the world’s population, uses 25 per cent. of the world’s resources. For how long can that last? One does not need a Saddam Hussein or a Gaddafi to point out that maldistribution of wealth is the greatest source of international conflict. So we must look to a United Nations that is not just there to launch a war under American auspices, but is there to solve the problems that lead to war. It must help to redistribute the resources of the world.

I must speak about Europe because, after all, we are all Europeans. But I will not give up the right of the people whom I represent to decide the laws under which we are governed. I will not do that, and I have no right to do so. I only borrowed my powers from Chesterfield, and at the end of five years I must hand them back. It will be no good my saying, “I am handing back some of them. The rest I gave to Europe”. I was going to say that I had given them to Jacques Delors, although I do not know why we always refer to him. I could say that I had given them to Leon Brittan or Bruce Millan. Why must we always concentrate on Frenchmen? I am not giving Leon Brittan, Helmut Kohl, Mr. Po”hl or anyone else those powers because they are not mine to give away.

In saying that, I am not being a nationalist. I am an internationalist. I believe in a Europe that co-operates in harmony. But we have no right to destroy democracy in Britain to build greater power for the bankers or anybody else in Europe. If people suggest that that argument does not spread across the Floor of the House, they must be living in a strange world.

We must shift the money from weapons to development. We must protect the planet from the dangers that are associated with nationalism, fundamentalism, particularism and racism, for those, combined with nuclear and chemical weapons, could destroy the human race. During this century, since the year 1900, humanity has been re-equipped with a new set of tools and, as a result, our institutions have been outdated.

There is the No Turning Back group– I believe that that was the battle cry of the Gadarene swine–but what has changed it all is a factor that cannot be measured on a “Newsnight” computer. With the events of today, there is a great influx of hope. People who saw no chance of a home, of a better pension or of decent health care have seen the light at the end of the tunnel. It is not the light of the little flickering candles of the three candidates. It is a different sort of light.

When I campaigned in the 1945 election, we never thought that we could win. Churchill, after all, was far more popular than the present Prime Minister. He had won the war single-handed smoking a big cigar and wearing a siren suit. Although we did not think that we could beat him, we did. Mr. Attlee was a modest man–Churchill described him contemptuously as a modest man with a lot to be modest about–but we won.

I was at Transport house in London when the results came in. In those days there was no television, no computers and no polls to mislead us. The news was shown on an epidiascope; we wrote the results on a bit of smoked glass and flashed them up. Ministers fell like ninepins and out of the darkness from Northolt came the little man, Clement Attlee, and he became Prime Minister. That was achieved by hope.

My right hon. Friend the Member for Blaenau Gwent (Mr. Foot) referred to the Norway debate on 7 and 8 May 1940. Chamberlain was the victor and two days later Churchill became Prime Minister. That was the verdict of Parliament on the 1930s. Five years later, after the war, when the people had a chance to decide, Churchill was out, there was a Labour Government and an attempt to build a better society.

We are going through that sequence again. Tonight, the Government will win an overwhelming majority and in a few days from now, whoever of the three pygmies wins the leadership, he will not be able to deny the British people the hope that will be released by the defeat of the present Prime Minister. That hope will carry into power a Government who will face such massive problems that their radicalism will far exceed that to be found, at present, in our printed policy reviews.

It seems very clear to the reader that in 30 years nothing has changed. The same problems revolve around and around. Each generation is presented with the same crisis the same problems the same hunger, and the same rubbish coming from our representatives in the palace of Westminster.

They don’t make politicians like that anymore, but mostly the establishment doesn’t want politicians like that…