The comments I made here yesterday and on Radio 2 about the possibility of there being a degree of coordination in what is happening right now in bond markets have attracted a lot of attention.
So, let's be clear. I offered speculation. The reason is simple. Something very weird is happening in financial markets, and no events, bar one, explain why it might be happening now. That one event is that Musk said at the weekend that the UK's Labour government needs to be pulled down. He then ran a poll on Twitter on this issue. He also spread scurrilous rumours. And as the FT has noted, the attempt at a coup that is following from those comments appears to be very real and front page news. I hardly had to make this up: it is out there.
I have received a barrage of comments saying banks cannot talk about or coordinate their trading positions. Such comments totally miss the point I was making. I entirely accept that on the trading floor this would be very hard. But let's be clear, that is very obviously not what is happening in this case. I never suggested it was. This coup is happening in plain sight. It is being talked about incredibly openly. And we know, for example, that six major US banks have now quit the US net zero programme in a very short time period under pressure from Trump. They did not all do it on the same day. But the actions happened in what seems like a remarkably coordinated fashion to curry political favour; the grapevine seems to have worked. That has also happened in the rush of corporations giving up on commitments to diversity. And it has also happened in another sphere, where suddenly Kemi Badenoch wants to talk about child grooming when she had never chosen to do so until Musk did.
So, let's try to explain this. Musk calls for a coup. Trump does much the same, saying he will use economic pressure to make Canada the 51st state of the Union. And in that case, maybe no one in any bank needed to say a thing to another bank. Maybe, instead, just every banker simultaneously, suddenly, and wholly irrationally (unless their belief in Musk might be called rational) decided Labour was a disaster within a day or so of him demanding the demise of their government, and as a result, everyone traded interest rates upwards, and bond prices downward, with exchange rates going the same way.
Maybe that is just what those commenting here would call rational market reaction, where everybody has come to the same conclusion based on reasoning that, they suggest, has nothing whatsoever to do with Musk.
Maybe there is no conspiracy, then, as some commenting here claim. But what I am saying is that if there was then this sudden, apparently consistent behaviour, is precisely what the expected outcome of the demand from Musk might look like.
And so the question to those challenging my thesis is, why else did this happen this week in that case when the Musk coup plot is out there and in plain sight? After all, we all knew Reeves had delivered a disastrous budget some time ago. That is not news. So, what is she the reason for this, if Musk isn't?
I doubt anyone can explain that. My suggestion is that the only thing about Reeves is that she has provided remarkable cover for what is going on, letting the banks move against Labour, as I am sure they wish to do to appease Musk, without ever having to say it had anything to do with him. Except, I thimk it obviously has.
And why, if as is claimed by all those commenting, the London gilt market is totally free from any form of fixing of opinion that informs behaviour, do we so often hear about the opinion of ‘the market'?
Why, too, do we so often hear tales about ‘gilt strikes', or the like, emanating from the City?
These oft-floated ideas exist. They suggest that the City can form opinions collectively and act on them. That is all I am am saying is happening here. I am saying that prompted by Musk, and maybe out of fear of not securing favour with Musk, the City has formed an opinion and acted on it, from top to bottom. A coup in plain sight has worked. That is my suggestion. All those who think I suggested otherwise, implying trader corruption, got everything they said about me wrong.
Should we, then, give up this idea of the City having a single opinion? That is what it seems I am being asked to do, but some of the comments offered clearly contradict that. They suggest that there is now a new and singular opinion, based on evidence that does, however, and very mysteriously, entirely ignore the role of the Bank of England's quantitative tightening in creating this crisis, and which instead blames it solely on Labour, about whom everyone in the City is now of one very certain opinion, since about Monday, for some very strange and apparently unexplained reason.
But, that being said, I accept I might be wrong. Someone might be able to tell me how so many people can, by chance, wholly agree with each other whilst ignoring what seem to be so many key facts, and whilst dismissing the one overwhelming fact that persuades me as to what has happened. Perhaps they can.
But I repeat, if there was a conspiracy against Labour - which there is, or the FT would not so avidly reporting it - this is what the consequence would look like. So, if anyone wants to stop spouting excuses at me about impossibilities and actually engage with the political economy of power, on the basis of which I have reached my conclusions, please join in. But don't waste my time with further supposed explanations that ignore key facts. They are complete nonsense.
Political economy suggests we are facing a power struggle, with Musk trying to overturn Labour.
Evidence suggests US bankers are rising to support the Trump worldview.
Given that, at this moment, the Trump and Musk worldviews appear aligned, I think we can safely assume UK bankers share the enthusiasm of their US colleagues on this issue.
And when Musk, in plain sight, said Labour is a risk, he manufactured the risk on which all those bankers could then act to then trade against the Labour government.
That is my suggestion. That is what looks like a conspiracy to me. No rules need have been broken. None needed to be. As I keep saying, this is all out in the open. That is unprecedented.
I have offered a wholly plausible explanation for what is happening, totally consistent with the observed behaviour of the politicians in the UK whom the City is likely to favour, and it is for others to show I am wrong without relying on rule books or my supposed lack of knowledge of City trading.
Just talk political economy, which is what I was doing. Then explain this in another way, given the facts and the behaviour and consequences we can observe. What else makes sense? That is my question.
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The City is not bothered about what is best for the majority of people in this country. Their first and second priority is their own profit. There was a time they might have pretended to care. It seems to me they feel they no longer even have to pretend.
Agreed
It is not on the trading floors where these things are agreed; it is in the Board rooms, gentleman’s clubs, golf courses, expensive houses here and abroad and away from democracy where these matters are discussed and agreed.
you might not see this as I’m posting a bit late.
When I was counselling people who came becuase work sent them- if not personal usually not reaching their ‘targets’.
What I found useful was not knowing about the official procedures ( which I usually did ) but the informal process. I think it is often the decisive factor in most organisations. People at the shop floor often use it to make things work -as often the management didn’t. And to subvert the official for self protection.
My inner anarchist proved helpful.
A storm is being whipped up by Trump and his associates that the West is being threatened by China. The issue in regard to the United States taking over Greenland is that it has vast quantities of rare earth mineral that can be mined to use in electronic devices many of which are used in instruments of war. All Western governments therefore need to be made to acquiesce to this view of China posing a serious imperialist threat. The German people were twice told by their governments other countries posed such a serious threat in the last century! So serious they must go to war to protect the country’s interests!
When Musk claims the UK government needs overthrowing there will be some that will take it as gospel and sell sterling. Musk, just like any other powerful voice (although it is usually a politician or Central Banker) can move markets. But, as I say in response to your previous post, Trade Weighted sterling (TWI) is unchanged since the election and there is no gilt crisis.
You mention “City Opinion”. Well every bank has its talking head and every journalist needs a quote. In practice, the opinion is nearly always an ex-post rationalisation of what happened.
If gilts go down – “buyers strike” they cry; if gilts go up – “recession coming” they cry. Do not freight City Opinion with any real meaning/importance
At board room level, was there collusion between top US banks? It looks like it but I have no idea. Are UK banks at board level pondering the right response to Trump/Musk? Certainly, every organisation needs to protect itself. Is this being expressed by trading positions held by those banks? Probably not.
I see no conspiracy… just BoE incompetence and a City community that believes the same things as the BoE.
We’ll have to differ.
Why has this week happened if you are right?
What has happened? Not a lot; gilts are down 2 points (or just 1 point relative to UST) and TWI sterling is down 0.6% year to date.
Sure, but in that case why the fuss?
Let’s not pretend nothing is happening.
The fuss is that a very powerful man is bad mouthing the UK… and we should fuss about this. It is profoundly undemocratic.
Are financial markets fussed? Not really, the data don’t support that view…… although the press would have you think otherwise.
Again, we will have to disagree
I think financial markets are very fussed about this
Take a look at FTAlphaville – always consistently good commentary.
This?
https://www.ft.com/content/03975602-54ce-469a-9dbf-760ea30e3017
and this
https://www.ft.com/content/c0bfd6dd-ab9e-481c-ac55-9dccf7e01d08
Three things
Musk is the context
Nothign happened on any of the issues noted to change anything this week. They are relevant – and much to agree with, but they are not new.
So, Musk it is
[…] be a missing X that can, instead, offer an explanation for what has happened. I have, of course, explained what I think that X might be. It is Musk and his call for the overthrow of the Labour government. The City has reacted in […]
There is such a thing as market sentiment. The accepted wisdom that leads to traders behaving like sheep following the herd, piling into dotcom stocks or AI or whatever the flavour of the month might be, and driving up the market price beyond all reasonable limits. It looks like a conspiracy or coordination, but there is no single person or cabal driving it. It is really them all “independently” doing the same thing because they all have similar information, similar education, similar incentives, and similar behavioural responses.
And then all trying to sell when the market dips. Bulls turning to bears.
There are sometimes illegal conspiracies or single actors driving the market. Soros driving the UK out of the ERM comes to mind but that was 1992. No doubt there are other more recent examples.
I am not suggesting anything illegal.
I am suggesting commonality of purpose with Musk. The net consequence is they connive in delivering what he wants.
“The net consequence is they connive in delivering what he wants.”
Please drop this Richard you are embarrassing yourself.
Someone who has never been seen here before turns up to say that.
Tell me why, what brought you here, and what your political thinking is to motivate that comment, please?
For the record, I am quite sure I am not embarressing myself.
Clive, yesterday evening I read all of the exchanges between you and Richard (and also the very long comment from GB, who I agree must be a current trader) on this issue. Many thanks for the many details of the bond market that you provided as they’re very insightful and useful. Speaking as an (ex) academic who would once have been classed as a political scientist, and who, like Richard, approaches these issues from a political economy perspective, I was late last night going to add a comment much along the lines of today’s blog from Richard. However, I noted Richard said he’d revisit the topic of the coup today and so left it.
I’m glad I did, because while I appreciate all the argument and information you and others provided on bond trading, rules and regulations, etc, etc, I agree entirely that this misses the point. This is about the exercise – or attempted exercise – of power and influence by an extremely wealthy individual (and quite likely acting at least in part, for the incoming presidential administration of the US) who has also bought himself one of the largest influence networks (X/Twitter) the world has ever seen (note he has millions of followers and his posts automatically deliver to every X user unless you can block them).
That said, long before Musk darkened the Earth, exercises of the sort of power and influence Musk is now using were commonplace, though never on the scale of now, of course. For example, no single person or government told members of certain ethnic groups in Mynmar to start slaughtering Rohingya, but it happened. Ditto the frequent attacks in India on certain religious groups that aren’t Hindus. The same can be said of much of the killing that went on for the Inquisition and for the witch hunts that went on in the UK and elsewhere for several decades. And what of the centuries of persecution of Jews across Europe? And, interestingly, there was often a political economy dimension to these events (e.g. a struggle for control of resources or a belief that this was necessary).
Anyway, the point is that in none of these cases was a written or formal ‘order’ or instruction given to most of the people involved to carry out the actions they did, whether for ideological, religious or whatever other reasons we can think of. But they did what they did anyway. The transmission mechanisms and networks that enabled this can be debated, and have been by historians. But as Richard makes clear, we now live in a different age and I agree entirely with him that what we’re now seeing is unprecedented, not least because we now have the richest individual (Musk) in the world who sees no reason why he should be constrained in his actions by any law, regulation, convention or anything else that has applied to people in his situation in the past.
And yes, we all know that the wealthy have exerted power and influence over politics and the economy for decades/centuries, although largely from behind the scenes. But the scale and scope of Musk’s reach and influence across social media, allied with the rise of right wing populism and anti-democratic sentiment is something entirely new. Add to that mix that an array of tech billionaires have already indicated they are joining this authoritarian movement and we do indeed have a coup taking place in plain sight. This week it’s the UK. But it’s already also happening in Germany where they have an election next month. So, not just one coup but a series. Starmer and his team need to wake up and smell the coffee otherwise their government – and what limited democracy we have in the UK – is toast.
Ivan
Thank you
The most reasoned comment so far
Appreciated
Richard
I am horrified by Musk; we should combat his malign influence on our public discourse. I don’t use X but I understand that the diatribe is about child abuse rather than economic policy (other than the broad (and laughable) accusation that Starmer is a “socialist”).
The question is whether gilt traders are using this intervention to short the gilt market in order to damage the Labour government….. I don’t think they are – selling of gilts can be explained by all the reasons identified on the blog – disillusionment with government and BoE policy…. with some journalist with an overactive imagination putting 2 and 2 together to get 5.
If they are trying to bring the government down (and I don’t think they look that far ahead – certainly they will want to get flat by 1330 GMT for the US economic data) they are well back in the queue behind Badenoch, The Daily Mail, etc.. in trying to make mischief.
Is “big money” in the back ground trying to destabilise the government? I have no idea….. but it ain’t happening in the gilt market.
I hear you
I am not alone in thinking that markets are doing exactly what Musk wants, whether wittingly or not
And economically he dues oppose Labour, heavily.
I am glad to see Mr Horrocks comment. I think we would all agree about the problem Musk presents (principally in mass international digital communications, and as a significant member of Trump’s new Government). But it is the conflation of that influence with the specifics of Gilt trades that has been the focus of attention, and some acrimony here. I am not trying to add to the heat when I offer my opinion that I can agree with Mr Horrocks and yet agree with Mr Parry (and in part on this narrower matter ‘BB’, although there is much he wrote with which I disagree).
My comment here is largely superfluous; except to say that I genuinely believe that in spite of the bumpy ride, this discussion spilling onto different threads has, overall been invaluable and instructive. If we are not all here to learn (and we never stop learning); what is the point of it all. And I still say ‘thank you’, to everyone.
John (or Mr Warren if you prefer – I’m actually Dr Horrocks 😉 ). Thanks for your comment. Much appreciated. I agree with you that across multiple related blogs by Richard on the topic of a coup and Musk much has been learnt, despite the occasional heated nature of some exchanges. You mention conflation – which has indeed happened, but perhaps I should have made clearer in my comment that my focus was on Musk because I agree with Richard’s thesis that if you strip out all the other stuff around gilts – which, as Clive and others highlight are not that significant and are not limited to the UK – the primary (and I emphasise primary but not sole) causal mechanism behind the events surrounding Labour this week is Musk. Such is my belief that this is the case, and that this is the forerunner of things to come, that I’ll take the unusual action of adding below a comment I made to another of Richard’s blogs from today, and that may not have been seen by those focusing on this specific blog. It was in response to a comment that what Musk and Trump are doing is throwing dead cats onto the table. In short, trying to distract attention from other events.
Best wishes.
Ivan
…these are not dead cats. Unfortunately that phrase has been overused to the extent it is now deliberately referenced when something else entirely is going on.
In this case it’s fishing (not to be confused with phising). Musk is dropping ideas/arguments to see how many bites he gets. Ditto Trump. In Musk’s case he gets millions from X as the platform is now primarily a mouthpiece for the political right. It’s also being used by Musk to create a mechanism for forging a virtual, global coalition for an extreme right wing, authoritarian movement. This will then be used to put pressure on any politician or political party at a national level that tries to stand up to it. Just look at how the issue of grooming gangs in the UK – an issue we’ve known about for years in this country and have had several inquiries into (to which a Tory government did nothing) – was taken global by Musk, leading to outrage from the X ‘community’ from across the globe.
So, a warning to one and all. The dead cats have been buried. We’re now into a period of constant fishing where the more bites Musk, Trump and his acolytes get to their casting of an idea – however outrageous we might once have thought it – may well result in follow through that may well be shocking and nasty.
Expect the same before every election in the EU over the next four years – starting with Germany – and particularly when we enter 2026 and the impending mid-terms elections in the US. There’s no way Musk, and the rest of the authoritarian wave coalescing around Trump, are going to give up their new found power to a democratic movement now they have it. And expect them to attempt to make this a global phenomena too. To use a phrase that’s been used a few times in recent blogs, THIS IS HAPPENING IN PLAIN SIGHT. And no, it’s not in any way a conspiracy theory. Musk and his acolytes are deadly serious.
Thanks
John is fine, Dr Horrocks; I tend to use the formality as a cue to a desire for robust but not overheated, plot-losing argument, to which social media’s seductive, fast (unconsidered) format is prey. I could not put myself through what Richard does; and therefore have the benefit of a more distant, vicarious relationship with the Blog, observing the heat of the kitchen from a slightly more advantageous position; although I have occasionally felt a warmer blast escaping though the door.
I did read your earlier comment. There is much sense in it, and I have no argument that there is a political problem; just not the Gilt-edge problem.
I would also add that behind a great deal of the no-growth, poor performing economy problem is not just the budget (or anything BB mentioned in his interesting contribution); but Brexit. Not just 4% of GDP (compound, and probably exponential relative to the track we are on), but real, substantive economic activity – in sectors that hurt us.
Clive Parry is right.
The bond yield moves need to be seen in a global context.
At the recent low in September, ten year gilts yielded 3.76%. Today it’s 4.85%, 109 basis points higher.
Over the same period the yield on US Treasuries has gone up from 3.62% to 4.69%, by an almost identical 107 basis points.
It seems very unlikely that US traders are mounting a coup against Trump.
It is reasonable to think that global bond markets are reacting to the threat of higher budget deficits (from Trump, Reeves and others too).
It’s also reasonable to think that commentators get over-excited and seek out rent-a-quotes.
But, nothing explains why this reaction happened this week bar Musk
That is my point.
Political economy shifts on the basis of changing power relationships. And those are what we are seeing.
I copy what Clive previously said ” What has happened? Not a lot; gilts are down 2 points (or just 1 point relative to UST) and TWI sterling is down 0.6% year to date.”
So nothing has really happened other than MSM talking about it. It seems they have got you along for the ride!
Clive dd a comparison since last Ju;y
On that basis you can say nothing happened
Since Musk made his comments somethign has definitely happened. Shall we stop playing make believe and talk about what is going on here?
@ Nick Carroll.
Ignorance of the fact that sovereign governments can easily determine interest rates (as explained by MMT) is being used by the mainstream media to cudgel the Starmer government. Why are you not understanding this?
Hi Richard,
Don’t the results of gilt operations, such as recent gilt auctions, have more effect on the government’s ability to continue to fund their programme than the prices of gilts in the secondary market?
https://www.dmo.gov.uk/data/gilt-market/results-of-gilt-operations/
Looking at the auction results, it appears that all of the recent gilts were sold at an average of at least 87% of the nominal price (i.e. the Treasury received at least £87 for each gilt for which they will need to pay £100 at maturity, or £100 plus inflation for index-lined gilts) except for the “green gilt” issues, which achieved significantly lower prices.
Perhaps this is worth further investigation?
The sale at an undwevalue is not a problem: the government prices this in.
Point taken. So, would you agree that the government does not seem currently to have any problem raising funds to finance its spending plans, apart from needing to factor in having to pay more in interest on debt because of higher gilt yields?
Wrong
It can bring rates down. I have explained how, endlessly.
The UK imports about 40% of its food and about 40% of its energy. To buy these, it needs to find those willing to sell their $s or €s to buy £s. Ideally, the others would want to buy goods or services priced in £s, but what if imports and exports do not balance? My take is that a country with its own currency has far less freedom than we think. Particularly if it needs essential imports. However, following this logic through leads to a position close to Richard’s. Raising interest rates should lead to an increase in the value of the £ as a short-term investment for a $ holder. However, in the longer term, more £s will need to be changed back into $s and the £ will weaken further. Worse, the competitiveness of the UK economy will be reduced through lack of investment. The better solution must be to ignore the markets, and make the necessay investment now. So that in the future we have more to export and less reliance on imports.
What has happened this week?
Nothing much, frankly, apart from an attention-seeking billionaire using his expensive megaphone to throw shit all over the place in an attempt to find something that sticks (but, for some reason, he seems to pay little attention to the country of his birth); certain newspapers and other media outlets coming back to work after Christmas and falling over themselves to give the billionaire the attention he craves; and UK politicians jumping around to deal with the newly discovered “financial crisis” which is either is either the same post-pandemic economic malaise which we been suffering for months or years, and/or the fevered imagining of someone with a loose grip on facts and a short attention span.
Musk and Trump will continue throwing dead cats on the table for as long as it suits them. Among the nonsense (eg Greenland, Panama, Canada) that distract the press and entertains the public, there will be some real things that need proper attention (eg Israel, Syria, Ukraine, climate change, AI, further erosion of the US body politic and its high-minded hegemonic liberal-democratic post-war world order in favour of something more nakedly nasty and brutish). California is on fire already, and we can expect other climate influenced disasters on a more frequent basis each year.
What is the world going to look like after four more years of chaos, and who’s next after Starmer and Trump?
Why do you think Canada, Greenland and Panama are nonsense?
A discussion I had with people in Denmark this morning suggested that they think it is anything but that. They think he is entirely serious.
Just as Musk’s coup is serious. As is the idea that the City is faciltating it, knowingly or not, serious and entirely credible, and even likely. Others assure me my analysis is sound. The world will catch up.
Andrew, this/these are not dead cats. Unfortunately that phrase has been overused to the extent it is now deliberately referenced when something else entirely is going on.
In this case it’s fishing (not to be confused with phising). Musk is dropping ideas/arguments to see how many bites he gets. Ditto Trump. In Musk’s case he gets millions from X as the platform is now primarily a mouthpiece for the political right. It’s also being used by Musk to create a mechanism for forging a virtual, global coalition for an extreme right wing, authoritarian movement. This will then be used to put pressure on any politician or political party at a national level that tries to stand up to it. Just look at how the issue of grooming gangs in the UK – an issue we’ve known about for years in this country and have had several inquiries into (to which a Tory government did nothing) – was taken global by Musk, leading to outrage from the X ‘community’ from across the globe.
So, a warning to one and all. The dead cats have been buried. We’re now into a period of constant fishing where the more bites Musk, Trump and his acolytes get to their casting of an idea – however outrageous we might once have thought it – may well result in follow through that may well be shocking and nasty.
Expect the same before every election in the EU over the next four years – starting with Germany – and particularly when we enter 2026 and the impending mid-terms elections in the US. There’s no way Musk, and the rest of the authoritarian wave coalescing around Trump, are going to give up their new found power to a democratic movement now they have it. And expect them to attempt to make this a global phenomena too. To use a phrase that’s been used a few times in recent blogs, THIS IS HAPPENING IN PLAIN SIGHT. And no, it’s not in any way a conspiracy theory. Musk and his acolytes are deadly serious.
Agreed, Ivan
Thank you
Exactly, Musk is dangling outrageousness in order to test the market for it. It is reckless opportunism.
@ Andrew
Nothing much has happened? Oh really the United States has just “fucked” itself by giving Trump an “unconditional discharge”! This will mean to a fascist sociopath like Trump that “no” conditions will apply to what he does in the future!
UK gov could send a “shot across the bows”. GCHQ monitors ALL data traffic into @ out of the UK. ALL. In real time.
There are a limited number of data centres in London and its surroundings. Telehouse (central London) being but the oldest and most well known.
Use prevention of terrorism legislation to shut down Twitter in the UK. Pull thge plug, confiscate the servers.
Dawn tax raids on Tesla.
Musk wants regime change? – time the (newly elected ) UK state showed who is in charge.
The UK state has no problem chucking people in jail for standing on motorway gantries (whilst posing no threat to anybody) – be interesting to see what Starmer and co do when faced with Musk & co. that want regime change.
But, at the end of the day, Starmer is in on the conspriracy against himself, so he won’t act out of fear.
I forget the details but when the Labour government fell in 1931 as a result of trying to stay on the gold standard, the incoming Tory government went off the gold standard pretty quickly. McDonald said “…but nobody said I could do that!”
So with Starmer – he does not realise that government DOES have the tools to do the job.
“Elon Musk, the owner of X and a frequent spreader of misinformation, claimed: ‘They prioritized DEI over saving lives and homes.’ In a response to Libs of TikTok, he wrote, ‘Wild theory: maybe, just maybe, the root cause wasn’t climate change?’ ”
https://www.theguardian.com/us-news/2025/jan/10/rightwing-misinformation-los-angeles-fire
The Guardian gets this one right “Elon Musk as a frequent spreader of information”, throw in Donald Trump and Nigel Farage not to mention the current Conservative and Labour party politicians in the UK and you are beginning to get the picture why democracy is deteriorating in both the US and UK!
Maybe, just maybe, all we are seeing is the gradual normalisation of interest rates around the globe as the effects of “Monetary Adventurism” (QE, ZIRP, NIRP, blah, blah) since 2008/09 wash out of the system? Things tend to revert to the mean.
One of the MAGA ‘achievements’ is that they have destroyed trust in ‘main stream media’. We know that the tabloids were toxic before then and the BBC would not cover certain things but some journals and websites are good. One could get a reasonable idea of what was happening.
They are called ‘fake news’ so many resort to very dubious sources with obscure funding.
G K Chesterton wrote, “When a man stops believing in God he doesn’t believe in nothing, he believes in anything”.
In a different context that applies today. Climate change is a hoax. Trump won the 2020 election. The wildfires in California are the fault of the Governor. Trump deterred Putin and so on. Anything that makes the ‘other’ look bad.
Richard
Some respondents seem obstinately not to grasp your point that the ‘coup in plain sight’ is much more banal than a coordinated conspiracy, yet effective, because “the City can form opinions collectively and act on them”. Group agency is a powerful (in part because it goes by unnoticed) social phenomenon encompassing such well-known forms as Groupthink and ‘hive mind’. It is well understood to be a risk to sound decison-making in cohesive groups like committees and juries and increasingly in more dispersed groups, which can achieve much greater cohesion via social media. It is often a credible explanation of what might appear to be a conspiracy that does not involve outlandish conspiracy theories and their out of hand dismissal by reason of insanity, neither of which offer satisfactory explanation and resolution. I would urge those less familiar with this phenomenon to look it up.
Thanks
A financial “crisis” has been whipped up out of nowhere by City traders, the UK right wing media and others following reports that Musk “seeks plan to oust Starmer as prime minister before the next election”.
As has been shown in the UK, a financial crisis can result in the fall of senior government figures including the PM.
It is not unreasonable to conclude that this fake crisis has the hall marks of trying to achieve a change of PM and Chancellor.
What can Ms Reeves do?
She can:
1. use her powers under the Bank of England Act to tell Bailey, cut the base rate to 3%, stop Quantitive tightening. If Bailey refuses, sack him, but keep him the building, then get the deputy governor to do it, or do it herself using the Act.
2. immediately stop paying interest to the banks on their regulatory deposits. Tell the public the £35bn non paid interest is going on the NHS.
3. warn the City, all profits subsequently made on betting against the £ will be super taxed at 100%
Would there be an outcry? Of course, but the public will go with it.
It might even hammer the Bond short sellers.
Musk will be off the business front pages, now. US employment data shows the US is going gangbusters – that is pushing UST bonds down (in price) and gilts are following.
One thing I think we learnt in COVID is that fiscal policy trumps monetary policy…. and we are seeing it now; rates from 0% to 5% has not dented growth because the US is spending big – a deficit of 6% of GDP (versus about 4% in the UK).
I believe that Tim Watkins & Tim Morgan explain much of what is going on.
This https://consciousnessofsheep.co.uk/2025/01/10/when-was-growth/ was published earlier today by Mr. Watkins and he’s not wrong.
Very good
In the Independent today (online) = Ian Hislop praised for ‘perfect’ takedown of ‘contradiction-riddled’ Elon Musk
‘Have I Got News for You’ star and ‘Private Eye’ editor didn’t hold back when tearing into tech billionaire (Jacob Stolworthy) https://www.independent.co.uk/arts-entertainment/tv/news/elon-musk-ian-hislop-labour-have-i-got-news-for-you-b2677250.html
Irrespective if whether this is coordinated or not, can’t the BoE buy the bonds until this blows over. The banks will presumably, once they fail in whatever they may be trying, buy new bonds if they provide a better income than their reserves. Particularly if we reduce the interest they get on their reserves. Indeed, as you suggest elsewhere, we don’t need to issue bonds, the government can borrow direct from the BoE.
The BoE could stop QT
It could intervene in markets
It could seek to control rates.
It doesn’t