A story of the failure of the ancient rule of law and new diseases.
text / Ba Jiuling (WeChat official account: Wu Xiaobo channel )
Tras resigned on the 45th day after she was appointed as prime minister.
After the death of the emperor of the Song Dynasty, the funeral place was called the mountain monument, and the person in charge of funerals was called the mountain monument envoy, which was often the prime minister of the previous dynasty. When the prime minister presided over the funeral as the mountain monument envoy, he would often lose his position. dynasty of Song Zhenzong dynasty, dynasty of Song Shenzong dynasty, and 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子 时子
Behind the seemingly fateful fate, there are actually fierce personnel changes and struggles after the new emperor ascended the throne. Tras was appointed two days before Queen Elizabeth II of the United Kingdom. Now, shortly after the Queen's funeral ended, Tras announced his resignation, as if the Prime Minister was appointed to "support the Mausoleum".
However, the Shanmao envoy had to work hard for several months before handing in the office, and Trass' term of office was less than two months. There was a live broadcast challenge in the UK, putting the photos and lettuce in front of the camera, to see if the term of Terras was long or the lettuce rotted first. Now the result is obvious, lettuce won.
ambitious
Because the time he was in office was too short, Tras's only big move - also the direct reason for her resignation, was the radical tax reduction plan.
Since the Russian-Ukrainian conflict, the inflation rate in the UK has remained high, and different trade unions in the UK have organized strikes on the streets several times. It can be said that how the new prime minister deals with inflation is the top priority. The prescription given by Trass and her appointed Chancellor Kwoten is: Growth.
In Trass's view, only by allowing economic growth can the UK get out of the predicament and have enough social wealth to support the value of pound . What can stimulate growth? Trass and her Caissen Kwaten believe that high tax rates undermine the competitiveness of the UK and reduce corporate investment and people's enthusiasm for work. Therefore, promoting growth is ultimately implemented in tax cuts.
At the beginning of his tenure, Tras announced the most radical tax cut plan in the UK in recent years. Because the government's main income is taxes, this plan is also called the "mini budget". The most eye-catching ones include:
◎ In advance, the basic personal income tax was reduced from 20% to 19%;
◎ The maximum income tax for people with annual income above 150,000 pounds was reduced from 45% to 40%.
In other words, this is a policy of "give rich more discounts". After the combination of was hit, both economists and ordinary people were shocked. The market also gave a strong response: the pound depreciates sharply, and the yield on the UK Treasury bonds soared.
In this regard, Nobel Prize winner and columnist of " New York Times " Paul Krugman said bitterly:
The UK's risk premium caused by fools, the market has cashed in. There shouldn't be a pound crisis next.
Disaster consequences
GBP 1 There is indeed no crisis, the crisis is the British pension.
is not because of the radical financial investment strategy that pensions adopt. On the contrary, the British pensions hedge against very well in investment, taking into account the impact of inflation and interest rate increase and decrease, and they have basically hedged.
In other words, even under such a huge change in the interest rate of the UK Treasury bond, the pension has lost in the interest rate swap agreement, but the pension liabilities have also declined and the overall balance is still maintained.
But the problem lies in that both ends of the hedge use leverage , and leverage requires margin.The sudden surge in yields has caused a shortage of margin for pensions to hedge interest rate risks. What should I do if
? The pension fund manager can only choose to sell the most liquid bonds to supplement the margin - and the act of selling bonds itself makes the yield continue to rise, so the fund manager has no choice but to continue selling bonds to make up for the margin deficit...
After the bonds were sold, the fund manager began to sell stocks with poor liquidity, which in turn led to a sharp drop in the UK stock market.
After the stocks were sold out, the crisis finally came - because the assets allocated by pension are not only stocks and bonds, but also long-term assets such as real estate and , which cannot be removed in the short term. After all, selling stocks and bonds is a matter of clicking on the mouse and making a phone call, but how easy is selling real estate?
Lehman , which went bankrupt in 2008, actually resurrected the British pension system because of such a policy by Trass. If there is no effective intervention, the consequences and public impact of pension liquidation will be an unbearable burden for the Conservative Party government.
Fortunately, the UK's Central Bank - Bank of England is still professional. It decisively launched quantitative easing at a critical moment, released liquidity in large quantities, suppressed the surge in the UK's Treasury bond interest rate, and saved the pension system from the Lehman moment.
But this has one consequence, that is, the behavior of the Bank of England looks extremely clumsy and strange: , on the one hand, is constantly hiking interest rates to suppress inflation, and on the other hand, is quantitative easing.
In fact, this inside story is extremely dangerous - the Bank of England is also full of anger: the policy space is very small, and every time the interest rate hike is hiring, the newly appointed Prime Minister and the Minister of Finance have made such a big mess, making the previous interest rate hikes look like a joke.
Who is the promoter
So, who proposed this tax reduction plan?
Tras and Kwoten both have close contacts with a British economic think tank. The name of this think tank is the "Institute of Economic Affairs", which has continued to influence Britain's economic and financial policies since the Thatcher era, especially when the Conservative Party was in power. Trass and Kwoten, including many other Conservative members, have spoken at the lunch meeting of this think tank and have close contacts with their top leaders.
Tras and Kwoten
The main idea of this think tank is closer to the traditional liberal economics of the 1960s and 1970s - advocating small government, privatization, and low tax revenue. This is also the theoretical basis for Mrs. Thatcher to carry out large-scale privatization of state-owned enterprises and to make drastic measures to cut down on welfare in the 1980s.
But decades have passed, and both the development of economics and the relationship between the British government and the people have changed a lot. The Johnson government's support for enterprises, protection of unemployment, and financial support for low-income people during the epidemic have been relatively in place, which has won the hearts of many people.
The inflation in the UK is now high, and energy prices remain high. After the new prime minister came to power, most people were looking forward to the government's introduction of severe measures to restrict inflation and measures to safeguard people's livelihood. What they were waiting for was a tax reduction policy that allowed the rich to save more money. How could it not cause a huge rebound?
The main problem in the UK is the economy at present, and there are not many opportunities to deal with economic problems in Tras' political resume. Once the Prime Minister encounters his own poor aspects, he has to obey his advisers' guidance.
Tras takes Mrs. Thatcher as his object of imitation, and he naturally has a bright eye on the think tank that Mrs. Thatcher relied on back then. It is not surprising that "tax cuts stimulate growth" policy with a strong fundamentalist liberal economics was proposed.
Results Economic growth is still not visible, and Trass's own career growth has come to an end first. Later, she urgently announced a major policy turn and fired Caishen Kewoten, which could no longer save her political leadership.
Epilogue
Someone said: My son has experienced four ministers of the Finance Ministers, three interior ministers, two prime ministers and two monarchs, and he is four months old.
Now, we are about to become three prime ministers.
After Tras resignation, the Conservative Party will hold another meeting to re-election the party leader. According to the analysis of sources, the UK may get the script of the Ming Dynasty Nangong Incident - , and he may be back...
Author of this article | Sima Yi | Duty editor | Li Mengqing
Editor in charge | He Mengfei | Editor-in-chief | Zheng Yuanmei | Photo source | VCG
