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Culture War Roundup for the week of September 26, 2022

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Not sure if this is exactly Culture War, but I think if anybody can tell me what the heck is going on, you lot can šŸ˜

Okay, so the UK has a new monarch, a new Prime Minister and in the past couple of days, a new budget. And now it looks like a new financial crisis.

Can anybody explain to me, in the manner that Chesterton describes Arnold, with "a smile of heart-broken forbearance, as of the teacher in an idiot school, that was enormously insulting" what has caused this kind of meltdown? I'm cribbing from The Guardian, which is trying to explain what is the problem, but my big difficulty is that I don't understand why the Bank of England had to do this. How did the British economy get to the state that the pound is dropping like a metaphor in Amazon's "The Rings of Power" and the currency apparently would have been worthless?

when the Bank of England made a Ā£65bn move to shore up the market in ā€œgiltsā€, or UK government bonds, for fear that their plummeting value could lead to a situation where pension funds couldnā€™t pay their debts.

And why is anybody surprised by the tax cuts? They're a Tory government, the first thing they do when they get into power - or when a new PM is hoping to take over - is announce swingeing tax cuts for the better-off (along with swingeing cuts in public spending). So why is everyone now going "Oooh, that's a bit dodgy"? The only surprise for me is that it's Kwasi Kwarteng who is the guy in charge of the Budget instead of Rishi Sunak, but I suppose Rishi - being disappointed in his expectations to succeed Boris - has decided to spend more time with his family('s billions).

I think Britain's leaders have no idea what they're doing. Dominic Cummings has been screaming about this for the last 8 years, initially in long, well-thought out essays and more recently in angry, over-capitalized tweets full of made-up technical jargon. He strikes me like a Lovecraft protagonist going mad at the true nature of the eldritch horror.

In this case, the pension funds had decided to leverage themselves on government bonds, using them as collateral to buy other things. When Kwasi issued a particularly blase announcement that they'd borrow even more money, investors freaked out. The price of government bonds dropped since the supply increased.

Since the price of the bonds fell, the pension funds started having to sell their assets, including said government bonds. There was a risk of a deadly spiral. But because it's not a real market, the central bank decided to use its own money (that it freely prints) to buy its own bonds and shore up the price, averting disaster for now. The UK economy is now significantly closer to being an 'emerging market', a place where the currency is really just a piece of paper.

This could and should have been predicted. Lee Kuan Yew wouldn't have done things like this - he was all about fiscal prudency, avoiding the accumulation of debt where possible. But the Brits clearly didn't predict the reaction to their tax-less, spend-more plan. I favour Cumming's diagnosis that the UK political elite lives in its own pocket dimension, only tenuously tied to reality by what the newspapers say, rather than any actual world-modelling ability. They didn't know that they couldn't just borrow more money, they didn't imagine that waging proxy war against Russia might raise energy prices in the UK, a part of the European energy/economic system. They don't understand what causes economic growth, they don't know how to make things happen quickly or efficiently. They don't know.

It seems like the UK and much of the rest of the west is run by the type of people who lived at Versailles. For them, politics is the debate, not the reality. A war with Russia isn't about tanks and bombs, it is about positioning oneself within the debate and what makes sense within the internal palace politics. Energy politics isn't about watts and power, it is about what works on twitter and what image is projected. The electrical grid is failing not because of Russia but because energy policies have been run by people who know more about PR than energy. They aren't really looking at inflation as an economic issue, they are looking at it as a PR issue.

The background of the people running a lot of the west isn't exactly hope inspiring, they come from media, think tanks and universities with little connection to reality. Politics lacks people who have served in the military, run a company, done engineering or worked in a hospital.