{"id":1707633,"date":"2022-10-23T08:48:58","date_gmt":"2022-10-23T12:48:58","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1707633"},"modified":"2022-10-23T09:05:13","modified_gmt":"2022-10-23T13:05:13","slug":"charles-gasparino-truss-worthy-biden-prezs-economic-mess-could-bring-doom","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/charles-gasparino-truss-worthy-biden-prezs-economic-mess-could-bring-doom\/","title":{"rendered":"Charles Gasparino: &#8220;Truss&#8221; Worthy Biden: Prez\u2019s Economic Mess Could Bring Doom"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcharles-gasparino-truss-worthy-biden-prezs-economic-mess-could-bring-doom%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1707633&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><aside class=\"single__inline-module alignleft\">\n<div class=\"inline-module inline-module--columnist inline-module--author\">\n<div class=\"inline-module--author__img\">\n\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"76\" height=\"69\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/02\/Gasparino_Charles_headshot.png?w=76&#038;h=69&#038;crop=1\" class=\"attachment-nyp_columnist size-nyp_columnist\" alt=\"Charles Gasparino\" srcset=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/02\/Gasparino_Charles_headshot.png?w=152 152w, https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/02\/Gasparino_Charles_headshot.png?w=114 114w, https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/02\/Gasparino_Charles_headshot.png?w=76 76w, https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/02\/Gasparino_Charles_headshot.png?w=38 38w, https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/02\/Gasparino_Charles_headshot.png 706w\" \/>\t\t<\/div>\n<\/div>\n<\/aside>\n<p>The bond market just carried out a hit on Liz Truss, so watch out, Sleepy Joe, <a href=\"https:\/\/nypost.com\/2022\/10\/21\/why-novembers-starting-to-look-like-a-red-tsunami-dems-have-nothing-on-voters-top-concerns\/\">you could be next<\/a>.\u00a0<\/p>\n<p>The implosion of the UK prime minister is certainly one for the ages. She came in with a burst of optimism that she would reverse the country\u2019s economic malaise with Thatcherite tax cuts.<\/p>\n<p>Unfortunately, Truss left out a few steps, including Thatcherite cuts to government spending. The bond market revolted. After less than two months in office, <a href=\"https:\/\/nypost.com\/2022\/10\/20\/boris-johnson-planning-comeback-to-replace-truss-report\/\">she\u2019s now political roadkill<\/a>.\u00a0<\/p>\n<p>It\u2019s a lesson of how markets \u00adimpose their own discipline on undisciplined political leaders, like Truss or, possibly someday soon, the dude we have in the White House.\u00a0<\/p>\n<p>Yes, real power lies with bond investors. They control things by setting interest rates on various government bonds that all other lending rates are pegged to and the economy responds to. If they think the value of their holdings will be eroded by inflation or deficits, they revolt by selling. Interest rates rise and the economic fallout could be devastating.<\/p>\n<p>Recall then-President Bill Clinton\u2019s famous surprise\u00a0 during the first year of his presidency about how debt investors \u2014 or as he put it, \u201ca bunch of f\u2013king bond traders\u201d \u2014 had a veto over his spending plans. After Clinton\u2019s economic team convinced him the traders did, he used revenues from a tax increase mainly for deficit reduction, and the economy eventually recovered.\u00a0<\/p>\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/Screen-Shot-2022-10-22-at-10.00.28-PM-1.png\"><img loading=\"lazy\" decoding=\"async\" width=\"576\" height=\"638\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/Screen-Shot-2022-10-22-at-10.00.28-PM.png\" alt=\"Biden Truss\" class=\"wp-image-24368839\" srcset=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/Screen-Shot-2022-10-22-at-10.00.28-PM-1.png 576w, https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/Screen-Shot-2022-10-22-at-10.00.28-PM-1.png?w=288 288w\" \/><\/a><figcaption><span class=\"credit\">New York Post photo composite<\/span><\/figcaption><\/figure>\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1244134776.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"682\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/GettyImages-1244134776.jpg\" alt=\"The bond market has become skittish in recent weeks.\" class=\"wp-image-24368718\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1244134776.jpg?quality=75&#038;strip=all&#038;w=2048 2048w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1244134776.jpg?quality=75&#038;strip=all&#038;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1244134776.jpg?quality=75&#038;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1244134776.jpg?quality=75&#038;strip=all&#038;w=512 512w\" \/><\/a><figcaption>Joe Biden has faced criticism over rising inflation in the US.<\/figcaption><figcaption><span class=\"credit\">The Washington Post via Getty Im<\/span><\/figcaption><\/figure>\n<p>I give Truss some credit for at least considering the bond-market reaction to her tax and fiscal plan, even if it was a feeble one.\u00a0 Last month, just after she officially took the job as prime minister, she appeared confident in looking to sell it to New York bond investors, sources tell me. The good times were about to roll, she assured one money manager I spoke to.\u00a0<\/p>\n<aside class=\"single__inline-module alignright\">\n\t<\/aside>\n<p>The markets will love cutting corporate taxes and more. The burst of supply-side stimuli will allow her to fight what ailed the UK economy \u2014 slow growth and massive 10% inflation, aka the stagflation she was handed by her predecessor, <a href=\"https:\/\/nypost.com\/2022\/10\/21\/boris-johnson-emerges-as-favorite-to-return-as-pm\/\">the recently ousted Boris Johnson<\/a>, whose tax-and-spend policies contributed mightily to the country\u2019s economic \u00adanguish.<\/p>\n<p>\u201cShe sounded like she was about to take over the world,\u201d the money manager added.\u00a0<\/p>\n<h2>Reversing course<\/h2>\n<p>Fast forward a few days and Truss was quickly reversing course. Bond traders had enough of the unprecedented spending amid the pandemic and the recovery, coupled with super lower interest rates and money printing by the Bank of England. UK debt is now around 98% of the country\u2019s gross domestic product of \u00a32.4 trillion. You read that right: The amount of debt owed by UK taxpayers to investors is as large as the economy itself.\u00a0<\/p>\n<p>In other words, it wasn\u2019t such a good time to cut taxes without also cutting spending. Traders began selling the Gilt, the UK version of the US Treasury bond. Yields spiked widely; UK pension funds loaded with debt tied to risky derivatives took massive losses, and a meltdown of the UK financial system was looming as the market imposed its own discipline selling gilts and sending interest rates soaring.\u00a0<\/p>\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1421411493.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/GettyImages-1421411493.jpg\" alt=\"Johnson is a front runner to become the next Prime Minister.\" class=\"wp-image-24368719\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1421411493.jpg?quality=75&#038;strip=all&#038;w=2048 2048w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1421411493.jpg?quality=75&#038;strip=all&#038;w=1536 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1421411493.jpg?quality=75&#038;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/10\/GettyImages-1421411493.jpg?quality=75&#038;strip=all&#038;w=512 512w\" \/><\/a><figcaption>Truss inherited a stagflation economy from Boris Johnson. <\/figcaption><figcaption><span class=\"credit\">Getty Images<\/span><\/figcaption><\/figure>\n<p>The Bank of England soon became worried about a \u201cLehman\u201d moment. Overnight, the BOE went from a seller of debt to stamp out inflation it helped create to printing money once again. This epic monetary policy reversal was followed by Truss\u2019 own epic volte-face.\u00a0<\/p>\n<p>Realizing that those damn bond traders hated her plan, she went from Thatcher back to the tax-hiking Boris Johnson.\u00a0<\/p>\n<p>No more tax cuts or cuts of any kind, she announced. In fact, tax increases are on the table. None of this helped her standing in the cruel world of British politics, which is far more capricious than our own, even if bond traders backed off.\u00a0<\/p>\n<p><a href=\"https:\/\/nypost.com\/2022\/10\/20\/economy-sinks-truss-but-not-xi-which-bodes-ill-for-global-economy\/\">Word spread Wednesday night she was out<\/a>, I first reported. By Thursday, she announced her resignation<a href=\"https:\/\/nypost.com\/2022\/10\/20\/after-liz-truss-the-shortest-serving-uk-pms-world-leaders\/\"> after just 44 days in \u00adoffice<\/a>.\u00a0<\/p>\n<aside class=\"single__inline-module alignright\">\n\t<\/aside>\n<p>Sleepy Joe Biden should be taking notes on Truss\u2019s trussing. Inflation is raging here as in the UK. Biden has kept spending, and until recently the Fed kept printing money. US debt is a staggering 125.9% of our GDP, or more than $31 trillion, according to \u00adUSdebtclock.org.\u00a0<\/p>\n<p>To fight the inflationary spiral created by Biden\u2019s spending (and its own easy-money policy) the Fed (like the BOE initially) is raising interest rates. The bond market isn\u2019t in meltdown but it is getting skittish.\u00a0<\/p>\n<h2>Recession soon<\/h2>\n<p>Yields on 10-year Treasuries have risen significantly over the past year, showing that those pesky bond traders think inflation and recession-inducing deficits are coming sooner or later.\u00a0<\/p>\n<p>If inflation doesn\u2019t peak and if the Fed keeps hiking, the bond market could sell off significantly, presenting one of those Lehman moments with mounting investor losses, and economic stagnation that the Brits just tried to avoid. Throw in massively higher US interest costs to service the enormous debt and you can see the pickle we\u2019re in.\u00a0<\/p>\n<p>There are key differences between the UK system and our own, of course. Our economy is much stronger thanks to American innovation in tech, etc. There will be no push to oust Sleepy Joe midterm, though he could be <a href=\"https:\/\/nypost.com\/2022\/10\/21\/why-novembers-starting-to-look-like-a-red-tsunami-dems-have-nothing-on-voters-top-concerns\/\">running for reelection in the middle of a financial storm.\u00a0<\/a><\/p>\n<p>That means Biden should be very afraid. The bond market is starting to eye him as its next victim, and those \u201cf\u2013king bond traders\u201d usually get their woman or man.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The bond market just carried out a hit on Liz Truss, so watch out, Sleepy Joe, you could be next.\u00a0 The implosion of<\/p>\n","protected":false},"author":1,"featured_media":1321749,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[],"class_list":["post-1707633","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1707633","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1707633"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1707633\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1321749"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1707633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1707633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1707633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}