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What did she do to make people's mortgages go up?
https://www.youtube.com/watch?v=0CswZ8Fbl80
Here's a short video summary if you're interested in some hilariously fucked up UK politics.
The first 45 sec of the video will set the stage for you.
So, this minibudget included tax cuts, coupled with a massive increase in government spending, which then caused the currency to devalue. Still don't fully understand how it got this bad, though.
The tax cuts were huge (billions). She didn't increase spending, but didn't decrease it either; so it would leave a huge hole in government finance that would require massive government loans. The "market" freaked out. The pound and UKs credit rating plunged. The main crisis became the gilt market crisis (which was a catastrophe for almost all pension funds and the economy as a whole). This itself is well explained here:
https://www.youtube.com/watch?v=5-FdX0djxAE
(In case you haven't noticed, I think TLDR news make absolutely fantastic videos and would recommend checking out their videos if you are interested in high quality news).
Thanks, but how did the pension funds hedge against interest rates in a way that they had to pay up when the interest rate went up?
I have no idea man. My knowledge extends as far as that video. After watching "The Big Short", I've learned that there are a lot of ways that finance bros play the economy in ways that we cannot comprehend.
My hypothesis is that they put the gilts up as collateral so that they could borrow money to invest. So, interest rate goes up, and the value of existing gilts goes down, because why buy a gilt with 1% interest when you can get a new one with 2% interest? Pension funds need to add more collateral to their accounts, because the gilts became less valuable.
Good movie
Thanks. I'll check it out in the evening.
Tried to force through a budget that brought the UK within hours of a greek style total economic collapse until the bank of England stepped in to unfuck things because it was just going to be that bad if they didn't.