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Isn’t this glorious?

D’ye recall a bit back when Smurf³ was insisting that the accounting for index linked gilts was wrong. No mark to market?

Now this:

Third, if Record knew anything about accounting he’d know that someone must have made a profit from this fall in value, because after all debits are always matched by credits. And who made that profit? HM Treasury did. In accounting, if the value of your debt falls you record a profit. It’s that straightforward. HM Treasury has gained exactly the amount supposedly lost by the APF. The net impact for accounting is precisely zero right now.

Quite so. But wat this means is that Treasury needs to recapitalise the Bank of England to make up for this. And that’s where the real accounting starts. Sure. BoE was making great profits on the interest rate spread for more than a decade. Which is sent to Treaury. Which then spent it – it’s not on the balance sheet any more. Now the situation is reversed. Treaury must send the money to BoE. Ooops, it hasn’t got it, it’s spent it.

Wonder what spin he’ll use to try and get out of that one.

But Record either did not know this, or chose to ignore it, or he does not understand accounting, or macroeconomics, or how the Bank of England works, or how the APF works. So he wrote a pile of garbage. And the Telegraph printed it.

But that’s the way the right wing media works now.


13 thoughts on “Isn’t this glorious?”

  1. O/T
    Retirees with assets worth more than £1m should be denied the state pension, a leading think-tank has suggested.
    This is the Adam Smith Institute FFS! (Can’t find it on their site)
    No. Fuck off!
    That commitment’s part of the social contract. It’s not the money, it’s the principal.
    Unless they want to go on & scrap all those gold plated not contributory public sector pensions.
    In which case I have other principles might interest you. (H/T the other Marx brother)

  2. Does that £1m asset threshold include public sector workers’ pension? If so, Bring It On!

    A £1m pot would give you the super massive amount of about £12K a year taking inflation into account.

  3. “We’ve been trying to discourage people from saving for several decades but it looks like the message still isn’t getting through. I want to make it quite clear that if you recklessly go about making financial provisions for yourself you’re going to face even tougher sanctions in future.”

    That was a party political broadcast by the Conservative Party (1834-2025).

  4. Was it so long ago that Spudly was outraged at profits created by marking debts down to market values? It seems amazing that he ever practised as an accountant

  5. A £1m pot would give you the super massive amount of about £12K a year taking inflation into account.

    More like £25k on annuity rates as they were last year, and they’re improving now interest rates are up. It’s true that annuities (and most DB schemes) cap their ‘inflation proofing’ to some extent, so if inflation continues at current levels for a decade or so, the £12k might well be correct – but in that event we’d have other problems to worry about …

  6. ” Which is sent to Treaury. Which then spent it – it’s not on the balance sheet any more. ”

    In Spud world the State spending money is always an ‘investment’, so he thinks its still on the balance sheet as an asset…….

  7. Diogenes: Well, there must be a reason he’s writing chippy articles for the Lefty media rather than running a successful accountancy firm. As my father used to say about all the lawyers in politics, if they were any good at the law they’d be practicing it.

  8. @Matt. Let’s be fair.. There are public sector employees that actually work.

    It’s not fair to discriminate against a minority that is powerless against the majority of wastrels and chairwarmers in that sector that give them a bad name.

  9. I used with an initial pot of £1m, 360 monthly withdrawls, and an interest rate of minus 5% (nominal interest rate minus inflation). It gave £1189 per month.

    A naive calculation of £1m divided by 360 gives £2777 per month, but what will £2777 be worth in ten years’ time, let alone 30 years’ time?

    My state pension will give me £8000pa, that tells me I have a “pot” of £0.5m. Does Lord Spudcup want to get his hands on it?

  10. He won’t use any spin and nor do the Twitterati commenting on it – all of whom have links with misanthropic organisations like Antifa, BLM, JSO and others. They just point to the author’s links with the IEA, GWPF and Restore Trust. Taking advantage of the Overton window in U.K. debate now standing well to the Left of North Korea, they imply guilt by association

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