The short history of Kwasi Kwarteng’s reign

These headlines were one day apart:Kwasi Kwarteng, the UK’s former chancellor, was sacked by UK Prime Minister Liz Truss on Friday, making h [Bloomberg]( Follow Us [Get the newsletter]( These headlines were one day apart: Kwasi Kwarteng, the UK’s former chancellor, was sacked by UK Prime Minister Liz Truss on Friday, making his tenure the second-shortest since 1900. He served eight days longer than Iain Macleod, whose one month in office was brought to an end by his sudden death in July 1970. In that time, it’s safe to say he made his presence felt in the markets. Here’s Elaine He’s illustration of his time in office, via the 30-year gilt yield, which dropped more than 20%, gained nearly all of it back and then fell 20% again: The financial and political turmoil — which threatened everything from the pound to people’s pensions — was unleashed by Kwarteng’s infamous mini-budget, released Sept. 23. It would have been one of the largest unfunded tax giveaways since the 1970s, until Truss U-turned on parts of it: In a news conference Friday, Truss stated that she would keep the increase in corporation tax that was planned under Boris Johnson’s government. Some sort of U-turn — humiliating as it is for Truss politically — was regarded as inevitable by investors. [At least Kwarteng’s failure can serve as a lesson for the rest of the world](. John Authers notes that borrowing a lot of money at a time of inflation and rising rates is not an option, and patience with austerity has run out. The trouble with pensions also demonstrates that regulators didn’t have a grasp on shadow banking — derivatives disguised a huge buildup of leverage and risk-taking, done with money that ultimately belonged to pensioners. The US, Canada and several countries in northern Europe will need to take a close examination of their pension funds. So what now? UK tabloid Daily Star is currently live-streaming a picture of Liz Truss [next to an iceberg lettuce](, in a bid to see which one lasts longer. A head of iceberg lettuce has a shelf-life of about 10 days. [Sacking Kwarteng may have been the first smart move of her premiership](, but everywhere Truss turns, she hits a trap, says Therese Raphael. [Most of them are of her own making](. Even after a semi U-turn, she’s trapped on taxes. Her hope with the roll back was to appease the market while signaling an eventual return to her tax-cutting agenda. But soon after her news conference, gilt yields shot up in an indication that only [a complete repeal of the mini-budget would work](. Then there’s a growth trap, spending trap and — arguably the most dangerous of all — the Conservative Party trap, as MPs publicly plot against her. The one thing that might save her is the fact that getting rid of yet another Conservative prime minister would be absurd. But as Adrian Wooldridge writes, [many Tories are starting to think that absurdity would be better than the alternative](. Several options are being openly considered: replacing Truss with someone neutral, replacing Truss with Rishi Sunak, or replacing Truss with both Sunak and Penny Mordaunt. The keywords are “replacing Truss.” No one can quite predict what might happen in the next few weeks, but it’s clear that [Truss is one of the least popular prime ministers ever to have served]( and that a general election would very likely work in the Labour Party’s favor. Watch this space. There will be more UK drama to come. More UK-Chaos Reading: - Marcus Ashworth explains how maybe, just maybe, the [Bank of England could get away with ending the pension rescue](. - Don’t mistake [UK investors for complete pushovers](, argues Chris Hughes. - Liz Truss may rail against the nanny state, but Therese Raphael points out that [the UK has far bigger problems](. More Data From Bloomberg Opinion There’s been a lot of hype about the Great Resignation, [but job tenure has been pretty flat](. Justin Fox has the data. Robert Burgess warns that the [Fed’s next crisis will come from US Treasuries](. Notes: To contact the author of this newsletter, email Lara Williams at lwilliams218@bloomberg.net. This is the Theme of the Week edition of Bloomberg Opinion Today, a digest of our top commentary published every Sunday. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022