Justin Waite

Behind the scenes of No 10 North…

We are witnessing the unwinding of the biggest bubble in financial history. Every crash I lived through started the same way: A genuinely good idea captures the imagination, then it gets carried to an absurd extreme. As Buffett put it, what the wise man does in the beginning, the fool does in the end. The names change but the pattern never does. Fear and greed, over and over. So let me take you back to the last great top, because I had a front row seat: I started shorting tech in the fourth quarter of 1999, and I was early enough that it hurt. Then in February 2000, the manager of the single best performing growth fund on the planet announced, "If it's not tech, it's drek." You know how it ended. The Nasdaq lost nearly 80%. Julian Robertson closed Tiger. Fidelity's second best manager had his fund pulled. Merrill's chief strategist was shown the door. Did all of them suddenly get stupid? No. The market lost its mind, and then it came to its senses the hard way. I'm watching that same arrogance right now. The difference is this time is WORSE, not better. The malinvestment in this AI buildout is at 17 TIMES compared to what we saw in dot com. This boom is far more asset intensive, and the dollars are far larger relative to the economy. And whenever you see hubris stacked on top of debt, you RUN, you don't walk. That's why I think Oracle can go bankrupt. That's why I think OpenAI WILL go bankrupt. The combination of ego and leverage never ends any other way. The market lost its mind, and it's now starting to come to its senses.

Before Windows95, before Oasis released Wonder Wall and before OJ Simpson faced trial, our new PM Andy Burnham had a job. He had a job as a journalist working for a little publishing company for 3 years. This is the only job any of the new UK Government Cabinet has had. Other than those three years, more than 30 years ago the entire cabinet has only ever worked in tax payer funded roles. None of them have ever had to make a sale. None of them have been paid to pour a pint. None have felt a sick feeling about making payroll. None have been answerable to investors. In the UK 50% of the jobs are small businesses and almost ALL of the jobs growth is small businesses. None of them has ever started, owned or run one. Wouldn’t it be nice if just one of them had some experience in making a small business profitably grow before having a crack at the 7th largest economy. Imagine what it must feel like to KNOW that your wage is paid for by the tax-payer. Imagine the certainty and security working for a government that never fires anyone for anything. Imagine how it would feel knowing you could blow out a budget with no real consequences or you could completely screw up a project and nothing bad would happen. Imagine that level of insulation and comfort for decades. I can’t. I’ve been in business for the last 25 years. If I don’t sell I don’t eat. If I screw up I face very real consequences very fast. Millions of small businesses are being asked to get out there and hire people and grow the economy by a team of people who’ve never had a proper job. Surely something isn’t right with that?

Today’s energy tax cut will give families some breathing room on bills, and provide some reassurance this winter. This will be funded from the cancelled Digital ID scheme this year, helping to bring down inflation while supporting households in every postcode.