Ex-Citi trader Gary Stevenson may become Andy Burnham's economic advisor. UK bankers are dubious
Gary Stevenson, the ex-Citi STIRT trader who claims to have been "The best f**king trader in the world" before retiring aged 27, may become an economic advisor to incoming British prime minister Andy Burnham. Bankers and traders in the City of London are looking askance at the prospect.
Stevenson's alleged appointment as Burnham's economic advisor has been discussed on X/Twitter since yesterday. The allegations are not confirmed and may be spurious. In a YouTube video from early June, Stevenson said he'd never met Burnham. However, he noted that Wes Streeting - Burnham's potential Chancellor - was in favour of a wealth tax. "When your political opponents start to adopt your political messaging, that means you have won," Stevenson declared.
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Stevenson himself has long railed against the inequality caused by rising asset prices in the wake of low interest rates and quantitative easing. His YouTube channel, Gary's Economics, has 1.62m subscribers and posts regular videos in which Gary attributes the UK's problems entirely to wealth inequality. Stevenson himself earned a £420k ($553k) bonus aged circa 24 as Citi's "best" trader and counts himself among the very wealthy. He advocates a tax on anyone with more than $10m in assets.
As we observed two years ago, there is some dispute about Gary's claims to have been Citi's best trader. The FT subsequently spoke to some of Gary's ex-colleagues who said he was good but not exceptional. "He wasn't even close to being one of the stars," said Jeff Feig, Citi's global head of FX. Stevenson regularly makes claims like: "I'm a very very good economist, my predictions will be right."
The possibility that Stevenson will help formulate economic policy under a future government is being received tepidly at best in the City of London. One former colleague said Stevenson may be right about the underlying problems but "that doesn't mean he's right about the solutions." The UK has been badly damaged by rising asset prices and by house prices in particular going through the roof, making it impossible for young people to buy houses, he said. But markets "worry about fiscal extremism" and although a wealth tax that closes the deficit could be viewed favourably, the same ex-colleague says it will be problematic if Burnham's administration is seen as "radical and extreme."
Issues with wealth taxes have been well-documented and include implementation costs, the question of whether to tax unrealised gains, allowing for inflation, and the risk that assets will be moved out of the country. Wes Streeting's support of a wealth tax appears to involve taxing capital gains as income while reserving lower rates for "genuine" entrepreneurs. Stevenson seems to envisage something beyond this.
One macro trader and hedge fund manager says that if a Burnham government attempted to tax cash in ISAs, for example, as wealth, there would be dramatic repercussions. "If I earn $20m, and put $10m into a bank account as cash, I can transfer that anywhere in the world at the press of a button," he says. This is why wealth taxes are often accompanied by exit taxes on attempts to take wealth out of the country, but the macro fund manager says these kinds of exit taxes would be disastrous for the UK. "If they impose capital controls, the pound will halve and gilt yields will be 20%. It would be a straight default. Everyone will try and get their money out of the country."
Instead, the macro trader says the only viable wealth tax is on "crystallised gains." - "If I have an investment and I sell it, I can be taxed on that." This is not what many of Stevenson's supporters seem to expect. "People need to be careful what they say," he says. "- They don't understand the implications."
Other former colleagues of Stevenson query the fairness of taxing wealth amassed by people who've already paid 47% tax on their income. "Conceptually I think it's wrong to say to people who've been slaving their guts out for years with no help from the state, that their success will be penalised," says one. "People are then being asked to trust that having accumulated these assets, the government will genuinely funnel them into the hands of the needy, and it's not at all clear they will."
The same ex-colleague says Stevenson is an "important economic voice" but that "God help us," if he's advising on national economic policy. Another banker turned entrepreneur says Stevenson has made his name preaching to "an economically naive audience desperate for simple answers." One ex-colleague suggests that if Stevenson does advise Burnham, he may be tempered by Jim O'Neill and Andy Haldane, who are also expected to be appointed. Haldane has proposed selling "war bonds" as a solution; O'Neill has proposed relaxing borrowing rules to fund government investments.
"Good luck to everyone," says the macro trader. "This country is already taxing hardworking people a lot. I am just a normal guy and from my perspective there is nothing more to tax," he adds. "They're already maxxed out and they're going down a slippery slope very fast."
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