Today we all learned a humiliating political lesson about who is really in charge of the country.
At the start of the year, if you had asked anyone who was running the UK, the obvious answer would have been Prime Minister Boris Johnson. Even a couple of weeks ago, most people would have said Liz Truss. Today, it looks like the newly appointed Chancellor Jeremy Hunt was in charge. Yet the true answer is none of the above.
For years, millions of Euro sceptics believed the EU was effectively running UK government policy, telling us what we could and could not do in our own country. That’s what Brexit was all about. Taking back control.
Yet our real lords and masters are even more shadowy than that unelected cabal of bureaucrats and we have zero control over them.
Jeremy Hunt’s pleading look at the camera this morning while delivering his emergency fiscal statement said it all.
His speech was all about keeping international investors happy. So I’ll tell you who runs the country today.
The bond market. You didn’t vote them in, and you certainly can’t vote them out. Bond market representatives do not sit in Parliament or write the laws that govern our country.
They don’t have a name, a face, or an institutional body that sets out their policy or handles complaints.
None of that matters. The bond market still tells our elected representatives what to do, and there is nothing any of us can do about it.
The bond market is made up of a global band of institutional investors who buy government debt such as UK gilts.
Governments fund their spending by issuing bonds, so they have to keep investors sweet. If they turn against us, we are doomed.
This was the lesson that former Chancellor Kwasi Kwarteng forgot, when he announced £43billion of unfunded tax cuts.
His rash mini-budget triggered a bond market strike, as investors lost confidence in his handling of government spending and debt.
Yields on 30-year gilts rocketed from 3.10 percent to 5.20 percent in a matter of hours, with a huge knock-on effect for all of us.
That drove up mortgage rates to more than six percent and would have triggered a £1.5 trillion meltdown in the nation’s workplace pensions, if the Bank of England hadn’t cobbled together a £65billion rescue plan.
The bond market has the power to do that. It holds outsize sway over the UK because we rely on the bond market to fund roughly half of all our government spending.
That’s what years of failing to deliver growth and relying on debt does for you. It has rendered our politicians impotent.
Politicians have known for years how powerful the bond market is. In 1998, then US President Bill Clinton’s political adviser James Carville saw the writing on the wall.
Carville said if there was reincarnation, he would have wanted to come back as the president or the pope until he saw where the real power lay. “Now I would like to come back as the bond market. You can intimidate everybody.”
The bond market intimidated the Kwasi Kwarteng into a series of U-turns that still didn’t save his job. It had Jeremy Hunt sweating today.
When he said the government’s “most important objective is stability” he wasn’t talking to voters, he was talking to bond investors. Or rather, pleading with them.
So-called “bond vigilantes” hand out punishment beatings to any country that is deemed to be fiscally reckless. The UK is now their number one target.
Liz Truss is a puppet prime minister, with Jeremy Hunt and other Tory grandees pulling the strings.
Yet they are puppets themselves. The bond market is the UK’s master now.
Source: The Express.co.uk