The Bondholder’s Democracy

Image from Wikipedia Commons

Like a posse of deranged clowns stubbornly clinging to some lead balloons in the Mariana trench, the Conservative Party remains ever committed to its unrelenting quest to hit rock bottom. Somehow, the perpetual political crisis that has gripped the United Kingdom since its ill-fated Brexit vote keeps getting ever more absurd.

The latest installment of the hit comedy series “Taking Back Control” has included such gags as MP’s being “bullied and manhandled” by ministers, the appointment as Home Secretary of a man who until recently lived a double life under an assumed name, a prominent newsreader calling a government minister a c*nt, reports that “Tory MP’s went to bed crying” and, finally, the Prime Minister losing an endurance contest to a lettuce and resigning from office.

That all this occurred in less than 24 hours should remind us that while “a week is a long time in politics”, in the accelerating doom loop within which Britain is ensnared so too is a night. Already this year, the UK has had two different monarchs, three Home Secretaries, four Chancellors of the Exchequer, and soon to be three Prime Ministers. It says a lot about the chaotic nature of governance in Britain that perhaps the most unexpected departure of all was that of the ailing 96 year old Queen Elizabeth II.

If the Queens departure was the year’s most surprising, the sacking of the Chancellor of the Exchequer, Kwame Kwarteng, was arguably its most significant. Not only did it signal the decisive termination of Liz Truss’s economic agenda, it also triggered the events that led to her eventual resignation. Kwarteng was fired by Truss after his disastrous September mini-budget sparked a run on the pound and arguably came close to precipitating a global financial crisis.

The package of measures announced by Kwarteng in September included £43 billion worth of tax cuts, the largest since the 1970s, and combined with Truss’s commitment to cap the price of energy for households facing into a potentially severe winter energy crisis, this left a gaping hole in the public finances. Unfortunately, the pair did not see fit to provide any details about how the tax cuts and energy supports would be paid for, raising fears that the government would have to borrow heavily. This sent the cost of government borrowing skyrocketing and sent the value…