The thing that frightens me is that no one in the Govt really understands how the financial markets work and how their condition is fundamental to the health of the nation. Rule One for governments that want to mess with fiscal rectitude is that the bond market will always win.Thank you for this perceptive (and frankly bleeping terrifying!) account of the PMQ fiasco.
And as for this sentence Rayner was...GRINNING! Rayner is a shark. She doesn't give a damn about the country; she doesn't give a gamn about the poor and the vulnerable; she doesn't give a damn about her party or her colleagues. In fact, the worse they perform, the more she sees opportunities to tread on their corpses and get a rung further up the pole.
She's horrendous.
So to take just one example, Reeves' little performance yesterday sent the FTSE 100 down 0.1% and the FTSE 250 down 3.1%. Because this Govt has hung their hat on housebuilding, and building in general is percieved as an economic bellwether, the housebuilders fared worse, down 6% on average.
So what does this mean? Contrary to what many far leftists think, a sustained share price denigration is not just an esoteric matter that's nothing to do with them, nor is it only a problem for the Evil 'Rich'. It means that the housebuilders now have to divert more capital to servicing their balance sheets rather than putting it into working capital ie building houses. This means that Labour's 300,000+ new homes a year target has now taken another blow. That in turn will send existing house prices higher, thus further locking the young out of home ownership.
Bond yields have gone up, because Reeves' tears made the market price in her removal, further tax rises (inevitable after the Welfare Bill debacle) and further UK economic decline. As all public sector and state pensions, and most private pensions, are managed by a few blue chip institutions, those funds will also have lost value, so your pension and my pension and everyone else's pension on this thread just eroded. That in turn will push inflation just as we were starting to get it under some semblance of control.
And if you want to know what can happen when there's a full on bond crisis, take a look at what happened to my home country of Greece in 2010 - 2012. The economy ended up contracting 25%. Pharmacists could not stock life saving medicines like insulin because these things are bought on hedged forward contracts directly linked to bond yields (same in the UK in case anyone's wondering). Middle class professionals were on the streets.
Any Govt that does not have people with an adequate understanding of basic economic or fiscal theory has NO BUSINESS governing us. AFAIK this is the first Govt we've ever had where no one on the front bench has that knowledge base.
Personally, I think it could all get very dark, very quickly. Speaking as a Greek - you never think it will happen to your country, because you're a comfortable first world country, right? Economic collapse doesn't happen here. That's what we Greeks said to each other. But it could, and did.