Post by @ChrisMayLA6@zirk.us

Commentary on the bond market (traders) claims Gilts' yields (the price of servicing public debt) may rise if Labour's prospective losses in this week's local elections prompt either a shift to the Left (in fiscal terms) or a change of leadership (or both).

'Threats' of adverse market reaction by traders to shifts in fiscal policy are really aimed at the Green Party of England & Wales, suggesting Zack Polanski needs a clear bond market strategy to deal with such pressure.

#BondMarkets #Greens

#bondmarkets #greens

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@[email protected] · 4 months ago

@ChrisMayLA6 Well, I have to agree. I'd rather not lend out money to socialists and communists because there would be a high risk of never seeing the money again.

Lending out money to capitalists and people on the financial right is associated with less risk, because they depend on their financial reputation for their credibility.

Communists just shrug and blame the "capitalist pigs" when not returning borrowed money.

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@[email protected] · 4 months ago

@h4890

Hmmm.... I'm not so sure that's what the history of bond defaults would tell us.... especially where capitalist states have inflated their way out of their obligations & corporations have abused bankruptcy laws to avoid their debt obligations.

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@[email protected] · 4 months ago

@ChrisMayLA6 Ahh, but here we must make an important distinction... the laws, which have been abused, are the laws of the government, so ultimately the government bears the responsibility here. Absent those, it is what's in the contract between lender and borrower that governs what happens.

Besides... there are credit rating companies which help with this, but, note that no matter the credit rating or the law, if the government just refuses to pay, that's it. Not much can be done about it.

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@[email protected] · 4 months ago

@h4890

Indeed, but I'm unconvinced that there are no problems in the privately contracted sector that are not covered by the rating agencies.... but as you noted at the start in a sense that is the investors' risk assessment

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Tim Ward ⭐🇪🇺🔶 #FBPE

@[email protected] · 4 months ago

@ChrisMayLA6 But the government only has to sell bonds if it happens to feel like it, so it can refrain from doing so if it doesn't like the interest rate. What happens to the prices of existing bonds doesn't affect government.

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@[email protected] · 4 months ago

@TimWardCam

True enough, but under the current fiscal model, bonds need to be sold both to re-cycle maturing debt requirements & to finance any shortfall in tax income against expenditure.... certainly under a different fiscal model we might do things differently as you suggest, but not under this one

Tim Ward ⭐🇪🇺🔶 #FBPE

@[email protected] · 4 months ago

@ChrisMayLA6 Sure - that's a current choice of the current government, which they could change, not a law of nature.

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@[email protected] · 4 months ago

@TimWardCam

Indeed, but the transition to a different fiscal model might well be quite fraught in the short-term - the bond-vigilantes would not be happy, and the widening impact on other aspects of the financial dimension of the economy would need to be handled deftly, which to be frank seems beyond many of our current political class (who mostly just do what the financial services tell them is 'good for Britain')

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Federation Bot

@Federation_Bot · 4 months ago

@Emeritus Prof Christopher May
Not a serious party to worry about in government; too many radical contradictions.

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@[email protected] · 4 months ago

@citc

Hmmm.... maybe a bit early to reach that conclusion - we're a couple of years out from a general election

Federation Bot

@Federation_Bot · 4 months ago

@Emeritus Prof Christopher May
By then, similar to those 'reform uk' amateurs they will have a body of councillors with their decisions open to scrutiny.

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@[email protected] · 4 months ago

@citc

Indeed, and that *may* work in their favour more than it has for ReformUK Ltd