Good-bye Again Great Britain, Bond Market Dictatorship Begins

The market popped to 3700 this morning on news the bond markets are back in control of Western governments.

ZH: Truss To Fire Kwarteng, Make Major U-Turn On Tax Cuts

Shades of the 1970s:

Instead of tax cuts, rumor has it there will be tax hikes. Various sides of the political circus will have their say about spending and policy, but lets be perfectly objective about deficit spending. Credit growth fuels economic growth as measured by GDP. We can debate up and down about the quality of that GDP, but we cannot argue that higher credit growth generates higher GDP. Even in extreme situations where the government is imploding the economy via hyperinflation, stopping that inflation will cause incredible short-term deflation. Slower credit growth will cause slower growth in the short term. Lower deficit spending will in the longer-term generate higher quality growth as government shrinks in the economy, but that will take time.

Politically speaking, one doesn't want to take office ahead of this collapse unless you have campaigned on doing it. Reagan survived a major recession early in his first term because he unleashed massive deficit spending at the same time inflation had finally peaked and the public was in the mood for reform. Thatcher came into power after the cuts had been made. Truss will end up like Kwarteng.

Only "revolutionary" leaders can handle the current situation. Almost the entirety of the ruling class wants to preserve the existing order. Most of the supposed outsiders are empty suit pretenders or losers who cannot handle the situation. I even include Trump in here because he surrounded himself with clowns and toadies. He came in with a good cabinet and strong advisors, and most were gone within a couple months of his election. Then he put some good people in at the last minute after losing the election. In between was a clown show with warmongers like John Bolton.