Thread by @paulmasonnews

I understand MPs' frustration with @Keir_Starmer speech, on top of election losses, but please look rationally at the risks we are running. Here's a visual guide... let me talk through it...🧵1/~

2/ In the left column are all potential options from MPs' discontent with Starmer. I am discontented too, and want more radical policies... I doubt a Streeting challenge would rattle the markets badly - though it risks doing so simply from the law of unintended consequences...

3/ Any soft-left/Burnham challenge that did not have its programme fiscally watertight risks setting off the whole cascade in this chart *even before it succeeds*...

4/ Here's why: this is what's happened to the UK's cost of borrowing since Trump/Natanyahu's reckless war with Iran... because inflation expectations are one factor driving bond yields....

5/ But gilt yields are also driven by fiscal credibility, plus supply and demand - which the Bank is affecting negatively by dumping billions of bonds onto a glutted market through QT...

6/ And we are already an outlier because, as @labourlewis points out, we are dominated by rent seekers who push up living costs to cream off profits from utilities, Amazon etc...

@labourlewis 7/ So when investors worry about politics, it's not about whether a government's 3-year spending plans add up; it's whether they are prepared to do something about this... because if this comes to pass, bondholders expect their money to be inflated away

@labourlewis 8/ Going back to the consequences of an untested (Burnham), uncosted (other soft left) or neo-Corbynite (Unison GS) programme gaining control of a sitting government loom rather large for the people we owe £2trillion to....

9/ The moment the markets believe a govt with a fiscally non-credible programme is imminent, we get a repeat of the Truss fiasco: yields spike, Bank bosses refuse to reverse QT, government falls... if you want to mess around with leadership challenges, this is what you must be prepared for...

@labourlewis 10/ Unlike in 2024, we now know there will be a Musk/MAGA/Putin led "strategy of tension" - the Zinoveiv letter on TikTok - if we then get a Reform or Reform/NatCon coalition, they will shatter our unwritten constitution much more easily than in the USA...

@labourlewis 11/ The only options likely to avoid combined electoral and bond-market meltdown are sticking with the 2024 programme but executing it radically and finding a new narrative voice. Bring the factions into a united cabinet, let the next generation prepare their pitch for 2029...