The Guardian view on fiscal rules and financial myths: Britain must stop fearing imaginary bond vigilantes | Editorial

The article critiques Liz Truss's financial policies, attributing her downfall to incompetence rather than simply borrowing. It draws a parallel to Nick Leeson's actions that led to the collapse of Barings Bank. Leeson gambled against the Bank of Japan's policy of keeping rates low. This bet proved disastrous when the Bank of Japan cut rates due to the Kobe earthquake, causing Leeson's losses to skyrocket. The collapse of Barings Bank serves as an example of a "widowmaker" trade. This trade involves speculation against Japanese authorities, often resulting in significant financial losses for the speculators. The article argues that Japan, with its central bank and government coordination, illustrates how the state can influence markets. The implication is that markets are not always the ultimate arbiter. The article suggests that Rachel Reeves should avoid repeating Truss's mistakes by not implementing policies that markets do not support. The author emphasizes the importance of understanding the interplay between government, central banks, and market dynamics. Finally, the article invites readers to submit their opinions on the issues raised.