Monday 23 September 2013

The Brown Delusion

The UK under Gordon Brown

Hmmm....I don't think we should let go unchallanged these assertions made about Gordon Brown in the new damian McBride book. If only becuase they show the usual one-eyed perspective expected of an apparatchik. Apprently Brown as amazing during the 2008 crisis because he managed to discuss getting troops on the street. Not only that but he was allegedly very clam with other world leaders and showed good leadership during the time of crisis.


How exactly did this crisis come about? As my colleague Nick Drew described eloquently last week, the banking crisis started in early 2007 and really kicked off when Northern Rock went under in the middle of 2007. Its peak was in October 2008. What did Brown and everyone else do for a year whilst the banks went under. Where were the stress tests and emergency capital calls that could have saved RBS or HBOS or indeed any of the other mutuals that went under. Or where was the preparation to allow the banks to fail whilst preserving the banking system and the deposits of small retail customers? No this was the time for great rhetoric from Mr Darling in hte 2008 Budget; he spoke of 'this other Eden' and about the opportunities that awaited the UK. Even in the teeth of the Financial Crisis there was to be a budget surplus in 201 and growth prediced at 2.25%.

It is hard now, just 5 years later but with so much having happened, to remember just how absolutely delusional the Government was at the time, not even realising there was a crisis until September 2008 and then being left with no alternative but to take over the bust banks which it had encouraged through the noughties to lend money and not worry about that pesky regulator or commercial reality. Tax income was too important for that.

Even in the crisis to say that Brown of Darling were statesmanlike is laughable. They knew nothing until the crisis was upon them and then had to make obvious decisions in the space of a few hours. Where was Brown counselling Bush against letting Lehmans fail or stopping the Wall Street domino crash of investment banks?
Nowhere to be seen, that's where.

They were worrying instead about how to reverse the 10p tax gimmick that had gone wrong. Worrying about whether the current budget was Green enough for Polly Toynbee.
That's where there were busy.

Could any Government have avoided the terrible crisis we have endured, probably not, could it have been handled much better than it was? Certainly. Idiotic scorched earth policies like 50% tax rates show how important political points scoring was over economic reality and also how they were happy to predict a future of easy growth to justify their vast over-spend ahead of what was obviously going to become a huge recession.

Leadership? Bravery? Do me favour. It's a horrific episode in our history that will scar the Country for the rest of my lifetime. Brown and Darling should be arrested for treason.
Finally, let's nto forget that at the heart of this Government, giving advice and inside the small cabal, were Edi Milliband and Ed Balls, the men who will likley be in charge to create the next economic crisis.


Jonas Lampeter said...

Totally agree. We saw RBS go through several rights issues before giving up the ghost. The government had no clue.

Remember when Darling warned of the recession he complained about "the forces of hell" being unleashed on him by Brown/McBride from Downing Street.

Worse it wasn't just the handling but the cost. Look at the blank cheques given to creditors in all instances.

Plus on a point of detail, the bank rescue plan was designed by bankers, treasury officials and Darling and only presented to Gordon Brown at 5am on the morning it was launched. However he was quick to claim credit for the bailout plans.

Ryan said...

"They knew nothing until the crisis was upon them"

Except Gordon "no more boom and bust" Brown was a historian who knew all about the Great Depression and the credit boom that triggered it. In fact that was probably the only thing he knew about economics.

So the question is, why did he create the credit boom that was bound to lead to a bust? Was he trying to break the system deliberately, or simply trying to buy Blair more time until he got himself in power? Or both? i'm guessing he was simply so ambitious that he was using it to buy time, that he's a thoroughly evil man and Damian McBride and Brown were therefore perfectly suited to each other.

andrew said...

Completely with you until

'Edi Milliband and Ed Balls, the men who will likley be in charge to create the next economic crisis. '

They wont be in charge.
People in the mass wont have as clear a memory as you, but they do know that Labor did something very wrong.

They know what both blair and brown did bad things.

Balls is already tarred by that brush. Milliband might dodge it.

But there are some fairly strong tides moving

After some time when the incumbents have been turfed out, it looks like incumbents are starting to get the upper hand.

Things are getting better (admittedly from a low base) - but they are getting better.

We need get rid of the deficit.
This will not be popular.

As a commentator noted on Today this AM, all the complexity boils down to who sells a vision of hope best.

I dont particuarly rate Cameron, but I wouldn't buy raffle tickets from milliband.

hovis said...

Jonas - I can never understand why the Govt. didnt let them all go bankrupt technically for a second or so and then step in and say we own you - our game our rules. Well actually I do, they didnt have the cohones or the nous.

CU: I'm afraid I dont but the line that The Two Eds will be much worse that the current shower we have in now. It's a question of degree perhaps but too many give Camerborne a free pass as they are dressed in nominal Tory clothes.

dearieme said...

Good stuff, but I must chide you over one remark: "the usual one-eyed perspective" is in bad taste.

As for the next election, all talk of who will win is pointless until people realise how huge will be the advantage that Labour will get from its unreversed gerrymandering of the constituency boundaries, and its corruption-friendly changes to postal voting.

Nick Drew said...

good post CU: important to write the history accurately, memories are short and spin is mendacious

let us hope Andrew is correct

Anonymous said...

They should have set up a load of local banks ready for the crash, perhaps they'll do it this time, it's got to be here in a year or so.

Blue Eyes said...

The only thing anyone needs to remember about Gordon Brown is that in 1997 he promised to ensure that a house-price bubble did not occur.

dearieme said...

In 1997 Blair promised not to scrap student grants.

Blue Eyes said...

I did not realise that student fees had caused the banking crisis. New one on me.