It is often claimed that no-one foresaw the financial crisis. It’s obvious that some people did – not Vince Cable – but certain hacks, notably Jeff Randall, on numerous occasions, and intriguingly, Larry Elliott (Guardian) and Dan Atkinson (Daily Mail). Intriguing because although they write for very different papers, they co-authored a superb book Fantasy Island, published in 2007 . This little masterpiece pointed out how badly things were going wrong in the UK. Gordon’s “global financial crisis which started in America…sub-prime..bankers let us down etc etc” merely compounded his gargantuan erors.
Very prescient and very thoughtful.
A shame then to see Larry Elliot reverting to “Brown is OK really” form in today’s paper. Although he is always worth reading, it seems he’s swallowed the Gordon excuse book. A bit of light fisking:
“Could it have been any different? Well, yes, actually. It would have been tough and it would have required Brown to eat several large helpings of humble pie, but it was possible for Labour to make a better case for itself.
Firstly, Brown should have highlighted the fact that he got most of the big economic decisions right. Labour’s tight fiscal policy during the boom of the late 1990s helped prevent the economy overheating and provided a war chest that could be spent when the dotcom boom turned to bust.
Knife: Brown only got it right initially because he was purposely and openly copying Ken Clarke’s plans. He absolutely did not build up a war chest. The much abused and recently quoted guru Keynes advised that in order to spend during hard times one should put away the surplus from the good times. Brown knew this – see his economic cycles, the length of which he kept changing. He just didn’t follow it.
The decision not to join the single currency has given Britain the macro-economic flexibility denied to those countries struggling to meet the harsh disciplines of a one-size-fits-all eurozone.
Knife: this is true, except it was John Major who negotiated the opt-out from the Euro, Gordon merely followed this lead. He didn’t have to do any tough negotiating, it was done for him**
And in the three years since the global economy entered its most testing period since the 1930s, the government got all the big calls right: bailing out the banks
Knife: plenty of commentators questioned the bank bail out. Put simply, why not protect deposits – which was already the law – and let raw capitalism deal with the rest. Shareholders should never have been bailed out. No other shareholders get this special treatment. See definition of RISK.
..expanding demand and using the power of the state to mitigate the impact of the downturn on employment, home repossessions and business failures.
Knife: inflation is rising because Gordon printed too much money. This is the inevitable result of his “Keynes excuse”. That learned economist did not say spend millions that don’t exist. And look at unemployment, quarterly growth etc. It’s not a picture to boast about.
Larry then redeems himself a bit with the correct point:
More significantly, Labour over-estimated the strength of tax receipts during the boom years of the mid-noughties, which meant that the economy entered the recession with the public finances in poor shape
but the spoils it again with the misleadingly virtuous claim:
Brown decided the only thing to do was to allow the City to make a mint, cream off the tax revenues and use them for socially useful purposes such as higher public spending and tax credits.
This is how it should really have read:
Brown decided the only thing to do was to allow the City to make a mint, cream off the tax revenues and use them for, on the face of it,socially useful purposes such as higher public spending and tax credits, but in reality to make millions of adults dependent on the state for their wages, pensions and handouts, in the almost certain knowledge that they’ll all vote Labour in the future, for fear of losing it all, while the rest of the electorate pay for it with the most comprehensive squeeze on the taxpayer ever devised…
So when a journalist with the intelligence and pedigree of Elliott ultimately can’t bring himself to state the truth of Gordon’s catastrophic reign, despite having written a book on it, you know that we need a complete clear out of the body politic and its many hangers on.
Three days to go…
**This is worth reading, given Gordon’s repeated claim, misleadingly supported by many commentators that it was he who kept us out. John Major, speaking a few weeks ago:
And he said it was he, not Mr Brown, who had kept Britain out of the Euro.
”Labour claim that Gordon Brown kept us out of the Euro. He did not,” he said. ”The UK kept Sterling because, as Prime Minister, I negotiated an opt-out from the Euro at Maastricht.
”Sterling has remained outside the Eurozone because I offered a referendum before any UK Government could enter the Euro, and Labour felt compelled to make the same offer.
”But for that safeguard, Tony Blair and Gordon Brown would have taken us into the new currency. So when Labour say Gordon Brown kept us out, it is yet another half-truth.
”For Labour, the Euro is another ‘I agree with Nick’ moment.”