Knifonomics (part 34): history made simple


The repercussions of the Great Financial Crisis continue to cause all sorts of effects: on policy, on households, on political posturing, mortgages, pensions…you name it. A certain group of leftist commentators find it handy to blame it all on American mortgages – no doubt a significant factor – in order to exonerate Gordon Brown, if that was possible.

Well, to use Zhou Enlai’s famous cliche regarding the effects of  one of the French Revolutions “it’s too early to tell”.

Having said that, Allister Heath, in City AM, provides a very neat one paragraph summary:

…the Gordon Brown years where the state and banks signed a Faustian, if implicit, pact, where they financed his public spending and he encouraged them to grow: that era was characterised by moral hazard, a safety net of taxpayer bailouts combined with incompetent supervision, with the discipline of markets and the fear of failure removed – a bizarre combination of misregulation and government intervention, socialised losses and privatised profits

Worth repeating, I’d say.


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