Gordon Brown wants to infect the leaders of the G20 countries with his Walter Mitty fantasies.* If he succeeds in luring them into his make-believe world the collective denial about the roots of the global economic crisis will mean the depression may well exceed the worst excesses of the ’30s.

The Prime Minister is scheming hard transmit his tragic syndrome for when they arrive in London on April 2.
Brown will cajole them into focusing on a narrow set of strategies. He wants them to think that the cause of the crisis is international – and entirely due to America’s sub-prime mortgage scandal. It isn’t.

If he succeeds, he will have conned these nations into misdiagnosing the problem. And that automatically means their “remedies” will be so far off the mark, that they are bound to fail.

“Don’t blame me, Guv”

During his visit to Washington, to bask in the reflected glory of Barrack Obama, Brown refused to apologise for his due diligence failures whilst he was steering the UK economy. Why should he? After all, there was nothing wrong with the British economy! Or so the Prime Minister would have us believe.

In the briefing for the G20 summit, Brown authorised an account that will for years to come be studied as a key document in the black art of state propaganda. This is how the UK is portrayed in Road to the London Summit:

“The global economy was growing strongly when the sub-prime crisis hit. In the UK, the economy was close to trend, inflation was close to target, public sector debt was relatively low and unemployment remained low. The US economy was the first to slow, but the crisis quickly spread to other advanced economies.”

The State of Denial

Brown’s head is buried so deep in the sand, that he could be confused for looking for oil. During his 10 years in the Treasury, he repeatedly lectured people on the risks of a housing boom bust. Over the previous 30 years, he emphasised, instability in the property market was always followed by recession.

The Treasury documented the price volatility. In one of its reports (Housing, Consumption and EMU) we read… “the UK stands out with one of the highest trends in real house prices and more volatility than in Germany and France”. What happened? UK house prices soared into the stratosphere in 2006-7, floating away on a bubble that had to end in a bust of classic proportions – which it did, on time.

But Brown was by now so heady with his own concoction of laughing gas, that he just could not see what was happening in the world of reality. Nor could his closest acolytes. Fir survival he was schooling his mind into the state of denial.

Britain’s home-grown disaster was replicated throughout the rest of the world. Global property markets were synchronised along a single path. But if the correct fiscal policies had been adopted over the previous decade Britain could have opted out of the property crash.

To prevent it happening again, the G20 should look closely at the land market, and the taxes that affect house prices. But that would be too close to home, for our fantasist Sub-Prime Minister. He prefers to distract us with the size of bankers’ bonuses and pensions - every illusionist needs a diversion. But let’s allow Brown to speak for himself on regulation:

“The better, and in my opinion the correct, modern model of regulation – the risk based approach – is based on trust in the responsible company, the engaged employee and the educated consumer, leading government to focus its attention where it should: no inspection without justification, no form filling without justification, and no information requirements without justification, not just a light touch but a limited touch. The new model of regulation can be applied not just to regulation of environment, health and safety and social standards but is being applied to other areas vital to the success of British business: to the regulation of financial services and indeed to the administration of tax. And more than that, we should not only apply the concept of risk to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all.“ Gordon Brown, 2005

* Walter Mitty is a James Thurber character who lived a life of fantasy. The name is now used to refer to an ineffectual dreamer.

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