Gordon Brown’s Toxic Tongue
To call the Prime Minister a liar is unedifying. And yet, what am I to do when faced with Gordon Brown’s claim that he is going to “clean up the financial system”?
He threatens to deal with “irresponsible behaviour” in the City of London. This, from the man who was repeatedly warned (by me) over the past 10 years, that he was leading the country into an economic bust that would be as ferocious as the 1930s.
As Chancellor of the Exchequer, he repeatedly assured the nation that there would be “no return to housing boom/busts”. But what did we get? The worst bout of land speculation (because that’s what it really was) in postwar history.
And yet, in 1997, I submitted to him the evidence of what it would take to stall the next housing cycle. He studiously ignored the advice, preferring to ride off into the sunset on his brand of Quixotic economics.
Promises, Promises, Promises
Now we are expected to believe him when he says “I’ve said for some time that we need reforms in the system”. And: “We’ve got to clean up the financial system, we don’t want these problems recurring in the future.”
But the future is precisely what he cannot foresee – or forestall. He’ll go down in history as the Chancellor who chanced his luck – and our homes – on the poker table of conventional economic wisdom.
He’s blaming foreigners, of course. “I proposed a number of things to our international colleagues because this is global action that is needed to deal with a global problem, and in our own country we’ll do whatever is necessary to make sure that people have confidence both in the system and we restore the prosperity of the country.”
Instead of worrying about people’s confidence in “the system”, Brown should reflect hard about whether people have confidence in him.
Popularity: 7% [?]
Hi Fred I am SO angry. Having told us for years that the City needs light regulation in order to attract the best talent and capital to the UK, what do we have now? Nothing but government intervention. What do you think will be the effects of Gordon’s sudden meddling in the markets? First, there’s the ban on short sellers, who are being demonised for being the only people in the system to acknowledge the fact that, er, laundering toxic mortgage debt and passing it off as pristine AAA-rated investments might be bad for a bank’s business. (And as if the traders at the banks themselves have never shorted a stock!) Thanks to this meddling we’re facing another miracle economy in which shares only ever go up (what other asset does that remind you of??) Then there’s the sickening picture of Gordon Brown brokering deals at drinks parties and agreeing to overturn competition laws, just to bail out his City buddies. Can you explain to me why the solution to a bank being too big to fail seems to be . . . to create an even bigger one!?!? I can’t help feeling that all this is going to have unintended consequences that no-one can predict. What disasters do you think is being stored up for the future?
Clare
Dear Clare,
When the history of New Labour is written, Gordon Brown will be revealed as the worst Chancellor that Labour has ever had. But, first, it will be necessary for the current disaster to unfold to its logical conclusion. We are not at the beginning of the end (which is what Brown is hoping for, with his brokered deals in the City, and the Bush Administration’s plan to nationalise all the bad mortgages in the US at American taxpayers’ expense).
We are at the end of Phase I. The financial sector will stabilise, for a while, thanks to the Big Bailout. But now begins Phase II, the slow-motion slide into depression.
Why do I say that Brown will be seen (in retrospect) as the worst Labour Chancellor ever?
Because this outcome was wilfully ordained by Brown. He has no excuses. I laid it all out for him in 1997. He could have prevented it all happening. He chose to pursue the economics of conventional wisdom. Using the practices and theories that have broken down so reliably in the past what made the man think he could avoid the inevitable? Hubris.
Many people will lose their homes and jobs, and there’s nothing that Brown can now do to stop it. His only option is to own up in an attempt to persevere some dignity.
Best regards,
Fred
I hope you don’t mind me asking you two more questions.
1. What can I do to protect myself during the next Great Depression? I’m self-employed so don’t have the worry of redundancy, but I do have the worry of work drying up. I have saved for a rainy day, but I’m worried that my savings will either disappear in a bank bust or be eroded by inflation, given all the money that’s being pumped into the system. Thankfully I don’t have a mortgage because I decided several years ago not to participate in this crazy housing market – I’ve never loved my tiny rental flat more than now!
2. Who should I vote for in the next election? Would any of the other parties have done anything different? Would any of Gordon’s Labour colleagues? I wrote to my MP (Liberal) about my concerns with the way the financial situation is being handled, asking him to challenge Gordon Brown, but he never responded. It seems you’re a bit of a lone voice!
If you could post some blog entries addressing these two questions I think it would be very useful for many people out there.
Apologies if they are answered in your Boom Bust book, but I bought it for my husband who lent it to a neighbour before I could get my hands on it. Both have been amazed at how your predictions are coming true!
Gordon Brown, the self proclaimed greatest chancellor we have ever had. It really makes me wondered what is in his mind. How anyone could possibly believe what they were doing would work. And just when we need the greatest chancellor ever to navigate us through the greatest economic disaster ever, where is he? Just a dot on the horizon and we are left with someone with eyebrows that are the wrong colour. But then if you look closer it’s no surprise he’s gone because in the end all he did was copy American economic policy so really there is no genius economist there at all just some ego centric mad man.
Or is there even more to this?
I’m now thinking either the whole thing is a scam by the banks. Who, some believe, control the governments of the world. I think that is plausible as all governments are in debt to them via fractional reserve + interest + fiat currency = We invent as much money as we want and charge you interest on it but don’t invent the money to pay the interest therefore its not possible to pay back the loan without taking out another loan = Slave!
Or governments and possibly banks are collaborating to destroy the economies of the world and then propose a world currency + government to solve the problem that they created.
Or I could be wrong and all that would require far too much organisation for the shaved monkeys in office and the whole thing is just one greedy fcuk up.
Hi Fred
May I first congratulate you on your book ‘Boom Bust’, I have both the 2005 & revised versions. Absolute required reading for anyone thinking of buying a property in the UK. Had Adam Applegarth or any of those guys at HBOS, Lehman’s, Merrill’s or Bear Stearns picked up a copy -those organisations wouldn’t have got themselves (and us) into such a pickle!
Back to your comments on Gordon Brown. As you say, he is trying to blame the ‘global credit crunch’ and the irresponsible actions of a few bankers.
Will the electorate understand his shift to the CPI (taking house prices out of inflation figures) kept interest rates too low for too long and exacerbated the property bubble? And will they also see that his rampant public spending spree left the coffers empty in the face of the such economic turmoil?
And he had the temerity to boast that he had beaten Boom Bust! I only hope that history judges him as harshly as I already have.
Regards
John