'Not my fault Guv'
Gordon Brown is trying to present a clear message about the dire economic situation facing Britain, -'none of it,' he says, 'is his fault it is all down to international events beyond his control.' This of course contrasts very strangely with his claim that from 1997-2007 the (credit fuelled), economic boom we enjoyed was all because of his actions as Chancellor and none of it was due to international events!
Where does the truth lie as unemployment, inflation and home repossessions reach their highest level since the early 1990's? On soaring fuel and food costs Gordon has a point. These are the result of international events on which he has little influence.
The financial crisis, the worst since the events that led to the Great Depression in 1929, however is a different matter. Here Gordon and New Labour must take their full share of the blame along with Margaret Thatcher and George Bush. In the USA and the UK the financial sector was deregulated massively in order to 'allow the capitalist free market to flourish and attract business into the City of London and into Wall Street.' In the UK this was started by Margaret Thatcher but continued by New Labour Chancellor Gordon Brown after 1997 -anyone remember Peter Mandelson saying that '"New Labour were relaxed about people getting filthy rich"?
The result was that some banks (and most building societies turned themselves into banks so that they could 'get a piece of the action'), started loaning money to people who could not afford to repay it, so that they could earn vast bonus and commission payments. Knowing that these debts were highly likely to 'turn bad' -i.e. NOT be repaid - a lot of it was mixed up with 'good debt' and sold to other financial institutions around the world.
The result of all this, we have been suffering from for the last year. Once solid organisations like Lehman Brothers in the USA and Northern Rock (with its 125% mortgages), in the UK, have gone bust. Nearly all banks have discovered that they own huge amounts of bad debt that will not be repaid. The financial system has ground to a halt and the 'free market' whiz kids who rejected all Government regulation now want the taxpayer to bail them out -to the tune of a TRILLION DOLLARS in the USA!
Gordon has now announced that he plans to introduce a Bill in Parliament in October to regulate the banks. About 11 years too late Gordon -you should have done this in 1997. The credit based economic boom of 1997-2007 would not have been so big -but the crisis we now face would not have been so devastating either.
Paul Holmes is MP for Chesterfield.