A gentle reminder
We are often reminded by Labour front-benchers of Britain’s period of great prosperity, which was brought to an abrupt halt by the “global credit crunch”. A period of great prosperity, often termed a “boom”, which they’d have us believe was architected by then Chancellor of the Exchequer and now Prime Minister, Gordon Brown.
And architected it he did. He—egged on by the (so-called) opposition—created a “light touch” regulatory regime, where the FSA and Treasury were encouraged to believe what banking bosses told them and the Bank of England become largely impotent. He (again, egged on by the Conservatives) revelled in dirty accounting tricks which meant the public purse was liable for a couple of hundred billion pounds over the next fifteen years or so, but that never appeared on any balance sheets. He was running HM Treasury when it refused to bail out Defra’s incompetence with respect to the Rural Payments Agency, leaving the Environment Agency an easy target for a funding cut (which was then forced to make swingeing cutbacks on flood defences, just before Gordon Brown became Prime Minister). Okay, that one’s Defra’s fault, but the Treasury line ensured it was unable to properly fund its operations. Gordon sure looked good shortly after he took up office in Number 10, parading around the country talking to ordinary folk whose homes and possessions were destroyed by floods, though, didn’t he?
The fact is, this regime was created through sleights of hand: tax havens, less-than-honest accounting tricks, “preferred bidders”, and lauding disturbing trends as successes with little regard for the longer-term consequences. So long as the public got new schools and hospitals, and those lucky enough to have houses were able to sell them for more than they paid for them, Joe Q. Public was happy.
He didn’t create a boom. Not really. He created a bubble. For years people have been saying that house prices were unrealistically high and that they appear to be overvalued. Savers in the know didn’t put their money anywhere near banks who borrow from Peter in order to lend to Paul. Certain slightly left-of-centre parties decried PFI for years as a scam which would come back to bite the public sector.
So you’ll pardon me if I’m ever so slightly cynical about Gordon Brown’s ability to save the financial world. Hopefully, would-be Labour voters will realise this before the next election if Brown hasn’t been replaced.
