Gordon Brown claimed today that he had been warning for ten years that the international financial markets needed to be more strongly regulated.
The Prime Minister said that it was a decade ago in Harvard that he first called for an international early warning system to alert countries to developing crises in any part of the world, because the huge global growth and reach of financial systems meant that all markets, all economies and all banks were now interdependent.
Mr Brown said that he had recognised the need for a stronger regulatory framework ever since the crisis in Asian markets in the 1990s.
The current global crisis, which began when the US housing bubble burst but whose effects were now being felt worldwide, he said, proved the need for world leaders to meet to put in place a new international system of regulation akin to the Bretton Woods conference after the second world war.
The subject would be top of the agenda at the G20 summit in London in April, he promised.
"As I said in Harvard ten years ago, we need an early warning system so that international financial flows are properly monitored," Mr Brown said in a speech this morning.
"We must create a framework for the international governance that we currently lack. We must consider at a global level the regulatory deficit. For a decade I have said that the current patchwork arrangement is inadequate."
The Prime Minister's claim to have been warning of the risks of failing to regulate global markets is likely to provoke derision from opposition parties, who accuse him of failing, as Chancellor from 1997 to 2007, to do anything to halt the worst period of unbridled risk-taking by financial institutions.
Britain's heavy dependence on the financial markets of the City of London as the motor for its economy means that the country will find it harder to recover than other more diverse economies, Mr Brown's critics say.
Mr Brown defended his record, claiming that Britain had "low public debt, low inflation and low interest rates", and that corporate debt was far lower than in previous times of financial crisis. He did not allude to Britain's record levels of personal debt.
"We are in a stronger position because we have taken action early to recapitalise our banks and aid recovery," said Mr Brown.
"In the last 10 years since the Asian problem we in Britain have been advocating greater international supervision and reforms in transparency and exposure.
"Every financial system will have to look at how it organises its affairs in future, but every financial system will also have to find a way of working with international partners. Because if something that happens in the US can affect every country in Europe, there needs to be a way by which regulators and supervisers can be more closely linked with one another."
Mr Brown listed the international reforms he said were needed, including:
* ensuring national financial regulators stay in close touch with their counterparts in other countries
* setting standards for all financial institutions around the world on transparency and corporate governance
* reforming bankers' pay and rewards to encourage responsible, long-term risk-taking rather than quick profit.
The rules would have to cover the new and complex, highly leveraged financial instruments that had come into being to spread risk, but which were too little understood and had now exposed investors everywhere to huge financial problems, Mr Brown said. He advocated "a simple rule - if you don't understand the risk, don't take it".
He said that international co-operation was needed to handle the threat of "de-leveraging" - when such investments are given a new, and much lower value, causing violent plunges in the balance sheets of banks, businesses and pension funds that have bought into them, and leaving ordinary people finding that their investments and pensions have dramatically shrunk.
He said that he and Alistair Darling, the Chancellor, would be inviting bank chief executives for talks before the G20 conference on how to handle de-leveraging.
He also warned against "de-globalisation" - a tendency for governments and banks to stop lending outside national borders, which Mr Brown said would only make the credit crunch worse.
Once more brilliant journalism here which fails to nail the bar steward to the wall by his gonads.
No mention of the warnings given by the IMF, isn't this a global organisation capable of issuing warnings?
No mention of the questions raised by Vince Cable in 2003 in the houses of parliament that Brown laughed off.
No mention of the likes of Roubini etc.... who've been warning about this for years that Brown ignored.
No mention of the laughable speeches by Brown which applauded his own genius for producing a stable economy.
WTF is a matter with the press, it's like they are all asleep at the wheel or high on crack cocaine.
Edited by interestrateripoff, 26 January 2009 - 03:14 PM.