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Gordon Brown Helped Cause The Crisis - W S J Opinion

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http://online.wsj.com/article/SB124500992205413331.html

Nice summary in the Wall Street Journal of all Gordon's dodgy bubble blowing shenanigans, followed by (my bold):

No integrity. No managerial competence. Ouch.

(Gordon: But it started in America! :lol: )

Always nice to see the ridicule coming out into the open. :lol:

The Americans have been bewildered by Brown since day one.

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I feel a better way of putting this is "Gordon Brown failed to prevent the Crisis". I'm not saying he's not responsible - he is, and should be punished at the next election for the damage that's been done to people's lives and livelihoods - but saying he helped to cause the crisis is a little too strong and may cause a reaction.

I liken it to a scene in one of the Pink Panther films where a bank robbery is taking place behind Clouseau's back. He even helped the robbers on their way. Clouseau didn't cause or help cause the robbery; however he was negligent in his duties and failed to prevent the heist taking place (although it was obvious to many by-standers what was happening).

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I feel a better way of putting this is "Gordon Brown failed to prevent the Crisis". I'm not saying he's not responsible - he is, and should be punished at the next election for the damage that's been done to people's lives and livelihoods - but saying he helped to cause the crisis is a little too strong and may cause a reaction.

he is a gopher...simple as that,as was St tony of sedgefield.

the policies he was ordered to carry out were quite deliberate,and the financiers and media were equally complicit.

you can apply exactly the same to the barrage of reality TV,database state,ID cards...over-zealous policing...the lot.

until you completely sever the influence of these groups from the machinery of government things won't change one jot.

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Link: http://online.wsj.com/article/SB124500992205413331.html

Nice summary in the Wall Street Journal of all Gordon's dodgy bubble blowing shenanigans, followed by (my bold):

No integrity. No managerial competence. Ouch.

(Gordon: But it started in America! :lol: )

After reading that Broon would of set a new record for the "printer throw". Rather scathing attack...

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Although Gordon Brown did not cause the credit crunch - how much is he personally to blame for how hard it is hitting the

UK, considering he was Chancellor for 10 years?

e.g. Could he have brought in new legislation to curb the excesses of the banks or to head off runaway house prices - what form should this have taken?

Should he have removed legislation, tax breaks etc?

Was he right to give control of interest rates to the BOE?

Did raiding the pension funds cause more people to invest in houses as an alternative pension?

Did he put pressure on the FSA to have a light touch?

Was Gordon Brown as Chancellor of the Exchequer the 'leading protagonist of self-regulation wherever conceivable for banks?'

How instrumental was he in the Financial Services and Markets Act 2000 which gave the FSA it's powers and ultimately

responsible in avoiding financial crisis?

Personally I think Gordon Brown has had a huge role in the mess we are in.

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Shocked by the parliamentary expenses scandal and suffering from the recession, British voters have shown their displeasure with Gordon Brown's government. Labour was trounced in local and European elections earlier this month.

Despite this electoral drubbing, Labour lawmakers expressed their confidence in the prime minister on June 8. Given his supposedly successful management of the economy while chancellor of the exchequer, the majority felt that he was best qualified to lead Britain out of the recession, which, they claim, was caused by external forces, not by Mr. Brown's policies.

The facts show otherwise. Britain's economic downturn began when its house price and household debt bubbles inevitably burst, beginning with the run on Northern Rock in September 2007. These bubbles had swollen to higher levels, relative to average price and income levels respectively, than in the U.S. and other major economies.

In relation to their long-term average, British house prices soared by 88.5% between 1997 and 2007, according to the OECD. In the U.S. the rise was 64.5%. Britain's household debt rose to 176.9% of disposable income in 2007 from 104.8% in 1997. During the same period, U.S. household debt rose only to 105.8% of disposable income from 64.3% in 1997. The increases in Germany and France were considerably lower.

Gordon Brown tolerated and even encouraged the formation of these bubbles for several reasons. The traditional sources of Britain's economic strength, the mining and manufacturing industries, shrank during his term as chancellor. Total mining sector output, including oil and natural gas, dropped by 31% between 2000 and 2007. Total manufacturing production was stagnant during this period.

The gross value, in inflation-adjusted prices, of output from all production industries combined fell by 3% between 2000 and 2007. Their employment level dropped by nearly 1.1 million over the same period. These trends were not an inevitable result of shifts in comparative advantages that are said to occur in advanced economies. Real manufacturing output rose at an average annual rate of 2.2% in the U.S., 1.2% in Germany and 1.1% in France between 2000 and 2006, according to the World Bank.

Eager to achieve the illusion of steady progress in the overall economy, Mr. Brown needed the rapid expansion of financial services, and the real estate and business services industries. Their output soared by 48% and 33% respectively from 2000 to 2007, compared with 19% for the overall economy. Their combined employment level reached nearly 6.7 million in 2007, an increase of more than one million.

Rapid expansion of consumer credit in turn boosted demand for wholesale and retail products and services. The booming financial and real estate sectors, with their inflated salaries, bonuses, and profits generated by unsustainably rapid credit growth, also filled Mr. Brown's tax coffers.

Thus, despite the decline in corporate and personal income and national insurance tax revenues from the production industries, he was able to fulfill Labour's 1997 election promise of expanding public services. The output of health and social services increased by 26.3% from 2000 to 2007. Employment in the category "other service activities," which includes public administration and government services, grew by 1.3 million between 2000 and 2007, reaching almost 10 million -- nearly a third of all British jobs.

So the boom in the financial and real estate sectors served Mr. Brown's political interests well. And he was by no means a passive bystander to their growth. He urged them along in several policy speeches. Introducing on April 1, 2005, a policy document entitled "Homebuy: Expanding the Opportunity to Own," he insisted that "this Britain of ambition and aspiration is a Britain where more and more people must and will have the chance to own their own homes."

Ignoring the inability of many house buyers to pay their mortgages, he touted this message to City bankers in successive annual speeches at the Mansion House in London, promising them "light-touch regulation." Already in 1997 he transferred the responsibility for bank regulation from the Bank of England to the inexperienced Financial Services Authority. He also curbed the central bank's ability to keep asset inflation in check by removing housing costs from the price index.

Mr. Brown also repeatedly praised the City's "innovative skills," bragging in 2006 that it was responsible for 40% of the world's over-the-counter derivatives trade -- which includes the now infamous repackaged subprime mortgages. He gave financial institutions a false sense of security by telling them on June 16, 2004, that "I am determined to ensure that we can lock in greater stability not just for a year, or for an economic cycle, but in this generation."

With this assurance from the chancellor, how could anyone expect bankers to forego juicy profits and bonuses by avoiding innovative but unduly risky practices? Because of the large size and global reach of Britain's financial sector, and the many newfangled financial instruments it created and marketed, Mr. Brown cannot honestly deny all responsibility for Britain's recession.

Given these historic facts, Britain's Labour legislators should think again about sticking with the prime minister. Choosing a new leader with integrity and managerial competence is the party's best chance to win greater respect from voters.

Mr. Marsden, a member of the Council of the Centre for Policy Studies, was formerly an operations adviser at the World Bank and senior economist at the International Labor Organization.

http://online.wsj.com/article/SB124500992205413331.html

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By KEITH MARSDEN From today's Wall Street Journal Europe.

Shocked by the parliamentary expenses scandal and suffering from the recession, British voters have shown their displeasure with Gordon Brown's government. Labour was trounced in local and European elections earlier this month.

Despite this electoral drubbing, Labour lawmakers expressed their confidence in the prime minister on June 8. Given his supposedly successful management of the economy while chancellor of the exchequer, the majority felt that he was best qualified to lead Britain out of the recession, which, they claim, was caused by external forces, not by Mr. Brown's policies.

The facts show otherwise. Britain's economic downturn began when its house price and household debt bubbles inevitably burst, beginning with the run on Northern Rock in September 2007. These bubbles had swollen to higher levels, relative to average price and income levels respectively, than in the U.S. and other major economies.

In relation to their long-term average, British house prices soared by 88.5% between 1997 and 2007, according to the OECD. In the U.S. the rise was 64.5%. Britain's household debt rose to 176.9% of disposable income in 2007 from 104.8% in 1997. During the same period, U.S. household debt rose only to 105.8% of disposable income from 64.3% in 1997. The increases in Germany and France were considerably lower.

Gordon Brown tolerated and even encouraged the formation of these bubbles for several reasons. The traditional sources of Britain's economic strength, the mining and manufacturing industries, shrank during his term as chancellor. Total mining sector output, including oil and natural gas, dropped by 31% between 2000 and 2007. Total manufacturing production was stagnant during this period.

The gross value, in inflation-adjusted prices, of output from all production industries combined fell by 3% between 2000 and 2007. Their employment level dropped by nearly 1.1 million over the same period. These trends were not an inevitable result of shifts in comparative advantages that are said to occur in advanced economies. Real manufacturing output rose at an average annual rate of 2.2% in the U.S., 1.2% in Germany and 1.1% in France between 2000 and 2006, according to the World Bank.

Eager to achieve the illusion of steady progress in the overall economy, Mr. Brown needed the rapid expansion of financial services, and the real estate and business services industries. Their output soared by 48% and 33% respectively from 2000 to 2007, compared with 19% for the overall economy. Their combined employment level reached nearly 6.7 million in 2007, an increase of more than one million.

Rapid expansion of consumer credit in turn boosted demand for wholesale and retail products and services. The booming financial and real estate sectors, with their inflated salaries, bonuses, and profits generated by unsustainably rapid credit growth, also filled Mr. Brown's tax coffers.

Thus, despite the decline in corporate and personal income and national insurance tax revenues from the production industries, he was able to fulfill Labour's 1997 election promise of expanding public services. The output of health and social services increased by 26.3% from 2000 to 2007. Employment in the category "other service activities," which includes public administration and government services, grew by 1.3 million between 2000 and 2007, reaching almost 10 million -- nearly a third of all British jobs.

So the boom in the financial and real estate sectors served Mr. Brown's political interests well. And he was by no means a passive bystander to their growth. He urged them along in several policy speeches. Introducing on April 1, 2005, a policy document entitled "Homebuy: Expanding the Opportunity to Own," he insisted that "this Britain of ambition and aspiration is a Britain where more and more people must and will have the chance to own their own homes."

Ignoring the inability of many house buyers to pay their mortgages, he touted this message to City bankers in successive annual speeches at the Mansion House in London, promising them "light-touch regulation." Already in 1997 he transferred the responsibility for bank regulation from the Bank of England to the inexperienced Financial Services Authority. He also curbed the central bank's ability to keep asset inflation in check by removing housing costs from the price index.

Mr. Brown also repeatedly praised the City's "innovative skills," bragging in 2006 that it was responsible for 40% of the world's over-the-counter derivatives trade -- which includes the now infamous repackaged subprime mortgages. He gave financial institutions a false sense of security by telling them on June 16, 2004, that "I am determined to ensure that we can lock in greater stability not just for a year, or for an economic cycle, but in this generation."

With this assurance from the chancellor, how could anyone expect bankers to forego juicy profits and bonuses by avoiding innovative but unduly risky practices? Because of the large size and global reach of Britain's financial sector, and the many newfangled financial instruments it created and marketed, Mr. Brown cannot honestly deny all responsibility for Britain's recession.

Given these historic facts, Britain's Labour legislators should think again about sticking with the prime minister. Choosing a new leader with integrity and managerial competence is the party's best chance to win greater respect from voters.

"

Good article.

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Superb article. We all knew this here on hpc, but this is a brilliant summary

Agreed it states what many of us knew that Crash was complicit in cretaing a massive bubble. Unfortuneatly the greedy MPs scared of losing their meal tickets will still by him to the bitter end.

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Superb article. We all knew this here on hpc, but this is a brilliant summary

what a brilliant analysis, pity it came from an americam journo and not from the Opposition Front Bench

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We won't be seeing that journo in the UK any time soon. Not with our anti-terrorist legislation.

I hope for his sake he doesn't enjoy a walk in the hills.

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