Wednesday, Sep 30, 2009

Gordon Brown was the cause, not only of the UK credit crunch, but also the US credit crunch

Telegraph: Was Gordon Brown's speech at the Labour Party conference the last gasp of a charlatan?

''Mr Brown...was the cause, not only of the UK credit crunch, but more seriously, the credit crunch in the United States....The light-touch, non-existent bank regulation that Brown had made available in the UK was noticed by American banks and so many of them switched their centres of operations to London that Clinton was forced to repeal the Glass-Seagall Act in order to prevent Wall St. becoming a ghost town for banking''
Comment by Rob Bryant 10:49 am

Posted by hpwatcher @ 09:35 PM (1299 views)
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1. hpwatcher said...

Here is the full comment in the Telegraph, which makes for very interesting reading:-

''Gordon Brown still claims to have saved the world from the financial tsunami of 2007. This is typically hypocritical of Mr Brown since he was the cause, not only of the UK credit crunch, but more seriously, the credit crunch in the United States.

In 1933 the first Roosevelt administration found that 50% of American banks had vanished in the depression. Confidence in the banking system had to be re-established, and this was done by the passing of the Glass-Seagall Act, which separated Main Street banking from investment banking. A depositor in Milwaukee could have confidence that his money would not go for adventures on Wall St. Confidence was gradually restored albeit slowly.

The Glass-Seagall Act remained law until it was repealed by Clinton in 2000. Why was it repealed? Because in 1997 Gordon Brown took UK bank regulation away from the Bank of England and split it between the Treasury, the Bank of England and the FSA. None of them knew exactly what their remit was but, crucially, they didn't know the remit of the others, resulting in Northern Rock and worse. No-one in Whitehall was monitoring Northern Rock lending long - 25 years - and borrowing short - three and six months - on the money markets. Darling admitted that the first he knew of the run on Northern Rock was when he read about it in the Financial Times while on holiday. But no-one in Whitehall noticed and told him!

However, the light-touch, non-existent bank regulation that Brown had made available in the UK was noticed by American banks and so many of them switched their centres of operations to London that Clinton was forced to repeal the Glass-Seagall Act in order to prevent Wall St. becoming a ghost town for banking. Clinton was succeeded by GW Bush, friend of Wall St, the genie was out of the bottle, and the rest is history. Gordon Brown caused the American credit crunch. No wonder Obama didn't want to talk to him.

The blame doesn't entirely rest with Brown. Cameron, allegedly a financial genius on account of his time working for Norman Lamont, did not notice what was going on and said nothing. The Sage of Twickenham is alleged to have forseen the tidal wave coming but did he? Some vague words about excessive lending and house-prices but nothing about the fundamental and fatal error in dividing bank regulation. And didn't Shell have their own difficulties when he was chief economist there? But he is a financial genius so enough said.

There is a conspiracy in Westminster to let Brown off the hook on the credit crunch debacle because they are all complicit in the mire that allowed it to happen, and it takes attention away from the expenses in which, if they were not exactly guilty, they still quietly passed by on the other side of the road without yelling 'Stop Thief!'

None of the LibLabConspiracy will change their spots. It has to be a change of party if life is to get better and it will only be done at Westminster, not in Brussels. So its UKIP for me and mine.''


Rob Bryant
on September 30, 2009
at 10:49 AM

Wednesday, September 30, 2009 09:37PM Report Comment
 

2. devo said...

We all agree that at the heart of the modern enterprise challenge is minimising regulatory concerns and I want to say something about that now.

Whenever I go to the USA and talk to businessmen and women there, they express exactly the same frustrations about regulation and the same hopes about reducing burdens.

And I know that you feel that what we need is real delivery – and I want to underline this by a better understanding of risk and indeed implementing a modern risk based approach to regulation so that the culture change we all agree upon can be advanced.

And let me thank Sir David Arculus your new President for his pathbreaking work and many others in this organisation who have led the way.

In the old regulatory model – and for more than one hundred years – the implicit principle from health and safety to the administration of tax and financial services has been, irrespective of known risks or past results, 100 per cent inspection whether it be premises, procedures or practices.

So regulation came to mean that government routinely and continuously inspected everyone and everything, demanded information from all of us on a blanket basis, required forms to be filled in for all issues subject to regulation and inspection -- the only barrier to complete coverage usually being a lack of resources.

This approach, followed for more than a century of regulation by governments of all parties is outdated.

The better, and in my opinion the correct, modern model of regulation – the risk based approach - is based on trust in the responsible company, the engaged employee and the educated consumer, leading government to focus its attention where it should: no inspection without justification, no form filling without justification, and no information requirements without justification, not just a light touch but a limited touch.

THE RT HON GORDON BROWN MP TO THE CBI INTERACTIVE CONFERENCE 2005

http://www.cbi.org.uk/ndbs/press.nsf/0363c1f07c6ca12a8025671c00381cc7/ee59d1c32ce4ec12802570c70041152c

Wednesday, September 30, 2009 09:45PM Report Comment
 

3. icarus said...

I don't think so. There was more complementarity than competition between London and Wall Street. American investment banks already practically wiped out their UK equivalents and dominated London's asset markets before 1997. London became a satellite for Wall Street and Blair/Brown were happy to play along since this since it spread wealth around the South East and gave the Lab party the SE support it needed. Brown knew he was allowing Wall Street, not UK, investment banks to regulate themselves with the light-touch "regulation". (Did I say "regulation"? The FSA couldn't pour pi55 out of a boot unless the instructions were written upside down on the heel.)

Wednesday, September 30, 2009 10:01PM Report Comment
 

4. the number cruncher said...

Just because GB is an idiot does nor mean that Bullingdon Dave is not. And the sad truth is that Dave will have to be a genius to survive in power and build a long term sustainable economy. He would do better personally by engineering the foundations of the next bubble.

Our political system rewards short term self interest and that is the real reason we are in the state we are and not because of the personal qualities of the party leaders.

Mind you to sum up the intelligence of the comments I thought this one was priceless, you just couldn't make it up if you tried:

"Our brave troops fight for Queen and country, so will this mean they come home early or does poor Tommy fight on behalf of the unelected and un-removable ruling elite."

Wednesday, September 30, 2009 10:33PM Report Comment
 

5. the number cruncher said...

Just because GB is an idiot does nor mean that Bullingdon Dave is not. And the sad truth is that Dave will have to be a genius to survive in power and build a long term sustainable economy. He would do better personally by engineering the foundations of the next bubble.

Our political system rewards short term self interest and that is the real reason we are in the state we are and not because of the personal qualities of the party leaders.

Mind you to sum up the intelligence of the comments I thought this one was priceless, you just couldn't make it up if you tried:

"Our brave troops fight for Queen and country, so will this mean they come home early or does poor Tommy fight on behalf of the unelected and un-removable ruling elite."

Wednesday, September 30, 2009 10:33PM Report Comment
 

6. britishblue said...

Very naive to think that the States repealled Glass Seagall because of the UK and that Brown is responsible for the world wide credit crunch.

There are some very bitter political posters on this forum. The de-regulation that took place when Blair took over was a continuation of what Major and Thatcher were doing and to a certain extent was apolitical and would have happened whether Blair/ Brown or the Tories had been in power. Where the Tories and New labour would have divided on policy is on areas like public expenditure not regulation of the banking system. If Labour had tightened the controls in the last few years, the Tories would have bayed for blood claiming it was old labour up to their old tricks.

But I suppose some peple can't sleep at night unless they can pin every ill of the world onto Brown.

Chill out with some cocoa!

Wednesday, September 30, 2009 11:07PM Report Comment
 

7. inbreda said...

6. britishblue said...There are some very bitter political posters on this forum

Yeah - but we don't need an excuse - Brown is a retard, and he's caused a large amount of this mess. There is no reason why we shouldn't knock. It helps pass teh time until the inevitable house price crash (or destruction of the uk - whichever brown chooses) comes to fruition

Thursday, October 1, 2009 12:25AM Report Comment
 

8. alan said...

" .....some peple can't sleep at night unless they can pin every ill of the world onto Brown". OK, try this one...

Gordo recently said:
"Labour investment or Tory tax cuts?"

A quick piece of political footwork will soon sell off more of the nation's assets. (See the Times frontpage today) Nice bit of doubletalk Gordo.

You're right...its gone midnight and I can't sleep.......I'll chill out with ouzo!.

Thursday, October 1, 2009 12:26AM Report Comment
 

9. hpwatcher said...

There are some very bitter political posters on this forum. The de-regulation that took place when Blair took over was a continuation of what Major and Thatcher were doing and to a certain extent was apolitical and would have happened whether Blair/ Brown or the Tories had been in power. Where the Tories and New labour would have divided on policy is on areas like public expenditure not regulation of the banking system. If Labour had tightened the controls in the last few years, the Tories would have bayed for blood claiming it was old labour up to their old tricks.


Do you remember what Gordon Brown said?

''Light touch doesn't mean soft touch'' - it was in fact, no touch.

Thursday, October 1, 2009 04:14AM Report Comment
 

10. hpwatcher said...

some peple can't sleep at night unless they can pin every ill of the world onto Brown

Not at all, only the economic ones that he is responsible for.....like, a bubble in house prices and an economic depression.

I think you need to read more about what people are writing, rather than making up your own stuff and trying to pin on others.

Thursday, October 1, 2009 04:21AM Report Comment
 

11. britishblue said...

HP Watcher as per usual you never read an alterntive point of view. Just jump in with you size nines. My key point was that financial regulation was supported by both parties (New Labour and The Tories). If you want to see its origins, go back to the 1986 Financial Deregulaltion laws and the comments from the Tory Parties then. Part of the UK econonomy is Fu!*@d because of financial deregulation and because of greedy bankers. The vast majority of the new debt created in the last year is because of this and this would have happended if the Tories or Labour where in power and isn't soley down to Gordon. Does anyone on this board agree with this?


The other part of the UK debt is down to the general management of the country, the increasing role,cost and power of the state and how this is spreading like gangrene across society. This is where I have huge issues with the current adminstration and hope to God they don't get re-elected. However, if Dave or the Quiet Man had been in powere would financial services been more regulated? If you think this you are living in dodo land.

Thursday, October 1, 2009 09:00AM Report Comment
 

12. smugdog said...

Did Brown cause this economic turmoil? - No.

Would we be in a better position if another party had been in power throughout this period? - No.

Who is best qualified and experienced to lead the British people out of this period - Brown.

Am I a Labour supporter - No.

Thursday, October 1, 2009 09:49AM Report Comment
 

13. icarus said...

No mention of Blair in all this. Deregulation and the growth of the City would have been a decision for Blair as well as Brown. And Blair is currently with JP Morgan Chase.

Thursday, October 1, 2009 10:35AM Report Comment
 

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