Monday, October 13, 2008

Save the Bankers, Save the World

The New York Times had a column by Nobel Laureate Paul Krugman simply entitled Gordon Does Good, which begins "Has Gordon Brown, the British prime minister, saved the world financial system?" He then goes on to praise the clarity, decisiveness and speed with which Gordon Brown and Alistair Darling have reacted to the crisis.

The comments to the Krugman article were instructive too. Anna, New York writes "Did we make a mistake in 1776? Is it too late to correct?".

Lisainvan, vancouver, bc writes "Can someone please just state the obvious? Brown was able to do this because he is the leader of the Labour Party. Labour, unlike the leaders of other leading nations at this time, does not have an ideological opposition to 'nationalizing' infrastructure".

And twofold, detroit, assesses the American presidential candidates and concludes that "Unfortunately, our choices for president are limited this year. Only a few weeks ago McCain was saying the fundamentals of the economy were sound. He also claimed little knowledge of economic issues at the start of the campaign season. Frighteningly Sarah Palin has shown less grasp of the subject. I would not trust Mr. and Mrs. Maverick with my financial matters. This leaves us with Obama, who at least shows a grasp of the facts. I feel his over all philosophy is more in tune with Gordon Brown’s."

Bless. You know something has changed when Americans are looking for the a leader "in tune with Gordon Brown".

It's always lovely when Britain leads the world and is praised for it. And our Gord is now de facto Leader of the Free World at least until the new American president is inaugurated in January 2009 and finally gets control of that rudderless state.


Anonymous said...

Gord: Leader of the free world. God have mercy on us all.

snowflake5 said...

"andy" posted the following comment on the snowflake image following this post, but I think he meant it to go here:

Dear Snowflake
Can I just gently remind you that is was GB who set up the regulation of banking following the 1998 Queen's speech. That same regulation he trumpeted as the saviour of financial services has spectacularly failed to to the job it was designed for. If it had worked, it would have prevented British banks from buying bad debt from international banks, principally American ones.

GB is responsible, personally and directly, for the f*** up in the UK bankings system - no-one else. And when the phoney truce is over, and Cameron starts saying this loudly and repeadedly, together with some of the more juicy Brown quotes from that time, your beloved NuLab is dead ..

All the best!

Dear Andy

If you've been following the current crisis you will know that the current crisis has in it's roots the securitisation of of US sub-prime mortgages, which were sold off around the world. When these mortgages became worthless, banks had to write them off, which had implications for their capital.

The root legislation that allowed UK retail banks to buy US securitised credit risk was actually Thatcher's Banking Act of 1987 (which also allowed retail banks to get into investment banking and insurance, and building societies to demutualise).

Perhaps Gord should have repealed Thatcher's de-regulations. But I don't think it sits well for Tories to complain about regulation. It's like Labour complaining about nationalisation - it doesn't fit.

The most prescient comment to the Krugman article was the one pointing out that Brown and Darling were able to act quickly because they weren't burdened with right-wing ideology. A Tory government would have been thus burdened and wouldn't have acted. Indeed, Osborne had been advising that Northern Rock be allowed to go bust - his right-wing counterpart in the US, Hank Paulson did just that with Lehman brothers. And the collapse of Lehman brothers was what made the global financial system enter it's recent death spiral. Isn't it lucky we don't have right-wing ideologues in power in Britain...

Anonymous said...

Ooops - thanks for putting my comment in the right place.

Of course I disagree with you; my point is that good regulation (and of course every game has to have rules) would have prevented our banks' exposure to Sub-prime - and dear old GB trumpeted that in 1998 (along with his belief in "light regulation").

Anyway, it's nice to have civilised debate without the insults that so often fly round the blogsphere!