Brown has a cunning plan...
Fraser Nelson 6:22pm
Gordon Brown’s Baldrick-style Cunning Plan for global finance involves using the International Monetary Fund (IMF) as an “early-warning system”. Great idea. When I was a business journalist, I remember the IMF early warnings – about how Brown’s switch to debt-fuelled profligacy post-2000 would end in tears. The key misjudgement made by both Brown and Greenspan was to try and get around the 2001 slowdown (which would have flushed out bad businesses and dodgy loans) by pumping the economy full of cheap debt. Pain delayed today means disaster tomorrow in financial markets. The IMF said in September 2001 that Brown’s spending spree was “regrettably pro-cyclical”. And since then? Here, via what Guido would call a co-conspirator, are some IMF “early warnings” Brown could have done well to heed…
September 2006: “A key risk on the demand side is that the continued cooling of advanced-economy housing markets will weaken household balance sheets and undercut aggregate demand. At this point, concerns center on the United States, although other markets, such as those in Ireland, Spain, and the United Kingdom, also still seem overvalued by most conventional measures.” (IMF, World Economic Outlook, September 2006, p.10)
“House prices in Spain, Ireland and the United Kingdom still look elevated, and could come under pressure in a rising interest rate environment” (IMF, World Economic Outlook, September 2006, p.45)
April 2007: “In the United Kingdom, the fiscal deficit fell to 2 and 1/2 percent of GDP in 2006, and tight spending control will be needed to halt the rise in public debt.”
August 2007: “Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward.” (Federal Reserve Board, 17 August 2007)
September 2007: “The [UK] cyclically-adjusted budget shortfall is still substantial and significantly larger than in most other OECD countries. There is a need to further reduce the government deficit… the UK fiscal balance is in a relatively worse position than most of the other G7 countries”
But did Brown listen?
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Nicholas
September 25th, 2008 7:04pm Report this commentAppropriate given the diminutive Tony Robinson's enthusiastic support of the national socialists.
Hugh
September 25th, 2008 7:08pm Report this commentFraser - Were there any earlier warnings that the then Chancellor ignored? Presumably the IMF has been giving an overview ever quarter since 2000, it would bhe useful to have them tabulated.
julia harris
September 25th, 2008 7:18pm Report this commentGreat post Fraser - hope we hear you make these points on Question Time tonight! Bring on the Brownies!!
Barnaby Trubble
September 25th, 2008 7:29pm Report this commentHere's a specualtion. What if there was some kind of agency, let's call it a free press, who would confront the Jockinese pork-pie merchant with some of this stuff, AND ACTUALLY PRESS HIM FOR A RESPONSE?
Athesius the Facilitator
September 25th, 2008 7:52pm Report this commentNo "they" did not listen.
My mates down at the Lee on the Solent community centre bar have all said in one way or another that this was going to happen. None of us had any expertise to speak of and for that reason found it difficult to articulate ourselves but in our own way we were right. How come then that all the experts and especially Brown either didn't know or kept it quiet in the hope that it would go away. He and his advisers; whoever "they" are ought to be ashamed of themselves and Gordon Brown should be made to resign.
mitch
September 25th, 2008 7:56pm Report this commentBut gordon stood up and told us he had ended all that "no more boom and bust" are you saying that gordon brown our PM lied? tell me it aint so.
molesworth 1
September 25th, 2008 9:06pm Report this commentThis is the kind of detail that all us yappers want. Sort out some web-links, make your references full.
oldtimer
September 25th, 2008 9:12pm Report this commentAs a keen newshound with a nose for good stories may I humbly suggest, Fraser, that you look up the contemporary Brown/HMG responses to these IMF reports? I await with interest to hear if they were dismissed out of hand or taken on board as a serious criticism.
This, I believe, is important to know. Not least because I can visualise our PM returning from Washington to present himself as part of the solution to the probelm we all find ourselves in, when in fact he is part of the problem.
Simon Cawkwell
September 25th, 2008 9:39pm Report this commentFraser,
You have missed the point. Brown knew all this was going on since, quite deliberately, he was engineering it insofar as he could in relation to the UK. His political career has been entirely based on it.
I suppose that his political career has been successful since it could reasonably be argued that even now the electorate does not realise how it has been deceived.
Simon Cawkwell
Dirty Euro
September 25th, 2008 10:12pm Report this commentFraser you are at it again mocking your nations PM. Why do you mock our PM? Are you Scottish or English?
mac
September 25th, 2008 11:25pm Report this commentDirty Euro. You are it again. Posting tripe, Why do you do it? Is your name Brown, or are simply unwell?
Vanessa
September 25th, 2008 11:50pm Report this commentFraser, enjoyed your contribution tonight on Question Time. One argument against ID cards would be that the Germans used them to identify the Jews in WW2 so making it very easy for them to be herded off to concentration camps. Yes, they are very useful for the State.
Newmania
September 26th, 2008 12:36am Report this commentFraser right now you are bossing the world of political chat like imperious Beckenbauer in his pomp. Great article on debt in the Speccie , magnificent appearance on QT and every post a must read
You are on fire man !
mitch
September 26th, 2008 5:43am Report this comment"Dirty Euro" used to post on Guido and other blogs just ignore him after a while his mother takes his PC off him.
john lynch
September 26th, 2008 7:09am Report this commentwhere can I read this hilarious post? do i detect an unseen hand at work to prevent the public reading the said post?
Barnaby Trubble
September 26th, 2008 7:28am Report this comment"But gordon stood up and told us he had ended all that "no more boom and bust" are you saying that gordon brown our PM lied? tell me it aint so."
This is the result of nothing more than an unfortunate punctuation error. He did NOT lie. What he said was "No more boom. And bust!"
Fraser Nelson
September 26th, 2008 8:57am Report this commentMum, I've told you that "Newmania" nom-de-plume doesn't fool anyone. But thanks anyway.
Sunnyinlondon
September 26th, 2008 11:58am Report this commentFound this interesting from a poster on AlphaVille -
"Dark mutterings from Long-only holders of Lloyds regarding Government "blackmailing" if they don't allow the HBOS deal.
Senior level contacts from government have been suggesting that the Pension industry will be "punished" if the bank deal is obstructed.
The question is, without ACT how can the Government punish the Pension industry further?"
So not only does Gordo not listen but is apparently threatening further illiquidity to funds
Frank Pulley
September 26th, 2008 12:32pm Report this commentSorry, I don't get it! Why is Ruth Kelly's picture appended to this post?
Frank Pulley
September 26th, 2008 12:34pm Report this commentFraser
"Mum, I've told you that "Newmania" nom-de-plume doesn't fool anyone. But thanks anyway."
Stop bullshittin' Fraser, we all know it's your own sobriquet
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