Brown won't be smiling for long

david

The Thatcher Revolution is now eating its own children!

richard bailey

A friend and I discussed this last night over a beer, and we concluded that just as we had declared war in 1939, but nothing actually happened until May 1940, similarly the process of recession has now well and truly commenced, but it may be months until we start taking real casualities.
It has been a feature of New Labour that it breaks something and then tries to take credit for fixing it. It wont happen this time.

Vj Angelo

When the dust begins to settle and a true analysis begins the truth will out. The beginings of this mess began with the repeal of the Glass Steagel ( not sure of spelling) act by Clinton in the 90's. A law enshrined after the last depression top prevent anyhting like it happening again. it went and here we are again. It was designed to prevent just the sort of sustemic risk we neded up with.
This was followed by the positively breathtaking arrogance of the left wing politicians of the era. Gordon Brown's incredible belief that he alone had consigned boom and bust to history defied belief as he said it, and now the bust is equal to the spectacular display of Hubris and incompetence he displayed. He believed he could spend all he had and all he would make in the future while relying on the electorate to keep paying for his pet ideas and the unbelievable imcompetence waste and mismanagement the Government displayed in spending our money. now we have to bail him, and the banks he failed to regulate properly, out. But its ok he has a gold plated pension and is financially secure for life, as a great many of his colleagues. And all the while he tells us they should keep running the country we have to keep paying for second homes expenses and lord knows what else. Its not just the fat cats in the city who need to see a proper control on spending. Westminster and every town hall should now have every penny scrutinised by the voters. And thats just a start.
I might add i feel i can be this strong about this as i work in the city.

Mike, Brighton

I would think today's market news has wiped any smile from his face. The market is pricing in a brutal recession which will be the end of Labour

The Laughing Cavalier

Brown is smiling because he sees this crisis as saving his own hide. According to Guido he may even be making matters worse deliberately in order to present himself as the nation's saviour. Never forget that this is the man who, with his acolyte Balls, didn't understand how to regulate the markets (the tripartite nonsense)and whose financial incontinence mean that he bears a heavy responsibility for the mess we're in. While he smirks we suffer.

David H

I blame the media mainly for toeing Brown's line. As soon as he said he had ended boom and bust I knew this was a man that I should not give much credence to. But the MSM have never challenged him on this, putting him on a pedestal instead.

David

"it will have its origins not in the Thatcherite mid-1980s "

Doesn't matter. The BBC will continue to maintain it does to the extent of attempting to absolve Brown of any responsibility at all.

A Social Democrat

This is all cobblers. Public borrowing to date has nothing to do with this crisis - which was made entirely by the ultra-rich and has nothing to do with extra classroom assistants or modernised hospitals.

Neither is there excessive debt in the economy - if there were then there would be a gilts strike and there is not. The government can sell its debt into the market without any difficulty.

Those who say there will be cuts in services are motivated by ideology, not economic rationality.

Lucy

Some very interesting observations from Michael Portillo last night on BBC reporter Robert Pestilence’s sources and influence on events this week that tie in to Brown casting himself as some sort of saviour.

Portillo is on the iplayer at the start of This Week saying these things and they feed into these very interesting reports too:

http://www.dailymail.co.uk/news/article-1072549/BBC-reporter-Robert-Peston-blamed-helping-trigger-shares-fall.html

http://www.dailymail.co.uk/news/article-1075714/MPs-demand-probe-Robert-Prestons-mole-city.html

This isn’t just about journalistic gossip, because what Portillo raises – and it’s only a possibility because no-one knows who said what to whom – that far from Brown being some mastermind, he was bumped into his rescue by bankers manipulating the news agenda by leaking things out that would help give them what they wanted.

We don’t know if that’s true, but what is evident is that Robert Pestface was being fed information from someone somewhere.

Who fed him what?

And why?

And on Newsnight we learn that all the councils with money in Iceland would only have put it there after taking ‘advice’, but that Brighton Council took its money out after it cottoned on to the risks.

Who were these advisers saying all was hunky dory? Somebody working for Brighton Council clearly managed to open a newspaper at some stage earlier this year.

I’m not a fan of Channel 4 News but they did a whole film back in Feb/March on Iceland which should have set alarm bells ringing.

And why did the British government set the precedent of guaranteeing all private savers’ money even though Iceland is abroad? Because they’re fearful that would put British savers into more of a panic than they already are and we might have another run on a British bank.

Don’t panic, Mr Mainwaring!

The Penguin

You sad deluded social democrat

Mike, Brighton

A social democrat...sorry I have to fisk this utter list of falsehoods.

"Public borrowing to date has nothing to do with this crisis"
Er, it hardly puts the UK into a good position does it. We are borrowed to the hilt and are now piling further epic sums on top. It's all deferred taxation. We are mortgaging our children's futures.
To be clear the sub-prime crisis occurred on both sides of the Atlantic. Bradford and Bingley went under because it specialised in selling sub-prime mortgages in the UK, was sat on huge debts and was therefore insolvent. Northern Rock went under because it could no longer obtain credit or finance on the interbank market because of the losses in its mortgage portfolio. These mortgage banks held NO US sub-prime debts.

The vast debts we have incurred have barely helped out public services have they. You mention classroom assistants. We have effectively doubled the eduction budget as our educational performance has tumbled down the international rankings. The NHS is a disaster. Who had heard of MRSA or CDIFF before 1997?

"Neither is there excessive debt in the economy"
If only this were true! Sadly it is not.
Personal debt in the UK is the highest in the West and our public sector debt is vast. If you factor in PFI, public sector pesion liabilites, Norther Rock, B&B and now the liabilities from the bank bail out; our public debts stand at epic south american levels. We are truly screwed.

"if there were then there would be a gilts strike and there is not. The government can sell its debt into the market without any difficulty."
Nonsense. Have you checked the prices and yields? Let me give you a clue - low and high respectively.
The government can only place its debt by pricing it well (at our cost) and by paying a large coupon.

"Those who say there will be cuts in services are motivated by ideology, not economic rationality."

No. We are about to enter a brutal recession of Brown's creation. Given the vast debts and huge public sector Labour have built and now have to finance they face some stark choices. Give tax receipts will collapse in the recession, either taxes will have to rise in order to narrow our deficit or spending will have to be cut. Unless you want to see further economic collapse.

Dalesman

This has nothing to do with Thatcher or her ideas.

This is entirely down to GB who has sat on his hands and let it happen.

he has bragged about how well off everyone was, and that this was down to his "prudence". he encouraged the borrowing, by everyone not just the banks.

When we had the Northern Rock fiasco nothing else happened, Brown & Darling sat on their hands again, doing absolutely nothing.

he won't be smiling for long because things are about to get a lot worse!

Mr G Green

The Thatcher Revolution was good for the country as it involved people using their money to make money.
The Brown revolution was destined for disaster as it involved people using borrowed money to invest in banks who they had lent them the money in the first place!!

Faceless Bureaucrat

A Social Democrat [9.37am]

You are really Derek 'Dolly' Draper and I hereby claim my prize...

Dirty Euro

Actually it was a republican congress and senartwe that pass the repeal of the Glass Steagel bill. Look at the voting. The bill was put forwarded by and passed by republicans the president had to sign it off. The democrats were against it,.

bencoolen

The ignorance of 'A Social Democrat' would be laughable if it wasn't so desperately depressing. For the record, Brown strapped himself on to the very destructive tail end of a debt super-cycle which began about 40 years ago, at almost exactly the same time as Anthony Crosland and Shirley Wiliams were razing the grammar schools to the ground. Whatever. The politics of this are totally irrelevant now. The world is scrutinising bank and governement balance sheets, but the international balance sheets of nation states have hitherto been largely overlooked. The UK has borrowed internationally to finance both excessive consumption and the construction of an enormous overseas asset portfolio, which is effectively a portfolio of risk assets financed by short term borrowing. Japan and Switzerland also have high International Investment Positions as a % of GDP but the difference with these two countries is that these assets have been built up as a consequence of years of sustained current account surpluses. Furthermore, the asset composition of the UK International balance sheet flags potential issues : there's been a huge build up of risk assets funded by short term flows : so the UK resembles a gigantic carry trade ….this bears more than a passing resemblance to the business model that markets are currently recoiling from at an individual bank level. The implications are a vast deterioration in domestic demand to avoid a collapse in the current account and, of course, the death of Sterling. And that will be the ultimate ideological victory.As for a gilts strike, just give it time.

John Miller

Brown is enjoying this. But Brown IS mad. He never has been able to see beyond the end of his nose. He doesn't yet see that whether this works or not, the bubble has well and truly burst.

When people are being evicted, when they lose their jobs, when even the poorest people are paying huge amounts of tax, he will be the most hated man in Britain.

And Iceland...

Travis Bickle

I thought senartwe was that Thai who owned Manchester City? (or perhaps a rather good singer with alleged mafia connections)

Nicholas

A Social Democrat I think not. The point is that the huge amounts "invested" in extra (socialist) classroom assistants and modernised hospitals have not resulted in relative improvements to the quality of life in Britain, which has significantly deteriorated under Labour. Labour have bankrupted a country for virtual improvements to trumpet at PMQs when everyone in the high street can see and smell the real impact of their public excrement all around them.

It is naive to write that the government can sell its debt into the market without any difficulty. If that was so then the previous Labour governments that have blighted this nation with debt and bad government would have very different records. In any case, several of the "rules" now broken or abandoned to increase the level of public borrowing were Gordon's own. Yet he remains largely unchallenged about this.

To accuse conservatives who say there will be cuts in services as being motivated by ideology, not economic rationality, is hypocrisy. Socialists have been motivated by ideology rather than economic rationality for decades and have driven that ideology relentlessly even where it has clearly not worked. Only by pretending that they had new economic credentials (New Labour) were socialists able to seize power and embark on a further ruination of the country. That was a con. The leopard did not change its spots, it had just put up glib-talking spivs to sell its dodgy product to a gullible public and even more gullible big business.

Gordon Brown has an appalling record on taxation, if you care to examine the reality. Not least by increasing its burden but by introducing aspects that have actually damaged society. One would never expect socialists to admit this, their stock in trade being manipulation of the truth for ideological purposes. The fact that the snake oil salesman can out talk the pastor, or that Satan can weave a seductive spell does not vindicate the merit of their intentions.

The very notion of "Social Democrat" is a non sequitur. In the last 11 years socialists have wreaked havoc on democracy in Britain, with badly conceived constitutional reform,"sofa government", repressive legislation and undermining the rule of law and centuries old concepts of natural justice - all in the interests of an ideology that was not even part of their manifesto.

Public borrowing may have nothing to do with this crisis but it is certainly going to have an impact on the effects of the crisis. For far too long devious socialist liars have been able to shout "skoolz'n'ospitalz" as a war cry to discredit conservativism. But pouring huge amounts of public money into failing institutions is the work of simpletons. What of Gordon Brown's "deep clean" - an expensive conjurer's trick? Brand new school buildings do not militate against the dumbing down of education or the socialist brainwashing of our children - all in the name of your socialist ideology. It stinks.

Ian C

Firstly, Glass Steagall was a Republican bill signed off by Congress (partisan in the Senate but with broad agreement in the House) and Clinton. So the Dems can have that one. What they can't have is the Community Reinvestment Act of 1993 which began the whole roller coaster to the sub-prime mess, encouraged by Acorn and many left of centre social engineers, in which Obama was a major player, until he discovered he could not live on $13,000 pa and that it would be a better life in big boy politics.

Next, Social Democrat - you are as naiive as the rest. How many non-jobs are advertised every week. Who pays? it is not the productive economy as they are already paying for the actual things that need doing. No, it is paid for by borrowing. That's OK in Brown's book if it's for investment - in gay outreach workers and 5m benefit claimants. Wake up and get real. We have at least £100bn of 'off balance sheet financing' that was all the rage in the 1990's and now we are taking on £trns more to sort it out. No it was not all down to the Labour Gov't. But democratic gov'ts always exacerbate a trend because taht fact alone, democracy, - they shrink economies into recession and expand into a boom.

That is why we need gov't to do the minimum with maximum efficiency as a matter caste in stone. This way they cease trying their ideological stupidities at the nation's expense and just get on with quiet unspun efficient day to day fine tuning and management.

A Social Democrat

@Mike, Brighton

Unlike you I base my comments on fact, not prejudice. Look up the statistics for gilt yields on the Bank of England website.

If you do you will see that the nominal yield on a 5 year gilt fell from 5.4% at the start of August 2007 (ie immediately before the credit crunch struck Britain) to just over 3.9% in recent days.

The market clearly remains happy to buy gilts.

I know a loty of Tories hate this country so much they wish it were otherwise, but it's not.

A Social Democrat

@bencoolen

Public debt and borrowing are substantially lower than the peak under Major.

Yes, the crisis is going to push that up. But given that private borrowing might be about to collapse that is a perfectly sensible counter-cyclical thing to do.

Tories who want to cut public spending because they don't want collective provision ought to have the guts to say so instead of looking for spurious external justifications.

Personally, as a social democrat, I think this is the hour of justification.

Chuck Unsworth

@ Social Democrat.

And the gold reserves were what, exactly?

Tories "don't want collective provision?" Rubbish. Evidence?

The markets are telling the government exactly where to get off - and no government in the world has sufficient resource to provide any real 'counter-cyclical' resistance.

And "a loty of Tories hate this country so much they wish it were otherwise, but it's not."

Evidence?

This is simple and mindless prejudice.

strapworld

Social Democrat!!

I cannot recall the Conservative Party, nor the Liberal Democrats come to that, singing THE RED FLAG within the Houses of Parliament BUT the Labour Party representatives most certainly have.

Brown is smiling now, but wait till the smile is wiped from his face! The people -we out in the real world- blame him for the problems!

jose garcia

I have always wanted to ask something

what would happen if BROWN printed billions of new money, gave it to homeowners in serious debt effectively wiping out a large chunk of debt?.

i know there is some good explanation but i cant see it

would increase inflation. no as it is debt what is being spent?

would plummet the pound?

wouldnt that be good for exports?

it would break a lot of IMF rules etc but what are the real downsides?

can somebody enlight me?

Mike, Brighton

A Social Democrat
I note you have only responded to one of my points. I do use facts and am very familiar with UK government bond market unlike you! Do you seriously believe that the UK government can place say £50, £80, £100Bn of debt on the market at a high price and low coupon you are insane! I suggest Letts GSCE Economics as a primer!
Notice how Labour picks one point to try to discredit everything I have said. In what way are any of my statements inaccurate? Like all Labour supporters you paint a wholly false picture of your legacy which is wildly at variance with the truth.

As four your closing insult "I know a loty (sic) of Tories hate this country". Well I love my country and I am not from the political party that has both allowed uncontrolled immigration forever altering the country in which I live and destroyed our military through underfunding and over-stretching them. Go back under your stone you ignorant person! If you lot continue in power my country will be destroyed, perhaps that is your aim?

Bobby

Bickle is pickle.

A Social Democrat

Mike,
You said gilts were being sold at a high coupon. Indeed you cahllenged me to look at the prices and yeilds. I produced the evidence that they were not as you said and you reply about something else - ie what they *might* be sold for in future.

If we could all predict what things could be sold for in the future then we wouldn't need markets.

My original point still stands - there is no link between the credit crunch and public spending and borrowing. None. Zip. Nada.

OK, let's look at your other points:

The NHS is a disaster. Who had heard of MRSA or CDIFF before 1997?

Well, MRSA certainly was heard of. The facts are that anti-bacterial resistant bacteria do change over time - that's a feature of them! But there istance is rising all over the world. It's a medical emergency and nothing much to do with ideology. But, since you mention it you will also have noticed how much lower MRSA infections are this year compared to last.

The ehalth service is not a disaster. In fact it's a great success for Labour. Please tell me - based on facts, not supposition or prejudice - how it is a "disaster"?

The rest of your "fisk" is nothing more than the usual Tory bile.

The way that many (not all) Tories hate Britain is shown every day - their desperation to talk the country down, to say it is "broken", to say our armwed forces have been "destroyed" (tell that to the dead Talibs) - to attack the country's richness and tradition of tolerance and assylum with their prejudiced rants about immigration - the list goes on.

Dirty Euro

The glass tegal bill was onmly signed by clinton because he knew the congress would veto him. It is crue manipulation of the fact to pretend Clinton did the repeal of the glass stegal bill. It was Gingrich and the republicans end of story face facts. Gingrich is to blame.

Chuck Unsworth

@ Social Democrat

"nothing more than the usual Tory bile."

Yet more mindless prejudice. That someone disagrees with you is obvious. That you dismiss disagreement as 'bile' is trite.

"The way that many (not all) Tories hate Britain is shown every day - their desperation to talk the country down, to say it is "broken","

That's a very naive interpretation of what is being said by, for example, Duncan-Smith. You seem to believe the Tories are 'desperate' to talk the country down. That is rubbish. They might well be desperate to talk the government down but please don't be so stupid as to concatenate country and government.

"to say our armwed forces have been "destroyed" (tell that to the dead Talibs)"

Know many people in the armed services? Perhaps you have actually served. Take a look at ARRSE for a real insight into how serving personnel regard this government.

" - to attack the country's richness and tradition of tolerance and assylum with their prejudiced rants about immigration - the list goes on."

Oh, so you'd wish to entirely discount genuine public concern? Ask the average man in the street what he feels about the "richness and tradition of tolerance and assylum". I think you may be surprised at the vehemence of his (prejudiced rant) reaction.

And where are the facts to support your comments about these wicked Tories?

anthony a

Yields fall when bond prices rise - that's because people are moving out of equities into the slightly safer world of bonds... I don't think the yield falling has anything to do with confidence in Brown.... it just means demand has gone up (relative to other asset classes - and as you would expect given volatility in the equity markets.

The fact the bonds are sold is not relevant either - bonds from a AAA issuer will always sell as they are a good hedge for something riskier.

There is alot private debt in the UK economy and people are tightening spending to pay for it as people are worrying about the fact that unemployment rising.

The point here is if Brown had not rammed up Public Debt when the economy was doing well he might have a pot of cash available (from reserves, not from issuing bonds) to help ease the pain and maybe give us all a fiscal stimulus.

The talk about the coupon rate is also irrelevant as bonds are not really traded on the coupon - they are traded on a relative basis (spread) to a benchmark and real rates of return.

anthony a

para 4
remove Public Debt
add Public Expenditure & Public Debt

Nicholas

A Social Democrat: your responses are classic socialist doublespeak, even to the extent of trying to create a politically correct gag for your opponents, e.g. daring to criticise the socialist government and listing their failures is expressing a hatred for our country. You may as well call us "traitors" or "counter-revolutionaries". So we all have to shut up, hold up our little red books and chant the mantra that everything provided by the Glorious Leader and the Party is wonderful. Don't you saps learn anything? The history of socialism throughout the world is an object lesson in injustice, drenched in the reeking blood and of innocent victims and you ought to hang your heads in shame rather than speaking up for its vile record.

Dissent is "Tory bile". Concerns about uncontrolled, Labour fuelled immigration are "racism". You really are showing your totalitarian left tendencies now.

It won't work because socialist lies and manipulation, especially through the use of that socialist wonder weapon Political Correctness, won't wash any more. You and your kind have been rumbled and it is not the Tories who hate the country but rather the country that hates you and your kind.

Familiar Clown

There is really only one comment to make about Labour politicians: You can't make racehorses out of donkeys.