Brown’s admitted his mistake – but we let him get away with it for far too long

After months of dodging the question, Gordon Brown has finally admitted he was wrong to repeatedly claim that he’s abolished boom and bust. Jeremy Vine has just asked him on Radio Two if that was a mistake and he replied: “Yes. Of course politicians make mistakes and I’ve got to be honest that we’ve made mistakes.” This goes far beyond a soundbite, and in fact lies at the heart of the economic bomb that has just exploded.

Brown, like Greenspan, thought we’d entered a new era of permanently low interest rates – and that just because inflation had been tamed, it meant we’d hit some kind of economic equilibrium. This is the dangerous folly which made policymakers blind to the massive asset bubble. “Don’t worry,” they all said, “People can afford the repayments of the debt, as a share of income they are low”. But when the credit costs went up, or supply dried up, we were sunk.