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Brown and markets

Robert Peston | 08:08 UK time, Wednesday, 30 September 2009

Gordon Brown made a not especially hilarious joke yesterday in his conference speech by saying that if he were to praise Alistair Darling as the best chancellor of the exchequer ever, the media would write the headline "Brown snubs Brown" - or that he was rubbishing his own decade as chancellor.

TOP: Gordon Brown 21 May 1997; BOTTOM: Gordon Brown 29 September 2009But Brown did indeed snub Brown yesterday. The prime minister put the boot into the Brown years at Number 11, or his own tenure as steward of the British economy.

Here's how.

His remarks that the banking crisis had exposed the dangers of free markets were intended as an attack on the Tories.

But it's probably only effective as an indictment of the Her Majesty's opposition for those who have been asleep since 1997.

To state something that is obvious to almost anyone except the prime minister, New Labour - the creation of Tony Blair and a politician called Gordon Brown - was defined by its conversion to the notion that the market is usually a more efficient allocator of capital than the state.

New Labour was - more than anything else - a rejection of post-war Labour's attitudes to the respective roles of the public and private sectors.

Blair and Brown repudiated a long-standing commitment to centralised, state-owned and state-delivered public services. They abandoned a predilection for planning the shape and structure of the commercial sector. And they ditched an instinct to intervene in the affairs of our biggest businesses.

Which grounded them firmly where much of the electorate had journeyed in the Thatcher years. And helped to deliver that historic landslide 12 years ago.

So it is by no means a trivial political event that Gordon Brown should make an explicit attack on what he called a "bankrupt ideology" that "markets always self-correct but never self-destruct".

So what's going on?

Well, it's a somewhat delayed reaction to that recent spot of bother for banks, which - as you don't really need me to tell you yet again - was to a large extent caused by the mis-pricing and misallocation of capital by the free market on a magnificent scale.

This wasn't just any old failure of markets. It was a system breakdown that has prompted a theological crisis for most mainstream economists and an existential crisis for those whom we trusted to deliver financial and economic stabiltity, viz regulators, central bankers and finance ministers.

And for politicians in the centre ground, such as Gordon Brown, there's something of an ideological crisis.

It's all very well to say, as he did, that "what failed was the right wing fundamentalism that says you just leave everything to the market and says that free markets should not just be free but values-free". But for years his government was seduced by this so-called fundamentalism.

New Labour may not have privatised and marketised (oh horrid techno-babble) the entire state, but it was a devout convert to the idea that the public sector should interfere as little as possible in the activities of the private sector and should extend the reach of the market to the way that the public sector buys stuff, builds stuff, finances stuff and supplies stuff.

The reach of the market was lengthened very considerably on Gordon Brown's watch.

But if Brown no longer trusts markets for the efficient allocation of precious resources and the optimal pricing of goods and services, what does he trust?

It is plain that state intervention in the private sector is on the rise. That vanguardist of New Labour, Peter Mandelson on Monday delivered a remarkable sermon on the virtues of what once would have been called industrial meddling.

But what, for Brown, are the appropriate new boundaries between private sector and public sector?

If markets are no longer the best guarantor that resources won't be wasted in commerce or public service, what is the new insurance policy of optimal resource distribution?

It's all very well to ditch a faith, if it can't be sustained by the facts. But I suspect that voters will want to know what will fill the vacuum.

And although bashing bankers' bonuses may resonate with many, it's not really a comprehensive industrial or economic policy.


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  • Comment number 1.

    Not sure what his post has to do with business - it is a political statement of the obvious. I fear Pesto's knighthood is now in the bin though.

  • Comment number 2.

    The true heir of Thatcher was Blair. New Labour's Thatchernomics has been destroyed by events and Robert is correct there is no coherent alternative espoused by Brown. The same beliefs justified 'managing' the economy by fiddling with interest rates. Brown is thoroughly corrupted by the absurdly called Third Way and what replaces its policies will be the agenda for a post defeat Labour opposition. The Green imperative and the fundamental structural weakness of the economy demands intervention at the heart of government policy at the very time it seems we will get another bunch of free market head bangers in six month's time. I think I will go cryogenic for the next ten years.

  • Comment number 3.

    As a political agnostic I have no particular axe to grind either way but it strikes me that Gordon Brown is trying to do a Derren Brown in that he is trying to con the people into believing something that is fundamentally unbelievable that the financial crisis was not as a result of his 10 years hands-off, light touch regulation but because of Tory free market values in the city bosses. "Look into my eyes, not around the eyes into my eyes...."

  • Comment number 4.

    What a depressing choice we are left with; the team who led us into the mess in the first place, or the other lot who are are waiting silently, like an animal waiting to strike.

    Where is our Obama?


  • Comment number 5.

    Brown is as guilty as any banker as Chancellor he moved billions off the public balance sheet via quangos and PPI’s. The debts he run up (before the crisis) still exist but are hidden, the banking crisis merely allowed the Government to hide their toxic debts for longer. Unfortunately the politicians (on both sides) have made the mistake of believing their own spin.

  • Comment number 6.

    Brown could have prevented or lessened the problems we are now having by earlier intervention and better regulation, but he didn't understand what he was dealing with.

  • Comment number 7.

    I can't blame Gordon Brown for accepting the wet fish slapped in the idealogical face of the free market economy advocated strongly in the past. We have all learnt new things. Or should I say we have all decided to look at what was starring us in the face and shouted at us by tweed wearing academics only to be dismissed as, never been in the real world, ageing students. Hmmmm!! A politician anyone?!

    My only great fear is that, if the inevitable is inevitable, the Tories take power then the free markets will be allowed to flow more freely as George and friends continue hedging at will!

    Now I sound like I may be an anti capitalistic lefty don't I? Well No! not in the least. It is just clear, that as the railways and the roads are public services that cost money as to ease the flow of life and the economy , so should be the banks. The banks are in business to make money. Enterprise is something that blow hot air about but ultimately are not interested in due to the total uncertainty. So unfortunately if we want enterprise then we need the state to become the catalyst because, in reality, no one else will. Other wise it's big buck for big people.

    So why not accept that Gordon has experienced that wet fish like everyone else and knows that we can't keep going on like this. rather a man of experience at the helm than a smiling(and rather pleasant at a tea party) fool.

  • Comment number 8.

    There wasnt much he could defend. he was in charge of our finances and he failed with distinction. He lauded the likes of Northern Rock as visionary businesses and revelled in the glory of his beloved tax revenues when the man in the street asked "Why" would someone want to borrow 125% of a products actual cost ? He was the one who repeated A Hundred Times or More "The longest SUSTAINED ECONOMIC" growth this country has ever seen !!! He didnt care that the "growth" was on falsh profits and reckless lending and borrowing. He lauded his end to boom and bust and gave us the most corrupt boom which ended with his epic bust. And he wants us to believe he his our future. NO THANK YOU GORDON.
    Our Country deserves a future, not a bleak debt ridden, crime infested, benefit culture demise.
    We dont need more of his recycled inititives and his prolific wasting of more billions on useless policies. Waste is of such magnitude in Browns Government that it is probably a bridge to far for anyone to get to grips with. He has bankrupted Britain Morally, politically and financially.

  • Comment number 9.

    Here's the thing.
    Pretty much everyone aged 18 or over in this country can vote. Of those that do, how many do you think actually understand the policies and promises of the party they are voting for? How many have a full grasp of what the vote will probably mean for them in real terms?
    Come on - we all know why Labour had that landslide vote. The public opinion of the Tories was bad. Sleaze in the papers every day - they took a knocking. Blair was a great PR figure at the time. Smiling, young, dynamic. Now, with the (global) recession, labour are taking a knocking and, perhaps in some ways, Cameron is the new Blair.
    But to the general member of public, it's all about PR and not about politics.
    I'm not saying this to belittle people - I am a university educated professional and I don't have the time to look in to all the different political party policies and what they mean to me. I've voted before without really understanding what I'm voting for. I'm sure the vast majority of voters don't either. So I'm sure most people "go with the flow" - what they read in the papers, what their colleagues and friends are saying.
    I think we need a change in the voting system. It's important! I don't agree that everyone should have the right to vote. I believe that everyone be able to earn the right to vote by proving that they have at least a basic understanding in what they are voting for. You should at least have to watch the party political broadcasts from each of the parties! At the moment, anyone can vote on a whim.

  • Comment number 10.

    I'm still trying to find some detail on this new investment fund for start-ups and spin-outs etc because I'm reasonably sure that under EU rules on State Aid there will have to be matched funding from the private sector.

    Anyone else know?

  • Comment number 11.

    Excuse me? Robert, where have you been for the last 12 years? Take your New Labour blinkers off and examine the record, rather than the rhetoric.

    "New Labour was - more than anything else - a rejection of post-war Labour's attitudes to the respective roles of the public and private sectors. " Hardly. Take some examples:

    How about minimum wage legislation, extra paternity leave etc. Possibly good in themselves, but examples of the state rewriting employment contracts that had been freely entered into.

    Or how about the Rover debacle, where the government decided that they knew better than the owners and managers of the business what was best (Phoenix Four vs Alchemy).

    Or how about the huge increase in intrusive childcare legislation --- vetting databases, nappy curriculum, etc. (Yes, I know, think of the children!) --- where the state has decided that it knows best what is good for children, better than their own parents who love and know them as individuals. And where two friends cannot look after each other's children without registering with Ofstead and going on diversity training.

    Or what about a culture that thinks the man in Whitehall always knows best and tries to micromanage every aspect of public service delivery with targets and checklists.

    Please. Writing a blog published on the mighty BBC, funded by its very own 140 pound household tax enforced by the criminal law, involves more than regurgitating cliches from the Westminster lobby. Please try and engage brain before the next post.

    Thank you.

  • Comment number 12.

    The bare-faced lies that Gordon Brown told at the Conference actually say more about the electorate than they say about the man. He regards the electorate as total fools - vote fodder - who can be relied upon to say: "The Prime Minister says it so it must be so." And you know what ... in a great many cases he is spot on.

  • Comment number 13.

    What we are seeing is a political elite retreating from yet another ideological dogma on which they have crucified the Britiah people. This is exactly the same as the Seventies in that respect where a sub-Keynsian ideology of state intervention also collapsed in crisis.

    The big question that I have for the British establishment is what is wrong with being pragmatic? Why dont we just focus on what will work?

    The answer to that question is easy: the Britiah elites don't like to work. To them work is for the little people along with paying taxes.

    Time to sack the whole lot and start again.

  • Comment number 14.

    eddixon @ 6
    "Brown ......... didn't know what he was dealing with".
    Is this a surprise? What are his real world credentials for 'understanding'. Let's face it, most of the bankers at the heart of the current financial crisis didn't understand what they were dealing with either!! Unfortunately, most of our MPs these days are average 'joe soaps' who have not enough knowledge, experience or intellect to deal with running a country, yet they rise through the political ranks and end up in the driving seat - it really is frightening!
    There are a lot of comments about the public not being fooled, but believe me, a lot can be influenced by such speeches that seek to deflect, deceive or are just downright dodgy - just look at some of the positive reviews on Mandelson's intellectually challenged pitch ealier in the week!! Unfortunately, too many people are swayed these days by the performance rather than the content!

  • Comment number 15.

    Is it a Bird?

    Is it a plane?

    NO! It’s old Labour to the rescue, question is, who will lead the charge at the election?

    Is it possible (as I stated many moons ago), that Labour adopted light touch regulation in order to expedite Thatcherism’s demise? Will they revert to the state rule’s mantra?

    We are in line for a significant political shift what ever happens, I reckon the BNP will do very well next may!

  • Comment number 16.

    The Bank of England was quite capable of regulating the banking system, but after putting the BOE in charge of interest rates Gordon Brown felt it necessary to balance the books by taking away an equal power and handing it a newly created FSA. The first of many errors of judgement. The rest as they say is history.

    Now GB bleats on about how the lack of regulation he created resulted in the mess that we are in and that it is the free market and, by association, the Tories who are to blame. He is shameless. One gets the feeling that when he deliberately told his first 'big lie' about having no knowledge (ho, ho) of Bernie Ecclestone's one million pound donation, the son of manse thought that 'in for a penny, in for a pound' and since that date has become a compulsive liar e.g. no more boom and bust, referendum on EU Constitution, Sun readers appreciate what I have done for them. Actually the bit about the Sun readers might be right, but just not in the way that he thought as he will discover when it comes for him to start looking for a new job after the next election.

  • Comment number 17.

    For those hoping that Gordon Brown was going to rise phoenix like from the ashes his speech was a flop. The regulation system was asleep on its watch and he is the one who was supposed to be in overall charge. The FSA have been a disaster, his baby. I'm not sure what he's waiting for, he should call an election and get it over with, no one in the Labour Party is going to want his job until after the election as they will simply be leading them into defeat, but perversely the damage to their standing will be greater with him in charge. If labour are wiped out at the polls then a Scottish referendum will probably mean a split from the union and a loss of North Sea oil money, but we could at least send them the bill for bailing out the (Scottish) banks who have been propped up.

  • Comment number 18.

    The Opposition can credibly claim a fair amount of this country's economic chaos is the cause of the Government, since they have been in charge for 12 years, with Gordon Brown 'running' the Economy. For Gordon Brown to claim that he has seen the light and is now best placed to reverse much of the inefficient spending on the public sector that he personally oversaw over the past 12 years, must be too much for the Electorate to swallow. Its rather like a convicted murderer who now claims he is going to use his knife as a surgical instrument in hospitals to help heal those he formerly hunted!

  • Comment number 19.

    For a prudent chancelor he was very imprudent. He oversaw a boom time and instead of saving or at least trying to balance to books in preparation for a rainy day, he carried on spending like there was no tommorow, having persuaded himself that we would no longer have boom and bust. Thank goodness some of us didnt believe him!

    The man is either a LIAR or a FOOL. Growth has to be based on either natural resources (coal etc), increased demand ( a finite commodity based on wealth and need) or improved efficiency, since it is almost impossible to have any of these continually it is inevitable that growth will not be constaint.

  • Comment number 20.

    Brown has travelled to Damascus and been transformed? Whatever.

    What is certain is that the meddling with the regulatory system that he was responsible for was part of the cause. If the BoE had been responsible then we may not have had the buying and selling of great tranches of debt.

    How can you believe anyone who does an about turn of such dramatic proportions. He knows what is right

  • Comment number 21.

    This week's Private eye got it bang on. Just over two years ago he addressed an audince of bankers praising them to the skies for what they had done for the City of London and declaring how much "Britain needs more of the vigour,ingenuity and aspiration that you already demonstrate.."

    Now he refers to this as "the bad old days"!!

    He's living in a goldfish bowl with a goldfish mentality, swimming around wondering to which audience he should turn

  • Comment number 22.

    The financial services sector needs to be strictly regulated and reined in. Banks are in many ways not operating in the 'private sector'. Consider this: why is it that banks have privileged access to seemingly unlimited funds provided by the Bank of England and then are charged only 0.5 % interest rates? Why can't small businesses or a private citizen get 0.5 % interest rates from the Bank of England. Is this a free market? Clearly not.
    Are banks a business just like any other business? Clearly not. With the financial privileges that banks enjoy, they also should have to accept responsiblities and obligations, serving the UK society, enforced by law.
    If banks don't want to be strictly regulated, then they should have no privileges.

    In the following comment I do not blame the average worker in banks, but certainly blame senior management in banks and those parts of investment banking and bank trading rooms that do engage in high-risk speculation, using the deposits of their own customers. How crazy is a system that allows a small elite to speculate with multi-billions of pounds of their own depositors, leveraging the sums up to 30 or 40 times, and when it all goes wrong expect the tax payer to foot the bill, pay hundreds of billions to stabilise the banks, and then expect millions of workers to go into unemployment to re-plenish the state and the bank's coffers. All of this whilst they continue to receive mega-bonuses and seek to evade taxes wherever they can? All banks in the UK would have failed without the combined impact of direct state assistance for some banks, state guarantees for all banks, continued access to 0.5% interest rates and quantitative easing pumping 175 billion pounds into the system.
    Such madness cannot be repeated again.

    Please find many more arguments why reining in banks is absolutely necessary, unavoidable and very good for fairer societies here:

    P.S. I liked Gordon Brown's speech today. Yes, he made mistakes and unfortunately trusted the City of London in the past, but I hope he will never be so foolish again.

  • Comment number 23.

    It will niether be an efficient nor a fair market as long as you have people like Madoff. So far, less than 1% of the $56 billion have been uncovered and less recovered. So, where is the rest of the assets? Who's got it and protecting it. More importantly, how are they going to use it?
    $55billion can "buy" countries, not just politicians.

  • Comment number 24.

    Nearly forgot to say. Shame the voting thing wasn't coming before the election as I fear the Tories would dismiss it out of hand. I have always been an advocate for getting more people at least feeling like they are engaged in elections. The fact that a small number of people actually decide the way we are governed is a pathetic slur on democracy. I am glad that someone is at last at least saying it out loud. Shame it had to come after an earthquake, but hey ho. What's the bet? NOT GONNA HAPPEN. Sigh!

  • Comment number 25.

    you could trust the 'market' if at the end of it all they would not throw their hands and say 'bail me out, its not my fault'
    If a small business did that the tax man would drive the owner in to bankruptcy along with the banks. As fa as I can see no banker has hand that happen to them. I would admit some have lost their job, but so I have I so have I and I am in the same boat. No job, no income, no help.

    A coalition is what is needed next to get the best out of politics

  • Comment number 26.

    Unfortunately, Brown has always been and always will be economically illiterate. Some of us have said from the start that he's the worst Chancellor in living memory. He basically did nothing for the first few years other than follow Tory spending plans and coining tax receipts in with the wake of the upswing in the economy which had nothing to do with Labour coming to power. We've seen in the last two years or more the decline in the nations economy that his mismanagement made inevitable. He has no idea how to manage the economy and never will. We are going to be paying for his mistakes for years and years.

    Labour's whole approach to evertything has been to throw money at it, money we haven't got. Waste is logarithmically endemic, and they say they're going to cut it now. Who created it? He was at it again yesterday. Where's it all coming from? He knows he can make promises like this because he knows he won't be around to clean up the mess he's created. We will though. We already are. Make no mistake, this country is going to be left behind in the worldwide economic recovery. Inflation is going to arrive here with a vengeance, primarily due to the fact that policy up to now has been built on a strong pound allowing cheap imports from poor workers in other countries, and an absurd housing bubble which hsa deluded an entire generation. Now the pound is tanking inflation is inevitable. Poor people becoming more affluent (hello China!) around the world are going to push prices up and since we no longer make much here we won't have any option but to pay those prices. Interest rates will go up, this will inevitably lead to the housing market tanking again. However, this is a GOOD THING.
    And this is the point, markets weren't allowed to self-correct last year. Govts stepped in with the consequence that markets haven't learnt anything, bankers certainly haven't. They're already behaving as if nothing has changed. Brown thinks he's sorted it! It's all going to happen again, because all the faffing about with ineffective new regulations won't teach these people the real lesson that allowing the markets to sort themselves out would have. God help us all. Still, at least we won't have to put up with HIM for much longer. Thanks Labour Party for giving us the chance to fomally deliver our verdict on Brown at his first Election!!!

  • Comment number 27.

    What a dilemma.. The capitalist dog was let off the leash and went mad, causing widespread damage and even biting its keepers bum! It would be a brave and, probably, stupid man who - even after a period of retraining - let the dog off the leash again! Society would want the dog put down, or at least muzzled for life.. In the same room you also have a very big but docile dog.. Bureaucracy. He's pretty placid, but just keeps on eating public funds and growing ever bigger...

  • Comment number 28.

    Gordon Brown was seduced by the bankers before he even came into office he was privy to their attempts to have Glass-Steagall repealed (successful in 1999) and how this extra leverage would allow them to create a tsunami of tax revenues that would allow Gordon to deluge his sacred cow Public Sector with undreamt of wealths.

    He did what was required of him as soon as he came into office removed the stabilising hand of the BoE from the financial tiller, something Eddie George and Peter Lilley for the Conservatives argued against. Gordon then fulfilled the second part of his faustian pact by changing the method of measuring inflation in the economy by removing that most volatile and accurate indicator of trouble brewing, namely housing costs.

    Gordon and Tony then spoke of litle else but light regulation for the City, dinner speech after dinner speech resonated with their thunderous message, the markets know best and all the time the monies rolled in to the tax coffers and the bankers bonuses, very few pension funds benefited. Then when it looked as if the "ponzi" scheme would crumble with the Dot.Com market crash, Gordon and Alan Greenspan colluded to keep bank rates low encouraging a public spending spree as opposed to the recesssion that should have happened. Now that was interfering in the free market in all the wrong ways.
    It was at this point that Gordon abandoned the Conservative spending plans he had inherited and stuck to up until this market crisis. His answer was Kenysian; spend, spend ,spend, the floodgates were opened on Public Sector spending and to this day they have never been closed.

    So contrary to what Gordon says the problem did not start in America, it started in his head even as he was planning to get into Government. I do not know if the Conservatives have the answers to get us out of our current dire straits but, I do know beyond any reasonable doubt Gordon and Labour in general do not.

  • Comment number 29.

    What's this! Is Pesto looking for a move to the sun?
    Lets face it the rhetoric is nonsense the world financial calamity was an asset boom that bust and yes the bankers milked it for all they were worth - what would you expect them to do? But at its heart the problem was not bankers bonuses but the fiscal and monetary policies of the UK and US who were seduced into thinking that tinkering with interest rates was managing the economy. They stood by whilst the ever increasing trade imbalances with China destroyed productive capacity across Europe and forgot that all booms end in bust. It's not that the markets do not function but that UK and US governments stood by and did nothing to correct a skewed market created by the pegged Yuan as it was easier to increase government spending and ride the debt driven consumer boom and turn a "blind eye" to the real problem.
    Extraordinary popular delusions and the madness of crowds( mackay) should be compulsory reading for all history graduates that think they are equipped to run the economy. Slogans like no more boom and bust are no substitute for effective economic management.

  • Comment number 30.

    Sorry, thanks for the guidance. Won't do it agaain.

  • Comment number 31.

    Two matters arise from your blog Robert first.

    Having listened to Gordon Browns speech at Brighton could the electorate please be kind to the PM and retire him to some country home he has obviously been running another country somewhere since the day he got into government because he clearly knows nothing about the state of this one.


    Markets are fine and self levelling like water in a pot and even if the pot is tipped they still self level to the ground. So problem is often the ground.

    They also wobble when people take out from them or put things in but they soon settle again. The problems occur when some one get worried that an activity is getting to great and they are at the loosing end so they try to put in a ladle to stop the swell. This creates back waves under currents and turmoil which can create whirlpools the moral is you have to be prepared to leave them alone and take the good and the bad. and live with the consequences Unfortunately in a global society and a world economy the playing field of which is far from level the swings are to fearful to contemplate for the wealthier countries so markets get big ladles stuck in them and fail

    However this is only true for anything transparent - markets like oil, wheat, copper, cabbages

    It is not true for

    The opaque markets of futures, derivatives, hedges, currency and debt these are simply bran barrels and are lucky dips that should be controlled by the gaming act or banned.

    They are money makers and losers but not life essentials like all the commodities.

    We do need a new model that allows us to level the world table before we can return to free markets that work and then we must leave them alone –oh dear, a new order on the Horizon?

  • Comment number 32.

    Is it just me or is Peston's blog becoming less about business stories and more about putting across his own political agenda?

  • Comment number 33.

    The hacks will be out looking for an epitaph for Gordon Brown and his period at the centre of our country. We can all help them. When I look back at 1997 it all seemed quite hopeful - the Major government had been mired in sleaze, and although they had been turning the economy around quite nicely it was clear that they were unelectable. The dynamic duo of Brown and Blair, a sunny day in May, and the tune ringing in our ears of things getting better duped me into putting aside thoughts about having voted for the wrong team. Bye bye sleaze, bye bye boom and bust, hello prudence and a social conscience.

    My epitaph would be that he conned us on sleaze and inappropriate conduct - just as bad under New Labour as it was under Major. He conned us on boom and bust - the worst in living memory, and only partly to do with the international dimension on which he blames the whole thing. He conned us on taxation by introducing so many stealth taxes that we were unable to believe anything we were told or read about budget statements. Bye bye pensions. Bye bye savings. Bye bye prudence. Hello 10p tax rate. Bye bye 10p tax rate. Cheerio to the proper regulation of the banks. Bye bye to our records.

    Bye bye trust in manifestos - where is that pesky referendum? Bye bye trust in what we were being told about WMDs and the Brown-funded contribution to the war in Iraq. Bye bye our lives as we know them without the clammy hand of Neilly and the other European sleepy regulators who slept through the Brown-sponsored Lloyds bid for HBOS. Hello Asbos but also hello the breakdown of the family. Hello 24-hour drinking - bye bye police control of neighbourhoods. Hello statistics, numbers, lists, targets, administrators. Bye bye efficient use of resources. Hello devolution, bye bye fairness for all the countries in the Union. Thousands more but for now the biggest of all - hello National debt that will be around the necks of my grandchildren for many years to come.

    Hello David Cameron, although you must realise that you are getting in initially because of who you are replacing rather than because of any perceived confidence in your ability. Time will tell if we will be writing a similar epitaph on you in the future - I sincerely hope not.

  • Comment number 34.

    Good grief Robert. I get the impression that you have only just realised (like the Sun).

    In the speech yesterday he continued to fantasize of spending more billions (of printed money).

  • Comment number 35.

    #11 - You are right that Blair and Brown have continued to follow a left-ish agenda in Employment policy and had a distinctive (i.e. different from the Tories) approach to Education and Health (I would question whether it was actualy left wing, but thats another matter).

    However that ignores the fact that as Economic policy is concerned we have had no change, and in fact, no debate, since 1979.
    Presumably as the Tories will win the election next year that will continue until at least 2014 - 35 years.

    Brown is clearly finished - you cannot rewrite history to this extent and be taken seriously, however if this change points the way for a post-Brown Labour party then maybe (and its a big maybe...) we'll actualy get some real debate about the economic direction of this country after the next election, and the election in 2014 or so could actualy present us with a real choice.

    No matter what side of the debate you are on, that has got to be a good thing.

  • Comment number 36.

    Well, I suppose you can at least say that Brown has at last seen the light. This is more than you can say for Cameron, who is still banging on about correcting the government financial deficit.

    The good thing about light touch regulation was that it meant that easy credit kept the economy buoyant. The tighter regulation we can expect in the future, means that if we are ever going to return to a reasonably buoyant economy, something must take over the former role of easy credit. A government deficit is the obvious answer. While the banks were pumping out credit, this would have caused inflation, but provided care is taken not to overheat the economy, a deficit is not a bad thing.

    While private liquidity is in short supply, the bonds used to fund a large deficit will need to be bought mainly by the Bank of England. This means that any interest payable will be returned to the public purse in the form of profits made by the publicly owned Bank of England. So effectively the loans would be interest free.

    This may seem to good to be true, until it is realised that in the past the banks, and other financial institutions with access to the wholesale capital market, made huge profits by effectively printing the money needed to keep the economy expanding. Regulating the banks to stop this, means that the Bank of England can take over this job, and can be made accountable for doing it so that financial system is kept healthy and ensure that the profits formerly made by the private banks, not just the taxes on those profits, will accrue to the public purse.

  • Comment number 37.

    We ignore decades, and even centuries, of experience at our peril. What we have learned (or should have) time and time again is that unfettered markets do not work effectively. Similarly, over the last century we have found to our cost that state allocation of capital is disastrous. What works both in the interest of the public/consumer, and the honest trader, is effective regulation of competitive markets (in fact, without effective regulation, markets are arguably not competitive). Without this, bad practice and dishonest traders will drive out or corrupt honest traders - just as bad coinage will drive out good - Gresham's Law dating back to the 16th century. Examples of this go back to, for example, the Weights and Measures Acts, health, safety and employment legislation. As well as being important pieces of social legislation, they can also be seen as instruments of creating fair and competitive markets.

    So the answer is not a simplistic Markets Bad, State Good - or vice versa or however Brown currently is trying to rewrite history. What is really clear is his failure to fulfil the essential role as effective regulator.

  • Comment number 38.

    Did anybody hear Gordon Brown this morning-I found it unbelievable.
    When asked about the £175 billion pounds the Government had borrowed he responded by saying that is really is not that bad as our debt is less than America,France and Germany.
    He then continued to say that this situation is mainly because we started from a low debt point than other countries.
    So he effectively said that when he inherited a strong economy from the John Major Governnment in 1997 then proceeded to destroy it through 12 years of gross mis-management by himself.

  • Comment number 39.

    It is not true to say that the banking crisis was caused "by the mispricing and misallocation of capital by the free market" as Robert Peston states. It was not the free market but US Congressional legislation and the desire by US Administrations of both parties to extend home ownership that created the "sub-prime" market. Additionally, in the last decade governments on both sides of the Atlantic have run increasing public sector deficits that have not been matched by private sector surpluses or higher savings ratios on the part of their electorates. The banking system had to take the strain and eventually broke beneath it.

    There is also no evidence that government intervention has made any difference to the current recession. Indeed by making banks reluctant to lend and take risks such intervention may actuially prolong it. In 1987 there was a sudden collapse in the equity market. Western governments responded with a classic Keynesian package of increased spending and reduced taxation. Before long, inflation, which had largely been brought under control during the '80s, began to rise again. This was exarcebated by German reunification which was largely paid for out of borrowing rather than taxation. Governments responded by tightening monetary conditions which resulted in the recession of the early '90s.

    There is no evidence to show that history will not repeat itself. Much of it points to the fact that most, if not all, of the fluctuations in the economic cycle since the end of WWII, particularly in the UK, have been caused by government intervention, rather than its absence.

  • Comment number 40.

    Not quite sure that is completely coherent Robert

  • Comment number 41.

    STanblogger @ #36

    Back to pre-Brown 1997 with the BofE in control? Sounds good to me. Why not reinstate Segall that went in 1999. Then we could regulate the markets again.

  • Comment number 42.

    It's frightening. What are our choices at the election? More of Brown and NuLab carrying forth the Thatcher flag and doing nothing about those privatisations that were idiotic or clawing back that reach of the market into the public sector spoken of by Mr Peston? Or the Tories, trying to carry the Thatcher flag but with no stated policies of merit as yet, and with Mr Osborne and his clever-sounding theories that will undoubtedly have unintended consequences? Worse, they will ride on the crest of blaming Brown (perhaps rightly) while threatening our economy and society with... well, with what? We don't know yet.

    What's more crazy is the Tory's desperation to win. I mean, surely this is an election that NO ONE wants to win.

    At least the Lib Dems have announced their intentions - they could hardly do worse than anyone else and with Chris Huhne and Vince Cable currently running the show they might just be able to do something good.

  • Comment number 43.

    Robert, yes you are right this is an ideological crisis and the political consensus on the supremacy of free markets ushered in (in the UK) by Thatcher and (worldwide) by the end of communism, is over. This is acutely embarrassing for Labour, as Blair and Brown bought in to this ideology as much as anyone else (not that they really had any choice in the matter - the public would not have had it otherwise). Whether Brown can extricate himself by doing an ideological U-turn by repudiating his former self remains to be seen. I suspect not, but it is certainly interesting to watch.

    The ultimate prize is to construct the post-Thatcherite consensus. A Labour party with a new leader untainted by past efforts at financial deregulation would be very well-placed to do that. In fact much of Labour's social agenda, such as the minimum wage and alleviating child poverty, will look very good in the new scheme of things. By contrast, the longer-term outlook for the Tories is catastrophic. Their entire economic philosophy has vapourised, but they show no signs of understanding this, let alone knowing what to do about it. I suspect the come-down for them will be very rapid and very hard once the public wakes up to it.

  • Comment number 44.

    I find it funny and sad that people on here still don't get what markets are, you only have to go through the years of financial papers to see that markets have cycles - not driven by demand or supply or by economic activity. They are run purely on fear and greed.

    It would be nice to think that markets are self levelling, that somewhere someone is pressing a reset button when things get out of hand. Unfortunately this is not the case - the dot com boom in 2000-2001, the housing boom (still going and it has to for banks balance sheets) and the commodity boom (2007-2008) only just over a year ago are classic examples. The current gold boom born on the FACT the UK is doing everything it can to DEVALUE the pound. The Financial Times calls it the race to the bottom of the foreign currency exchange, ha !

    If you look at the fact £800 billion pounds was pumped into the UK banking system and sold to their clients - us the UK public - practically at any cost, 125% mortgages and low initial monthly payments rising dramatically after 3-5 years. Just get the money out there and take the commission, if things went wrong - no matter, just repossess the house and make another killing. In the UK any outstanding debt is still the responsibility of the mortgagee, including bank costs.

    While this in itself is horrific both in the concept that the naive fell for it (poor/sub prime) and the fact it was carried out - it HAS all come good for the banks.

    Now here is the REAL sting in the tail. That £800 billion pounds of wholesale lending was on the accounts of the Bank of England, there for EVERYONE to read - it's a public document.

    I would expect senior civil servants and ALL financial gurus of the political parties to have read and digested those same documents.

    So either they ALL KNEW or they are ALL FOOLS. I don't think there are that many fools around,,, especially when you consider those same documents were in the hands of so called Economists and Financial specialists. I wonder when Robert Peston started to see things were not as they should be ?

    Please everyone, stop being so forgiving to those in power. They KNEW what was happening. While I WHOLEY blame BROWN OUT. The opposition wasn't doing it's job either - the Conservatives and Liberals should have been on this everyday, every hour, every minute exposing it. But they did nothing - as did the media - as did ALL financial institutions.

    I knew a boom was happening (as I am sure you all did) but just had no idea where the money was coming from. I thought it would end 3-4 years ago.

    While the Labour "Muppet Show" was somewhat entertaining they are doing nothing more than offering carrots to cattle while the pigs in power eat sirloin steak.

    The only weapon we all have is our vote - use it wisely, don't waste it.

  • Comment number 45.

    Labour need to go back to what they used to be about. This "New Labour" approach has lost them their traditional voters, and I don't think they've won too many voters from the right either, as most on the right are laughing at them.

    Their pragmatic approach of light regulation, privatisation and allowing the free market to run amok has alienated a lot of true labour supporters. Unfortunately, I think it's clear that it's too late for a labour fightback. However, hopefully Labour can regroup, and as the opposition party (which they're likely to become after the general election) return to their traditional labour values, and reclaim their own party, which had been hijacked by neo liberal, laissez faire policies that appeased businesses and City workers, but disillusioned a lot of the working class.

    The Tories may talk tough on banks, but I don't think they will do much to change the status quo. If they are elected, there's a good chance they will follow the tired old rhetoric of "privatize, deregulate, denationalise", and coupled with the obvious cuts in public sector funds and taxation of the rich, I can see a lot of disillusionment occuring if the conservatives are elected. We know the conservatives are not in favour of public goods, so the financial crisis provides them with the perfect excuse to do what they want.

    For labour to come back, they will need to return to traditional labour policies. Significant government intervention, strongly regulated markets, large funding of public sector goods and services, nationalisation of fundamental industries, increased taxation and looking after those who are disadvantaged economically and socially, and haven't been able to compete in our capitalistic "free for all" jungle. But even these ideas are working within the traditional capitalist framework. What I really feel we need is a complete overhaul of the capitalist system, but I doubt that's going to happen anytime soon.

  • Comment number 46.

    Government backed Fannie Mae and Freddie Mac guaranteed the vast majority of mortgage lending in the US under the guise of home ownership for poorer people, which was then secured to create more debt which was distributed around the world through the investment banking network. This never constituted, no matter what politicians were saying the last 30 years, to a free and undistorted market.

    Throw in the 80s bailouts of big business, the Long Term Capital Management bailout, and the NASDAQ bailout after the 2001 crash when rates were down to 1% for almost 3 years and you have a tapestry of moral hazard. This is why big business now has no problem holding governments to ransom as they know governments will always buckle.

    So with most world governments declared as Keyensians, particularly ours, they are adding government intervention/distortions to an already hugely distorted market.

    So Robert, your 'theological' crisis that you say some economists are having doesn't really exist.

  • Comment number 47.

    I think that what this essentially says is that there cannot be one dogmatic economic (or social) policy for any Party for all time and that there needs to be a reaction to events.Economically in the good times you can spend some and save some-In the bad times you tighten your belt and use your savings.(Ant and the Grasshopper) So what we actually need is a competent and very skilled team of experts to run things and probably not career politicians with no real experience.It seems to me that those who aspire to power are always flawed in their nature and are to some extent always megalomaniacs and control freaks and often obsessed with their own pet dogmas but we need these talented people who are motivated to do the job( Wouldn't want to be Prime Minister) but we need to control them (Bankers are probably the same) and one way to do this and bring credibility back into our Democracy would be a massive enhancement of the Freedom of Information Act so that we can actually check the basis of ministerial and establishment assertions. So the failure here and in the USA looks to have been the result of a loss of control and that may be because of policies but because the Government teams were not clever or competent enough to do the job. So perhaps at elections we should be looking at the abilities of the team and not the charisma of the leader.

  • Comment number 48.

    #39 Allan D
    "It was not the free market but US Congressional legislation and the desire by US Administrations of both parties to extend home ownership that created the "sub-prime" market."

    Oh right, really ? So the reason the UK could not get wholesale funds from Eastern countries like China and Japan was because of USA sub prime lending ? The USA property market was a sack of kack and UK was not, but the Chinese said I don't like the UK any more ? they weren't feeling well ? or perhaps they misjudged the UK as another state of the USA ?

    Why did we need wholesale funds anyway ? The UK barely used wholesale lending before 2002-2003.

    The reason is clear - banks made a killing on selling cheap money from the far east to the british public. Selling that money into the mortgage market as fast and as hard as they could. To say anything else is extremely insulting and quite frankly deluded.

    No need for wholesale funds - NO PROBLEM - end of story.

    Without TAX PAYER intervention there would be no markets AT ALL. It would have ALL fallen over like the sack of kack it is.

    I'm glad to note that at least you recognise one thing - Markets have only one purpose and that IS to BOOM and BUST on what seems a far to regular basis to me.

    Financial institutions should be playing the role of recognising when a market is either over sold or over bought - the stock market is very clearly over bought (another bubble, so soon too) but no reset in sight. Oh remember oil at $200 a barrel ? Or the fact Goldman Sachs has been predicting oil over $200 a barrel in the near future ? Oh right, yeah government intervention - what a joke, dream on.

  • Comment number 49.

    We all forget the cries from the media in the 80s & 90s that Labour were unelectable (Sun headline about turning-off light) - response Labour followed the media and became electable (review Sun 1996-2005). Now Mr Peston says Labour was wrong to become electable (think where we would be after another 12 years of Tory rule) on a platform that won a landslide in 1997 (and maintained for 8 years) because it was un-Labour, well doh, read your own press.

    When the crowd is aggitating for all that is wrong the level headed have two choices. One, prognosticate to the mob in the hope that a Sun reader can pay attention long enough for truthes to sink in. Two, allow the blind masses to perpetuate their excesses until the denouement and they find out for themselves the error of their ways. The latter always has a more lasting impression on the unreasoned mind (suggest a quick read of Piaget and concrete and abstract thinking).

    Should we study past prognostications of the media over the past 7 or 8 years and see where you were leading the nation, nay the world? A model of selffulfilling prophecy of banking wealth creation; hedge fund entreprenuerial success - but little guidance as to the shallowness of the illusion. Articles, ad nauseum, on the benefits of playing the credit switch game; the quick return investment; very little on the staid and secure, the mundane normality.

    The charade is over, but still the media acts as though it knew/knows more than any other clearly fatuous financial institutions. A gentleman 2000 years ago is reported to have suggested that an individual set their own house in order before commenting on others (something about throwing the first stone). Maybe other lessons could be learnt here?

    In conclusion, I would have thought that starting with the foundation of the bonus/perk driven culture (banks/insurance/retail have relied on commission and bonuses for generations) would be the card that would bring the whole corrupt process down. Boards of Directors; Council Officials; politicians, et. al., all seeing it as a right to get a bit (in most cases a lot) extra. To start somewhere, prefferably where the public can see best rewards would make sense. To show through action that past complacency (set in stone by Thatcherism and maintained by Blairism) and prognosticated by Cameron's Cronies, is to be overthrown even if in little steps.

  • Comment number 50.


    You left out us in your blame scenario. We are the ones who have been living for today and not tomorrow, spending on credit cards and taking out fancy mortgages on properties we couldnt afford. At least during Thatcher's time (not because of her but because of the way we were) if you wanted a loan you had to go and speak to your bank manager. If you wanted a mortgage you had to produce watertight evidence of your salary/company profit and then it was three times and no more. Rigid. I was buying a house in 1975 and was living in Germany at the time. The bank manager needed to see share certificates to justify the last 2k of a 17k house purchase. I had to travel from Germany to see him. Ridiculous and I changed my bank, but that is the way they were.

    Gordon Brown's Britain: Six times, Sir? A 400K house Sir? No problem. We dont need anything like proof of earnings, your word is good enough Sir. A bit on your credit card for extras? Again no problem. When it all went pear shapoed there were the companies on TV - step forwar if you have got a problem with money? CCJs and cant get a loan?. We will give you up to 25K no questions asked.

    We didnt need to borrow or to lump billions on our credit cards and on mortgages. But we did. Except I didnt - in 72 years I have never had a credit card and only one mortgage which paid off in 25 years. Brown taught a phony message. Live now, pay later. It serves us right.

  • Comment number 51.

    I am compelled to accept that Labour have got it wrong and indeed that Gordon Brown was particularly culpable. I am however a bit concerned that there is a popular drive for a conservative party that has not detailed its economic vision in any form of coherent detail or to any degree of consistency. Brown/Labour with all the inherent faults have at least attempted to do so. The question then being whether a party with a vision albeit flawed should be subsituted with one with no coherent plan other than simply seeking to get elected. These are seriously dark times for this country.

  • Comment number 52.

  • Comment number 53.

    to mellowtraveller: if we did have an Obama it is unlikely he would bother with this country. The British have a Biased, Predudiced Bigotted attitude which is not fit for any purpose what so ever.

  • Comment number 54.

    I pretty much agree with Robert on the issues he raised. Brown is definitely incongruent on the issue of bankers, but then the public gets what the public deserves.

    I hear no public uproar about Mr. Fernando Alonso's £20,000,000 salary as he moves to Ferrari; Race a car or kick a ball for a living and multi million pound salaries are no issue. Employ hundreds of thousands of people, but be called a banker - begat the sperm of the devil.

    I'm not a banker (can't even say I like the profession), but it's time for everyone to realise they are being completely manipulated and it's dirty, intellectually unsound politics. It suits (all) the politicians to have someone else to blame on the crisis and its causes because it takes the spotlight off them and their roles as chief promotors of the system at the time.

    However, my observation on both Brown yesterday, and Cameron thus far is the lack of vision for the country. There is no cohesive narrative and I truly beleive the nation is at a tipping point in our history.

    The future could be tremendously exciting, or we could really be left behind, squeezed out by industrial might (China / India) on the one hand, and Innovation (USA) on the other; not to mention our huge vulnerability on energy security (as but one example of many I could give; I wonder how many people know we only had TWO days natural gas supplies last year during the Russian Gas crisis?)

    This is really serious stuff, and no one is telling this story, no one is thinking out of the box on how to solve our real issues, and there are some great answers out there.

    Still waiting for someone to float my vote!

  • Comment number 55.

    #50 majorroadaheadagain2


    You left out us in your blame scenario. We are the ones who have been living for today and not tomorrow, spending on credit cards and taking out fancy mortgages on properties we couldnt afford."

    Mostly we follow our parents and in some ways are carbon copies of what our parents have done and do. Perhaps some are swayed by the media.

    I've been lucky in that I have always seen borrowing as waste, as are holidays and excessive spending. This is not to say I haven't been lavish in living the way I want to live, but I am sensible. I don't have a credit card and never will. It doesn't serve me right paying for something I was wholey opposed to.

    There are many like me up and down the country - your quote of "we" should be "some".

    I've seen others promote the "we" theme but give it no credit.

    Banks are professional institutions, not market sellers or tacky traders in the back of the paper. They have responsibilities to their share holders, to the public and to the country.

    If banks ceased to respect the value of money is it surprising those either weak enough or devious enough took the money ? We are all "human" after all.

  • Comment number 56.

    Well done people, some of the best posts in a long while with thankfully no AlexanderCurzon style capitals shouting.

    The big question is would the Tories have done any better and i doubt it.

    The light touch regulation was continually demanded by the City when GB was chancellor. New Labour sought to appease them although it went against the grain. Lets face it they were damned if they did and damned if they didnt.

    Even worse the Tories if faced with this recession would have let the markets decide and if that were the case i probably would be amongst the 5-6M unemployed that would now be living on benefits.

    My only regret is that they don't seem to be comming down on the bankers who got us into this mess half as much as the general public want them.
    Seeing certain bankers being led off in cuffs on newly introduced charges of "Endangering the fiscal stability of the UK" would ram home the message.

    Lets treat them like crime Lords and see how many of them would dare to keep doing what they are doing.

    Personally if i was GB i would tap into the public mood and go for this big style. It would expose these people for what they are and point out how many of them fund the Tories, esppecially the hedgies.

    Gordon use it or lose it is my advice.

  • Comment number 57.

    Seal couldnt have put it better

  • Comment number 58.

    1) So we would be in the worst economic crisis since the great depression regardless of who was in power over the last 15 years.
    2) We would be in the appalling disaster that is the Iraq war regardless of whether it was Blair/Brown/Cameron in power.
    Two of the most defining events of the last 100 years with terrible consequences for so many and the two main parties wouldn't have done anything different. The worst thing is they are going to be in power...again, straight away. Unless we recall Brown/Cameron ideology the day we vote.

  • Comment number 59.

    The last point I'm gonna make before putting my time to a far better use by going fishing 8).

    Just look back over the years, 1 million Polish and god knows how many brought into the country - where were they going to live ?

    1) Who knew they were coming and did nothing about it ?
    2) Who made money out of where they lived ?
    3) Who employed these people ?
    4) What was the result on the lower paid ?
    5) Given we now have 5-6 people (or more) living in houses cohabiting - what is the net result on crime and civil unrest ?
    6) Why have no council houses been built for 20 years ?
    7) Why are houses the smallest in Europe ?

    The Labour party knew property prices would increase, do you seriously think knowing about what was inevitable they didn't profit from it ?

  • Comment number 60.

    Seal_67 @ 51

    Let me help you with your dilemma? Read post 33. Now consider "education, education, education" - remember that - I've just put my two lads through school and onto university and my spouse works in a school ........ can't for the life of me see any real improvements in education over the last 12 years! So anyone considering re-electing the current load of pathelogical liars really do frighten me more than the useless government itself. Now examine the track record of previous governments achievements against their manifestos - you may not like them but at least they haven't lied and treated the populace with quite so much contempt. Still don't like them, then feel free to waste your vote on someone else with no track record whatsoever. The dilemma facing all of us is the lesser of several evils come next May or whenever but re-electing this bunch of 'wasters' cannot be seriously considered ........ can it?

  • Comment number 61.

    "Blair and Brown repudiated a long-standing commitment to centralised, state-owned and state-delivered public services ..."

    They failed then, didn't they?

    Since we now live in the world's first soft, totalitarian state, with millions and millions of citizens dependent on the state for work or benefits, a politicised police force, immigration policies giving rise to the ultra-left extremism of the BNP, public finances out of control with national debt hurtling towards and through £1 trillion by 2011, the state - through legislation (most of it from the undemocratic EU) - penetrating into every trivial nook and cranny of our lives, state education a shambles, more CCTV cameras per capita than any other nation on earth, our lives captured and held on state databases, whether we like it or not, a tax system which takes money from you first and then makes you fill in forms and jump through hoops to get back what was yours in the first place, ill-conceived, half-baked, incompetent and incomplete constitutional reforms, over 1,500 unaccountable quangos wasting hundreds of millions of pounds per year ... I could go on and on.

    Please do not let me hear once again anyone trying to tell me that we are not the victims of 12 years of unreconstructed marxism/socialism/statism ... call it what you like. The Labour Party has destroyed the economy and is well on its way to wrecking a way of life in this country that before 1997 had a lot going for it.

    Anyone who has the faintest inclination to vote Labour when the time comes really does need to get their head examined. The Blair/Brown/Balls triumvirate has been an unmitigated disaster for this country, from start to finish.

    The prospect of having these people at the helm for another 9 months is a first-order scandal. With each passing day now, all that is happening is that the challenges facing any incoming government are becoming ever more intractable and ever more threatening to the prosperity and stability of the (dis)United Kingdom.

    Perhaps the Labour Party's epitaph should be, "We were an insult to democracy".

  • Comment number 62.

    It is not the markets that failed, it is the criminal justice system, which despite the pretense of separation, is a creature of government.

    Nu Labour has abandoned the "rule of law" and the result has been turning a regular recession in to the UK credit crisis. This abandonment continues.

    To repeat:
    - deliberate lying about income on a mortgage application is fraud.
    - bank staff processing such an application suspecting the income quoted may not be true is aiding and abetting the fraud.
    - bank executives bundling what they referred to as 'liar loans' in to securities and selling them as AAA rated was fraud.
    - MPs claiming expenses that did not further their function as an MP was fraud.
    - 1/3 of the cream of the metropolitan police claiming personal expenditure as work expenses was fraud.
    - the attorney general failing to abide by law she took part in drafting is very suspicious. Whether she was just incompetent or criminal is a question for the criminal courts not a civil servant.

    A govt which follows policies that knowingly push 100s of thousands of citizens to commit very serious fraud, to get a home, is a corrupting government.
    A government that fails to prosecute people and offenses because it would cause that govt embarrassment is a corrupt government.

    We pay for the BBC. It's purpose is to inform. The BBC is continuing to ignore the nu-labour government's abandonment of the 'rule of law'. The reason is the spread of people who committed mortgage fraud, in london most people have a friend or family member they suspect of doing this. I've no doubt it's the same in the BBC.
    But that is immaterial. Serious crimes have been committed and the result is 10s of millions unemployed around the world, $ trillions lost, 100s of bankrupt banks, bankrupt countries, pensions diminished, good business' starved to death. And people are and will die because of this.

    The BBC is happy to see 100s of thousands of license payers get away with mortgage fraud. What next, a BBC campaign to legalise lesser crimes like street robbery, burglary, shoplifting, cheque book and credit card fraud, drug dealing. Where does it stop.

  • Comment number 63.

    51 aint lying!

    Jings crivens!

  • Comment number 64.

    "So it is by no means a trivial political event that Gordon Brown should make an explicit attack on what he called a "bankrupt ideology" that "markets always self-correct but never self-destruct"."

    Typically Brown has put up a straw man that he felt he could easily knock down.

    In reality there has never been a perfect "invisible hand" in the markets, they have always been subject to some regulation, which was accepted by the ideology of the "Free Market".

    The problem was that Brown bought into it too much - he thought that light touch regulation could be taken further than it ever had been.

    He was blinded by the profits that seemed to be generated by the Financial Institutions, and wanted nothing in their way that could reduce their competitiveness - lest his tax pounds that rolled from their profits should slow down.

    When he speaks of greedy bankers and their bonuses, do not forget that he is speaking in hindsight and he didn't mutter a word whilst he as Chancellor was taking 40%+ of those bonuses, as well as Corporation tax on what was left with the companies.

    He claimed that the Tory Ideology had failed - he is wrong. It was New Labours ideology that failed, and now it has we do not have to throw out the baby with the bath water.

    Imposing proper regulation, as existed in the past, will be sufficient.

  • Comment number 65.

    The banks made a mess of our economy.
    The politicians made a mess of our economy.
    The British public made a mess of our economy.

    Let's try being honest for a moment. If any party ran on a platform keeping credit expensive and difficult to obtain (for our own long-term good), would they have stood a chance of being elected?

    You may not like Brown. You may not like what has happened. But who in the UK really thinks that if the Tories had been in we would be better off as the bubble burst? And who, really thinks they will make it better? Oh, Im sure they'll make it better for the bankers, but certainly not for the rest of us.

    This isn't a UK economy problem, it is global. Who honestly thinks the isolationist proposals of Cameron will sort this out? there are still people in this country trying to sort out people, communities from the mess they made of whole stretches of the UK in the '80s. There is answer is more of the same devastation. It was industry that took the hit then. Let them anywhere near No 10, and watch as they move further to the right, replace Cameron and dismantle the NHS.

    I wouldn't trust a tory MP to take a granny for a walk around one of their moats.

  • Comment number 66.

    What a spectacle we are witnessing. Suddenly, the system that has sustained us ( not just in the last 10 years) but since the last world war, we are being told must now be swept aside and replaced by a state controlled economy.The Marxists love this because it counters the free market case that points to the disaster which was the Soviet Union. What has failed in the last 10 years is a combination of excess money chasing a shortage of housing (hence the property bubble), and a banking system which actually had too little competition - the problem with markets occurs when they stop working property because too much power is in too few hands - either monopoly or oligopoly. In a truly free market, that power is restricted by competition. Having said that I don't believe in totally unregulated financial markets, only urging caution - do we really believe that committees of MPs or career civil servants are the omnipotent ones who know what is right for all of us. Beware of knee jerk reactions

  • Comment number 67.

    Forgive me for being naive but it appears that the world leaders have chosen to follow Brown and view him with the utmost repect. Are we then saying that these world leaders are in fact fools with no understanding of economics or the workings of the free market?

    The Conservatives if they get in power will attempt to undo what he has done and would not have interfered in the recession - going against what the leaders of the more prosperous countries have done and are continuing to do - so who is wrong the Conservative Party or the world leaders? Very worrying.

  • Comment number 68.

    A fundamental principle of economic theory is that markets need accurate and transparent information to operate effectively. When information becomes opaque, markets will mis-allocate and mis-price. The highly complex financial instruments being traded in recent years were extremely opaque and ultimately the market failed! It was the role of academics, economists, regulators, finance ministers and bankers to ensure market transparency was maintained through an appropriate regulatory framework and they failed to achieve this! Given Gordon Brown was chancellor during this time and in view of his conference speech (rant) yesterday he has merely confirmed he's an intellectual minnow that doesn't understand market economics and the need for coherent regulation.

  • Comment number 69.

    *67 The conservatives. If they had been in charge wed have 5-6M on the dole and anarchy breaking out all over the place, you think things were bad in the eighties? the people are a lot less tolerant now than they were then and more likely to resort to violence and unrest if you threaten their way of life.

  • Comment number 70.

    Robert if you are reading this you should really use some of these points next time you interview Darling/Osborne/Vince(God bless him- the best financial man the Tories and NL never had)

  • Comment number 71.

    From your blog Robert I am wondering if you have had some kind of Damascene conversion yourself and finally come to realise what a complete disaster Gordon Brown and Labour have been for this country.

    Brown seems to think he can win back the public by all kind of extra spending on things like hospital car-parks. However, these have to be paid for out of further taxation. Do we really want to be plunged further into debt? This is just pork-barrel politics of the worse kind.

    Brown himself is becoming a laughable basket-case. He is an embarassment whenever he appears in public and is clearly suffering from some kind of advanced delusional syndrome. At least 80% of the country cannot wait to see the back of him, and the other 20% probably have no understanding of the economy whatsoever.

  • Comment number 72.

    The real sadness is that in order for our political system to work this inept government HAS to be voted out in the same way that the tories had to go in 1997. If not, then anyone can get away with anything. I say sadness, because I dont see anything better about the alternative, but it still has to be done.

  • Comment number 73.

    You've just got to love the Great British public. When the economy is booming and our houses are doubling in value, it's all down to us and our cleverness; when the economy goes tits up and our over-inflated houses are back to somewhere near their true value, it's down to everyone / anyone else -- Brown, Blair, Bush, God, some spotty little oik in California who sold 150% mortgages to people who didn't have a cat's chance of ever paying them off. Funny how it's never our fault... I don't remember Gordon Brown making me buy my house; I don't even remember him encouraging me to re-mortgage it in the boom years so I could instantly have that new car -- that new kitchen -- that holiday. It's time we all grew up a bit and accepted our share of the blame too, coz we're all going to have to grow up pretty darn quickly under Cameron and his talentless chinless wonders, and you'd better believe it.......

  • Comment number 74.

    Hell and Handcart come to mind.

    When it comes to the elections, could we have a box for '\none of the above'?

    (Investment) Banking is badly broken but I cannot see any fixes on the way. It will all happen again.

  • Comment number 75.

    There's no doubt that this tired and discredited regime has reached the end, exactly as did John Major's tired and discredited regime in 1997. It says much for the redundancy of our entire political system that even our saviours get less convincing every decade - then it was Blair/Brown - now it's Cameron/Osborne. We're on a slippery slope. Caledonian Comment

  • Comment number 76.

    God I am getting nearly as repetitive as RP himself.

    GB had to deregulate the markets so that they coul dmake the returns they needed to to pay his stealth taxes and give us a decent return on our pension investments. It was his "alchemy" tax the growth on pensions, deregulate the market so that they can make higher returns and no one will ever notice, and he woul dhave gotten away with it if it hadn't been for those meddling kids who suddenly realised that they were heading for oblivion like a stuent with a barclaycard. And whilst we are getting all political, at the last General Election, Tony Blair said he was going to do a full term, I wonder at what point he realised the game was up? obviously a couple of days before Gordon (who had the numbers) so he "reluctantly" resigned and left him to his fate. We will probably never know all the history between those two, but at said last general election, Labour made much of "40 quarters of continuous growth" when thy had only been in power for 7 of them and had stuck to Tory spoending plans for the first 2. Clearly, as Labour rely on stupid people to elect them, they have to increase the number of stupid poeple.......

  • Comment number 77.

    @ 74

    it will all happen again

    a terrible comment, really terrible

    ... especially because it's true

  • Comment number 78.

    Well quite, it was a transparent attempt to weave in a pop at the Tories. Of course, if GB was serious, he presumably meant to say Milton Friedman instead. But Robert, having recently warmed to you, particularly in light of your recent spat with Murdoch, you would surprise me if you were to concur with throwing out all the free market "ideology" with this cold bath water being chucked over economics. What is the appealing alternative then? What level of intervention and where? What aspects of public and private life? Why just stop at banks? At the extreme end, that is asking for a totalitarian state or perhaps less severe, Chinese-style capitalism - not much room for free press in that one which does mean you out of a job. If in favour of aggressive state intervention any lessons to apply from, say, Nova Huta?

    In all seriousness, I do support some greater regulation via democratically elected governments and perhaps greater market transparency so the consumer can demonstrate their moral fibre and make better informed choices in consumption and therefore act as stimulus for both valuable innovation and reduction in undesirable activities – as dictated by the consumer – in markets relating to finance, climate and sustainability matters; but any intervention has to be coherent and not based on some market ideology bashing rant.

    Anyway, on other more important matters Robert, how are you settling your differences of opinion with Murdoch? Pistols? Fisticuffs? A dance-off? Much prefer that to be televised on his channels as opposed to some debate between the main party leaders. I'll start an alternative petition for that. My money is on you.

  • Comment number 79.

    75. At 4:18pm on 30 Sep 2009, CaledonianComment wrote:
    There's no doubt that this tired and discredited regime has reached the end, exactly as did John Major's tired and discredited regime in 1997.

    I couldn;t disagree more. In 1997 the public finances were in great shape and the economy was growing BUT Tony Blair was just a bit better looking and camera friendly than John, so as far as everone was concerned TB had to win that election and the press, much like today chased down every story about every corrupt act of every Tory MP, and what did thye come up with Neil Hamilton alegedly (just in case) taking a few quid off that well respected business man Al Fayad. Not a lot compared to recent events but none the less enough to condemn this country to more than a decade of this rubbish. And don't for one minute think that this is the first time we have hit the skids, there have been at least 2 other occassions in the last decade when the economy was on the slide but was propped up, remember TB saying it was our DUTY to spend our way out of recession and max out our credit cards?

  • Comment number 80.

    In response to OutatSea #68

    then please explain why Thatcher and Friedman were so keen to deregulate in the 80s. The first Tory Budget removed restrictions on currency movements (no tax havens then), while the present Cameron Clan led by Osborne would leave it all to get much, much worse in the name of market forces. The adage "you only miss it once it's gone" rings true, bot you will miss Old Gordon and his incompetence when the real free marketers get a hold of the purse strings - just watch interest rates fly, general taxation esculate while to Monaco rich just get richer.

  • Comment number 81.

    # 71 wykhamist

    "At least 80% of the country cannot wait to see the back of [Brown], and the other 20% probably have no understanding of the economy whatsoever".

    Thanks for articulating something that's been baffling me for years. How there can possibly remain a proportion of the British population that continues, stubbornly to back the Labour Party?

    You're absolutely right: that proportion of the population that does indeed declare its support for the Labour Party is bereft of all economic nous, bereft of all critical faculties, bereft of the slightest understanding of the state we're in. Goodness only knows what these people read/watch/listen to; how can anyone swing in behind £1 trillion of national debt and the most appalling economic management experienced by the British people in generations??

    It really is incredible that so many people can still view Gordon Brown and the Labour Party as the answer to good governance and the prosperous and peaceful future of this once fine nation; it beggars belief.

  • Comment number 82.

    65 CopperDolomite

    "Lets try being honest for a moment". There is nothing honest about the type of codswallop espoused at 65. In fact it is jut a rant with no balance whatsoever.

    What do you know about how Cameron would perform as Prime Minister? In the same way that I didnt have a clue about how Tony Blair would perform in 1997. Or Chamberlain when I was a boy. If people elect Cameron because they are fed up with Brown we all have to hope that he makes a success of it. Otherwise you would be wishing for the country to go further down the tubes than it is now. In 1997 I voted Conservative, and was sick when they lost. As I walked to work on the following sunny May morning everything was normal and life went on. If Cameron wins and proves to be as bad as Brown then I would be the frist to say good riddance.

    Incidentally, in my view industry didnt take a hit because of Thatcher in the 80s. It took a hit because we were trying to hang on to outdated manufacturing methods (while the Japanese were not), were making the wrong things, and had industrial relations that were reckoned to be the worst in world. The bully boys provided the Japanese with a ready made opportunity to take over our car industry, others were making ships cheaper and quicker, and we had too many ideological issues when it came to protecting our defence industry.

  • Comment number 83.

    In response to 80.

    .......because it was the right thing to do in the 1980's as subsequent economic events demonstrated! We're now 30 years on ... the world economy has globalised, capital flows are much more immense and variable, technology enables 24/7 trading, India & China have emerged as major economies and so on. Accordingly, the regulatory framework needs to be adapted to reflect the current realities and this has been a major failure of the current government especially as London is the world's major financial centre. So I'm a strong advocate of intelligent, coherent market regulation and expect our policy makers to do the job they were elected to do!

  • Comment number 84.

    Surely the biggest con is that Labour has done anything to help us get through the recession. Lets look in detail.
    Reducing VAT to 15%, wow. When this was first applied you would go to the till with your goods and were surprised when it wasn't £9.99 but got charged £9.78 instead. Does that still happen, I dont think so, shops have put their prices up and with 15% VAT it makes £9.99. So who is benefiting, certainly not the consumer. The money that would have been in the treasury is now in the till. No wonder buisnesses want the cut to carry on.
    QE: all the money is in bank vaults, as the banks wont lend.

    Scrappage. How many British jobs/companies has this saved, as most cars being bought are foreign built.

    Gordon claims to have saved 200,000 small buisnesses with his plans, can he name a hundred.
    How many have been saved from repossession, probably less than 100.

    All his plans are words and no actions. He claims the Tories would have done nothing , but i believe its all been smoke and mirrors with Gordo and he has in fact done absolutely zilch.

  • Comment number 85.


    You could not be more naive you patronising snob. It should be obvious to most people that the crisis began in the right wing, business run U.S.A. If the crisis had been merely confined to the UK you may have had a point, as it stands you do not, and I would counsel all the other people so determined to pin the whole thing solely on GB and his party to get some education. This is a crisis of the neoliberal ideology, that of Friedman and the Chicago school of economics. It is not due to the specific policies of any one political party or person. It is much broader than that. But then of course, right wing stick in the muds like you little Englanders are famously incapable of balance and rationality. I am also staggered at the arrogance of you people to claim that everyone else is stupid. You are not the master race and your blinkered and selfish ideology is faulty and repugnant. Nothing you can do will change that.

  • Comment number 86.

    The FTSE 100 index of leading shares has enjoyed the best three months in its 25-year history.

    The index, which has just closed at 5133.9 points, gained 21% between July and September.

    Its next best performance was in the last three months of 1999, while the market was enjoying the dotcom boom, when it rose 14.9%.

    This is what the BBC said today - This report is not balanced by the fact that the FTSE was over 5000 in October 2008 so lost more than 20% between October and March 2009 dropping to 3500, and was at nearly 7000 in 1999.
    It is recovering losses made late last year and savers are trying to find a better return than the interest paid by the banks.
    I hate selective statistics, it seems to be something this government is very good at.

  • Comment number 87.

    #84. splittingtheatom wrote:

    "Gordon claims to have saved 200,000 small buisnesses with his plans, can he name a hundred."

    Many people claim there are 3 million unemployed: can they name a hundred? :-)

  • Comment number 88.

    85 I take it from your use of insulting and uncalled for language that your capacity for rational argument comes from the same mental incapacity as does your hero's.

  • Comment number 89.

    If it was down to Market economics then the Government should be put into receivership.

    The Government's assets are 337Bn

    The Government's debts are 797Bn

    The Government made a loss of 100 Bn fy 2008/9 which is set to rise sharply so any future present value of profits is negative.

    Thus the Government is worthless even to an asset stripper.

    With this monster to feed, no wonder capitalism is in such a mess.

  • Comment number 90.

    The really sad thing, is that Labour and Brown hasn't had and still does not have any vision or strategy to rebalance the economy towards high technology and renewable energy. All we get is knee jerk, short term, wasting of money like the car scrappage; just to buy the votes of Unions during the Labour conference and the election. Where are the long term investments to build new industries and jobs. Complete lack of support for tidal and wave energy businesses, constant delays to decisions like the Severn barrage, they even let the only significant wind turbine manufacturer close down.

  • Comment number 91.

    #84. splittingtheatom wrote:
    "Gordon claims to have saved 200,000 small buisnesses with his plans, can he name a hundred."
    Many people claim there are 3 million unemployed: can they name a hundred? :-)
    I probably could with a little effort, simply stand outside a job centre and ask, in fact I only need 98 as I and my colleague are 2 of the latest victims, hmm come to think of it, I can add another 2 to that, but I bet you couldn't find the businesses. Oh dear, how depressing, I've just thought of another 2, so now I only need 94, and I've only been thinking for 3 or 4 minutes, in fact, one of the previous two was a result of a business failing - and, come to think of it, I know of a business just down the road that closed a few weeks ago, but I don't know how many lost their jobs. God I'm now even more depressed than I was after listening to 5 minutes of Gordon Brown yesterday :-(

  • Comment number 92.

    In truth Brown's years (and we have to accept that for much of the first 10 years Blair allowed him to be de facto domestic prime minister through his control of the purse strings) have been a tawdry marriage of old-labour authoritarian social engineering with an intense relaxedness about certain individuals becoming filthy rich - as one of those engineers put it - providing the latter helped pay some of the bills. It was not so long ago that Brown trumpeted his approach as being "not just a light touch, but a limited touch", and how he has the gall, applying his usual uniquely poisonous cocktail of deceit, hypocrisy and mendacity, to call it a failure of Tory thinking. It is not just tiresome to have this man telling this stuff, it is downright insulting that he thinks we will believe it after all his broken promises and lies.

  • Comment number 93.

    I have not read all the comments but I particularly agree with:

    26. At 10:05am on 30 Sep 2009, RonnieJamesDio wrote

    Brown sounds plausible, like the man is honest but may be overlooked due to low social skills that you just have to give a chance to as he is clearly the geek who knows. He worse than a hardened con man.

    Whenever you intensively study any area of his policy you begin to see that a little beyond the understanding of everyman you have someone who has continually made cheap political decisions over long term choices for the benefit of Britain. He spins ideas like he wants to be an economics professor, this is clearly a man that is just a power hungry inadequate with no sub-conscious altruism. This might seem harsh, but why does he continually move the debate backwards with straw man arguments, clearly he is not interested in the nation moving forward or politics moving beyond the Nasty Tory arguments of 1996, even when Cameron is almost pathetically soppy.

    Brown is without even a basic grasp of cash flow, let alone economics, if he could work as an economist that would not be in any business that had to pay for itself, but he would be there in some institution in Scotland; but, he wants to be prime minister forever, since forever, and that is his inner truth, without it he would have to face the fact he is of no merit or use.

  • Comment number 94.

    If you think I was harsh to Gordon, why do you not buy into the recovery, the rest of us can take bets on the hole thing tipping into a hole once the new government works out the situation after the election.

  • Comment number 95.

    This is not a failure of markets but of government. We do not have free markets as propounded by Milton Friedman so the socialists among you cannot pin it on him.

    The third way is one of meddling in markets, with central banking and fractional reserve lending at its heart. To those looking for even more government control (remember this is the government that was trying to obtain the power to lock anyone up for 42 days without telling them why), I would say - be careful what you wish for.

    The true cost of anything is what you give up to obtain it. The more the state intervenes in your life the less free you are.

  • Comment number 96.

    There are two issues here.

    Issue number one is that Gordon Brown will say whatever he thinks voters might want to hear. In my life I have never seen a politician in a western country clinging so stubbornly to power. He sees the PM post not as a responsibility and a service to the people, but as his very personal job that he defends with whatever it takes. That is all one needs to know to precisely understand the stunning "U-turn" now. Brown (probably rightfully) assumes that the vast majority of voters is so uninterested in politics that hardly anyone remembers that it was him personally who loudly praised the creators of the bubble, as they were doing it. He was himself praised by the media at that time as the maker of the miracle economy.

    The other issue is that whilst Brown may now say the opposite of what he used to say, he keeps doing what he did. He actively works for the bubble, no matter what this will cost future generations. The bubble is all he knows and all that he can think of what might save him his beloved job. So he uses our tax money and stuffs it right into the bubble to stop it from deflating. That is why house prices temporarily rise again when they should be in free fall. Whilst the bill for this will be presented to all of us, Brown reckons that if he can delay it for a little while, he may fool us all and keep his post.

  • Comment number 97.

    It was a certain G.Brown who in his Bank Of England act removed the monitoring of banks' capital assets (tier 1 capital ratio) off the BOE and trusted it to the banks themselves. The same G.Brown sold the bulk of our gold reserves to his European buddies (after pre announcing it to wreck the price) at historic lows. The same G.Brown removed housing from the cost of living index as interest rate were correctly rising to cap house prices, creating the massive asset rise that should have been capped by (previously linked) interest rates, Once removed interest rates dropped to a false low encouraging idiots to gorge themselves on 125% interest-only mortgages. When interest rates do rise again after the world realises we are bankrupt the above idiots will go to the wall and the (by then) Tory government will get the blame for the record repossessions. Do I even need to mention the wrecking of the finest private pension provisions in the world that will put 100s of 1000's of working men who have saved all their lives into poverty in their old age - G.Brown has been a disaster which will take generations to recover from (if we can) - still, the student union idiots can blame it all on Thatcher...

  • Comment number 98.

    This is an excellent summing up of the present state of our country.

    I find it rather depressing having to sit out what is destined to be a long and drawn out decline while most people seem to think we are near the end of the recession. That is what they are being told and that is what they want to believe.

    You are right when you say there is no plan for a proper recovery. All that is happening at the moment is that QE is a replacement for the funny money that has now gone.

    You can only have an illusionary recovery when the country is running on created money. The excuse that all other countries are doing the same thing is blatantly untrue. The currencies in the East are holding their value whereas the currencies in the West are not.

    Brown and Blair inherited a money making machine in 1997 but they have abused it and ruined everything by letting it run out of control. Even to the point where they were so addicted to giving money away the NHS and other departments did not even know where to spend it initially.

    So now we have a huge burden of public services without that easy money to fund them and a government who found it easy to give money away but not so easy to take it back.

    We are back to the very long haul but in even more difficult times than we have ever known. It took ten long years after the last labour government to rebalance our economy. It could take much longer this time around. We are at the moment in the eye of the storm.

  • Comment number 99.

    I bought two copies of The Sun today!

  • Comment number 100.



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