Saturday, August 15, 2009

So Gordon Brown did Save the World

On Thursday evening there was Tower Hamlets Council Investment panel immediately followed by Pension committee.

There was an interesting and important discussion about the state of the economy and our economic future.

Our pension scheme is currently worth just under £600 million. I asked the scheme professional advisors if equity investments are still “king” and whether the current economic recession is yet another painful short term market correction which we eventually come out of ...or is it the end of capitalism itself!

This provoked a lively debate during which the professional advisors were pretty adamant that this was a short term correction which we will come out of eventually.

One advisor did admit though that during the crisis most of the big banks were at one point very, very close to total collapse and if it was not for Government action to intervene and save them then this might have meant the end of capitalism as we now know it (or something like that). Scary or what?

To which I quipped “So Gordon Brown did save the World then”. This caused broad amusement all around and no agreement amongst all of the Committee members present I hasten to add – Conservative and Labour Councillors as well as Chief Officers. (Franks West GMB and myself were staff side reps).

A certain senior unnamed Councillor suggested that I would use this quote as a title for my blog...and I suppose - why not.

I am writing a full report for the trade union JCC which I will later post.


Charlie Marks said...

Gordon saved capitalism.

Am I supposed to be pleased?

John Gray said...

Hi Charlie
No, I didn’t think you would be best pleased with Mr Brown’s actions. You can add this to your list.

But I think that anti-capitalists of whatever forms constantly underestimate capitalism, its complete and utter ruthlessness and it amazing chameleon survival abilities.

Bush privatising Banks and mortgage companies LOL.

Dave said...

Hi Charlie,

yeah you're supposed to be pleased.

The alternative would have been more misery for millions.

And there's nothing that mechanically says that that sort of capitalist collapse leads to anything better.

Just remember the Thirties.

Dave Draycott

Anonymous said...

'Bush privatising Banks and mortgage companies LOL.'

Surely you mean nationalising.

John Gray said...

Hi Anon

Whoops - well spotted!

Charlie Marks said...

Brown could have taken - and can still take - the kind of measures that get us to a fair market economy, as he's been talking about. Yes, not acting - the Tories would have sat on their hands, I suspect - would have been a disaster. But my fear is that we'll be back to free-market capitalism with more privatisation and securitsation...

Nationalisation of the banking sector would have been cheaper for all of us and would have allowed curbs on bonuses and perhaps a return to a strong mutual sector for mortgage lenders. Now that we've got control of some banks, we should be sure that they're investments are ethical and that they're not helping out tax dodgers.

You'll be aware that I view capitalism not as an economic system, but as a system of class oppression - what we are seeing is not the ruthlessness and survival abilities of a *system* but of the ruling class - in our case, the British ruling class, which is pretty well represented by the Tory party!

Anonymous said...

By the time the country has finally paid back the 1.5 trillion pounds that the Iron.. "no more boom nor bust" Chancellor has prudently borrowed we will all be dead. It will cost just 15 billion to upgrade the main west cost rail line - perhaps that puts into perspetive the scale of the debt that has been run up. The other reason that you don't feel so bad about this yet is that Labour have not addresssed this debt and started raising tax and cutting back the bloaters in the public sector.. the fact that we will have to cut back the state and raise tax is totally inevitable, but Gordon knows that if he admits the scale of the probblem in a language the ordinary man in the street understands Labour faces obliteration in the election. Instead they prefer to wait until after the election. In Ireland they are laying off teachers, heavily raising income tax and even getting new policemen to buy their this space. Of course we are "the best placed economy to surbvive this recession" according to Stalin - what a laugh...Japan, France, Germany are all back into growth. The party of economic prudence ..ahem!!

Dave said...

Hi Charlie,

yep. Good to be on common ground: a better regulated market economy, some remutualisation and state involvement. And I agree outright nationalisation would have been cheaper.

Now whilst we may propose such measures, it does not take away from Brown the fact that he did take action which has greatly ameliorated the effect of the recession ( I understand you accept this.)

But look at our ' friend' Anon. Will these Tories ever get it? Monetarism screwed up the 80's it doesn't have to devastate the 2010's. Will Hutton (and every other leading economist on the planet) are coming down on not making cuts as it will depress the economy further. Also me old mucker try looking at the level of private debt which is what got us into this mess in the first place and which is the reason why the UK and US economies are slower recovering.We're all busy "deleveraging' (getting out of debt to me and you.) But no you would prefer to talk about the level of public debt needed to put this right. So 'Anon' I'm a little surprised that you're so over the moon that France and Germany with their social models and less reliance on the financial sector are the ' first back into growth." And it's so marginal that it has yet to be seen if it will be sustained. A few months ago the predictions were for Britain to be first back to growth.
With this attitude to economics, the Tory right breaking cover on dismantling the NHS and the Ian Duncan caught out in his over-privileged attitudes. There's still plenty to play for.

Dave Draycott

Anonymous said...

Will these socialists ever get it? Brown and "no more boom or bust" that a bit wrong then didn't he!
Who set the useless FSA up?
Who sold the gold reserves at rock bottom prices?
Who pumped billions into the money supply and who allowed the free and easy credit.
Who knighted Sir fred Goodwin and then signed off on his pension.
You make predictions on the Tories with such ease - which is bold when you think that unemmployment is headed for three million and is already higher than when Labour took office. Look how long Labour has been in Government and the appalling state of the public finances - I think we have had enough preaching on economics from you. We can judge this Government for ourselves on what it has done. Bit of humilty and acceptance for the mess they have created would be good..but it's always someone elses fault..see what you think in the coming years when we all suffer for this crass incompetence and economic mishandling.

Charlie Marks said...

"the fact that we will have to cut back the state and raise tax"

If we raise taxes on individuals across the board then that will take demand out of the economy. If we cut back state expenditure, then many private companies that supply goods and services to the public sector will go bust.

Japan has a whopping deficit - and has just come out of recession. So, it's not so clear cut.

Dave said...

Hi Anon,

mmmm touched a raw nerve: good. "Preaching on economics.' Not really just making one or two points which you clearly don't have an answer to. Not surprising as you presumably come from the monetarist tradition which thinks that a large economy is just like the household accounts.

Has to be said claiming abolition of boom and bust was a bit cheeky as the capitalist system has been operating on that cycle since day one. But really did the Tory's have much to say when we were in a 10 year boom. Oh yeah ..... they wanted to deregulate further. Hell lucky you guys weren't in charge eh.

As for the FSA for just that point it would have been weaker under the Tories and again the downturn would have been more severe. Now of course the Labour Government is strengthening it .... your boys are looking to abolish it.

Yeah we're pumping billions into the money supply (take it you're talking about quantitive easing) and from the reports I've read it's working.

Of course your bumbling bunch would never have knighted a rich guy like "Sir' Fred the Shred Goodwin.

Unemployment ..... it's a terrible situation which at least one newspaper has said would be a lot worse if Tory economic policies were in force. And unlike previous Tory Government's Labour does not see it as a positive thing.

Must say you get so whingey towards the end that it's hard to continue to put you straight. With that level of emotional distress you need a hug. Give your mam a ring.

You seem to be struggling under an inferiority complex (unusual for a Tory.) I could point you in the direction of a good economics tutor who could give you the basics. Unfortunately they would be unlikely to help with the politics.

Dave Draycott

Charlie Marks said...

"Bit of humilty and acceptance for the mess they have created would be good"

Yes. And it would be nice if the Tories would apologise for starting the credit boom, flogging off our utilities, railways, etc.

Anonymous said...

Gordon Brown has plundered this country into debt and you make a joke about it?

Dave said...

Hi Anon,

just love your propensity for Orwellian double-think. Not to mention your humorless self-righteousness. Were you ever a Trot in a past life?

How exactly has Brown plundered the country? The Labour Government implemented an economic model which all 3 mainstream parties agreed on. In fact your lot would have gone further. Following 10 years of boom we get a bust. Brown moves on and responds with keynesian economics. The Tory's 'bless em' are rooted to the spot......'what's happening?' it's private debt wot did it. Get it?

If this action had not been taken more firms would have gone bust and there'd be more on the dole.

Hey but at least you've moved on to asking questions. The first step to knowledge :)?

Dave Draycott

PS You really should take my advice on the hug.

Charlie Marks said...

If you don't laugh, you cry.

Like Dave says, Brown was following the consensus that the growth of the trade deficit and the expansion of credit were okey-dokey.

And as both Dave and John have said, the freezing of credit markets, first in the banking sector, then the increase in costs for corporate and consumer borrowing meant that action had to be taken to avert a 30s style Depression.

What we are now faced with is the need to orient our economy towards low-carbon energy technologies, manufacturing, and domestic food production, so that we can be more resilient in the face of increasing import costs and future global shocks like the international financial crisis.

Zitlife said...

No he his just going to create more debt for us taxpayers to deal with.

Dave said...

Hi Zit,

recession hits.......bad.

Two choices:

do nothing and watch as the economy implodes and we are strangled by the worst depression since the thirties. Watch as millions are thrown on the dole. Watch as we lose massive sections of our manufacturing base, most of it forever. Think 1980's. Think 'Maggie, Maggie, Maggie..... out,out,out. Would she go? Would she hell. Only a lot, lot worse.

Option two: pour billions into propping up the banks (that's right the guys who got us into trouble in the first place.) In an effort to mitigate the worst effects and shorten the recession. Mitigate. Not eradicate because it's global. This results in big time public debt.

Option 3...... there isn't one. Like I said at the start there are two options. 'No third way.' 'No alternative.'

Do you have any other ideas that haven't occurred to anyone else? Or is that sort of unemployment and social dislocation 'a price worth paying.' A price we're still paying from the last time the Tories had their hands on the reins.

Dave Draycott

Anonymous said...

Gordon has finished this country, sure he has got us a shot of morphine. But it will merely delay the pain. He did not slow down the economy, because he wanted to be prime minister after Tony Blair.

This is economic failure is more about his greed for power then doing the right thing for the economy.

And please don't say Gordon Brown did not know what will happen. I read an article in the FT many years ago, which explained the problem of credit expansion. So if economist knew there was a problem, why did n't Gordon as Chancellor do anything? Do we employ muppets in the Treasury and Bank of England?.

Charlie Marks said...

Anon - sadly neither the FT or the Economist would have welcomed a pre-emptive attempt to restructure the banking sector. In fact, there would have been an uproar by big business and an attempt to destabilise the government.

In the 80s, the Tories made it easier for money to flow freely in and out of the country - which makes regulation harder to accomplish on a national-level.

Anonymous said...

I think we will judge you on your results rather on "what the Tories would have done"...and your results speak volumes.

Dave said...

Hi Anon,

Charlie is quite right to point out the difficulties of regulating the financial sector on the national scale and Brown has made efforts towards international regulation.

Labour expects to be judged on it's results and be assured the privilege of simply being the opposition will not stop the Tories being judged on theirs: the contributions by various anonymous Tories on this blog show an attitude to the the economy which it would be harsh on the ignorant to describe as ignorant. Simple assertion fills in for connected argument. Unfortunately (for you) your Big Fish aren't much better.

Judged on results?: an independently wealthy Tory whinging about being on rations, two of your grandees thinking it a jolly good idea to double MPs pay in the middle of the recession, one of your MEPs attacking the British NHS and siding with opinion that compares Obama to Hitler's Germany for trying to do something about Health care in the States (yeah really.) So when you say 'we' I take it you don't mean the British People (or do you speak for everyone.) Always get worried when individuals use the plural about themselves. But just call me a silly old democratic lefty.

You will also be judged on the policies you put forward and I think the mask is starting to slip. As for your deep conspiracy theories regarding GB and the economy. Whoah you're starting to sound a little like the ultra-left fringe groups I take it you can't stand (me to.) The economy was not slowed down? The consensus politically was massively against it and yes the Labour Government was part of that consensus.

And your section of the political spectrum would have been squeeling at the tops of their voices if they had tried. You can see the Mail headlines can't you.......slow down house price rises....waaaah.

As for the level of debt. It will have to be tackled but get a grip. The accumulated national debt in relation to GDP is still lower than Germany or Japan (where it is massively higher.) Also we have had periods in our history where it has been far higher in this country.

Clearly you guys for clear political reasons are getting a kick working yourselves up into a 'blue' funk.

Dave Draycott

Anonymous said...

Like I said..labour will be judged on their results, and lets be straight you have little to crow about. It is what we call "a fact".. Are we really the "best placed economy to get through the recession" as Gordon Brown tells us...hmmm, I think not.So instead of simply repeating anecdotal rubbish and trying to pass it off as facts ie..Sir Tufton Bufton said we would drop a nuke on Russia so it must be Tory policy..why don't you face up to the mess that has been made. A bit more humility Dave would go at least someway towards respecting the millions that are being thrown out of work. So far Britain's "most successful post war Chancellor" has only managed to indebt our grandchildren...there is everything still to play for ...Ho ho, ho!

Anonymous said...

Dave .. don't get you knickers caught up.

Dave said...

aHi Anons 1 and 2,

Big Gordy saved the World.

Oh yeah.

Get used to it

Dave Draycott