Is the recession really Brown's fault?

Wookster

Rochdale_Pioneers wrote: »

!!!!!! we have gone over this repeatedly. Debt was lower in 2007 than in 1997 - yes it increased from 2003 but ended lower. In suggesting that Labour increased debt you are either being deliberately dense or are deliberately lying. Which is it?

Maybe you are a labour plant after all - your ability to put a spin on something, despite all evidence to the cotnrary is astonishing.

Though debt has decreased as a PERCENTAGE of GDP, it has increased in nominal terms.

What are you going to say in 2 years when the economy has contracted 10% and debt has increased both in nominal terms and as a percentage of GDP?

macaque_2

I knew it would only be a matter of time before mealy mouthed excuses for Gordon Brown would start to appear. There are many culprits for the mess we are in but Gordon Brown is the arch villain by a country mile.

It has been repeatedly said over the past few days that banks of two years ago would have sacked any CEO who failed to get on the band wagon. The bottom line is that banks operate in a very competetive environment and have huge pressure from share holders. It is their natural instinct to behave like wild dogs if left to themselves. It is the job of governments to keep them under control.

As a dysfunctional chancellor (who refused to communicate with the prime Minister), it was Gordon Brown's responsibility to regulate the markets. Instead of doing this, Gordon set out to make London the world's financial centre. He created special tax breaks for the rich. He gave safe haven to crooks and spivs. He abandoned proper regulation and fostered a climate of corruption and 'jobs for the boys'. He did make London the world's financial centre. Unfortuantely he also turned it into a toxic pit of greed, corruption and gambling. In a world financial crisis, the world's biggest financial centre must take a major share of the blame. Gordon has left us mired in sleaze with our manufacturing sector in tatters.

It is Gordon's fault that we, amongst all the developed economies, are in the biggest mess.

Radiantsoul

mbga9pgf wrote: »

how about legislating max 3.5X salary mortgages? how about minimum 10% deposits? How about banning ludicrous 125% together mortgages that Northern Rock were pumping out? How about including HPI in the Consumer price index?

How about limiting retail banks to standard lending practices and not diversifying into more risky investment banking practices?

THere was plenty he could have done. He chose not to as he was greedy for power and chose what would get him elected instead of what was good for the country. And for that reason, he makes me sick.

The government could hardly have started legislating against the free workings of the market. Credit is a good thing as it diverts money from those who don't want or can't spend to those that do. It is not obvious that the boom that encouraged home ownership is an especially bad thing.

It is true that Brown could have limited bank lending, but the result would have been a lower national income(as the banking sector would have contracted). Additionally there would be lower home ownership, less investment in property, new build housing and home improvements. And the bottom line is we would still face a recession as oversea demand collapsed, overseas banks failed and British companies struggled to raise credit to finance working capital and investment.

JayScottGreenspan

There seem to be a bunch of posters (Rochdale Pioneer, BackFromTheEdge, StevieJ) reasoning as follows:
"The Tories would have been at least as bad" => "It's not Brown's fault"

Quite simply, this is bad logic. The job of the Labour government wasn't to ruin the economy in a slightly-less-bad way than the Tories. The chief task of the government was to manage the economic cycle correctly, which they patently failed to do.

Slag off the Tories all you want. But please open your eyes and see past your big red rosettes for a moment and recognise the mistakes of the current government.

Your 'Tories bad', 'Labour good' world is a simple one, and easily understood by the feeble minded, but it is one that I do not wish to share.

JayScottGreenspan

Radiantsoul wrote: »

It is not obvious that the boom that encouraged home ownership is an especially bad thing.

Gordon Brown, 1997 Budget speech:
“I will not allow house prices to get out of control and put at risk the sustainability of the recovery”.

Gordon Brown, 1998 Budget speech:
“Booms channel too many resources into speculative activities and not enough into others, hampering economic progress. The fleeting gains that such episodes bring are invariably far outweighed by the pain of the downturn that must follow.”

Generali

Rochdale_Pioneers wrote: »

Go look at the Eurostat figures which includes PFI and other off-books liabilities. Above 40% yes, but they clearly show that the UK debt fell between 1997 when Labour took office and 2007 when the sample stops. Any attempt to manipulate the figures showing that Labour increased debt in the 10 years they had growth is an outright lie.

And yes our debt is shooting up now. In 1990-1993 it increased from the low 30s to the low 50s% - and that recession had no bank bailouts or fiscal stimuli.

And how does our debt compare to most of our neighbours? Lower! A lot lower! So when Cameron says we are the most indebted government, can afford to borrow no more and need the IMF that is also an outright lie.

Is debt a good thing? Of course not. Can the UK sustain higher levels of public debt? Of course - how do Greece and Italy manage?

Look at the Blue Book. Is the notional level of Government debt higher today or lower than in 1997?

December 2008 - Net Government debt = GBP 697,500,000,000
December 1997 - Net Government debt = GBP 391,916,000,000

cogito

Game, set and match.

Sir_Humphrey

Wookster wrote: »

Though debt has decreased as a PERCENTAGE of GDP, it has increased in nominal terms.

It is proportion of GDP that counts. Everything has increased in nominal terms since 1997, it's called inflation.

The fact of the matter is that Labour has done what the Tories did in the 1980s - a fact illustrated by the IFS report you kindly posted the other day. This obviously does not excuse Brown's stewardship.


IMO, it is personal debt that is the biggest worry, as individuals are in a far worse position to bear debt than government.

Generali

cogito wrote: »

Game, set and match.

You'd think so.

I have my doubts. I going to change my signature before I break Google.

Wookster

Radiantsoul wrote: »

The government could hardly have started legislating against the free workings of the market. Credit is a good thing as it diverts money from those who don't want or can't spend to those that do. It is not obvious that the boom that encouraged home ownership is an especially bad thing.

Really? how about the near 2M unemployed we now have? Where do you think it will peak? 4M? Won't that be a bad thing?

People like you can Rochdale simply fail to see that borrowed money must be paid back, and when its paid back thats money that cannot be spent on other things e.g. consumption.