Monday, October 13, 2008

Politically bankrupt

Gideon Osborne has managed to achieve a unique trinity.

He has proved to be a cock of the first order, a complete arse and a right tit all within the space of a week.

Last week, he pronounced to the world that he thought that the government should recapitalise the UK banks. Oddly, this came shortly after he'd had a confidential briefing on the developments to date. Yup, George got information on a privy council basis and the first thing he did was to run to the media to try and claim the credit for the implementation of the plan. And he's not missed a chance to remind us that he talked about the idea before anyone else. Cock. Utter cock.

For the past week, the Tories have struggled to portray themselves as relevant to the cure - much as the Democrats in Congress were crucial partners in the US rescue package. Of course, in the UK, the Tories are irrelevant - the government is in charge by virtue of the majority in parliament, so the opposition parties can have no impact on the rescue. Far from appearing statesmanlike, they have just seemed desperate and entirely unknowing of their own role in this whole damn mess. They are just out of the loop and their revolving platform - sometimes they back the plan, sometimes they are lukewarm, sometimes they seem to be opposed to it - reeks of indecision and incompetence. Nobody buys that the Tory mantra of 'light touch' and deregulation would have prevented any of this.

Aside from that, Gideon floundered and blustered on Newsnight last week - Chris Paul spotted that Kirsty Wark appeared to be laughing at the economic genius, although Tom Harris eventually disagrees. All of this attempt to pin the blame on Labour is a thin disguise for the fact that the Tories have no alternative plans - the only proposal put forward has been to scrap stamp duty and to take a few thousand rich families out of inheritance tax.

The recapitalisation plan is rapidly becoming the gold standard for bank rescue, with Europe and the US both looking at the Brown/Darling approach as the way to go. Paul Krugman, the US economist, wrote yesterday that
Mr. Brown and Alistair Darling, the chancellor of the Exchequer (equivalent to our Treasury secretary), have defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up.... the Brown government has shown itself willing to think clearly about the financial crisis, and act quickly on its conclusions. And this combination of clarity and decisiveness hasn’t been matched by any other Western government, least of all our own
He compares the swiftness of the British response to the sluggish answers gradually proposed in the US
the British government went straight to the heart of the problem — and moved to address it with stunning speed. On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement.
He highlights a problem for the neocons in the Tory party, as well as their Republican colleagues across the pond
It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as “private good, public bad,” which must have made it hard to face up to the need for partial government ownership of the financial sector.
Sensibly, Krugman accepts that we just don't know if the Brown plan will work, but it does seem to be the best game in town.
So, who do you trust? The smug economic incompetent or the novice Nobel laureate?


Richard Allen said...

Who do I trust?

Neither of them. Krugman is wrong and Gideon doesn't know what he is talking about.

Robert said...

And we all know if it fails, will this government do it again with another £500 billion or another or another until the bankers have enough.

Fergus said...

Of course, George Osborne has denied your claim about the briefing in the Chamber of the House of Commons. Now, are you accusing him of lying to parliament?

And, of course, he explicitly referred to this as the Swedish solution - something James and Alistair (if you're going to play with names - though having a PM called James Brown might raise the odd smile in these troubled times) have spectacularly failed to do. This is NOT original thinking by the government, nor by George Osborne, but only George Osborne has made this clear.

On another site, you spectacularly shoot down your argument here, by stating that George Osborne only started talking about this AFTER Robert Peston raised the issue. It's therefore already in the public domain - are you really arguing that he should be gagged from talking about something because he's had a(n allegedly) confidential briefing, the contents of which you do not know?

Anyway, the evidence from the banks is that no plan was in place when they held their initial meeting with the Treasury - AFTER George Osborne first floated the idea.