| Gordon Brown announced in his 1998 Budget that | | | | overnight money market, and of course when the |
| "Booms channel too many resources into speculative | | | | other banks stopped doing that they hit a brick wall |
| activities and not enough into others, hampering | | | | and the Government nationalized Northern Rock. |
| economic progress. The fleeting gains that such | | | | Gordon Brown states that this is a great thing and |
| episodes bring are invariably far outweighed by the | | | | that he acted as a saviour. |
| pain of the downturn that must follow." | | | | But all he had to do was the same thing that |
| Gordon Brown said in his 1998 Budget Speech and I | | | | happened in the 1970's when the Banks were not |
| quote "Booms channel too many resources into | | | | nationalized then, and indeed they did not need to be |
| speculative activities and not enough into others, | | | | nationalized now. As usual he blustered and panicked. |
| hampering economic progress. The fleeting gains that | | | | In the 1970's the Bank of England put in place a life |
| such episodes bring are invariably far outweighed by | | | | boat and that is exactly what should have happened |
| the pain of the downturn that must follow." | | | | this time around with the Banks. |
| Now here we are firmly and squarely in the down | | | | Recently Gordon Brown has admitted the error of his |
| turn that Gordon Brown's policy of boom and bust | | | | ways in an interview with presenter Mark Austin |
| has induced. | | | | which was screened on ITV1 when he was asked |
| The severe UK banking crisis was clearly created in | | | | what his biggest political mistakes had been. He said |
| Britain by Gordon Brown, and he has now admitted | | | | that the Government had helped to fuel the banking |
| that his idea of taking regulation away from the Bank | | | | crisis by failing to step in and stop reckless lending. |
| of England was a disaster. | | | | In what is a rather damaging admission, just a few |
| A very light touch on banking control coupled with | | | | weeks before the forth coming Election, Gordon |
| removing the role of regulator away from the Bank | | | | Brown stated :"We should have been regulating them |
| of England was a very dangerous and short sighted | | | | more". Perhaps he should have remembered that old |
| policy. | | | | adage - if it works do not fix it - or he could have |
| Had he forgotten the secondary banking crisis of the | | | | said - with hindsight, I wish I had not interfered with |
| 1970's? After all he is the chancellor that said no | | | | a perfectly good regulation system in the first place. |
| more Boom or Bust but had in fact conjured up a | | | | Let's remind our selves of what he said, as Chancellor |
| much worse banking crisis than some 30 years ago. | | | | of the Exchequer, some 12 years ago in 1998. |
| In those days it was only the secondary banks like | | | | Gordon Brown stated that "Cycles of boom and bust |
| London & County Merchant Bank, Cannon | | | | have been particularly damaging to the UK's long-term |
| Street Securities, First National Finance Corporation | | | | economic performance. Recessions lead to premature |
| and many others that had to be rescued. | | | | scrapping of productive capacity and increase both |
| None of the big four clearing banks were affected. | | | | short-term and long-term unemployment". |
| Under Brown major banks, like the Royal Bank of | | | | Just three years ago in his Budget in 2007 he said no |
| Scotland, Lloyds Bank and Bank of Scotland, have all | | | | more "Boom or Bust" but at that date all the warning |
| ended up being owned by the state having been | | | | lights and klaxons were sounding. So why did he not |
| independent for hundreds of years. | | | | then wake up from his dream like sleep and take |
| The lack of proper regulation due to the relaxation of | | | | some corrective action. |
| the controls and the light touch approach enabled | | | | Only after the ship has smashed up on the rocks has |
| Banks such as Northern Rock to over expand and | | | | he started his recovery plan. |
| not build and retain prudent reserves. This Bank was | | | | The question that has to be asked Is Gordon Brown |
| once held out as a shining beacon of success. | | | | fit for Britain? |
| To argue that their problems arose in America and | | | | Sadly no as it would be like asking the Captain of the |
| are of a global nature is simply a lie. They had simply | | | | Torrey Canyon or the Titanic to be in charge of the |
| over extended themselves in times of lax regulation. | | | | Life Boats. |
| To balance their books they were borrowing on the | | | | |