Tuesday, October 14, 2008

“The government will make pots and pots of money”

Here are three views on the UK financial rescue plan, two of which are very critical.

First, economist Tim Congdon, Treasury adviser from 1992 to 1997, on the BBC News at Ten yesterday:

The government isn’t losing money on this deal, the government will make pots and pots of money on it at the expense of the shareholders – that is thoroughly wrong.

Pretty much what I was saying yesterday, only more confident, more succinct, more professionally informed… and differently evaluated. I’d like to play this clip over and over to anyone outraged that we’re paying through the nose to bail out the bankers.

Second, Shadow Chancellor George Osborne says that this is “the final, sorry chapter of the Age of Irresponsibility”, in which Gordon Brown has been forced into “a necessary but desperate last-ditch attempt to prevent catastrophe” and “an angry taxpayer has had to step in and risk billions of pounds… to bail out the bankers”. But the Tories have “made the right judgment” and “showed the right leadership” in going along with this awful plan while simultaneously sniping at it.

He adds that Brown “presided over the biggest economic disaster of our lifetime”. Mr Osborne is thirty-seven.

Third, Paul Krugman, US economist, who just yesterday won the Nobel Prize for Economics, thinks that Brown and Darling “have defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up”. He says that with a “combination of clarity and decisiveness… the British government went straight to the heart of the problem – and moved to address it with stunning speed”.

He’s scathing about the US approach to the crisis, and concludes:

But policy is, finally, being driven by a clear view of what needs to be done. Which raises the question, why did that clear view have to come from London rather than Washington?

Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.

As Don and Hopi point out, this isn’t the only time Krugman’s been positive about Brown. But I still think the Congdon quote is politically the most useful for Labour right now: it has punchy vernacular, it shreds the ‘taxpayer footing the bill’ myth and it has the added credibility of coming from a critic.


Tejvan Pettinger said...

Good Post. The UK Plan is certainly a lot better than US plan. Interesting they are now starting to copy us.

marksany said...

Debt for equity would be a better plan.

See Mark Wadsworth