Tag Archives: financial crash

The next election is a race that both main parties seem anxious to lose – Michael Meacher

While Michael Meacher’s comments on the Tories are well worth reading, it is his criticism of his own party’s economic policy that attracts the attention of Yr Obdt Srvt today.

“Despite being ahead of the Tories on every policy area bar one- the economy, where the Tories now lead by a full 25% – Labour now seems transfixed by trying to outdo them in promises of austerity, a bigger turn-off for voters than it’s possible to imagine,” writes Mr Meacher, echoing words published in this blog only days ago.

“Labour has allowed itself to be outflanked by Tory claims that

  • It was responsible for the financial crash (as though the bankers had nothing to do with it),
  • Osborne’s recovery has repaired the damage (as though the ‘recovery’ isn’t fragile and unsustainable, with no demand to promote growth), and
  • Austerity is the only way forward (when it has failed on every count, including the crucial one of rapidly reducing the deficit, which is now actually rising).

“Why should disillusioned electors vote for Labour when it insists it’s going to be at least as tough as Osborne in enforcing austerity for another five years?”

Why indeed. Any answers, Mr Balls? Mr Miliband?

“Voters need hope: why doesn’t Labour get behind a policy of public investment to expand the economy, create jobs, raise incomes and government revenues, and thus pay down the deficit far more quickly and effectively than endless spending cuts?”

Vox Political has been saying this since the blog was founded back in 2011.

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Was the crash really ‘all Labour’s fault’? – Flip Chart Fairy Tales

Of course it bleedin’ wasn’t.

It was the result of far too much blind optimism by financial institutions that should have known much better, as this Flip Chart Fairy Tales article shows.

If you want the full details, read that article, but to whet your appetite, here are a few snippets.

For a start, the Organisation of Economic Co-operation and Development (OECD) was useless. In June 2007 it suggested that, if there was a downturn, the UK’s deficit might rise above three per cent of GDP; two years later it was at 11 per cent.

The OECD’s idea of the UK’s structural deficit in 2007 was around 2.5 per cent, but it now says the actual level was five per cent, and it didn’t realise. Nice!

Almost all our financial institutions, as the following graph shows, believed the economy would grow (by up to five per cent!) in 2008 and 2009. Outturn: Minus six per cent.

screen-shot-2014-09-11-at-10-21-16

In May 2008 the Bank of England said it expected conditions to improve gradually.

The International Monetary Fund had already said, in April that year, that growth in the UK would slow to 1.6 per cent in 2008, with a moderate recovery (!) in 2009.

And what was Labour’s perspective? At the end of August 2008, Alistair Darling told The Guardian we were facing economic times that were “arguably the worst they’ve been in 60 years. And I think it’s going to be more profound and long-lasting than people thought.”

Most people didn’t believe him.

So – all Labour’s fault? It seems Labour’s Chancellor was the only one who saw it coming! For many, that won’t absolve Labour of the imagined crime; they’ll say Darling – and Brown before him – should have tightened up regulations to head off the crash and protect the UK from what happened in the rest of the world.

But with everybody else and their mother arguing that there was no need, clearly they should take some of the blame as well.

That’s all this blog is saying.

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