Thursday, September 13, 2007
Alastair Darling blames the Banks for Brown's mistakes
Alastair Darling, who has just remembered that he is Chancellor of the Exchequer and noticed that something appears to be up, has criticised the banks for being reckless lending and urged a return to 'old-fashioned banking'. This is, of course, a meaningless soundbite. As Darling well knows the current crisis is on the finance side of banking operations, not on the lending side. As he also knows there are already serious effects on the real economy, but they are effects not causes. No financial institution lends unless they expect to be repaid, though it is certainly true that some are more risk-averse than others. In any case, the banks are already raising interest rates and tightening up on lending independently of government and the Bank of England, and that is the policy failure that he is trying to cover up. Not only has there been a regulatory failure with regard to complex debt-based instruments, but the refusal of the Bank of England to inject liquidity into the UK money markets means that it is the consumer that is going to take the pain. This is not the stance taken by either the Federal Reserve in the US or the European Central Bank by the way, who have acted to protect ordinary people. Who is at fault? Well, who has been Chancellor for the last 10 years? Who has set the regulatory framework? Who hired Mervyn King and the rest of the Monetary Policy Committee? It's Gordon Brown of course. Darling is covering for his boss as the failures of Brown's tenure at No 11 become apparent. That he feels he has to do it does not augur well, however. One wonders what the report that must have just landed on his desk actually said.
Posted by Steve Horgan at 9:25:00 am