UK Recession: Gordon Brown admits he failed to see economic crisis coming
- Thread starter mattheman
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what? through his silly spending and lack of foresight he has caused the hard hitting effects.
I know you are a dyed-in-the-wool right winger, and instinctively hate anything left wing or to do with Labour, but you do realise that America is hit even harder and they have had probably the most right wing conservative president in America's history, for the last eight years?
and what does that have to do with it?
We would be n a far better position that we are currently in, if it wasn't for GB stupidity. I'm not totally right wing, I liek what works and that's a mix of lots of political views. It's just that no party has such views and Tories are the best of a bad bunch..
Soldato
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Sorry I didn't make myself clear, Labour didn't start this. What they did was build an economy that would be just fine as long as house prices continued rising and people could borrow easily. It was inevitable that this could not continue however for the rug to be pulled out from under them so violently was something that I don't think could be so easily predicted.
maybe not, but that does not defend his blarzay spending of our money and what he has done since it was pulled out from under him.
Soldato
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Agree with that. Bush even had to go against his/his parties ideals when he bailed out the banks.
He was even on television saying how he "wouldn't normally agree with bailing out businesses" or words to those effect.
If Labour have the best solution to the current problem (irregardless of how it was caused) then it doesn't matter whether they're left-wing, centrist, right-wing or extremist religious fanatics.
Fact is, the problem needs to be solved. If, hypothetically, Cameron was currently in power, then I would like to think that I would hope that he was doing all he could to solve problem and want him to do well, and maybe set aside my prejudice of the Conservative party & Cameron himself.
I don't think the current bunch of Tories have given any indication that they would be better than the Labour government. The shadow chancellor has talked down the pound and Cameron's great idea is to give savers higher interest rates - meaning people will be less likely to spend, meaning there will be less money in the economy and the recession will be deeper and last longer.
But they dont have the best solution to the problem or we woudnt be bailing the banks again 4 months later.
Some companies are folding because the banks have closed their overdraft facilities. The companies may not be badly run at all and are not in debt but cash flow can be a problem when you are waiting to be paid by your customers.
In industry customers can take up to 60days to pay you but wages for workers cant wait, so there is a potential cash flow problem which is why an overdraft facility is useful or even necessary. The problem is banks arent lending as much now and some banks have closed overdraft facilities all together which means there are times when companies dont have any money.
So I suppose the "many" people that saw it coming are currently millionares because they invested their money in things like bank CDSs and shorted the FTSE.
If people had realised there was a bubble earlier then the ensuing crash would have happened earlier. The point at which people realised there were problems was when the market crashed.
Only possible excuse people could have is that short positions can be wiped even if the fundumental analysis is correct during the boom.
The fact is the extent of any downturn was never predicted by anything other than cheap talk. During the original problem with the market for securities, Morgan Stanley actually took a short position on the housing CDOs and were about to make billions as their prices tanked. But even they underestimated how bad it would be and the derivative they constructed lost billions.
I'd like to know where analysts/economists exist that could have predicted that q4 growth in the uk for 2008 would have been greater -1% in magnitude before the summer of 2007. I don't want vague claims with no identification of time periods which could have been applied to any recession which was inevitable eventually.
The UK government did however underestimate the magnitude of the downturn even as late as august last year.
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£444bn worth of goods in 2006.
Soldato
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I'm more interested to hear when we're going to be out of recession. It would be nice if there was a concensus amongst economists about that.
You can't really pin the blame on any one thing:
Gordon Brown was/is an incompetent fool, selling the country's gold reserves at an all time low, failing as chancellor to do anything about a rapidly expanding credit bubble that was fairly obviously going to cause a problem at some point down the line, and since being in charge he's ploughed a lot of money at a problem and generally failed to do a huge amount,
Bankers, got far far too greedy and lending out lots of money with very little security on that loan because they could sell that debt on and make more and more money, even when they were buying up this debt, much of it 'toxic' from other banks themselves, just plain dumb.
Corporations, running a business model that relies so heavily on debt, no wonder then we've seen so many businesses fail really.
People, yes, the general public, the idiots who bought into the idea of ever increasing house prices, who thought that 10x income multiples of 125% of the value of the house was a good thing, who thought that it was sustainable to live your entire lives on credit cards, hire purchase and finance.
With regards to the government, would the tories have done any better? we'll never know. Could and more importantly *should* the labour party have done better, hell yes.
Banks, frankly I think brown/darling should do some fairly hefty steps here. It looks like RBS and possibly Barclays are in a dire situation, why not draw a line under them, nationalise at least RBS, sack the idiot directors with no redundancy/retirement/a single penny, let the people with savings withdraw their money. Then do a full accounting of the loans outstanding, those that are worth anything sell on, those that aren't (and I think this might be the majority), then effectively right off the losses on them. Yes it would cost a lot, but it would draw a line under RBS and let the other banks know that this could well happen to them.
Corporations, not sure here, if they were dumb enough to run in a manner that was entirely dependant on credit then should we bother to save them?
People, I don't want my tax money going to help out the feckless frankly, if they got themselves into an unsustainable amount of debt then they can declare themselves bankrupt and lose their house, wouldn't bother me one bit.
Gordon Brown was/is an incompetent fool, selling the country's gold reserves at an all time low, failing as chancellor to do anything about a rapidly expanding credit bubble that was fairly obviously going to cause a problem at some point down the line, and since being in charge he's ploughed a lot of money at a problem and generally failed to do a huge amount,
Bankers, got far far too greedy and lending out lots of money with very little security on that loan because they could sell that debt on and make more and more money, even when they were buying up this debt, much of it 'toxic' from other banks themselves, just plain dumb.
Corporations, running a business model that relies so heavily on debt, no wonder then we've seen so many businesses fail really.
People, yes, the general public, the idiots who bought into the idea of ever increasing house prices, who thought that 10x income multiples of 125% of the value of the house was a good thing, who thought that it was sustainable to live your entire lives on credit cards, hire purchase and finance.
With regards to the government, would the tories have done any better? we'll never know. Could and more importantly *should* the labour party have done better, hell yes.
Banks, frankly I think brown/darling should do some fairly hefty steps here. It looks like RBS and possibly Barclays are in a dire situation, why not draw a line under them, nationalise at least RBS, sack the idiot directors with no redundancy/retirement/a single penny, let the people with savings withdraw their money. Then do a full accounting of the loans outstanding, those that are worth anything sell on, those that aren't (and I think this might be the majority), then effectively right off the losses on them. Yes it would cost a lot, but it would draw a line under RBS and let the other banks know that this could well happen to them.
Corporations, not sure here, if they were dumb enough to run in a manner that was entirely dependant on credit then should we bother to save them?
People, I don't want my tax money going to help out the feckless frankly, if they got themselves into an unsustainable amount of debt then they can declare themselves bankrupt and lose their house, wouldn't bother me one bit.
Yeah, but one of those people is probably a public sector worker so the other one is paying for them anyway. We've had artificially inflated growth for a number of years so our economy will now correct itself to where it should be and Brown can spend as much as he wants, it won't change that fact.
Well, according to the Pre Budget report it'll be the 2nd Quarter of 2009. The only problem is, only one person in the world believes that and it wasn't even the guy who said it!
Soldato
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Agreed, however if the value of house had slowly gone from rising to stagnating to falling over the space of 5 years (with availability of credit going with it) it would be a much more manageable crisis.
I have no respect for our government and long before the credit crunch I felt that house prices were masking an unhealthy economy. I knew they were setting us up for a fall, but I didn't think we'd be falling this far, this quickly.
I'm scared that Britain won't ever fully recover from this and we will become a less wealthy nation.
http://www.marketoracle.co.uk/Article4003.html
What you say mr?
And what of that not any thing like 444bn worth of exports was actual goods rather than financial services (the point we are making), as you can see, not a great deal.
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