January 16, 2011
The UK news was dominated a few days ago by New Labour’s leader, Ed Miliband and his first speech of 2011. It’s long, and I don’t propose to comment on it all, but I do propose to look at the element that was considered ‘newsworthy’.
The full text of the speech is here.
Taken from the speech is, “The implication of much of what the Conservative-led government say is that it was high levels of public borrowing that caused the crisis. That is just not true.
In fact, it was the crisis that caused high levels of public borrowing.
The deficit rose from manageable levels of around 2% of national income to above 10% because of the global financial crisis.
And when the Tories and the Liberal Democrats are trying to propagate this myth about the past we must not let them get away with it.
The reason is not simply because of desire for truth about the past but because they are using it to shape our future.
They want to tell people that the only lesson to learn from the crisis is that as long as we simply cut back spending far and fast enough, we will contain the deficit and reach the sunny uplands of economic prosperity.”
The thing is, from what I can tell, pretty much every sensible person in Britain disagrees with this. I’m all for political debate and some political grandstanding is always to be expected, as are jabs at your opponents.
He was clearly buoyed by the election win. But really? Is he serious?
There can’t be much doubt that the bailouts of the banking sector pushed borrowing in the UK over the edge. Things would be much better without having done that. But does he really believe that the state of borrowing in the UK by the government was acceptable before that?
In contrast, the Cameron and Clegg double-act seem to be coming in for a fair amount of praise from those sensible people in the UK that recognise that something had to be done and tough decisions are required. Gordon Brown certainly seemed to duck a number of them in the months leading up to his election loss.
As we can see from the speed of financial problems engulfing the euro in 2010, time was short and there was very little of it to waste. If Brown had won, would those tough decisions have been taken? Would the UK have been first on the markets ‘hit list’ for a devaluation? Possibly.
As far as your author can tell, the economic dreamland that New Labour insisted on living in during the last few years in office have yet to fully pass.financialguy