Quote: chipolata @ February 11 2011, 4:55 PM GMT
Which may well be true, although I think global factors, especially what was going on in America has as much to do with the ecomic crisis as Labour's handling of the economy.
Well I think anyone who doesn't directly attribute the bad 'packets' of Stateside investment to be the defining moment in the crumble of the economy, is either mad or under read. There are so many different contributing factors, and we were woefully underprepared to deal with the fallout, but the failure of the US lending market is the thing which started the spiral.
For anyone who doesn't know what I'm on about or know the banking crisis backround:
1- Sub prime mortgages- US banks loose billions of dollars.
2- large UK investment from banks in US market.
3- UK banks would not communicate to say which of them had investments in these 'bad packets', so internal lending (which was one of the most common funding methods for commercial banks) stopped.
4- 2 major UK banks contacted BoE for bailouts due to lack of internal lending. This was not reported in the media.
5- Northern Rock contact BoE for bailouts due to lack of internal lending. This was WIDELY reported by the media, and started the first bank run and eventual downfall of NR.
I think that's a fairly accurate (if not highly simplified) run down of the first couple of months of the banking crisis, which started the whole thing snowballing. Labour's terrible spending plans CERTAINLY didn't help anything, and our banking system was far too frail to support itself due to poor decisions.
I worked for Northern Rock, in the Savings call centre on the day it all went to shit. I came into work, which was surrounded by news reporters. The wall boards which told you how many people were in the queue wouldn't work because there were too many people.
Quote: Tim Walker @ February 11 2011, 5:02 PM GMT
Yes, but a significant part of the reason that what happened in the sub-prime mortgage market etc. was able to affect the strength of British banks, was the financial deregulation introduced by both Clinton and Blair (with Brown's enthusiastic support). This, coupled with massive public overspending (based largely on ideological rather than practical principles) is the reason UK plc is economically f**ked. "Global factors" may be a convenient get-out-of-jail card, but it doesn't actually excuse the actions of the Treasury under Labour's command.
This is also correct. You do realise you're both right, don't you?