In Scotland, small children have always resorted to excuse the consequences of their actions (broken windows, little brother’s bloody nose, etc) by claiming that “a big boy did it and ran away”. Looking at our (mostly Scottish) leaders, it strikes me that they have not really grown out of attempting to avoid the blame.

When the current financial crisis first became apparent, we were told that this was a Global issue. Indeed, there was little we could have done to stop it and, in any case, the UK was well placed to weather the storm. This excuse ignored the fact that British banks were amongst the worst culprits in stoking irrational indebtedness (Northern Rock’s 120% mortgage for example) and that our economy was heavily dependent on financial services, the worst affected industry on the planet. Clearly, this particular “big boy” was absent at the time of the crime.

There was a fleeting attempt to blame Mrs Thatcher and her Government’s deregulation of the financial sector but this was quickly shelved when it was pointed out that this policy was a contributing factor to the prosperity which Mr Brown had claimed as his own from 1997 onwards. Thus, we land at the current situation where all of our current problems have been caused by bankers. Very big boys, indeed.

However, rather than addressing issues such as the advisability of loans to people who could not afford to pay them back or the economic logic of paying a considerable premium for a Dutch bank heavily involved in collateralising these debts, we now have the rather unedifying spectacle of our political elite attempting to outdo each other in criticising bonuses.

Does anyone else feel that this is missing the point? Stopping bonuses will not cause the global financial system to recover overnight nor will it suddenly re-float RBS and HBOS. What it does is to deflect attention from the point that, when the banks were making mistakes, the regulator and the Government completely failed to stop them.

What was the Government and the FSA doing when every commentator in the UK was pointing out that the RBS bid for ABN Amro was the height of hubris or when it was pointed out that Northern Rock was lending money on 20 year terms but funding it with 3 month money? What did they say when house prices became so inflated that two thirds of our national wealth was accounted for by the value of our homes? I cannot remember any warnings or attempts to alter the situation. Now that we are up to our shoulders in financial crises, the political solution appears to be stop the bonuses.

To my mind, this is the worst sort of obfuscation. The financial crisis which, according to the IMF will hit the UK harder than any other Western economy, has its roots in the political and regulatory laissez faire attitudes prevalent in the boom.

For sure, bankers are to blame but whipping up the public’s indignation at their remuneration structures only serves to highlight that we have no particular solution to our current woes.

When the next election is called, I wonder if we will have the wit to see that Gordon Brown did it and then ran away.

Tags: Gordon Brown, Margaret Thatcher

Tuesday, 10 February 2009 at 10:32

One Response to “Running Away”

• Andy

  Linda, the complexities of the international banking system pass me by, I admit. However, there seems to be a certain truth in a little pearl of wisdom that my old Mum said to me the other day when I popped round for a cup of tea.

  “The Labour party” - she said - “always mucks it up” (I think she said ‘mucks’, although she was very irate at the time) “every single time. And it’s always, always left to the Conservatives to pick up the pieces and sort out the mess”.

  Bring on the election, I say.

  02/10/2009 at 20:28