Now is Not the Time to Write Off Capitalism

We had our biggest run on a British bank in 100 years in the form of Northern Rock last year. Since then things have spiralled downwards. In September Bradford and Bringly was nationalised, and in October the government delivered a £50 billion bank rescue package. Gordon Brown is mortgaging our future, conservative estimates suggest public debt is 60% of GDP, this rises to a staggering 100% or £3.4 trillion, if pension debts are included. Far greater than his golden fiscal rules.

Some will use the downturn as an excuse to denounce market freedom, in favour of more state planned control. For those who hail for the nationalisation of banks, what makes you think the government will do a better job than the market? Regulation where it works well, is of the utmost importance. When Brown’s ‘big idea’, The Bank of England Act 1998 was implemented, a tripartite regulatory regime was established and the banks powers of regulation removed. This has turned out to be devastating in today’s recession, as no individual organisation has complete responsibility for financial regulation, and the Bank of England is no longer involved in day to day money markets. It is therefore deadly slow to react.

We’re in this situation despite IMF borrowing warnings from as far back as 1999, and despite Gordon Brown having a bigger insight into the world economy than most, whilst chair of the IMF’s International Monetary and Financial Committee for 10 years. The government have failed miserably to prepare us for this recession. If the government cannot even regulate the banking sector correctly, to stop over borrowing, why exactly should we allow them to regulate themselves, while simultaneously taking on the additional role of running the countries banks? If the recession is due to over borrowing in the private sector, why is Brown countering it by over borrowing in the public sector?

Reckless borrowing, and disasterously irresponsible deregulation. This is Gordon Browns legacy.