When this credit crisis really got going “Hank” Paulson, The United States Treasury Secretary created a US$ 700 Billion plan to buy up the “toxic debt”. The idea being that the U.S. government would take on the debt freeing the banks from the risk. The banks would then be able to resume lending. The U.S. government wouldn’t necessarily lose out as not all the toxic debt would default and they may even make a modest profit.
American congressmen didn’t like the idea of risking a lot of government money and it took two attempts to get their plan through congress.
Gordon Brown, the British Prime Minister, then started lecturing everyone about how what was really necessary was to inject liquidity into the banking system. His plan was to give the banks loads of cash so that they could start lending again. Brown postured that he was some kind of economics guru and strutted around telling the world that they should follow his lead. Without too much publicity The Americans changed tack and started giving the $US 700 Billion to the banks rather than buying up the bad debt.
On the 14th January The Daily Telegraph ran a story stating:
“The (UK) Treasury is understood to have asked the investment bank Credit Suisse to draw up a detailed plan for the logistics of creating a bad bank, in a bid to restore confidence in the sector and to kick-start lending to consumers and businesses.”
In effect Brown is admitting that, once again, he was wrong and he will now need even more money to start buying up the bad debt just as Hank Poulson had originally planned.
I am reminded of Gordon Brown’s boast that he had abolished boom and bust. Gordon Brown’s ego is only paralleled by that of Tony Blair. They both strut around the world telling everyone what to do and, infuriatingly, seem oblivious of the fact that everything they touch turns to shit.
The folk lore is that, though Brown is a hopeless buffoon, his one saving grace is that he understands economics.
HE DOES NOT!
It was Brown who helped screw our pensions, it was Brown who let property and stock inflation run out of control and it was Brown who dithered for months before bailing out Northern Rock.
He talks Bollocks and should step down.
But don’t stop there! Sign the petition on the Down Street web site: