By mbaxter 17 Mar 2009 [7 Comments | 412 views]
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Whenever the Rottweilers of the media interview Gordon Brown, Alistair Darling, or indeed just about any of the senior figures in the labour party, it always seems to come down to the issue of them apologizing.
But maybe the media, by focusing on trying to persuade GB and his chums to say sorry, are either deliberately, or perhaps unconsciously, detracting us from their own culpability for this crisis.
But it is not just the press. The real error that lay behind this crisis was collective errors of judgement made not only by politicians and economists, but also by the media and, quite frankly, most of the public.
And maybe it is time we stopped calling for blood, and for all of us to eat a little more humble pie.
When the leader of the Tory party David Cameron apologized recently, he said: “Where I look back now and think we would have done it differently if we had the time again. For example, while we warned that it was wrong and complacent to claim that boom and bust had been abolished…we based our plans on the hope that economic growth would continue.”
Or to put it another way, Cameron’s biggest mistake was to trust some of Gordon Brown’s figures – clever that.
In recent weeks, Gordon Brown and Alistair Darling have been trying to implement policies designed to get the UK out of recession. You may not agree with their actions – that is a quite legitimate point of view. But in just about every TV and radio interview, the interviewers skate over that, and return to the issue of apologizing. It is as if they don’t understand the economic arguments for and against, so they resort to trying to score cheap points.
Gordon Brown made mistakes, that is clear. His claim to have ended boom and bust was just plain silly – indeed, there is even an argument to be made for saying it is not desirable to end boom and bust, because the natural economic cycle is a useful tool for cleaning out the system of excesses. Gordon Brown made the financial system over complicated – there is no doubt about that; does anyone understand the benefits system these days?
When he was chancellor, our Prime Minister introduced a tax and benefit system that was actually quite generous to people on low incomes, and very generous to high earners, but clobbered those in the middle.
But the real error made by GB was not just his, rather it was a national error.
It wasn’t merely the belief that house prices always go up that led to an inevitable bursting of a bubble, it was the idea that a surging property market was a good thing.
And if you look around, across the economy and across the social spectrum, you see that error everywhere.
Debt didn’t matter, went the argument, because it was covered by rising asset values.
Shamefully, the media got behind the national myth and propagated it, without even the sense to realise what they were doing. So when TV shows such as Location, Location, Location, and Property Ladder, go on air, it is not that the programme makers are deliberately trying to sell us the idea of an ever-upwards property ladder, but they are doing it all the same.
TV presenters such as Kirstie Allsopp have gone on record in denying they are responsible for causing an unsustainable boom in house prices – and to an extent, she is right. She is just as much a victim – a victim of collective madness.
But then again, only a year ago, one TV programme outlined the benefits of leveraged property investment.
Just as bankers did not question their practice, because it is too difficult to go against a trend, it was the same not just for the media, but for the majority of the British public.
That was the true madness, that somehow we could all get richer through seeing our house go up in value.
It is too easy to blame politicians and bankers. If we blame them for the crisis, it means we don’t have to take any responsibility ourselves. But until we do, there is no hope of truly learning the lesson.
The article completely misses the point. If a child is given a bag of sweets it is likely to eat them. You do not then blame the child for being irresponsible. The Government encouraged banks to lend through the incentive of large bonuses and no constraints and the public in turn to borrow. Clearly the banks must shoulder some responsibility, but if you leave your front door open then you can expect someone to steal your possessions.
Ultimately the Government’s ineptitude has to be the prime motivator behind the mess we are now in and they continue to make the same mistakes by attempting to buy their way out of recession.
We live on an island with a finate supply of land & ludicrous planning laws.
In the UK people want to own their own homes. Pay £750 a month rent and have nothing or pay the same on a mortgage and have something to call your own – it’s hardly rocket science – most people will choose buy and as soon as they can get credit people will buy and prices will start moving up again. It is the very basic economics of supply and demand
I think the first reply has just validated the comments in the blog.
Yes, children will eat too many sweets if offered the chance, that is because they are children and have a limited grasp of right and wrong, cause and effect and self moderation. You are an adult therefore you should have picked up some of these traits by now. That means you cannot do something irresponsible and then blame someone else because they didn’t stop you or warn you that it was wrong.
Also the government did not encourage banks to lend through the incentive of large bonus’s. The banks encouraged themselves to lend in an irresponsible manner and who fed that greed? The shareholders (normally your pension or ISA fund) who wanted more profit, and the customers who wanted to borrow the money and ultimately that was you and I, however you wish to dress it up.
And no if I leave my door open I do not expect you to come in and steal my possessions. I expect you to close the door on my behalf, with no other potential for reward than the fact that it was the right thing to do.
Yes, the government and the banks should shoulder some of the blame, but they didn’t do it on their own……….
The appologising game on the whole appears to be the press scoring cheap points as you say, however what is getting my goat is the fact that much of the time GB appears not to remember what part he did play whilst in nbr 11. GB put the FSA in charge of the regulation of the banks. GB spent money like water and blew away the country’s savings so we have nothing now that we can do apart from put our children to work to pay for what he is spending today. GB is the guy who is now telling the FSA to govern the banks behavior more carefully and increase the banks capital ratios and at the same time is pushing them to lend lend lend. GB is the guy who watched the personal debt mountain growing out of control and did nothing to stop it. I could go on and on but what is for sure is that history will not show that Mr Brown was anything but a spendthrift with no concept of financial diligence. My mother would say that he appears to think money grows on trees.
Robert Peston, last December, in a look forward to 2009 seemed unusually candid when he said:
“As for the media, we certainly could have shouted louder about the risks of all that debt being accumulated – but perhaps the volume control was set a little too low because of all the splendid advertising revenue that was generated by the property boom.â€
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Regarding the first post this is all about comeuppance:
If you borrowed too much and can’t make the payments you get your house repossessed, and this is happening all across the UK at the moment.
If you lend too much to the wrong person your going to lose money, and this is happening, the banks are writing down billions, but they get help from the state in the form of billions from the government.
The person who borrowed too much and lost their home also gets help from the government, but its not much, atleast it probably doesn’t feel like much when you see what the banks are getting, or how they’re still behaving.