What with her being a Treasury minister, you’d have thought decent economic predictive abilities would come in useful. Alas, her record isn’t up to much, for she was dispensing these pearls of wisdom in Parliament as recently as April this year:
According to the motion, we are facing an “extreme bubble in the housing market” and the “risk of recession”, and we must “act to prevent mass home repossessions” … Fortunately for all of us, however, that colourful and lurid fiction has no real bearing on the macro-economic reality … the economy is strong and stable … The housing situation will be unwound in a relatively calm and orderly way … It does not do the Liberal Democrats any good … tabling a hysterical motion, upsetting people and scaremongering.
Boring factual interlude: latest home repossession figures up by 48%, house prices falling at their quickest since at least 1991 and a recession is being predicted.
Getting an economic forecast wrong is something is not exactly a rarity, even – or perhaps especially 🙂 – amongst economists. But dismissing well-grounded and well-argued views which you happen to disagree with as ‘hysterical’, ‘upsetting’ and ‘scaremongering’ is the sort of blinkered partisanship that does so much damage to politics – and hardly reflects well on how the Treasury is being run.
There’s an uncanny parallel with the Northern Rock fiasco, where again Labour repeatedly dismissed very robustly out of hand differing views … until reality caught up and they had to change course.
P.S. Two pieces of good news for Angela Eagle. The prize for the worst economic prediction made during that debate goes not to her but to Labour MP George Mudie for this gem:
I do not see how anyone can table a motion that suggests that we are nearing a recession and that we are in all sorts of economic gloom.
Whilst the prize for silliest piece of partisan posturing goes to Labour MP David Wright (PPS to the Financial Secretary) who said the problem with Liberal Democrat MPs highlighting economic problems the country is facing was that they were:
They are talking down the economy.
Accurately, it would appear.
Hat-tip: the FT
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2 Comments
I think anyone with an understanding of economics realised several years ago that Gordon Brown’s “Economic miracle” was based on an ever in increasing levels of consumer, government and business debt and his “End to boom and Bust” was based on policies which involved pouring ever more money into the economy to keep growth going. Effectively this is exactly the same policies that the US was following under Greenspan. Sadly it simply moved us ever closer to the precipice.
It was just a question of which particular random factor would finally tip it all over. As it turns out a double whammy has occurred, massive raw materials price inflation (particularly energy) and the American lending crisis. We were caught by both, partly because several banks had lent more than people could repay (Old banking saying “Any fool can lend money, it’s getting it back that takes ability.”), and others because other banks had bought American debt in the belief that it offered a wizard way to massage the figures (Second old banking saying “A profit you don’t understand, is much more dangerous than loss you do understand.”)
Ultimately though, no one gains credit for predicting a catastrophe years in advance, they just get accused of “Talking the economy down”, or just laughed at. I think Vince almost certainly knew exactly what was going on, well before Northern Rock. The problem is that even now most people either don’t understand or possibly don’t want to understand just how bad this recession/depression will be.
Imagine the headline… “Ambitious Labour MPs don’t know what they’re talking about shocker”. Hardly news is it! 😉