The “I told you so” game continues over at the Times, whose list of the prescient includes an astrologer, two websites and a Russian Marxist economist executed in 1938. Only two UK politicians feature on the list and they are, of course, Vince Cable and Lord Oakeshott (the latter by dint of his warnings about Iceland).
Let’s hear those questions to the government again:
1. Vince Cable – deputy leader of the Liberal Democrats
Here is a question Mr Cable’s posed to Gordon Brown, then Chancellor, during Treasury Questions back in November 2003: “The growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level. What action will the Chancellor take on the problem of consumer debt?”
Mr Brown did not answer how he would solve the problem, merely replying that: “We have been right about the prospects for growth in the British economy, and the hon. Gentleman (Mr. Cable) has been wrong.”
8. Lord Oakeshott – Liberal Democrat Treasury spokesman
…
In a written question to the government in July, he asked: “What steps [have] the United Kingdom financial authorities taken to satisfy themselves, independently of the Icelandic financial authorities, of the solvency and stability of Icelandic banks taking deposits in the United Kingdom?”
Lord Davies, for the Government, replied that there was no concern about the liquidity or capital base of Icelandic banks operating in the UK.
A number of other suggestions for inclusion follow in the comments, including a couple of “Me too”s.
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We can add Fred Harrison, George Soros, Bernard Lietaer, Roger Bootle, Peter Warburton and many others who, in more sane times, many people would have paid a lot of credence to (especially Bootle and Warburton if not the others).
I think their use of Kondratiev is interesting. It’s not so much that he predicted it, as that people are fitting this into his wave pattern to make it fit. But I do believe this crash, or at least its causes, began in 1913 with the founding of the Federral Reserve or in 1932 at the bottom of the great bear market.
They should ditch the Astrologer and include John Kenneth Galbraith, who repeatedly warned that ‘Financial Genius Comes Before The Fall’. But that might be too painful an dmission for economists who have spent half a century mocking Galbraith as ‘not a proper economist’.
Basically Galbraith said that every twenty years or so the people in the financial world who remeber the last crash die out or retire, leaving a new generation in control bewitched by all the old magic incantations of leverage and pyramid-selling (under new labels of course). They confuse the making of lots of money with their own wisdom and so we get the same thing hapening as ever.
Can I officially get in first here, and predict that there will be another financial meltdown, after we have recovered from this one.
I agree with Edis about Galbraith.
It is certainly true that Vince Cable and others warned about debt levels and they were absolutley right to do so. He was also right to face down the libertarians in the party and propose nationalising Northern Rock when there were clearly no other viable alternative options apart from the bank going bust. What I do not recall, and therefore stand to be corrected, is that they argued that greater regulation was needed not only to control debt, but irresponsible market behavoir in general.
In fact I recall the opposite. For some “deregulation” equated to liberalism. Those who argued for a smaller state agreed with Ronald Reagan that “Government is NOT a solution to our problem, government IS the problem.” How wrong that turned out to be!
In the late 1970s, economic orthodoxy started to switch from Keynes and Galbraith to Friedman and Hayak.
Now we are starting to see a switch back again, as free market ideology has been shown to be deeply flawed.
I would say that those who got it right were Glabraith, Soros, Joseph Stiglitz and John Gray.
“Free market” anything hasn’t shown to be anything as we haven’t seen a “free market” in my lifetime at least, and I doubt in anyone’s reading this either. Particularly in banking. Banking is the most protectionist industry. Strong or weak regulation is neither here nor there when the system itself is fundmanetally fraudulent and protectionist.
Also the monetarist policies of Thatcher in 1979 were pretty well abandoned before the end of the eighties – not least that they kept moving the goal posts of which measure of money they sought to control. So I don’t think you can really blame this most recent bubble on monetarism either. Except perhaps as a reaction to the ending of monetary control.
It seems to me that the history of the past ten years shows that government most definitely IS the problem. And even in the clear up exercise government appears to be going out of its way to take the side of the very system that is so corrupt. Because government likes to think it was their big idea in the first place – getting rid of any value behind currency and letting private interests do what they want with our money. Had there not been a government for J D Rockerfelleer and J P Morgan to spend years lobbying for a central bank and fiat money system that they could control, they would not have secured their positions as the masters of the universe.
But let’s not all that disturb your fanciful images of what “libertarians in the party” were thinking or advocating in any of this.
It must take a special kind of vision to be able to stare into the abyss of financial meltdown, and solemnly declare that it is clearly all the fault of Government. It is the same level of devoted commitment to a preconceived ideology that we see in the climate change denial community.
I’m particularly impressed by the bit that says “had there not been a government …. (the financiers) would not have secured their positions as the masters of the universe.” The oil industry will pay good money for lobbyists to come up with lines like that. It’s like blaming your decision to commit crime on the existence of a police force!
This party has always in the past maintained a healthy distrust of dogmatic political ideology, whether of the right or of the left. I don’t think any of us would share Michael Foot’s confidence in the intrinsic goodness of statist solutions. We should show equal disdain for the opposite form of ideological prejudice.
“This party has always in the past maintained a healthy distrust of dogmatic political ideology”
Then why are we named after a political ideology (or, arguably, two ideologies)?
Liberalism is a tendency, not an ideology, & doesn’t lead inevitably to a fixed set of policy positions.
It’s like blaming your decision to commit crime on the existence of a police force!
Actually it’s the exact opposite, it’s the fact that government makes a special case for bankers that they can commit what if any of the rest of us did it would be a crime, and an enormous one at that, with impunity.
Jock,
Surely whether banking should be considered a crime would depend on the terms under which depositors hand over their money. If they understand and expect it to be lent out, at some risk, to others, then banking is not criminal.
There is a problem in defining how much risk is acceptable in a contract between bankers and depositors – because it is bankers who assess these risks. And regulators can only grope in the dark towards such assessments, which is not good enough, but better than nothing.
Rather embarrassing that Sutton Council put another £2 million into an Icelandic bank only a couple of weeks ago.
Could Lord Tope not have had a word with Lord Oakeshott first?
“…it is clearly all the fault of Government”
leaving aside the question of whether this bunch were at fault for causing the crisis, it is certainly the responsibility of government for failing to prevent it.
Considering the fact that the government has all our resources available at it’s disposal (as recent events have shown) it has no excuses when any crisis does come around – what exactly are they doing if they aren’t planning for every concievable contingency? exactly why did nobody in the civil service predict the meltdown?
Radio 4’s “Thinking Allowed” pointed out that Richard Dale prophesied back in 1993, when the deregulation process in the US and UK started, almost exactly what was going to happen a decade later.
For all those who still believe that “Make it Happen”‘s tax cuts can now be passed off as a brilliant piece of Keynesian deficit financing, and therefore just what’s needed to deal with the coming recession, ponder the wise words of Robert Peston on his BBC blog today:
“…The British government is being forced to think about something new: a substantial and sustained increase in public spending to offset the contraction of spending by the private sector (there may be little point in cutting taxes, since nervous consumers and businesses would probably hoard any extra cash that went into their pockets).
…An old-fashioned Keynesian stimulus to the economy (could mean) that the UK suffered a shallow recession rather than a deep and dark one.”
By contrast, MIH would instead reduce public spending alongside making tax cuts. According to Peston’s analysis, that would be deflationary, and would make the problems of recession worse.
Surely, it is more than just the fault of the government.
All three major parties were asleep at the wheel.
Vincent Cable should have been making a big fuss about this. Yet I have heard nothing.
This leads to the conclusion that warning people was not seen as a big priority – where in fact we now see that it should have been
Certainly there have been enough clever and well respected people predicting that this could happen for years. Vince has been better at telling people about the symptoms for years – it might not be seen as “responsible” for a politician to be hitting the “panic button” himself.
However those clever peoples’ opinions, even if a “minority report” at the time, should have fed into some kind of risk management strategy on the part of government at least who could be merrily inventing spending plans and golden rules blissfully unaware that there might be a potential problem…
Just like they have. What we know now is that Prudence was never actually there, else she would have taken this into account in her risk analysis. However, that risk analysis must always have been flawed if government and their agencies were the ones wanting to talk the asset bubble up in the first place as a piece of economic policy.
If there is a fire, then hitting the panic button is responsible.
I do not see how to arrive at any other conclusion
Not if there is no fire though. For years (five at least that I can recall) Vince has been warning about the piling up of the sticks to make the fire if you like. I don’t think people would have forgiven him for prophesying ruin, Cassandra like, before it was inevitable. And since it has been inevitable if you like, he has been more forthright.
Well, people should not forgive him for sitting on his hands either.
If you want the credit for being right in advance, you have to speak out.
A man in the cave with the solutions to all our worries is useless.
Cable must resign but no one takes responsibility for his actions these days
I don’t know what you are on about, frankly. He’s been warning about this sort of outcome for simply ages – like I say, throughout the half decade he has been the Lib Dem Shadow Chancellor.
Whatever he did has been ineffective and now we are in a mess.
I judge people by results not aspirations
And Cable had the power to do what exactly? Other than warn. Time and time again. Which he did.
It may have escaped your notice but the Lib Dems, sadly, do not run the government.
Had they succeeded in getting their way when they were last in power as a predecessor party (ie Asquith and Lloyd-George and so on) none of this would have been possible – the property speculation bubble I mean.
The Lib Dems had the power to warn about the credit crunch every time they talked in public.
Every time a newspaper came out, they had the power to put in adverts to get the word out.
Every PMQs, there was an opportunity to say that there was a critical danger to the economoy which was not being addressed.
Was there a warning about the crunch in every party conference? No, of course not, because then it would have been a big story and people would have known about it.
This is a big priority and the ball was dropped by all three parties.
All these things are possible
Voter, unhappily it’s partly a matter of what the press choose to report.
You can see for yourself above that Vince Cable has been asking questions in parliament about the debt crisis for years. And you might have heard Evan Davis on Today the other morning telling George Osborne that he had been receiving emails about dangerous consumer debt from Vince every three weeks when he (Evan) was BBC Economics editor, going back to the beginning of the decade. Those are the usual methods of churning out a message to people – press releases and public challenges to the government – and it just didn’t work here.
Sad but true: if the press don’t want to report something because they think it’s boring, or they think the Lib Dems are irrelevant or whatever, then they won’t, and unless you take a forensic daily interest in Lib Dem policy (or whatever it might be) you won’t get to hear about it.
Actually – having been at most of them, yes, there has been considerable anxiety expressed by Lib Dems at party conferences for years too. I’ve hosted/organized some of those events. At PMQs they’ve been quite consistent in pursuing the debt mountain and house price bubble issues for some time too – but it’s not the only issue for a party that may only get one question allotted them each week.
Face it – you said something which you now realize to be wrong. Vince and others – Matthew Taylor in his position before him for example, as well as Huhne and Kennedy, have been needling about many of these issues for years. And have had quite a lot of coverage for it.
The fact that apparently nobody listened, including yourself, is not “our fault”.
Perhaps I am naive but it seems to me that if PMQs had had a warning of financial meltdown, then it would have been picked up on.
Can you tell me of if any PMQs had that explicit warning? What dates? I would like to look it up for myself
By all means. We report PMQs on this site every week. Read and enjoy.
I’ve focussed on the first half of the year. Here’s a warning from Clegg about the “impending winter of discontent” back in July:
https://www.libdemvoice.org/pmqs-nick-tackles-gordon-on-impending-winter-of-discontent-3023.html
And here’s Vince Cable standing in for Clegg in April on the subject of (in his own words) “economic gloom and recession”:
https://www.libdemvoice.org/todays-pmqs-2456.html
Clegg has used other PMQs this year to go into more detail about consequences of the expected economic collapse – food prices, fuel poverty, housing repossessions, high taxes etc – stretching back to his first PMQs as leader in January:
https://www.libdemvoice.org/pmqs-nick-tackles-gordon-on-fuel-poverty-2888.html
https://www.libdemvoice.org/pmqs-nick-tackles-gordon-on-pverty-2618.html
https://www.libdemvoice.org/pmqs-nick-tackles-gordon-on-the-10p-tax-con-2585.html
https://www.libdemvoice.org/pmqs-nick-tackles-gordon-on-home-repossessions-2-2426.html
https://www.libdemvoice.org/pmqs-nick-tackles-gordon-on-northern-rock-and-energy-prices-2210.html
https://www.libdemvoice.org/pmqs-nick-tackles-gordon-on-home-repossessions-1998.html
Did you read any coverage of these repeated highlightings of burgeoning economic problems in the press?
I wanted to know on which date (before Northern Rock, 2005 or earlier) someone warned about the potential meltdown of the financial system at PMQs.
The links you gave seem to be from this year
I don’t think you’ve been particularly naive, by the way. I think any normal voter (i.e. not a political anorak, like wot we are here) would be well within their rights to expect the press to provide fair coverage of all parties’ current concerns and policy priorities, as outlined through occasions like PMQs and party conferences. Sadly for the cause of reason, they just don’t.
Northern Rock was only a year ago by the way, 2007.
But in any case:
http://tinyurl.com/5vowts
http://tinyurl.com/58lnm6
http://tinyurl.com/6rpddy
http://tinyurl.com/5d4e89
…are all Vince Cable in 2005 and before talking in Hansard about the problems of a personal debt and house price bubble.
And Menzies Campbell refers to the issues in the budget speech in 2006:
http://tinyurl.com/636yv6
I have quickly read through that page of Hansard.
What is clear is that Sir Campbell is concerned but he is far from calling “all hands to the pump”.
He hints that the debt level may be connected to a crash but does not go beyond that.
He does not mention a global credit crunch nor does he say that stronger regulation would be useful.
In fact, he says regulation is squeezing British business
Voter, this is the critical passage from that speech:
“One issue that the Chancellor said nothing at all about was that of personal debt. Consumer debt is now approaching £1.2 trillion—practically identical to the gross domestic product of the United Kingdom as a whole. Of course, consumer debt has underpinned the economic boom, but the legacy for many families will be disaster. Nearly a fifth of all income is being used to service debt. That means that it is back to the level that it was at when the economy crashed under the Conservatives in the early 1990s. The immediate signs of that stress are clear: rising bankruptcies and rising repossessions.”
I’m sorry, but I don’t see how any reasonable person could ask for a clearer prediction of an approaching crash resulting from high levels of consumer debt than that. Much before that time, of course, and we were too busy being right about Iraq at PMQs.
Now you’ve seen evidence that we’ve been warning about the debt bubble through press releases, major budget day speeches and parliamentary questions for some five years, and been insistently making as much noise as possible at PMQs about the impending crisis all this year (and the last quarter of last year, of course, when Vince was acting leader).
If you want to get angry, get angry with the people who failed to pass all this information on to you. Not us.
“Every time a newspaper came out, they had the power to put in adverts to get the word out.”
Nice idea. We don’t have that kind of money. Anyway, wouldn’t it count as political marketing? Feel free to go to the party website and hit donate so that you’re never left in the dark again 😉
Will you now be asking activists on Conservativehome.com the same questions? (I would invite you to ask Labour activists as well, but I don’t think non-members are allowed to comment).
There’s four quoptes from Hansard as well by Cable from 2003-2005 waiting for “moderation”. But the point is clear – you can find them if you search at Hansard.
But of course you’re changing teh goal posts now – wanting them to talk about “regulation” when “regulation” is only one viewpoint as to what could have or should be being done about this.
I for one am not in favour of more regulation, even though I’ve been cussing in public about the debt-money situaiton for at least 8 years.
“Sir Campbell”?? Which state of the union do you vote in, Voter?
If I start saying in the middle of winter “One day it will get warm again” and I just keep saying it and saying it, then eventually winter will end and it will become warm, that doesn’t make me some sort of genius.
The question posed in 2003, was during some of the biggest economic expansion this country has ever experienced, particularly the property market, and it went on for years and years, the “problems” that Vince Cable was talking about in his question were not really the reason for the global economic crisis, it was due to the toxic nature of sub prime debt being passed on again and again all over the world, and then so many debtors defaulting, it caused a collapse in the banking system…this was never mentioned by Vince Cable. He is one of these people who were he not a politician would probably say things like “I did the right thing and saved my money” meaning they never had an original idea, they never tried and anything and like the parable buried their talents. Here we are it’s 2003 the economy is rockin and rolling, just booming along, and he wanted to start whining, that’s not genius is it?
Admittedly Labour made massive errors during all that growth throwing money round like a man with four arms (as they are accustomed to doing) selling the gold at the bottom of the market, when they didn’t even need to and just inflating the public sector to ridiculous proportions. I guess when pints of beer are a pound, and you have a fiver you can have five pints, unless you are in Labour then you can have fifteen, he never asked about any of that though.