Tuesday, 28 January 2014

Straw man rides again

Barry Sheerman (Labour/Cooperative, Huddersfield) asked George Osborne at Treasury Questions when he was going to stop blaming Labour for causing the global meltdown. As he well knows, neither Conservatives nor Liberal Democrats are making that accusation.

The real charge against Labour is that Gordon Brown increased the budget deficit, and thus vastly increased borrowing, at a time when he should have been building up reserves. Thus, when the depression hit UK industry, there was practically no money available for Keynesian measures which would normally have been deployed to revive the economy.

Of course, it was not a "global" meltdown, but at base a catastrophic loss of confidence in transatlantic financial institutions. Far Eastern economies (apart from Japan) continued to motor along with growth over 5%. Labour has to share at least some of the blame for failure to regulate our banks (some of the largest in the world) and for not insisting on stricter accounting standards. It was this latter omission which allowed Lehman Brothers to conceal its losses in the City of London.

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