Forex Media News Station

2010/04/12

A Prime Minister who knows something

[A really interesting post I found here: http://blogs.telegraph.co.uk/finance/edmundconway/100004814/a-prime-minister-who-knows-something-about-the-economy/]

Here’s a quote – see if you can guess who said it and when:

“The real problem we’re left with is that we now have an economy which is so locked in to international trading, so dependent on what happens in America, that anything that happens in Wall Street reverberates around the world. Now the key lesson that we’ve got to take out of this is the necessity for governments of any political colour to work together to stop the excesses of the free market, because that’s what’s really been shown over the last few days.”

I’ll put you out of your misery – it was none other than a very young-looking Tony Blair in 1987, just after the Black Monday crash, which obliterated prices on Wall Street. I wonder if he ever looks back and agonises about why he chose not to heed his own words?

I hadn’t realised Blair was Shadow City Minister early on in his career, but the clip is a reminder that our former PM did have one or two of his own economic views (some of them pretty sensible – I don’t think he comes across that badly in the clip – do you?) but that they were so comprehensively wrestled into the background during his time in office.

In fact, according to some documents teased out of the Treasury by PricedOut – a volunteer group campaigning over the lack of decent housing policy for first-time buyers – it turns out Blair was rather more worried about the state of the economy than you might have thought. So concerned was the PM back in 2004 that the housing market was turning into a bubble that he asked the Treasury for a full briefing note (in fact he was prompted by an FT column by Martin Wolf, warning: “Nobody knows when the bust will come. But come, I believe, it will”.)

Now, it probably isn’t a surprise to hear that the Treasury dismissed this view in its document, which PricedOut has attained under a Freedom of Information request. But I was surprised by the length of the document (eight chunky pages) and throughout its length a sheer unwillingness to countenance the possibility that the housing market would crash. It underlines the simple fact that the Treasury under Gordon Brown was blind to the possibility that things could go horribly wrong – even within the confines of Downing Street. It turns out no-one was allowed to challenge the “end to boom and bust” trope – even Tony Blair himself.

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