- (october 2008)
How Gordon Brown saved the world.
The USA caused the financial crisis. It was a colossal pyramid scheme that
eventually started crashing down. Unfortunately, most of the world depends
on the USA, and therefore, for one reason or another, this crisis became
a worldwide crisis.
Having caused the problem, the USA could not come up with any solution that
made sense. Paulson, one of the many incompetent and corrupt cronies appointed
by president George W Bush to important government posts, came up with a
ridiculous plan to rescue his friends on Wall Street, that eventually passed
the Congress after the votes of senators and representatives were bought in
one of the most egregious case of bribery in the history of the USA
(see Cash for trash ),
despite Nobel Prizes like Paul Krugman warning against it.
Needless to say, that bailout plan only made things worse, causing the worst
week of the stock market ever.
Across the Atlantic Ocean, a humble and rather boring prime minister,
Gordon Brown, who was all but discredited in his country, came up with a bold
and decisive plan to rescue the country's banks. It was soon recognized as
a master stroke, with the best chances to save the international banking
system, and it was executed like a surgical strike.
After inviting him to an emergency summit,
the eurozone countries quickly adopted his plan, and on a scale that
made Paulson's plan look even more ridiculous than it is.
While Bush was wavering and incapable of outlining a strategy, Brown's firm
hand was at least reassuring the world's leaders (if not certain to calm
the markets).
Brown's medicine was actually quite simple: recapitalise the banks and
guarantee interbank loans. Needless to say, this greatly increases the role
of government in the capitalist system, potentially making it the largest
shareholder of a bank.
Brown decisively redefined the role of banks in the post-derivative world.
The state has taken over the markets, and undone decades of deregulation
that started in the 1970s (even before Reagan and Thatcher turned deregulation
into an ideology).
In the meantime both USA candidates for president endorsed the silly Paulson
plan (probably not understanding a word of it) and kept promising USA citizens
all sorts of tax cuts and spending programs, instead of telling them the truth
(that any solution will entail tax increases and spending cuts).
Bush and his pal Paulson (basically, Bush's link to his friends on Wall Street)
reluctantly adopted Brown's plan also for the USA. It must have been hard to
swallow because Bush and the conservatives are still stuck with Reagan's
dogma that government intervention is bad (Reagan famously said that the nine
most terrifying words in the English language are "I'm from the government and
I'm here to help", where i think that the 13 most terrifying words in the
English language are "It is an old Ronald Reagan idea and it is still around today").
Brown is now calling for a new Bretton Woods (the 1944 meeting that created
the foundation of post-war finance). He advocates
"a new financial architecture" for the new century.
Suddenly, he is making a lot of sense.
Brown may not be as good as Tony Blair as uttering memorable lines, but his
sobering words may be more momentous:
"Sometimes it does take a crisis for people to agree that what is obvious and should have been done years ago".
Gordon Brown may lose the next elections to the conservatives of David
Cameron, but he may go down in history as the one man who singlehandedly
rescued the world from a second Great Depression.
After all, Churchill lost the 1945 election after winning the war against
Hitler, but it didn't diminish his achievement.
TM, ®, Copyright © 2008 Piero Scaruffi All rights reserved.
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