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“Condemned to repeat it”

John Rentoul

cam 300x168 Condemned to repeat itMuch of interest in David Cameron’s There Is No Alternative speech today, which included the correct but incredible assertion: “The richest 20 per cent are making the greatest contribution to the deficit reduction and paying the most.”

But I was struck by the idiot-history of his opening section:

Let’s start with what went wrong.

Because if we don’t understand what went wrong in our economy…

…we’ll never understand what is needed to put things right.

How very true. And what a guarantee that what follows will be unadulterated rubbish. And so it proved, as the Prime Minister listed the three problems of the economy – the public deficit, private debt and loss of competitiveness – in turn:

First, the deficit.

This deficit didn’t suddenly appear purely as a result of the global financial crisis.

It was driven by persistent, reckless and completely unaffordable government spending and borrowing over many years.

By 2008, we already had a structural deficit of more than 7 per cent – the biggest in the G7.

In the cold reality of the bust that followed, we saw the true scale of the myth of the boom that had preceded it…

…the broken model of growth that was propelling our economy into an increasingly unsustainable position.

Most of the deficit “suddenly appeared” precisely “as a result of the global financial crisis”. Obviously, it would have been better if Gordon Brown had been running surpluses from about 2001, but there were two people who failed to warn against this “persistent, reckless and completely unaffordable government spending and borrowing” at the time and they were David Cameron and George Osborne.

As for the “broken model of growth” you just want to weep at such drippy Compass-Milibandism.

Second, we had over-indebted households borrowing from over-indebted banks.

Banks lent more than they could afford to – spurred on by an irresponsible banking culture that rewarded short-termism and unmanageable risk-taking.

And households borrowed more than they could afford to – spurred on by an assertion that we had ended boom and bust.

Again, this is just drivel. The credit crunch of 2007-08 was not caused by over-borrowing by households. It was caused by bad debts in America being repacked and sold on over here. Household borrowing in the UK was high but sustainable and, once the crash happened, completely sustainable at unusually low interest rates.

As for the idea that Mr and Mrs Mortgage borrowed at the limit of what they could afford because Gordon Brown had some silly slogan about the “end of boom and bust”, that is just as daft. No one believed that Brown had abolished the business cycle, but equally no one knew when it would turn.

Third, there was a fundamental erosion of our competitiveness.

Let me put this simply.

Britain is in a global race…

At this point, I lost interest.

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  • a_no_n

    It’s very true…Cameron will never admit that while Gordon Brown sold off all the gold, and Blair steered our country toward the proverbial iceberg, Cameron as leader of the opposition was silent, and why? because the gravy train pulled into his station as well and he had no interest in stopping any of it.

  • cobden

    I was less interested in David Cameron’s speech, more in what Ed Miliband had to say yesterday and Yvette Cooper today on the emotive subject of immigration.

    It now appears the Coalition government and HM Opposition are largely in accord over reform of the benefits system which would bring Britain into line with policies adopted by other EU member states and deemed legal by the European Court of Justice.

    These include: councils making greater use of existing powers to give social housing priority to people with local connections; people claiming non urgent NHS treatment being asked to prove they have been here for a year or more; and the exclusion of new arrivals from eligibility to benefits until they have been in the country for a qualifying period.

    Is there any possibility of all parties working together in the national interest to close benefits loopholes by expediting a bill to become law before December, and thus counter forebodings of floods of benefits migrants from Romania and Bulgaria?

    Or are we to endure a continuation of xenophobic scaremongering and futile political punch-and-judy posturing?

  • greggf

    “..to close benefits loopholes by expediting a bill to become law before December, and thus counter forebodings of floods of benefits migrants from Romania and Bulgaria?”

    No cobden!

    For example; study the Statutory Instrument, 2011 No. 1556, issued by the NHS intended to charge overseas visitors for services. Most of the document lists exemptions, which includes treatment for, it seems, most diseases.
    And how does the NHS check the residence test, and in particular; the claim for exemption (item 8.2.e) by reason of “taking up permanent residence in the United Kingdom.”?

    The Statutory Instrument is a joke.
    Any legislation will similarly be a joke – but undoubtedly would provide work for the many lawyers now engaged on exploiting the taxpayer.

  • http://twitter.com/britmouse Britmouse

    Your explanation of the 2008 recession is almost as cliched as Cameron’s, John!

    The recession of 2008/9 was an aggregate demand crisis. It was mostly domestic – external (export) demand was increasing through most of 2008 even as domestic spending collapsed. Bad loans in the USA do not cause AD crises in the UK. The UK sailed through a “global recession” in the early 2000s without wavering because we had good macro policy.

    UK macro policy has been run by the Bank of England since 1997, and it was UK macro policy – inflation targeting – which failed us in 2008.


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