Chancers In Charge

What is incredible in the current economic crisis is how many of the people who made decisions that led countries that are feeling the worst effects of the downturn, such as America, Britain and Ireland, are being looked to for solutions. The Alan Greenspan spawned approach of no regulation/intervention at all until something too big to fail must be saved is the worst possible economic model of all. If bailouts are in the model then so must regulation to prevent ridiculous risk taking.

In early 1998 when Brooksley E. Born, the head of Commodity Futures Trading Commission (the federal agency that regulates options and futures trading), began putting forward a proposal for derivatives regulation she was firmly knocked back by Alan Greenspan, Robert Rubin and his protege Laurence Summers. Unbelievably they claimed that her attempts at regulation would actually lead to a financial crisis:

In early 1998, Mr. Rubin’s deputy, Lawrence H. Summers, called Ms. Born and chastised her for taking steps he said would lead to a financial crisis, according to Mr. Greenberger. Mr. Summers said he could not recall the conversation but agreed with Mr. Greenspan and Mr. Rubin that Ms. Born’s proposal was “highly problematic.”

As the derivative market is being blamed for the huge build up in fictious wealth and risk that set the foundation for the crash one must wonder why Summers and Rubin are advisors to Obama. We should thank our lucky stars that Alan Greenspan has retired although unfortunately we are left with his equally clueless pupil Bernanke.

One of the biggest chancers of them all though has to be Gordon Brown who has now found a crisis to cover up his floundering. He is leveraging on his love of crisis and dourness to distract the British people from the reality that he was the one who actually got them into the mess in the first place. As Britain's economy and banking sector began to crash in 2008 we have to wonder at his economic stewardship as chancellor of the exchequer in the preceding decade (2 May 1997 – 27 June 2007). This is all the more laughable when he prided himself from being the chancellor of the party that would take Britain out of the boom bust cycle as he boasted at the Labour party conference in 2000.

Breaking from the chronic and flawed Conservative short-termism and implementing Labour values; planning for the long-term; economic responsibility; building from strong foundations. Determined to protect hard working families from a return to boom and bust.

As invented paper assets are being blamed for this whole mess his understanding of banking has to be questioned with his sell off of gold in 1999. He cost the Britain at least £2 billion then when he sold off more than half of the country's gold reserves at stagnated price levels.

We have to assume that these people did not see any of this coming and just lacked any understanding of economics at a level required for making national and international decisions. As long as they remain in their positions the prospects of a quick resolution to the financial crisis are zero.