'Labour ignored Bank of England warnings, caused recession & cost 1m jobs'

[Tony]

The man in charge of the Bank of England says that the Labour Government ignored their warnings, the eventual bank bailout came too late, caused the recession, and the loss of a million jobs.

 

That's a bit of a bombshell to drop the day before an election.

 

 

Labour lost a million jobs, says Bank chief

 

More than a million people may have lost their jobs unnecessarily because the Labour Government failed to act on warnings from the Bank of England which could have prevented the recession, Sir Mervyn King claims.

 

The Bank governor claimed that action by Gordon Brown’s administration had been “too late” to prevent the banking crisis causing a recession, which led to the sharp increase in unemployment.

 

Sir Mervyn said that he argued “from the beginning of 2008” that British banks required more than £100 billion of extra funding to avert a crisis.

Mr Brown and other senior ministers failed to bail out the banks until October 2008, which was “too late to prevent the financial crisis from spilling over into the world economy”, he claimed.

 

He said that the delay in intervening, and the subsequent recession led to unemployment in Britain rising by over a million people.

 

http://www.telegraph.co.uk/finance/financialcrisis/9242161/Labour-lost-a-million-jobs-says-Bank-chief.html

[PeteMorris]

I saw a short snippet of his speech this morning on TV, and pretty much, the opening line Mr King said was "With the benefit of hindsight" We can all be clever with hindsight!

[Tony]

You might say that of the previous government, but only if you ignore the fact that the Bank of England was telling the Government what needed doing 10 months before they got around to doing it... when it was too late.

 

Hindsight doesn't wash.

[taxman]

Or alternatively

 

"David Blanchflower, a former member of the Bank of England's Monetary Policy Committee, accused Sir Mervyn of being "disingenuous".

 

"If Mervyn King had thought more regulation was important he could've done something about it. And because he didn't he must take responsibility for the fact the Bank of England missed the biggest financial crisis in a century," he told BBC Radio 5 live."

[PeteMorris]

You might say that of the previous government, but only if you ignore the fact that the Bank of England was telling the Government what needed doing 10 months before they got around to doing it... when it was too late.

 

Hindsight doesn't wash.

 

Exactly: Hindsight doesn't wash. As soon as I heard those words this morning I sort of mentally switched off from anything else he said. It was all irrelevant in my view.

[Tony]

taxman, King was talking about putting money into the banks because they were going to fail, not legislation after the event.

 

And as much as I am an admirer of much of Blanchflower's work, the Government are responsible for legislation and it's elimination in 1997, not the Bank of England.

[Grandad.Malky]

A bit of last minute campaigning its too late for the Lib / Dems they are about to get their comeuppance …….. I hope they have enjoyed their two minutes of fame because it’s all over …….. never mind I am sure the Tories will welcome Clegg with open arms when his own party finally get some balls and show him the door.

[taxman]

taxman, King was talking about putting money into the banks because they were going to fail, not legislation after the event.

 

And as much as I am an admirer of much of Blanchflower's work, the Government are responsible for legislation and it's elimination in 1997, not the Bank of England.

 

So it's the elimination of regulations that you see as being the main problem not, as King and your thread title imply, a delay in bailing out the banks?

 

King is arguing that Labour should have bailed out the banks much earlier. I take it you disagree because I believe in the past you have claimed to have been against any such bank bailouts at all.

[Tony]

I believe that you brought up legislation, not me.

 

My opinion? I have argued that the bank businesses should have been allowed to go bust. King has an alternative view. Labour did neither and we know what happened there.

[Jim Graham]

Or alternatively

 

"David Blanchflower, a former member of the Bank of England's Monetary Policy Committee, accused Sir Mervyn of being "disingenuous".

 

"If Mervyn King had thought more regulation was important he could've done something about it. And because he didn't he must take responsibility for the fact the Bank of England missed the biggest financial crisis in a century," he told BBC Radio 5 live."

 

 

 

What is more significant is the bits he didn't talk about. He didn't mention the meetings with Brown and what he was being told to do as part of the government's policy on the economy. As King said in his speech. Deregulation of the bank did not mean they could do as they pleased. They still had to follow the government's economic plan and could only use the powers the government gave them. Blanchflower's sour grapes might go down well with the lefty BBC but the speech as a whole correctly lays the blame squarely on Brown's shoulders. And who was his bezzy mate at the Treasury giving him all that sage advice and brilliant economic wisdom? Oh yes, one Ed Balls. Still, Labour followers are very good at airbrushing out inconvenient facts.