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Gordon Brown slams Greek bailout – and warns Europe over austerity

February 22, 2012 2:38 pm

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In an article for the Washington Post entitled “Europe’s shortsighted response to a worsening fiscal reality“, Gordon Brown has hit out at German-led austerity in Europe, lambasting:

“policies that the whole world can see have already failed.”

In fact, Brown goes further still in tackling head on the central argument around austerity – that any failings that arise from austerity are because there isn’t enough austerity:

“the unfolding tragedy of a bankrupt Greece is only a symptom of an even more fundamental miscalculation: a wrong-headed conviction, widely held across Europe, that if austerity is failing, it is because there is not enough of it.”

His prognosis for Europe as a whole is bleak. As he discusses a global shift towards emerging economies, he warns European leaders that:

“What Europe is experiencing may prove to be a permanent and irrevocable loss of prosperity.”

You can read the full article here.

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  • derek

    I’ve always held the view that Gordon was more in tune than anyone else on the fiscal crisis. Austerity will throw up more problems than solutions and I envisage an Iron curtain being created throughout Europe. The more austerity imposed the more the security risk will develop. Former Eastern blocs will most probably become a focus for Russian intervention and the Germans would react with a re-armour programme.I find it shocking how anyone can believe that the measures being implemented on Greece will have anything other than a negative result.The whole focus of trying to protect Europe from protectionism has failed and austerity has driven us all to that protectionism nightmare. 

    • treborc

      That is plainly wrong Germany has already got one of the biggest armed forces and with France it even knocks spots off ours, it has no need to re-arm, but it has lost two major wars and the people are not interested in another loss.

      If Germany was to act within the EU by force I suspect the people would say enough, no more.

      The Italians different kettle of fish we will have to wait to see where they are going with a new leader.  The Greeks well not all the country disagrees with the governments cuts, the middle class and the rich all think as they do here, that if you cannot get a job it’s because your not trying enough Riots maybe civil war doubtful.

      Austerity started in 1997 in the EU/UK not 2008 with people on benefits, the problem was dear Gordon believed Banks would control them selves he believed the hype about allowing us to make it.

      Look today RBS makes a massive loss yet pays out 33 million for a massive loss in bonus payments,  money at the bottom has dried up, money at the top is flowing like water.
       

  • Rose

    What we are doing in Grece is a modern day Treaty of Versailles.

    • treborc

       yes and you know the Story of that, and the outcome.

      have to go my Asda superstore is on fire…..no joke.

      • girlguide

        Were you hoping for some free ready cooked chickens?

        • treborc

          No need the local charity gets us a box of charity food which is either out of date or has basically lost labels or gone a funny colour.

          hell of a life on welfare..

          • girlguide

            Well, we eat loads of out of date food that’s been reduced and we’ve never been ill cos of it.  Happy to eat yoghurts a month out of date.  This is my mum’s trick.  She goes to Waitrose just before it closes and hunts out the buy one get one free stuff.  She buys, eg, a bag of oranges that have been reduced to 10p,  gets the second bag that are still full price.  Puts the reduced item through first, and gets say £1.90 back.  Two bags of oranges and Waitrose give her £1.90!  Try it!

  • http://twitter.com/gonzozzz dave stone

    A very welcome blast of insightful coherence from Brown. This is something that Labour should address immediately:

    “Europe’s problems are not exclusively fiscal, as current policymakers argue, but stem also from a deep-seated and ongoing banking crisis and a long-term collapse in competitiveness.”  

    Today Liam Fox launched a credibility offensive with, among other proposals, a call for deregulation of the labour market. Cameron previously signaled something similar with his declared “war on health and safety culture.” These policy initiatives can be understood as a response to the long term collapse in competitiveness, mooted by Brown.

    Labour is going to have to respond and the sooner it gets its retaliation in the better. Let’s hope it doesn’t turn out to be a lilly-livered Surrender Tendency inspired tribute to Conservative Party policy.

    • ovaljason

      Dave.  Full disclosure.  Were you also a supporter of Foot and Kinnock?

      • http://twitter.com/gonzozzz dave stone

        ovaljason. Full disclosure. Gestapo?

        • ovaljason

          I take that as yes. No further analysis is required.  

          • treborc

             Did you support Blair and Thatcher, bet you did come on…..

          • http://twitter.com/gonzozzz dave stone

            If you want to pretend your guess-work is “analysis”, that’s up to you. But if you direct unexplained demands for information at me, then don’t expect a response.

            Perhaps you should consider  improving your manners.

  • SaucyJack11

    Glad to see Gordon hard at work as ever on behalf of his constituents.

    The man is a disgrace and should stand down if he cannot do the job he is paid to do.

    • treborc

       I tend to agree with you on some of it, but a disgrace come on bankers are a disgrace, Brown is well shy.

    • http://www.facebook.com/profile.php?id=1557475545 Jack Bonner

      you don’t need to be sat in the Commons everyday to represent your constituents well. Besides, Gordon won a massive majority in 2010, I think I’m correct in saying it was his biggest in all his years as an MP. I get the impression the people of Kirkcaldy and Cowdenbeath like him very much

      • treborc

         No true but now and again would be a benefit after all he can fly all over the world we are told making money for charity.

        I suspect we will see Lord Brown of somewhere for all his charity work.

        • John Ruddy

          I suspect not. He is not the sort of person who would take up such honours.

          • Hugh

             No, he’s never been one to put himself forward.

          • Winston_from_the_Ministry

            There was that one time he saved the world…

          • treborc

             Prescott said the same only weeks before guess what he took it, you would be surprised what people will do.

          • MarcusTankus

            Like Kinnock and Prescott you mean ?

    • John Ruddy

      Are you one of his constituents? I suspect not. Because if you were, you would know that the vast majority of the people of Kirkcaldy think he does a great job.

      Did you know that an SNP MSP has called for him to be give the Freedom of Fife in recognition of his outstanding public service?

      • SaucyJack11

        No, I don’t live in the UK anymore.

        However, if I were one of his constituents (adulating Labourites aside), I would want my MP to be representing me in Westminster, not “enjoying time with his family” in the constituency, or devoting himself to his “work that I’ve been doing internationally”.

        If he is spending his time “doing constituency work”, does that mean he is foregoing his second home allowance?

        Why would I be very surprised to discover he was?

  • Daniel Speight

    In 2008 Brown discovered Keynes. He showed real leadership skills as he flew round the world trying to get other countries onboard to avoid a depression. What he is now saying still makes sense. Osborne’s theories have turned out to be made of sand and now we are awaiting yet another u-turn from him.

    The shame for Labour was that he discovered it so late in life. Instead of following the Thatcher government’s economic policies he could have been re-regulating the City from the, now disastrous in hindsight, Big Bang deregulation.

    • charles.ward

      In 2008 Brown discovered Keynes.

      And there’s your problem.  You can’t be a Keynesian only in the bad times.  If you participate in a fiscal expansion in the good years, call it “borrowing to invest” if you like, then there is no money left to spend in the bad times.

      Gordon Brown’s “golden rule” of borrowing to invest didn’t work, how do we know?  Because he couldn’t keep to his own “Sustainable Investment Rule” that government borrowing should not exceed 40% of GDP throughout the whole economic cycle with the Labour Treasury’s own prediction of borrowing peaking at 79% of GDP.

      You can just about argue whether in the UK we have reached the point
      where increased borrowing is counter productive due to increased
      interest rates but you can’t argue about it in the case of Greece. 
      Greece simply can’t borrow at a reasonable rate of interest.  Austerity is the only option (even if Greece were to exit the Euro).

  • jaime taurosangastre candelas

    For the 11 years preceding the banking crisis, was Gordon Brown in a position to intelligently apply the full power of national regulation and fiscal policy to avert such an existential crisis?  Or did he instead spend his time devising and implementing partisan policies that massively improved short term prospects at the expense of added risk to long term stability?  Four examples spring to mind:

    Loosening even further regulation of the financial sector.

    Taking a lot of real debt off-balance sheet and pretending it is la-la-land PFI and not real debt.

    Spending like an alcoholic with a financial windfall in his favourite bar.

    Perverting industrial policy to favour dying industries in Labour heartlands (such as ship building, to the extent it would be more expensive to cancel a Navy ship building contract for aircraft carriers than to build the ships that we have no aircraft to fly from).  If the same cost had been applied to regeneration in those areas, we’d have more vibrant and sustainable post-industrial areas.

    Economic analysis and advice from Gordon Brown is about as useful as a cancerous growth.  I wish he would shut up and disappear permanently from public life.

    • John Ruddy

      Hindsight is such a wonderful thing.

      • jaime taurosangastre candelas

        I’ve always been in favour of balanced budgets and prudence.  For a short while after 1997, so did Gordon, but then he had a polar reversal in thinking.

        Don’t confuse this with support for any other party’s policies.  They are all as bad as each other, spending our money that we don’t have and our children cannot support in pursuit of a 2% swing in next week’s opinion poll.

    • http://twitter.com/gonzozzz dave stone

      But as is pointed out by Hilary Benn over on the Progress website* Brown wasn’t the only one to get it wrong. So did: 

      “the French, the Germans, the Americans and George Osborne; remember when he criticised us for being too tough on them [the banks]? Prior to the economic meltdown, we had reduced the debt we inherited from John Major’s government and the Tories cannot accuse us now of overspending when at the time they had promised to match our spending pound for pound.”

      The question now is how to get things right in the future. Liam Fox’s deregulation of the labour market is one proposal. But how much deregulation will be required if we are to avoid the scenerio sketched by Brown? How low will wages have to go, how inhuman will working conditions need to be?
      The slave-labour option has been in the news this week – is this the thin end of the wedge?

      Brown suggests “a coordinated global growth plan — a modern and international equivalent of the Marshall Plan” but who of the present players has the capability to devise such a plan? Certainly not Osborne. Perhaps we’ll have to wait for President Hollande to form an alliance with President Obama…

      *http://www.progressonline.org.uk/2012/02/15/handing-power-to-communities/

      • jaime taurosangastre candelas

        Of course many politicians got it wrong.  It is because they all believe that deficit spending is acceptable.  They only differ in degree.

        There are a range of solutions to avoiding future crises.  They may be by raising taxes to cover expenditure, or reducing spending to match income.  That is politics.  A consensus to relentlessly spend more than we raise  - in good times and in bad times – is insanity, and all parties are guilty of it.

        I am deeply suspicious of any politician talking about a “coordinated global growth plan”, because politicians do not control markets.  It is all hot air, but the price of the hot air is horrible and measured in failure that impacts upon people.

        • Chris Cook

          @google-285908a073bfe41d26f162a0d9780abd:disqus 

          There is nothing whatever wrong with deficits. Problems occur when they are used to finance consumption, rather than creating productive people and productive assets – and by ‘productive’ I do not restrict the meaning to ‘productive of profit’.

          You should get your head around Modern Monetary Theory

          http://ftalphaville.ft.com/blog/2012/02/22/890211/yes-virginia-there-really-is-modern-monetary-theory/ 

          which is really going mainstream

          http://ftalphaville.ft.com/blog/2012/02/22/892201/why-mmt-is-like-an-autostereogram/ 

          since all the conventional economics based upon an understanding of ‘money as debt’ are demonstrably useless.

          • jaime taurosangastre candelas

            Thank you Chris,

            I have got 2 problems with deficits in practice, not in principle.  

            Firstly, there are too many populist reasons for a politician to declare that this is a special occasion when deficit spending is good.  Since 1945, there have been far more years of deficit spending than there have been of recession.  It is like a short term heroin rush, but the long term damage is real.  That is a non-partisan point.

            Secondly, what is spent in creating a deficit is very often wasteful (i.e. failing your test of creating productive people and assets).  The last Labour Government is particularly guilty of that.

            On your wider thesis (“money as debt”), you may have an intellectual point, but again in practice to overturn the system there would need to be a fundamental change in how we all think.  That may be possible, but I do not underestimate the scale of that task.  However, I believe that the theories put forward would not survive in the real world in which individuals’ control of their owned assets is more influential than central policy.

            In short, the market – composed of billions of people with their own selfish agendas – is more powerful than a wonk sitting in the Treasury.  I am one of those people. I don’t believe in the capacity (or even the motivation) of some faceless bureaucrat, banker, insurance or pensions sales advisor, far less Gordon Brown or George Osborne to look after my interests, so I choose not to play in the centrally directed game. 

          • Hugh

            Strangely the conclusions of the “deficits are no problem”/”the government doesn’t spend tax” school of economics never seems to be for the government to sod off and stop taxing us. I think it would be a surefire vote winnner so I’m confused why it’s not implemented.

          • Chris Cook

            @google-285908a073bfe41d26f162a0d9780abd:disqus 

            When have I ever advocated public allocation of credit and investment?

            As opposed to public origination of credit which is not taxed by bank shareholders and management, but is professionally managed by service providers with a stake in the outcome, under the accountable supervision of a monetary authority.

  • AnotherOldBoy

    Gordon who?

  • geedee0520

    Hmm.

    Maybe the real problem is that Germany won’t give money to Greece as richer parts of the UK monetary union do to poorer parts. Read this by John Redwood (yes, I know) and it makes it clear.

    http://johnredwoodsdiary.com/2012/02/17/the-uk-transfer-union/

    A bit much for Gordon I know, but a level of understanding of how Germany has in practice devalued and made fortunes from a weaker Euro than the DeutschMark would be, might help.

    Also, consider California – virtually bankrupt but you don’t see the IMF putting a bailout together.

  • uglyfatbloke

    He’s really not that popular in Kirkcaldy and Cowdenbeath. His majority was huge, but that had a great deal to to with incumbency and the perceived power of the PM, though actually it has n’t done his constituents much good. The equivalent Holyrood constituency went to the gnats in 2011 and nobody locally (it’s where my family live and I spend a lot of time there) was even remotely surprised. GB ‘ll get re-elected in 2015 – though it would be no great shock if he went to the Lords. In Glenrothes (next door) the gnats will make a gain because the MP is simply a waste of space in the ‘old buddies’ tradition. Better candidates must be found if the gnats are to be prevented from making advances.

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