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Yep, yep, yep. That’s exactly why I called Robert a liar. But back to the issue of Labour bailing out RBS with our money and not prosecuting the bank directors. Strange that the Federal Reserve didn’t bail out Lehman Brothers. “Ah, folk tell me, but if we’d not bailed out the banks, things would have been even worse!” Says who? Some economists. Not orthodox economic theory — as so often, it’s economists not economics saying these things.So lots of economists, particularly of banks with a vested stake in what policy is adopted, told us that if we didn’t go with their preferred policy there would be immediate economic disaster. Does something about that sound familiar?Is there any situation we might point to where we didn’t go with what the conflict-of-interest doomsaying bank economists told us we had to do, so we can get a view on whether they might be right in such cases? Ah yes: we voted to leave the EU.One key implication of the performance of the economy since the Brexit vote seems to me to be that folk should abandon whatever residual credibility they were giving to the claims of bank-employed economists about how terrible it would have been if the banks hadn’t been bailed out in 2008 and 2009.Bailing out the banks has not been justified by subsequent events which showed that markets were significantly under-valuing them at the time. And subsequent events do not suggest we should have placed great faith in the claims of bank economists about how bad the economic effects of not bailing out those banks would have been.Here’s the key lesson: next time (and there will be a next time), listen to the lessons of economics, not the doom-saying of conflicted economists.”

Steve Taylor ● 20d

Greenspan was already a retired hasbeen and we all know about the controversy of ‘The Greenspan put’ “the claim that the government was justified in taking over RBS because of some market failure, and that its doing so would enhance economic efficiency, can be seen with the benefit of hindsight to be as bogus as it obviously was at the time.Another set of recent events that shines a light upon the bank bailouts has rather slipped under the radar. One of the other big claims about the bank bailouts was that they were necessary in order to avoid economic disaster. The chutzpah of the self-interest of that claim somehow passed most comment by at the time.From the mid-1970s to 1990s economists told us that when shipbuilders, car companies, steel works, coal mines and the like shut down, that was necessary for economic efficiency, even when it resulted in systemic damage to whole regions, with other connected firms and industries shutting down across large parts of the North-East, South Wales, Scotland and the Midlands and unemployment elevated for decades.In those cases, that was the market, and in the long-term the economy and society as a whole would benefit. Quite so – they were right then.But in 2008, it wasn’t folk with regional accents in dirty overalls and young people’s future employment hopes that would be affected, far away from the Metropolis. Instead, London bankers in suits and rich elderly depositors in failed banks were the ones who might lose money. Suddenly, the economists who — by a total coincidence — worked for the banks concerned, miraculously discovered that systemic risk was impossible for society to tolerate and allowing market forces to work would be an economic and social catastrophe.Well, as we know, this nakedly self-interested tale carried the day. Did bailing out the banks avoid a huge recession? No. In the UK we had the worst recession since the 1920s. In Spain and Greece unemployment went above 25 per cent and the West has seen its first sovereign default in generations. The bank bailouts failed that economic test.”

Steve Taylor ● 20d

Steve, you are either sadly mistaken or deliberately dishonest in your presentation of data. Where do you get your data for public debt? Total public sector net debt in 2010 was £1350bn, up from £768bn before the financial crisis. The financial crisis was not created by the Labour government, as you so dishonestly allege. It started as a result of the junk loans problem in the US, and was triggered by the collapse of Lehman Brothers. The sudden rise in UK indebtedness, which for most of the Labour government's time in office was well under control, was a direct result of the operation to bail out UK banks, as you ought, but appear not, to know. Under the Conservatives net debt rose inexorably, up to £1887.9bn in 2017, and in 2021 there was a big leap to £2044.1bn, with further leaps in 2022, 2023 and this year - largely attributable to Covid and the war in Ukraine. Basically Labour was keeping net debt well under control before the financial crisis, in marked contrast to the Conservatives, who had already allowed net debt to burgeon in the 10 years of their administration before the pandemic. If you look at net public debt as a percentage of GDP the Conservative record looks even worse (especially since reducing public debt as a percentage of GDP was the avowed (but clearly dishonest) aim of austerity. In 1997 net public debt was 37.4% of GDP. Labour kept it below this level for all the period through to 2007. It was only in 2008 that it rose to 47.9%, then to 61% in 2009 and 70.3% in 2010. However, when the financial crisis was by now well overcome, it continued to rise steeply under the Conservative government, to 98.7%, before the effects of the pandemic were felt. Clearly the pandemic and the war contributed to the enormous increase in public debt from 2020 on, but it is impossible to ignore the Conservatives' inability to contain it in the preceding 10 years. The idea that the Tories had to "clean up the mess" made by Labour is a travesty of the truth.No more of your dishonest claims, please! If you want to question the data, it's all available from the ONS. See: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/timeseries/hf6x/pusf

Robert Fish ● 22d