Well, what do you know? Northern Rock, the first British lender to go completely pear-shaped and take a massive bail-out from the taxpayer, continued to make ‘risky’ loans after it was bailed out.
Yes, and so what? The National Audit Office says that an underprepared Treasury failed to properly assess risks, carry out its own due diligence or challenge overoptimistic business plans after nationalising the lender in February 2008.
Tory Edward Leigh, the chairman of Parliament’s public accounts select committee, is scathing about the Treasury’s failure to clamp down on the riskier loans.
In fact, everybody who should have noticed that something was wrong with a banking system that was more and more reliant on risky investments to deliver the massive returns that investors were demanding is now having a right old go at the government policy of trying to restart a burst bubble.
But, in a severely limited defence of the government, all of today’s critics were just as committed to the restart. Capitalism’s apologists couldn’t believe, at the start of the finance system’s collapse, that the merry-go-round was grinding to a halt, that the super-profits which the shareholders and speculators had been squeezing out of the system by trading on ever-riskier finance packages with the resulting ever-higher margins could ever end.
No-one comprehended, or wanted to admit, that capitalism had shot itself right in the foot.
But what else was Gordon Brown’s government to do? It was committed to the free market and the free market had, in its terms, delivered.
Growth had continued, profits had been pouring into the City, there had been enough cash about to keep paying working people just enough to keep them quiet, well, for most of the time.
And there was even sufficient surplus to prosecute the odd imperialist war and keep George W happy and onside. Tony Blair had managed to become a hero of the New American Century. Why couldn’t Gordon Brown get a slice of that action? Well, it was the economy, stupid. Capitalism ceased to trust itself.
The capitalists, whose fragile alliance is always based on self-interest, discovered that they really didn’t like or trust each other. And the whole operation went down the pan.
And what are we left with? Edward Leigh saying that Labour got it wrong and that the system would have been OK if only the government hadn’t trusted the banks which are the heart of their system.
Northern Rock, doing as it was told at the time and trying to continue a system which had failed, but to which there was no alternative, in the government’s limited view. The Lib Dems criticising, but only until their bluff was called. The Tories, attacking the new Labour policies that they have faithfully supported in Parliament.
And new Labour, which had put all its housing eggs into the owner-occupier basket but, at the same time, collaborated with bosses to keep wages rising at a slower rate than house prices.
To that end, they privatised social housing and demolished council building programmes to keep prices high enough to fund the housing association privateers.
What else could Mr Brown’s sell-out mates do?
Not a lot, really, unless they remembered and implemented the basic principle of a socialist economy – social provision for use, not for profit.
Mind you, that presumes that they knew it in the first place, and that is the most doubtful thing of all.
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