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Global Recession Emerged From US, Brown to Tell Congress
PM pinpoints poor regulation and sub-prime crisis in America as being at the root of economic crisis
Gordon Brown will reject the calls of cabinet colleagues to accept responsibility for the economic crisis when he makes a landmark speech to the US Congress tomorrow.
A statue of George Washington stands in the snow in front of the New York Stock Exchange. A pall of economic gloom hung over President Barack Obama's talks with Prime Minister Gordon Brown, who came armed with a plan for huge reforms of the reeling global finance system. (AFP/Getty Images/Mario Tama) In the speech, the fifth by a serving British
prime minister to both houses on Capitol Hill, Brown is in no mood to
admit that the British government bears any responsibility for the
crisis, insisting it is a banking failure caused by lack of regulation
in the US and the rise of sub-prime mortgages.
In an interview in the Daily Telegraph today, the chancellor, Alistair Darling, acknowledged there were "a lot of lessons" to be learnt from a "culture" of limited regulation that encouraged bankers to take risks. Ed Balls, the schools secretary and another close ally of Brown, also admitted "it is clear we were nowhere near tough enough". The comments chime with criticism by Lord Turner, chairman of the Financial Services Authority.
But Brown insists this is not a typical recession caused by a government allowing inflation to rear out of control, and is instead the product of the failure of an international regulatory system to stay abreast of globalisation.
In an interview with National Public Radio this morning, Brown said the global banking collapse needed a global solution. He called for the same standards in banking "of remuneration, accountability, transparency and disclosure all round the world", saying it would lead to a restoration of confidence in banking.
Brown will today hold nearly two hours of talks with Barack Obama at the White House, and take a few questions from reporters. But he is not getting the full-scale press conference with the new president that had been expected by Downing Street. The decision was interpreted as a "snub" in some quarters of the British media, where it was noted that the president was due to find time for a meeting with the Boy Scouts of America this afternoon.
The prime minister's officials played down the significance of the decision, which has taken some of the lustre off his coup in becoming the first European leader invited to Washington for talks with Obama since his inauguration in January.
However, Obama's team pointed out that the busy president did not hold a press conference after meeting the Japanese prime minister, Taro Aso, last week.
A Downing Street spokeswoman said this morning: "We always said that a media event was planned and that's what will happen. The White House will confirm details in the course of the day."
Brown will attend around 45 minutes of talks in the Oval Office followed by a working lunch with the president and his officials.
In his radio interview Brown declined to endorse Obama administration projections that an economic recovery would start strongly next year. "The level of international cooperation achieved in the next few weeks may dictate how quickly we come out of this downturn," he said.
"We are about to put in perhaps the biggest fiscal stimulus the world has ever seen ... and the biggest cut in interest rates the world has probably ever seen. If we can follow that up with greater international cooperation that can make a big difference to our chances of recovery quickly."
ABrown sidestepped questions on whether he had allowed too much personal debt to pile up in the UK.
On Afghanistan, he said the war had changed in two respects: the Taliban were now operating over the Afghan border in Pakistan and the coalition forces were being attacked in a guerrilla campaign using roadside devices. He said there were as many as 2,000 terrorists who used to be in Afghanistan operating in Pakistan, "so we cannot solve the problem without looking at what is happening in Pakistan".
He said Britain had already increased its troop levels, implying there was no need for a further British increase beyond the 8,200 troops operating in Afghanistan already. He also called for a stronger central government in Afghanistan and said he was convinced that the Pakistani government was determined to root out terrorism.
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6 Comments so far
Show AllWhy is the solution to problems caused by "Globalization" and "One size fits all" rules, more Globalization?
The Countries banking systems that escaped this crisis are the ones that for the most part were "closed" and protected from the "Global System". Where they did suffer it was where they participated in that Global system.
What Mr Brown suggests is some International body developing banking rules and standards for the entire worlds banking system.
I can not see how this is progress. This body will still be co-opted by the Financial Elite who will seek to exploit such a system and Individual Countries will see their hands tied by a body that does not have the best interests of each jurisdiction in mind.
Think of it of surrendering all municipal and or State power to the Federal Government.
How is this a good thing? Would it not open the entire system to an even larger disaster?
1) GORDON BROWN is correct of course. the global recession is the direct product of US economic shenanigans. in fact...if brown was more forthcoming...
2) it is the LONG-due product of capitalism which BOTH the USA and ENGLAND have been the absolute masters at "inventing"...
3) however -- the present accelerated phase IS a product of the USA..with or without england's complicity in the past . sooner or later the USA -- with or withouth Thatcher's globalization, privatize everything under the sun, deregulate everything, "there is no alternative to capitalism" -- which the british soon enough learned to CURB in their domestic economyc , the USA , in its essential nature would eventually STILL have arrived at producing its "product" .
I'm going to beat this dead horse until it gets up and gallops---it wasn't "deregulation" that caused this financial meltdown, it was DECRIMINALIZATION.
Glass-Steagall and other Depression-era reforms made certain banking practices illegal, based on painful experience. Bill Clinton's erstwhile advisors (and now Obama's) Lawrence Summers and Robert Rubin led him to repeal these laws, which had protected us for some 60 years.
And now it's not chickens coming home to roost, but carrion crows.
Not to excuse the US's contribution to the global meltdown, but the London boys in their financial district have blood on their hands. They ran a casino just like Wall Street did. People in glass houses....
Perhaps newly selected UBS Chairman, Kaspar Villiger, (a former Swiss finance minister) will not only help bring accuracy and credibility to their financial operations, but also their marketing.
For example, with believable candor in their TV ad campaign:
"UBS ------ You and Us.
Helping you extract looted funds safely in our globalized world.
UBS helps."
It seems entirely clear to me that the most substantial part of the instability and brewing social unrest in Europe, Japan, and elsewhere is associated with the European and Japanese ruling-elite's decision to cast their lot (and operating assumptions) in with the global ruling-elite 'corporate financial Empire' nominally headquartered in the US and utilizing what might be called the American/Wall Street 'consensus model' for running a political-economic looting empire under the guise of democracy.
While the US GINI index of income inequality (at 0.49 and rising fast) has shot up over the past several decades, and is now on a par only with South American 'banana republics', African dictatorships, and Middle East plutocratic oil monarchies, Europe and particularly Japan (although still reasonable in GINI indexes between 0.25 and 0.32) have also increased markedly from their historically low and egalitarian levels.
However, there has been no talk in the US media about the rest of the world complaining, grumbling, and even taking civil disobedience ‘action’ about this entire global financial mess being proximately caused by the US ‘banksters’, financial Ponzi-artists, and hedge fund whores selling those CDOs, massive CDSs (credit default swaps, like AIG) and other toxic 'un-securitized' junk instruments. Nor has there been generalized and wholesale 'blowback' yet by European and Japanese populations constrained under the boot of the US financial empire with it brutality of higher inequality rates.
I would guess that well before people are starving in Europe, Japan, China, and the Middle East that many foreign governments will be telling their distraught citizens 'where the bear shits' ---- and that the particular bear most responsible for shitting-up the world is the US leading us all toward the cliff and abyss of unsustainable empire, high income inequality rates, and now economic collapse.
Get ready for world condemnation of the US, and ‘blow-back’, even from our friends in Europe and Japan --- and deservedly so!