Saturday, 11 October 2008

Death Spiral

Ministers can throw our cash at crisis, but can't stop crisis

Last week we nearly saw a run on the entire UK banking system - an event only forestalled by Alistair Darling's rescue package on Wednesday. The chancellor is having a good war, so far. His unflappable calm - which I saw at close hand at a reception at Downing Street last week at the height of the crisis - is a real asset to the government. He must have known about the bank run as he nibbled canap├ęs with hyper-ventilating hacks. But he looked as if he'd just dropped in on his way to the opera. Not that he appeared complacent. No-one can accuse Darling of failing to appreciate the gravity of the situation because of that Guardian interview two months ago when he warned us this could be the worst financial crisis in 60 years. He was not wrong.

It's a sobering thought, but Alistair Darling will now forever be associated with one of the greatest economic catastrophes of modern times. His face will adorn every website devoted to the Great Crash of 2008. That curry he bought to feed his team on the night of the rescue has already become part of history as the "balti bail-out". Economists and historians will now assess his every move and word. Remember hapless Tory chancellor, Norman Lamont, outside the Treasury on Black Wednesday 1992 standing next to a dumpster and trying to sound calm while his hair was blowing in what seemed like a financial hurricane. Further back, Philip Snowden had the misfortune to be Labour's chancellor during the 1929 crash and Great Depression, and is hardly a congenial role model for Darling. Snowden imposed a fiscal crackdown and split the government, and the Labour Party, with his call to cut unemployment benefit. He never recovered. Let's just not go there.

... so benefit cuts on the horizon. Interesting to see that one play out in the uk.

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