Alistair Darling told the BBC that compared with Thatcher’s cuts…
“They will be deeper and tougher – where we make the precise comparison I think is secondary to an acknowledgement that these reductions will be tough.”
The billions lost by Brown’s decision to sell Britain’s gold reserves are mounting as gold prices have more than quadrupled since that debacle. He has the reverse Midas touch when it comes to market timing. This chart shows what is known in the gold market as “Brown’s Bottom”:
Cameron brought it up on budget day, Labour spinners reckon it is ancient history, even though they constantly hark back further to Thatcher’s days.Guido thinks it is worth the Tories bringing up gold sales fiasco as emblematic of Brown’s bad decisions.
Gilt yields, Credit Default Swap rates, inflation projections, Public Sector Borrowing Requirements and Quantitative Easing are incredibly important for an understanding of the economy, but they are unfortunately almost incomprehensible to the general public.
Selling off the Bank of England’s gold reserves is easy to understand, it was an act of monumental stupidity and it was executed incredibly badly (Brown tipped the market off to his future intentions). Anybody who watches TV at the moment is bombarded with adverts offering to buy people’s gold (cheap), Dale Winton is telling viewers day and night that gold is up, the demographic that this is aimed at are C1s and D1s. These voters might not be interested in the finer points of monetary policy, but they all know one thing for sure, it was a catastrophically expensive economic error to sell the Bank of England’s gold reserves. Driving home that simple message graphically will undermine Brown’s claims to making the right judgements. Whenever he says that he should be asked Was it the right judgement to sell gold at the bottom? In the past he has retorted that he bought euros, that has had very little return over above what the Bank of England could have got from leasing gold out to short sellers and nothing like the 300% return from holding gold over the same period. It is easy to understand that selling gold was Brown’s £7 billion misjudgement…
Gordon Brown claims that because UK debt levels are lower than other European countries he can run Greek-style deficits. This ignores all the debts that the taxpayer is on the hook for even if they are off the books. Local government pensions are just one example: Bloomberg is reporting that English local councils’ pension plans are underfunded by £65 billion – all off the books making it look as if the UK has lower debts than it really has.
Andrew Clare, professor of asset management at Cass Business School in London, has published research today confirming widely held fears, “Pension provision is one of the most pressing issues of our time … Unless drastic reform takes place, the black hole in this scheme will have to be funded by the underlying sponsor: the British taxpayer.”
Guido asked Gordon Brown (video above) about this very point back in October 2008, his disingenuous monotone answer is here. The national debt figures have been fiddled to also ignore the billions in PFI deals that are off the books but for which the taxpayer is on the hook. Not very credible to claim we have low national debt is it?
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