Is it the fault of NuLabour or socialism?

[Mich the Tester]

Used properly it should have avoided the poo in the first place no?

Yep. Monetarism would have avoided the big pile of poo because the artificial expension of the money supply through the explosion of public, private and corporate debt would have been prevented; effectively banks were allowed, using credit derivatives, to 'print money' and fill one hole with another.

Keynesianism would have prevented the poopoo by making governments save for the hard times instead of running debts in periods od growth.

Some people seem to think that Monetarism and Keynesianism are somehow radically different. They aren't; they're basically two descriptions of economic common sense. That's the problem; a lack of common sense.

[EternalOptimist]

That's the problem; a lack of common sense.

combined with a large dollop of greed

[Foxy Moron]

Hang on

To me capitalism dictates...

A/ Markets should be allowed to control and self regulate themselves. the invisable hand, laisse faire, supply and demand. Let the market decide.

Socialism is more..

B/ The Government should control the Markets, and interviene where the markets fail


It's rather disingenuous to argue, the Tories would have opted for method B over A.

[Ruprect]

Hang on

To me capitalism dictates...

A/ Markets should be allowed to control and self regulate themselves. the invisable hand, laisse faire, supply and demand. Let the market decide.

Socialism is more..

B/ The Government should control the Markets, and interviene where the markets fail


It's rather disingenuous to argue, the Tories would have opted for method B over A.

Given the state that the banks got into I think it would have been (had they been in power) politically untenable to persist with a policy based on A when so many people's savings were at risk. That said, it is not guaranteed that preceeding policy decisions would have led to the same place.

[Foxy Moron]

I would like to think the Tories would have controlled the housing boom. but would they?

99% of the house owning populace thought it was great, what government would have slapped on the brakes?

[Ruprect]

I would like to think the Tories would have controlled the housing boom. but would they?

99% of the house owning populace thought it was great, what government would have slapped on the brakes?

$64000 question, however of course we'll never know now

[Mich the Tester]

I would like to think the Tories would have controlled the housing boom. but would they?

99% of the house owning populace thought it was great, what government would have slapped on the brakes?

Multiple Mortgage Tax Relief was abolished by the tories and they started the process of limiting Mortgage interest relief before El Gordo abolished what was left of it in 2000. The tories did it to try and prevent housing bubbles and stop giving middle class home owners an advantage over renters, who are often the poorer people. Gordon abolished it completely to try and fund huge public spending.

So, 'maybe' is the answer to your question.

[Solidec]

Given the state that the banks got into I think it would have been (had they been in power) politically untenable to persist with a policy based on A when so many people's savings were at risk. That said, it is not guaranteed that preceeding policy decisions would have led to the same place.

Would have been easy enough and a hell of a lot cheaper to guarantee 100% of bank deposits, let loads of banks fail, buy shares in those banks unaffected, eg (at the time) Lloyds and HSBC and even barclays) and let RBS, HBOS and NR fail.

Surviving banks would have been able to buy up mortgage books at firesale prices, meaning even if these "assets" deteriorated, as long as they were bought at mega discount, they would still be profitable.

It would drive home the point that irresponsible lending and casino gambling would not be blessed with govt guarantees!

Of course, Labour would never have done it, Scottish heartlands etc effected!

They would have then had so much MORE money for a PROPER fiscal stimulus, and support for manufacturing and other industry and small business in this country!

[Foxy Moron]

I think boom and bust is as natural as night follows day, human beings tend to overdo things, it's the emotional factor, it's not necessarily rational.

IMHO no government will ever control economic cycles, they just need to make sure the bust isn't a complete meltdown and try and curb over enthusiam in the good times e.g. creating dodgy finacial instruments without considering the potential and significant downside.

[Old Greg]

As a kind of socialist, I think these are interesting times. The Tory / Labour divide boils down to 2 capitalist parties with relatively minor differences in taxation and public spending. There's no socialism in either, as socialism is about ownership and control, which both parties have maintained should always be private and open to consolidation in the hands of a few.

The part-nationalisation of the banking system is not a socialist solution, but presents an opportunity. It's not a solution, as state ownership and control is not (in my view of socialism) a desirable outcome, but it is better than private ownership if it's part of a route towards democratic ownership.

So the opportunity is to move from state ownership to a different model of ownership. There are some existing models out there: workers' cooperatives, partnerships (like John Lewis), mutuals (owned by customers). I'd like to see (for those banks that are in trouble) perhaps a hybrid of worker and customer ownership / control, set up in a way that privatisation is impossible (without Act of Parliament, which will always trump everything). Politically, I think it might capture the zeitgeist and be a popular choice.

It doesn't make the world a paradise (but then, I've never bought into utopian socialism - or scientific socialism for that matter), but it makes steps in the right direction in terms of where power lies. It also does so in such a way as overcomes what I have always seen as the 2 problems with socialism: 1. How do you get power from those who have it without them getting the army and police to shoot you, and 2. Having achieved '1', how do you make sure that some all-powerful party doesn't set up its 'dicatatorship of the proletariat' and shoot you.

By the way, I don't think any of the above will happen, but it's nice to give a cheery wave to those once in a lifetime opprtunities that whizz past you before returning to business as usual.