fantasycouriers
Black Monday 2008 and the events thereafter, including the effective Nationalisation of 3 major banks today, brings the 1987 Black Monday back into forefront of everyone’s mind.
Undoubtedly Alistair Darling’s bleak phrophesies of the beginning of Septembers are fulfilling themselves, and we truly are facing some of the worse economic conditions of modern history. And although Governments, Chancellors, Economists and Policy Makers are currently busy trying to head off the worsening conditions, attention will soon shortly turn to recovery, and how we can kick start the economy, and the financial systems back to life.
In the late 1980’s Nigel Lawson took some very controversial measures which many believe we are now paying the final price for. These included a slashing of the top rate of income tax, and reduction of the interest rates (yes, you youngsters, the government used to be able to set interest rates itself) to encourage a spending boom. These forcibly, perhaps unnaturally, low interest rates are credited with the creation of that monster the housing market boom.
And out of these circumstances was created Maggie’s most famous creation – the Yuppie! Greed is good, filofaxes, shoulder pads, sharp suits and Macintosh’s. The young Urban Professional, frequently found guzzling the Beaujolais, and saying “OK, Yah” loudly into their brand new brick sized mobile phone.
These yuppies helped to spend the UK out of the recession, and during 1988 and 1989 UK growth was at 5% pa, twice the long term average rate.
So, do we need the yuppies back? Is there room for the Yuppie mentality which is based on greed and self, particularly in a world that is now concerned about the environment, long term energy solutions and is supposedly a more caring, sharing place than the UK of the late 1980s.
We also have a very different political thinking in place. In the 1980’s and early 1990’s Thatcher and Lawson were busy telling us that the Free Market was the only way, and that state involvement and ownership only distorted markets and interfered with pricing. But since then we’ve seen that British Rail wasn’t that bad after all, and that running fundamental organisations such as the Water Utilities and the Rail Transport Network with the sole motivation of profit, isn’t such a “win,win” situation for the rest of us.
The Labour government has a strong ethos of social responsibilty. How they pursue it, and how successful they are at achieving it, is a matter for everybody’s own individual opinion. However we cannot doubt that it is core to the policies and decisions made by them.
In the early 1990’s the Midland bank was one of the first UK banks (in modern history) to verge on bankruptcy. But instead of stepping in and protecting the millions of ordinary people that had savings and mortgages, the Thatcher government left it to the markets, and HSBC picked up the midland bank for a song. No more the listening bank.
The 1990’s also saw hundreds of small banks & building societies swallowed up under the label of “de-mutalisation”. Perhaps now we can interpret that term slightly differently – taking the benefits away from the members and giving them away to the shareholders.
The crash of BCCI saw a lot of UK organisations loose a lot of money. Not householders, but local councils, charities and larger companies. The UK government did not act, but instead left it to the companies and the banking and market regulators to sort it out. Laissez Faire – let it be – the free market catchphrase.
Contrast this with the current headlines we are reading this week;
- UK to sue Iceland
- Government takes stakes in 3 UK banks
- Gordon Brown leads way through financial crises
- even “Gordon Brown Superhero”
So who will be the winner? Who has got it right? Is it best for Governments to get involved aka Brown, or sit back in the Style of Thatcher and just let it all run its course. Unfortunately there is no quick and easy answer to that, infact we may now, 20 years on, be finally assessing the impact of Maggie’s decision to Let it Be.
Fantasy Couriers 