Its stuff like this that gets me. The British Government at the time were just like every other government in the western world. We were having good times, everything looked rosy, the future was bright. Borrowing money wasn't a problem because it was readily available, created a higher standard of living and nobody, absolutely nobody, was saying don't do it.
That's not true.
And of course there's quite a difference between borrowing money to invest for the future and borrowing money to pay day-to-day bills.
Not only did the Labour government borrow money to pay those day-to-day bills they also had to hide borrowing off balance sheet to avoid breaking their own borrowing rules (and they had to write those rules twice!).
It's blatantly obvious that, if you have to borrow money during a period of record growth and record income i.e. a huge structural deficit, then it is
inevitable that there will be huge problems when the economy slows down.
There was plenty of discussion about the Labour approach when the Chancellor was forced to repeatedly increase borrowing forecasts.
The Tories admitted that you could get a sheet of paper between the differences in 'left' and 'right' policies. The banks were demanding less regulation, weren't saying anything about too much borrowing but were making huge amounts of money.
As discussed in other threads, when in opposition you don't get very far by suggesting that you will spend less.
Were the banks asking for their regulator to be removed and replaced with a different regulator without sufficient experience to monitor the sector and understand the build up of risk???
If GB and TB had put the brakes on borrowing, then the Tories would have been on them like lions on a zebra in the veldt. "No problems borrowing money, why put the brakes on the economy? Why should the UK not benefit while the rest of the World does?" All that type of stuff.
You are just surmising.
Regardless, those in charge should do the best for the long-term health of the economy, not what makes them popular in the short term.
Suggesting that a different government would not have done things differently, is hardly a strong defence for the government in power at the time.
But now, because we did what everyone thought was acceptable, because we did what everyone else was doing, because we did what all the experts told us was the right thing to do and all sides agree, now it is apparently a stick to beat GB with. No it isn't. You have to accept that if he hadn't have done it, the Tories would.
You are stating a consensus that wasn't there - other countries weren't running structural deficits to the same extent we were.
Further they weren't also hiding tens / hundred of billions of pounds of debt off balance sheet.
Anyway, whatever spin some people try and put on it, selling the gold was not a good thing, nor a bad thing. It was sold, the price was reasonable, it could have been a little better but for the bloody banks and the money was useful. It wasn't GBs nemesis, it was just (with hindsight) unfortunate timing.
By telling the market what was going to happen that made sure the price
wasn't reasonable.
And the reserves are there for good reason - it is not the Chancellor's job to try and make strategic investment decisions on commodity prices!
In your desire to blame everything on the banks, you fail to acknowledge the points I raised previously that the claims doesn't really stack up (or at least there are significant questions still to be asked):
- What about the counterparties on the other side of the trades (which would have included other banks)?
- Why was the Fed not doing this to help a US bank?