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Nobel economist praises quick action by Gordon Brown
Central America News.Net
Wednesday 15th October, 2008 (David Ellery/Tom Rivers (VOA))
A notable endorsement for the handling of the economic meltdown has come from Paul Krugman, who won the 2008 Nobel Prize for economics.
Mr Krugman has praised British Prime Minister Gordon Brown as the man who launched the most timely action against the ongoing financial turmoil.
In an article titled "Gordon does Good", published in the New York Times, the Princeton University scholar lavished praise on Brown and Alistair Darling, the UK Chancellor of the Exchequer, who he said defined the character of the worldwide rescue effort, while other nations simply played catch-up.
He praised Brown's policy of equity injection into the market, which is the solution to the recent financial crunch advocated by many economists, and even favoured privately by US Federal Reserve chairman Ben Bernanke.
Paul Krugman wrote in his article: “The British government went straight to the heart of the problem and moved to address it with stunning speed. Brown's equity injections into British banks, backed up by guarantees on bank debt, should get lending among banks running again.”
He went on to say: “We still don't know whether these moves will work. But policy is, finally, being driven by a clear view of what needs to be done. Which raises the question, why did that clear view have to come from London rather than Washington?”
The British prime minister poured an astonishing 37-billion pounds of taxpayers money into a bail-out scheme, buying stakes in Royal Bank of Scotland, Lloyds TSB and Halifax/Bank of Scotland.
Winning the argument against each country trying to take care of its own financial crisis independently, British Prime Minister Gordon Brown's coordinated-action approach appears to have won over his colleagues in Europe. Others around the world are watching as well.
His financial plan has been a guidepost for U.S. officials implementing the $700-billion bank bailout. On Monday, German Chancellor Angela Merkel announced a plan that closely resembles the British model.
Mr. Brown, who just a month ago was facing calls from within his own ruling Labor party to step aside before the next general election, has risen to the occasion in facing the global financial meltdown head on.
His decade as British Treasury Secretary appears to have prepared him for this moment. In Brussels for the European summit to hammer out an agreement on a common plan, Mr. Brown is leading the call to bring liquidity back into the system, to recapitalize the banks to strengthen them for the future, and to get banks to start lending money once again for things like mortgages and small business operations.
"Today is an important moment for the European Union, all 27 countries meeting together," Mr. Brown said. "I hope we will find agreement also from the whole of Europe on what needs to be done. That all countries within the European Union will feel part of the program that is necessary to stabilize the financial system and then to move the economy of Europe forward."
In addition to these initial goals, Mr. Brown says much stronger oversight is required if these financial problems are not to be repeated.
"Stage two is to make sure that the problems that developed in the financial system, problems that we know started from America, that these problems do not recur again and we give people the confidence that we have taken the action that is necessary to root out the irresponsibilities and excesses in the system, and to make sure that the rules of the system are such that we have proper disclosure and proper transparency, that we have supervision in areas where supervision was previously not required, but we now know is necessary," Mr. Brown said.
What Brown calls an early warning system needs to be established to identify financial problems before they get out of hand and he says better international coordination in needed to handle crises that may arise in the future.
Compared to just a month ago, the prime minister today looks like a man brimming with new found self-confidence. And while this will undoubtedly help him in the polls, more pain in Britain's domestic economy in the form of rising unemployment, increasing national debt, and a higher cost of living may temper the political gains he has made in leading Britain and other nations through these difficult economic times.
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shteeeve
10-14-08, 08:26 PM |
Nobel economist praises quick action by Gordon Brown
Go Brownie!
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