And another thing…

I expect he’ll be in good company, working with somebody with the ‘experience’ of creating the ineffective tripartite regulation, hiding billions of debts off the balance sheet, and being so decisive so as to delay the decision on Northern Rock only for several months.

Yes, always worth mentioning that Labour under Brown hid over £200Bn in off balance-sheet PFI debts and that Darling was responsible for single-handedly killing the mortgage market by kite-flying a policy to freeze stamp duty over a month before formally announcing it.

Tom,

A couple of quick questions: what, precisely, would the Shadow Chancellor have done differently in 1992 if he had been in office? Is it not the case that the events of Black Wednesday would have happened regardless of whether the Conservative Party or the Labour Party were then in office ? If so, is it a little disingenuous of you to mock Mr Cameron in this way?

Don’t be such a twunt, young Tom. It demeans you. Either make a serious contribution or don’t bother. (Oh, I forgot! It’s your blog and you can say want you want. Yes Minister.)

The decision to participate in the ERM was a way of raising the Conservative governments economic credibility, reducing inflation and interest rates whilst at the same time paying a small price in terms of unemployment. Participating in the ERM had been advantageous in the run up to the 1992 election, but with the election won, the political utility of participation in the ERM was diminished.

The Cons were not committed to the ERM and the speculators sensed this weakness. The Cons wouldn’t defend the currency with high interest rates for a sustained period. The Cons raised interest rates on BW but they wouldn’t devalue (you have to do both) because the cost for the government was too high.

They could have done three things (in the midst of BW), do as the Swedes did significantly raise interest rates. Take the UK out of the ERM for a short period (rejected because they would have to go back in with the pound devalued) or third leave altogether. They did the third.

Lamont in many ways carried the can, the government could have done other things (as above), it had three choices but took the one which was politically easiest for them.

For political advantage, they had previously (prior to BW) handed effectively handed power to the Bundesbank and they paid the price, the Cons had attempted to import low inflation from Germany with the pegged exchange rate, but when inflation hit Germany with reunification, those halcyon economic conditions were history.

In a nutshell joining the ERM was politically expedient in the build up to the 92 election, low inflation etc, but once they had won, they weren’t too bothered and the city boys sensed blood in the water and the Euroscepticism of the Tories. Lamont carried the can for BW, although his behaviour at the ECOFIN meeting didn’t help when he harangued the German’s to lower interest rates, but the Tories could have stayed in the ERM on BW.

The ERM was a very silly thing to join and cost the UK a lot of money, not as much as selling our gold at discount prices but a lot.

Rather like the Euro didn’t and doesn’t make much sense for the UK, being tied to the ups and downs of Germany/France and having interest rates set to help their economies isn’t a smart idea for us.

So one bad thing done by the Conservatives (joined ERM) and one good thing (kept us out of the Euro).

Now, what have the NuLabor done for the economy? Saddled us and our descendants with debt and made a lot of money for themselves and their contributors.

Black Wednesday also highlighted the problems associated with dealing with tying our financial institutions in too closely with those who have a vested interest in a collapse in the value of the pound.

That Labour are simultaneously mocking Lamont whilst promoting the Euro is rank hypocrisy.

Gordon Brown’s response to all problems is that “he will do what is necessary for the economic well-being of the country”, hmm, what does that mean, sounds like I will make it up as I go along. Until Gordon admits his own mistakes and cuplability in this whole fiasco that has come about on his watch, I shall not trust him to do anything.