Diplomat Magazine - The Current Financial Situation
I write this two days after the House reassembled following the Summer Break and the Party Conferences. By the time you read it we shall be on the eve of the American Presidential Election. Looking back over the last few weeks, I can only hope that the financial markets, and the world economy, will have stabilised by then. I have never known a time when the atmosphere has been so febrile or where it has been so impossible to forecast, with any degree of confidence, what will happen seven days hence.
Looking back it is quite clear to me that the United States Treasury made a terrible mistake in not coming to the rescue of Lehmann Brothers. It is equally clear that the House of Representatives made an equally big one in prevaricating over agreeing the 700 billion dollar package. These events, in their different ways allowed panic to set in. In the States and all over Europe those who had been greedy were gripped by fear, those who were uncomprehending or gullible were terrified too. Some saw their amorally acquired gains under threat, others their homes and life savings at risk. And all this was happening while Parliament was in Recess. We should, in my opinion, have been recalled although if we had made as good a job of our responsibilities as those charged with theirs in Congress perhaps that would not have been a good idea.
As a seasoned parliamentarian I have seen the House in many moods but I do not think I have ever seen it so sombre or apprehensive as it was when we met on Monday or as we await the results of the Chancellor’s Wednesday rescue package. Wherever two or three parliamentarians are gathered together the talk begins, and inevitably returns, to the subject of the hour. On Monday evening I slipped out briefly to go to the city to listen to Mayor Bloomberg and though I was, as I have been before, greatly impressed by his presentational skills and his grasp of detail it was sobering to hear a man of his immense experience say that he could not know how things were going to pan out in the weeks ahead.
One thing there does seem to be a consensus on in Westminster is that the Prime Minister is no longer under threat. The combination of the gravity of the financial crisis, his rallying of his troops at the Manchester Labour Party Conference, and the much more thorough going reshuffle of his government than any one had anticipated, has given him a lease of life that many thought he would not have just a matter of a couple of months ago. Whatever happens at the Glenrothes by-election on November 6th I do not think that we shall see any coup.
The government will batten down the hatches. The opposition will seek to behave responsibly in supporting the Government’s efforts to stabilise the situation – and we shall have, almost certainly, no talk of an election. This parliament will, I feel almost certain, run its full course until May or June of 2010. Of course every prediction on the political scene is a hostage to fortune but as we seek to keep afloat in these stormy and unchartered waters there will be a new mood of seriousness on which Mr Brown is well placed to capitalise. Do I think that he will be able to make a sufficient recovery to be in with a chance at the next election? Frankly I do not. But this is certainly no time for the Conservative Party to take anything for granted, to be either complacent or triumphalist.
I well remember how Harold Wilson was the favourite to win the General Election of 1970, and how, four years later Edward Heath was the favourite to win the election held during the Miners’ Strike of February ‘74. I remember too the predictions that John Major would go down to defeat in 1992. None of those things happened. And yet it was easier to make forecasts in those days. My hunch is that Mr Brown will go down to a fairly major defeat but the cataclysmic and worrying events of the last few months have presented him with an opportunity to display leadership.
As for the election that will be happening as this issue of The Diplomat arrives it looks to me, at the beginning of October, as if we shall see a change of power in the White House at the beginning of next year. But so much can happen in a few weeks that I am going to refrain from being at all firm in my prediction. As the Late Lord Renton said to me on my first day in the House of Commons in 1970: ‘The only thing you can confidently expect in politics is the unexpected’.
