In the period 2004-2008 Gordon Brown then Alistair Darling ignored much repeated advice and public warnings issued by Lyndon H Laroche JR, many other eminent economists and Mervyn King, Governor of the Bank of England of the rapidly overheating British economy.
The financial “blow out” that hit the world financial markets in 2007 was brought about by defaulting mortgage holders in the USA and the UK who had been contracting to significant additional debt against their properties through excessive loans creating an unsustainable housing bubble.
Brown and Darling, conspired to divert blame away from the Labour government and had the audacity to blame the Royal Bank of Scotland for the financial disaster that befell the UK when it was clear the mismanagement of the economy was entirely the fault of a Labour Party leadership who had been warned in 2004 of an impending financial wipeout.
At a time the UK should have been introducing measures taking the heat out of the economy Brown and Darling instead played fast and loose with the electorate pushing on with a wilful expansion of the financial market, approving bank mergers funded by borrowing, looking forward only to the next General Election.
2004: Warnings Ignored – Warnings Ignored – Warnings Ignored – Warnings Ignored – Warnings Ignored
Lyndon H Larouche jr. ranks highly among the world’s most influential international political figures. His exceptional qualifications as a long-range economic forecaster, was confirmed when, in 2004 he forewarned in the “Executive Intelligence Review” of the erupting, global systemic crisis of the world’s economy.
British Prime Minister Tony Blair suffered his worst humiliation, in 10 June 2004 local elections and European Parliament contests across England and Wales, since he was elected in May 1997. The result of Blair’s Labour Party’s miserable showing in both, is that the Prime Minister is now, at best, a lame duck, In the local council elections, ripe to be removed from power at some early date in the coming months.
In London on June 15, Blair showed the strain in his monthly press conference; he was rambling, losing track of his thoughts in mid-sentence, and issuing contradictory politi-cal assertions. British press the next day noted that the best indication that Blair is losing it, was that he broke down amidst the subject he loves best: praising himself and the great domestic “successes” of his New Labour regime.
2004: Warning of Unsustainable House Prices
House prices in Southern England are at the outrageous level of 7.5 times local earnings. Nationwide, the multiple is 5.6. Since 2001, house prices have risen by one-third in greater London, but almost two-thirds in the rest of Britain. Halifax Bank, Britain’s biggest mortgage lender, reported that the average British property now costs nearly £158,000.
British householders are borrowing heavily on this bubble. In April, they took out a record £6.4 billion against the value of their houses, pushing net mortgage borrowing up 27% over April 2003; 60% over April 2002; and a breathtaking 131% over April 2001! Household debt is at a record 120% of disposal income, up from 100% during the pre-crash 1980s. In France, by comparison, household debt is 58.7% of disposable income. Which will burst first, this debt bubble, or Tony Blair’s political career.
2004: Economy Overheating – Brown And Darling Dithering
Then, there is the economy. The Bank of England (BoE) chose 10 June 2004 to announce it was raising interest rates by a quarter-point for the second time in two months. This was
even a greater blow for Blair. BoE Governor Mervyn King followed up, four days later, with a blunt speech warning price inflation is now over 20% a year in Britain. With credit
card and other debt added on to mortgage obligations, British households are £1 trillion ($1.835 trillion) in debt — a bubble just as bad, per capita, as that in America. One trillion pounds debt equals Britain’s annual output, the Financial Times noted sourly on 2 June 2004.
2004: Britain’s Housing Bubble Surfaces.
Already, the Bank of England has carried out four 0.25% to bring its base rate up to 4.5%, and there is widespread discussion that the rate will be raised to 5% before the year is out. BOE Governor Mervyn King’s June 14 statement that British home prices are not sustainable shook up the financial markets, and in a limited way, acknowledged the problem. But while King and Greenspan make different public statements, both they and their respective central banks have indicated that they hope for a miraculous soft landing for their twin housing bubbles. That is a fantasy wish; such highly-leveraged, immense housing will experience a hard landing. Synarchists Cheney and Blair must prepare to experience their very brief last days in office.