Looking beyond 'crass Keynesianism', Tom Griffin

Tom Griffin — Sun, 14 Dec 2008 17:53:44 +0000

Tom Griffin (London, OK):Perhaps it's something to do with his Freudian slip during the week, but Gordon Brown's bailout plan for the British economy has come in for some sceptical scrutiny in the Sundays today, and not just from his opponents on the right.

In The Herald, Iain MacWhirter agrees with German Finance Minister Peer Steinbrueck's critique of Brown's approach:

The government seems to think it can turn the clock back to 2007 - but the clock is broken. There must be a return to a savings culture. There must be reform of the housing market to prevent another boom, new rules for the Bank of England to curb asset bubbles. We need regulation of derivatives markets and closure of the tax havens which allowed banks to set up shadow entities. The hedge fund industry, which was based on abuse of tax havens, needs to be dismantled as a matter of urgency. As is becoming clear from scandals like that of Bernie Madoff, who ran a £50 billion scam, the hedge funds were essentially Ponzi pyramid schemes built on leveraged debt.

In the Observer, Andrew Rawnsley also picks up on Steinbrueck's comments, in arguing for a greater focus on investment rather than reflating consumption:

A modernised rail system, a national fibre optic network and a renewable energy grid: all have the triple merit of generating business in Britain, creating jobs in Britain and enhancing Britain's competitiveness. They are not make-work schemes of the sort that can give infrastructure projects a bad name when money is spent building bridges to nowhere. All these projects meet a national need and will leave a profitable legacy.

Interestingly, one recent government estimate suggests that the cost of a national fibre-optic network could be between £5 billion and £30 billion, depending on the technology used, a strikingly similar range to the competing estimates of the cost of ID cards.

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Looking beyond 'crass Keynesianism', Tom Griffin