The crisis

Robin Ramsay

Lobster Issue #57 (Summer 2009)

The crisis

In Parish Notices in the last issue I wrote ‘there isn’t much in this issue about the economic situation because there really isn’t much to say that hasn’t already been said, for example by Larry Elliot in The Guardian every week.’ Well, I changed my mind about that and here are the bits I found most interesting or useful.

Only one warning light on the UK economy: inflation

The Bank of England’s Sir John Grieve stood down in March from his role in charge of financial stability at the Bank of England. In an interview with the BBC’s Robert Peston he tried to explain how and why the Bank of England got it wrong:

‘We didn’t think it was going to be anything like as severe as it’s turned out to be… Why didn’t we see that it was so serious? I think that’s because….we hadn’t kept pace with the extent of globalisation. So the upswing here didn’t involve the big increases in earnings and consumption and activity which we saw in previous booms. We saw the credit, we saw the house prices, but we did see a fairly stable pattern of earnings, prices and output.’ (emphasis added)

This is the heart of it on this side of the Atlantic. Economic policy thinking between the years between 1979 and 1997, when New Labour took office, had been dominated by the fear of inflation getting out of control as it did between 1972 and 1976. How many times did Gordon Brown boast of stability (meaning price stability, of course) during his time as chancellor? Twenty five years after the events of the mid 1970s Brown still felt it necessary to demonstrate over and over again that Labour would not be the party of inflation. (As if Labour had caused the inflation in the 1970s!) The Monetary Policy Committee under New Labour had been tasked to worry chiefly about inflation. All the other indicators – the creation of debt, the external trade deficit, for example – were secondary. In the system in which Gordon Brown (and Grieve) thought they were operating, they didn’t matter. It was assumed that a rising money supply would produce inflation: too much money chasing too few goods, pushes up prices; and so would a rising external trade deficit as the international value of sterling falls and pushes up the price of imports. So the inflation warning light would come on in response to a wide range of factors. But neither the rising deficit nor the expansion of credit produced the expected inflation. The ever-growing trade deficit did not push down the value of sterling because the foreign currency traders didn’t care about the deficit, only about the relative earnings on money deposited in sterling.(1) The ever increasing money supply, or debt formation, didn’t cause inflation because the Chinese and Indian economies were producing very cheap – increasingly cheap – goods which didn’t push up the retail price index. So the system trundled on, increasing credit formation and a growing trade deficit producing little inflation, except in the price of houses, and that wasn’t included in the inflation index. As far as the official system was concerned, all was apparently well – Grieve’s ‘a fairly stable pattern of earnings, prices and output.’

As Grieve says, the Bank had identified the global bubble, one of its own committees warning of the dangers of all this credit expansion in 2006. Commenting on this the Telegraph noted at the time:

‘The City could face a financial meltdown if the debt bubble bursts, with over a year’s worth of bank profits – £40 bn – potentially being wiped off balance sheets, the Bank of England warns today. The Bank is issuing a stark warning about the potential damage a credit crunch and a collapse in asset prices could cause to the economy and financial system……In a worse-case scenario, a sharp fall in credit conditions world-wide would have devastating consequences for Britain, the Bank warns. It could cause a 1.5% contraction of the UK economy, a 25% fall in house prices and a 35% drop in commercial property prices over three years, according to the scenarios mapped out by the Bank. Other major countries would suffer similar effects, it says.’(2)

Revisiting this more than 2 years later, the same writer, Edmund Conway, commented that a good deal of the blame has to lie with the Bank’s Governor, Mervyn King, who ‘succumbed to the received wisdom spouted in the City that securitisation – the sale of mortgage debt onto other investors – had reduced the risk in the banking system…..’(3)

Even so, why didn’t King, Grieve and co. raise interest rates to attempt to stem the growth in lending and the rise in the price of houses and other assets?

Robert Peston gave one answer in his piece.

‘As others at the Bank of England have told me, the Bank’s Monetary Policy Committee believed mistakenly that the lending binge and asset-price surge were semi-independent from activity in the real economy, and that they would eventually moderate without wreaking devastating damage to prospects for households and businesses.’

At one level I find this incredible: how could a monetary policy committee think that a lending binge (of all things) was ‘semi-independent from the real economy’? But the economy’s inflation warning light had not come on…..

Grieve gave Peston the rest of the answer:

‘If we’d used interest rates to try and address this asset-price credit growth,(4) we would have been holding down the level of activity elsewhere in the economy, in manufacturing, in other services, holding down the level of employment at a time when consumer price inflation and earnings were stable and reasonably low. And people would have said, you know, “this is a wilful reduction in the prosperity of the country”.’ (5)

In the first half of the quotation Grieve shows why the idea of ‘controlling’ a system as complex as the economy using only interest rates – what Edward Heath derided in the 1980s as ‘one club golf’’ – doesn’t work. In the second half he shows why attempts to ‘control’ the economy using only interest rates is politically difficult: it causes unemployment. In 1973, under the Competition and Credit Control legislation, interest rates were supposed to rise in response to rising inflation. But the economic consequences are so severe – what Grieve ponderously describes as ‘a wilful reduction in the prosperity of the country’ – that, like Prime Minister Heath in 1973, when push comes to shove most politicians won’t wear it.(6)

Further, as I reported in Lobster 53 (p. 12), the former Governor of the Bank, Eddie George, admitted that the Bank had also been active in creating the credit bubble:

‘In the environment of global economic weakness at the beginning of this decade…..external demand was declining and related to that business investment was declining. We only had two alternative ways of sustaining demand and keeping the economy moving forward: one was public spending and the other was consumption….. But we knew that we were having to stimulate consumer spending; we knew we had pushed it up to levels which couldn’t possibly be sustained into the medium and long term. But for the time being, if we had not done that the UK economy would have gone into recession just as had the United States. That pushed up house prices, it increased household debt.’(7)

The blame game

The new chairman of the Financial Services Authority (FSA), Lord Adair Turner, has said its failure to spot the banking crisis in advance was partly due to the style of regulation wanted by the politicians ‘which suggested the key priority was to keep it light rather than to ask more questions.’(8) This line was echoed the next day by the Governor of the Bank of England, Mervyn King:

‘Mr King also claimed that financial regulators were unable to stop City banks taking huge risks because they did not get support from the Government and MPs……. Regulators who had criticised banks lending in 2006 or 07 would have had “a massively difficult task” persuading politicians to back them. “They would have been seen to be arguing against success,” said Mr King. Suggesting that politicians were in thrall to powerful banks, Mr King said any regulator who challenged the banks would have been left isolated and “lonely”.’(9)

Don’t blame the regulators, blame the politicians…..But this really won’t wash because there is no evidence that the regulators ever appealed to the politicians for support. No doubt King is right about the kind of reception regulators would have received from the politicians; but part of the explanation for the docility of the regulators is more banal.

The FSA and the City

An unidentified FSA whistleblower reported in The Sunday Times said:

‘Financial institutions are asked for feedback on FSA staff charged with supervising them. The comments are considered for appraisals used to decide pay and bonuses…..

The whistleblower claims: FSA staff were anxious not to antagonise the banks because of the potential impact on pay. The FSA’s regulatory staff were warned not to frighten the horses during visits to financial institutions because it relied on their co-operation. The FSA ethos was that it was to serve the industry which fully funded it. Staff turnover and lack of resources meant there was insufficient FSA expertise to question the strategies of the big banks……

The FSA was in thrall to the industry, said the insider. The consensus was you don’t rock the boat. If a firm complained, you could get marked down on your appraisal. It was deluded and immoral. ….

It was felt that unless there was trust between the FSA and the companies, they [the FSA] would never be told anything. The problem was they didn’t have the proper resources to find out for themselves.’(10) (emphases added)

The Clinton administration’s part in the drama

In the New York Times of 30 September 1999 in ‘Fannie Mae Eases Credit To Aid Mortgage Lending’, Steven A. Holmes reported:

‘In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action…….. will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.’ (emphasis added)

As well as allowing the deregulation of the financial sector (discussed below), the Clinton administration, for whatever reason, encouraged the creation of subprime mortgages.

Deregulating the financial sector

In November 1999, after much lobbying by Wall Street, Congress repealed the Glass-Steagall Act which had separated commercial banks from investment banks, legislation which had been passed during the Depression.(11) The derivatives business had also been deregulated.

‘In the mid-‘90s, though, the credit-derivatives industry was hitting its stride and argued vehemently for exclusion from all state and federal anti-bucket-shop [stock fraud] regulations. On the side of the industry were Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and his deputy, Lawrence Summers. Holding the fort for the regulators was Brooksley Born, who headed the Commodity Futures Trading Commission (CFTC). The three financial titans ridiculed the virtually unknown and cloutless, but brilliant and prophetic Born, who warned that unrestricted derivatives trading would “threaten our regulated markets, or indeed, our economy, without any federal agency knowing about it.”…..The sleepy hearings received almost no public attention. The upshot was that Congress removed oversight of derivatives from the CFTC and pre-empted all state anti-bucket-shop laws. Born resigned shortly afterward.’(12)

The deregulation of the financial sector was achieved by the usual American method of buying the politicians. (13) A report by Essential Information, Ralph Nader’s group, and the Consumer Education Foundation, reported that between 1998 and 2008 the financial sector in the US spent more than $5 billion on getting deregulation.

‘$1.7 billion went to campaign contributions and the rest – some $3.4 billion – went to lobbying. The study finds that in 2007 alone, there were nearly 3,000 registered federal lobbyists working in the financial sector.’(14)

Fraud

A regulator turned academic, William K. Black, wrote in February on how the FBI had begun warning about an epidemic of mortgage fraud by the sellers of mortgages in 2004 but had been ignored. By then the US financial sector had become a ‘crimino-genic environment’, at whose heart were the US credit rating agencies which had been giving out triple A ratings on bonds based on mortgages (CDOs) without checking the paperwork.

‘It is impossible to detect fraud without reviewing a sample of the loan files…….the rating agencies never reviewed samples of loan files before giving AAA ratings to nonprime mortgage financial derivatives……

If they had reviewed even small samples of non-prime loans they would have had only two choices: (1) rating them as toxic waste, which would have made it impossible to sell the nonprime financial derivatives or (2) documenting that they were committing, and aiding and abetting, accounting control fraud……….The supposedly most financially sophisticated entities in the world – in the core of their expertise, evaluating credit risk – did not undertake the most basic and essential step to evaluate the most dangerous credit risk.’ (15) (emphasis added)

Simon says

The most striking piece I have seen so far – striking because of its author – is by a former chief economist at the IMF, Simon Johnson.(16) Johnson accepts the IMF orthodoxies, that capitalism is a wonderful engine of economic growth but it produces booms and slumps and that national economies have to undergo domestic contractions to restore the equilibrium of their trade with other economies if deficits are created. In his view the USA (and by extension the UK, though he doesn’t mention it) was an economy trying to avoid the necessary cuts (and politicians trying to avoid defeat) by borrowing, hoping that something would turn up; and thus making things worse in the long run. With his IMF goggles on, Johnson sees the US as a pretty standard example of what happens when oligarchs – financial oligarchs in this case – are running a country.

‘One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W. Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni — including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson — not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman (inside the Beltway, at least) as an institution that was itself almost a form of public service.’(17)

Things are different here: prime ministers don’t appoint bankers to the cabinet; influence is less direct. But Goldman Sachs, for example, employed Gavyn Davies,(18) one of NuLab’s most important financial advisors, whose wife, Sue Nye, was Prime Minister Brown’s personal assistant-cum-gatekeeper for many years. There is Baroness Vadera, who moved from UBS Warburg to advising Brown and thence to becoming a junior finance minister.

And then there was Andersen Consulting: which employed Patricia Hewitt in the years just before NuLab took office; which worked on NuLab policies without payment (apparently); which trained the shadow cabinet in how-to-be-a-minister; and which was one half of Arthur Andersen and Co, the other half being Arthur Andersen, the accountants who advised Enron on how to fake their accounts by concealing their losses in so-called Special Purchase Vehicles (SPVs) (19) – a wheeze which Chancellor Brown imitated with the PFI schemes which kept hundreds of extremely expensively borrowed billions off the government’s books.

Manufacturing returns to the UK agenda

What Simon Johnson does not say in his essay is that in both America and the UK the belief that their economies could do without making things accompanied, and was promoted by, the rise of the financial sector to total dominance. But as the financial sector imploded, with it apparently went NuLab’s assumption that the future of the British economy lay in services. In The Independent Jeremy Warner wrote:

‘Much of my reporting and commentary over the past 15 years has been on finance, banking, the housing market and the creative industries. In the post-industrial society we seemed to have moved into,(20) this was where the action was. With these industries in the doldrums, it is to manufacturing, until a year ago a backwater of the British economy, that everyone looks for salvation.’(21) (emphasis added)

The concentration on the service sector, and the City of London in particular, has produced some strange, delusory thinking. John Lanchester, who has written some very good articles in the past few years in The London Review of Books, had a long piece on the housing crisis, ‘Bringing the house down’, in The Guardian back on 8 November 2008. His analysis was heavily influenced by his belief that ‘The financial services sector now accounts for 20% of the UK economy; it is by a huge margin the most important sector.’ (emphasis added)

This is nonsense: 20% is at least double the real figure.

Heather Stewart, one of The Observer’s financial staff commented in December: ‘In hindsight it was foolish to rely on financial services, the over-inflated housing market and shopping.’ (22) In hindsight? How could anyone believe in the first place that we could rely on financial services, the over-inflated housing market and shopping’? But people did. By their actions, NuLab did.

The delusion that the British economy could dispense with making things began in the late 1970s with the arrival of North Sea oil revenues. The ‘post-industrial future’ to which Warner referred, in which oil and the City of London would provide, was taken seriously by some within the Treasury. Edward Pearce reported in 1992 a conversation with a ‘Treasury knight’ – i.e. a permanent secretary – in which the ‘knight’ bemoaned having to do things for manufacturing while John Major was prime minister because Major was unwilling to follow the example of Switzerland and rely on services.(23)

And these attitudes have survived. In February a report, ‘A decision the next prime minister must take’, by Tony Edwards, a former Head of Defence Export Services at the Ministry of Defence, now of the UK National Defence Association, included this:

‘I am aware that one of the Government’s more influential economic advisors went so far as to say, allegedly, to senior union officials, that “defence, aerospace, manufacturing and engineering have no value to us. Only high quality professional services, financial services and the City of London have any real value and they should be supported at all costs. The rest of the country can be turned over to tourism.” ’(24) (emphasis added)

Will these attitudes – the contempt for ‘making widgets’ – really disappear from the upper echelons of the British financial civil service with the current crisis? I doubt it. But there are odd flickers of rethinking going on within the almost brain-dead NuLab. Interviewed on the BBC, Foreign Secretary David Milliband en passant referred to manufacturing being twice the size of the financial sector – something no NuLab minister would have said or thought until recently.(25)

Chances are good, of course, that we will be told: that no-one in NuLab ever really believed that the service sector in general, and the City in particular, could keep us all going; that the government always supported manufacturing; and indeed that such support has been a central feature of its economic policies from the outset. But in the meantime, what we have seen on this side of the Atlantic is a great deal of government effort (and taxpayers’ future earnings) being put into rebooting the financial sector and thus far, the 2009 budget included, though there have been some welcome changes in rhetoric, little of consequence being done for the makers of widgets.(26)

But what can be done in an open economy? How do you rebuild manufacturing (or expand agriculture) in competition with cheap manufactured goods from India and China et al and cheap agricultural products from the EU? I can think of no examples of a manufacturing economy being built or rebuilt in open trading conditions. Is this government – or the next government – willing to go down the road of tariff barriers, and managed currency? Of course not. And so manufacturing will not be rebuilt.(27) We are in for a protracted period of high unemployment, shrinking tax base, massive cuts in central government spending and the associated social turmoil. And we are probably in for a ‘national’ or ‘emergency’ government to make us swallow the nasty medicine.

Et enfin

Here are the concluding two paragraphs of my 2002 The Rise of New Labour (Pocket Essentials). Gore Vidal described ‘told you so’ as the best three words in the English language. In this instance ‘I was wrong’ would have been preferable.

It is all deeply depressing at one level – and hilarious at another. Based on nothing more than a hunch about the shape of the future, a Labour government is pissing away what was left of the manufacturing base after the Thatcher governments had a go at it. This country’s fishing industry was largely wrecked as part of the price of entering the EEC in 1972. The steel industry was ‘rationalised’, and, like coal, was mostly closed in the 1980s. Agriculture is being reduced under ‘set aside’ schemes and another chunk will vanish as a result of the foot and mouth outbreak; and a further section will go as the result of the collapse of farming incomes in the last three years caused by the low payments made in ‘green pounds’ (i.e. Euros) via UK membership of the EU’s Common Agricultural Policy. But never mind, eh? Trust your Uncle Tony: he may not know how to use a PC but he knows we have ‘the knowledge economy’ coming over the horizon and everything is going to be OK.

And perhaps it will. Perhaps we will all end up in ‘the knowledge economy’ (whatever that is) and we won’t need fishing, farming, steel-making, mining, machine-tools and manufacturing in the future. What am I complaining about? Labour’s policies are working. Unemployment fell in the same month that manufacturing officially went into recession. Perhaps the neo-liberals are right; perhaps the service sector can replace manufacturing.

But it can’t: the service sector has not replaced the manufacturing destroyed by its policies in the last 20 years. Britain is running a huge, and growing, trade deficit: this is not permanently sustainable. Thus far only a bunch of the ‘old lags’, the unreconstructed Keynesians, as Gordon Brown probably thinks of them, are worried by this. I’m with them. I cling to the now old-fashioned idea that on a small island with a population of 60 million it is madness to let the island’s productive resources be abandoned. I think Labour’s leaders have got it completely wrong and however they think of themselves, history will judge that the Brown-Blair faction was merely the ultimate triumph of the ideology of the City over the rest of us; and, let us hope, the last dribble of Thatcherism down the leg of British politics.

Notes

It was Vice President Dick Cheney who famously said that deficits didn’t matter any more.
Edmund Conway ‘City faces meltdown if debt crisis hits’, Daily Telegraph,12 July 2006.
He changed his mind – see Tom Easton’s book review below – but too late.
He means borrowing against rising house prices.
Robert Peston <www.bbc.co.uk/blogs/thereporters/robertpeston/ve>
Only Mrs Thatcher, with North Sea Oil revenues at their peak, could afford to ignore this.
As for what should be done, Grieve stated the obvious: ‘Maybe we need to develop something which bridges that gap and directly addresses the financial cycle and prevents the financial cycle and the credit cycle getting out of hand… I think we need to complement interest rates…….. with something which is more financial-sector specific.’This was echoed in remarks made by the Bank of England’s Charles Bean, deputy governor for monetary policy on 16 February 2009 to found at <www.bankofengland.co.uk/publications/speeches/2009/speech375.pdf > and by Lord Adair Turner, the new chair of the FSA, in The Economist’s Inaugural City Lecture, 21 January 2009 at <www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/0121_at.shtml>
<http://news.bbc.co.uk/1/hi/business/7910699.stm> 25 March 2009
James Kirkup, ‘Mervyn King, the Governor of the Bank of England, has said it is “impossible to say” how much capital will be required to shore up the British banking system’, The Daily Telegraph 26 February 2009.
The Sunday Times 8 March 2009 <http://business.timesonline.co.uk/tol/business/industry_sectors/ banking_and _finance/article5864476.ece>Very similar comments, including the same phrase, ‘don’t rock the boat’, were made about the USA’s SEC by former SEC official Gary Aguirre. See <www.truthout.org/122208J>In both instances, the SEC and the FSA, we seem to have had a version of what is referred to as ‘regulatory capture’ (see for example <en.wikipedia.org/wiki/Regulatory_capture>), that is the ‘capture’ of the regulatory body by those it is supposed to be regulating. However in both these cases ‘capture’ is the wrong word. As far as I can see there was no regulatory intent behind either the SEC or FSA. The intent was to give an appearance of regulation while allowing the ‘masters of the universe’ to continue.
See Joseph E. Stiglitz, ‘Capitalist Fools’, <www.vanityfair.com/magazine/2009/01/stiglitz200901>
James Lieber, ‘What cooked the World’s Economy? <www.villagevoice.com/2009-01-28/news/what-cooked-the-world-s-economy/1>A contemporaneous interview with Born is at <www.derivativesstrategy.com/magazine/archive/1997/0597qa.asp>On bucket-shops, google <bucket-shop + wiki>.
Joseph Stiglitz – see note 11 – estimates that Glass-Seagall was scrapped after $300 million was spent on lobbying (i.e. bribing) politicians.
<http://undertheinfluence.nationaljournal.com/2009/03/> The full report is at <http://wallstreetwatch.org/soldoutreport.htm>
William K. Black, ‘The Two Documents Everyone Should Read to Better Understand the Crisis’, The Huffington Post, 27 February 2009.<www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html>Black said similar things, though in a more robust manner, in a conversation with Bill Moyers at <www.pbs.org/moyers/journal/04032009/watch.html> Here’s a sample:Black: ‘This stuff, the exotic stuff that you’re talking about was created out of things like liars’ loans, that were known to be extraordinarily bad. And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That’s why it’s toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it’s scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I’m quoting Fitch, the smallest of the rating agencies, “the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined.”’
‘The Quiet Coup’, The Atlantic, May 2009 <www.theatlantic.com/doc/200905/imf-advice>. Johnson runs a blog on the crisis at <http://baselinescenario.com/>.
Johnson, ‘The Quiet Coup’, see note 16.
Davies’ articles for The Guardian are listed at <www.guardian.co.uk/profile/gavyndavies>
On the Arthur Andersen/Andersen Consulting/Arthur Andersen Consulting nexus see the late Paul Foot’s ‘Medes and Persians’ in the London Review of Books in 2000 on-line at <www.lrb.co.uk/v22/n21/foot01_.html>.
The ‘post-industrial society’ was just another white man’s fantasy in which he did the clever stuff and the third world continued doing the heavy lifting.
‘Can Mandy fix it as UK manufacturers stare into the abyss?’, 7 February <www.independent.co.uk/news/business/comment/jeremy-warner/jeremy-warner-can-mandy-fix-it-as-uk-manufacturers-stare-into-the-abyss-1570791.html>
‘Sterling may be in trouble, but the euro’s no safe haven’ in The Observer, Business and Media, 14 December 2008.
The Guardian 8 January 1992. I wrote to Pearce but he was unable or unwilling to name this individual.
At <www.uknda.org/news.asp> My guess as to the identity of this ‘economic advisor’? Baroness Vadera, one of Prime Minister Brown’s favourites from the City.
Simon Mayo show, BBC Radio 5 Live, Wednesday 11 February. I heard the interview. Manufacturing may be much more than twice the size of the financial sector, depending on how one defines ‘manufacturing’. See Oliver Morgan, ‘Official figures hide manufacturing jobs’, The Observer (Business) 22 October 2000, which suggested that more careful analysis of the categories then gave manufacturing something like 28% of the British GDP.
On the rhetorical front see the speech in April by Peter Mandelson (duly reported by his loyal acolyte Andrew Grice), ‘Labour’s industrial revolution’ at <www.independent.co.uk/news/uk/politics/labours-industrial-revolution-1671315.html>And the bankers are still in control of the EU’s view of the financial sector. See <www.corporateeurope.org/lobbycracy/content/2009/04/finance-lobbyists-experts-clothing>.
For a similar view applied to America taken by former US Democratic Senator Ernest Hollings go to <www.economyincrisis.org/articles/show/2785>. Hollings says, for example, ‘After six months of bail-outs and another trillion stimulation, there has been no “jump-start” to the economy. In order to “jump-start” the engine there must be an engine under the hood. To “jump-start” the economy there must be an economy under the hood…..We have offshored the economy and no one mentions this problem. Investment, research, development, production, jobs are in flight to China, India and Mexico.’