Alistair Darling has warned international finance will never be the same again, while Gordon Brown has called on every bank in the world to increase its capital ratio.
Writing in the Financial Times, the chancellor of the exchequer – currently in Washington DC to meet with G7 finance ministers and the International Monetary Fund (IMF) – said: “The world economy is changing. Sticking with the solutions of the past is not an option. Now, more than ever, we need new ideas.”
He explained the financial crisis and surge in commodity prices had hit every country in the world.
“These twin shocks demonstrate the need for new, comprehensive approaches to maintain stability, both in economies and financial markets,” Mr Darling wrote.
“All forecasters, including the IMF, have been surprised by the profound impact of this shock. Beyond that, it is clear that the global financial system will never be the same, so we must discuss how to strengthen the system for the future.”
The chancellor wrote in the FT the first challenge was to take action to stop financial collapse and put banks on a firm footing.
“Markets cannot do this alone. Governments have to take the necessary action.”
Meanwhile, Gordon Brown writing in the Times called on other governments to follow the lead of the UK’s £50 billion recapitalisation offer to banks.
“Every bank in every country must meet capital requirements that ensure confidence,” the prime minister wrote.
“Just as in the UK we have made at least £50 billion of new capital available, so other countries where banks have insufficient capital will need to take measures to address this.
“Only strong and solid banks will be able to serve the global economy.”
Mr Brown warned: “The potential economic consequences cannot be understated. The role of banks is to circulate the savings from deposits, our pensions and from companies to those that need to spend or invest them.
“This paralysis of lending from loss of confidence jeopardises the flow of money to every family and every business in the country.”
The prime minister also called for greater transparency in the financial markets and promised reformed to encourage “responsible risk-taking”.
“When risk-taking crosses the line between the responsible entrepreneurship, which we want to celebrate, and irresponsible risk-taking, then we have to take action to see that markets work in the public interest to reflect our shared values,” he wrote in the Times.
10 Comments
Brown boasted no more boom and bust. So encouraging UK taxpayers into huge loans. UK savings ratio under Brown fell from 10% in 1997, to -0.5% in 2007. Brown loaded debts onto the State (taxpayer), both on, and off balance sheet. Brown took away state reserves of gold, and private reserves of pensions. He boasted of 1st prudence, then 2nd an end to economic cycles. So his arrogance grew to historic levels, matched only by his own ignorance. What arrogance to boast of ending economic cycles. Only a madman does that. Now he gives out a lifeboat, and before seeing if it works, he is boasting again. Follow me!
Most people think it will NOT work. What Brown touches falls into disaster. He can try his utmost. Brown is misguided, misleading, devious, deceitful and dangerous. Labour are a symbol of spinning headlines covering ‘unfit for purpose’. Labour are £40 million in debt. No chance of recovery. Sack Brown now. Only a change of leader can assist confidence. Brown is the worst PM in 100 years.
jimmy- rubbish- a good headline but rubbish. gordon and alistair are the men of the year and are fast delivering this country out of a global crisis.
i think what it shows is the need for more international governance, i know the euro sceptics wont approve and i too am all in favour of more devolution BUT on big transboundary issues now climate change, trade, war & peace, and regulation of capital markets, clearly national governance doesnt work, we need massive reform of the UN, the IMF etc as there bodies need to take on more power for running the worlds interconnected global systems
Jimmy, Rubbish2.
The CONservatives would have had to handle this situation and, yes, they would have ended up in the same situations because they would have given the banks more freedom and power to ride this wave of economic boom that just quickly got dismounted.
All this blather about hitting the bonus’s is not something a CONservative would do if in power. There are forces the current toy-town-Torwies will not feel unless they get elected (from their own side).
No time for trainees.
sorry jimmy. but you most open your eyes to the bigger picture.
gordon brown is tryiny to save the uk, the usa banks have done this by leading money to people who could never pay back on homes.
the us banks to keep up with the house market have borrowed from banks around the world.
Now the rest of the world banks are going under from this , he is one of MANY leaders around the world doing the same, sacking brown is not going to help now is it..
In the next two years i would say 10-15% of jobs will be gone if the money stops now maybe more, house values are going to lose 25-40%.
YEA lets sack Brown, what ever he get know for, he’s trying to fix a broken leg with a match…
What’s the betting that some of these here, praising and defending Brown and Darling have a few thousand quid salted away in Iceland or in some of our own “failed” banks and Brown and Darling have just got them out of the cart by giving them taxpayers money as a guarantee that they won’t lose anything. Sorry, those that put money into Banks and Building societies should realise that just like shares, things can go down as well as up and if things go so far down then you lose your money. I am totally with you Jimmy, why should I as a taxpayer pay for bank-rolling banks and, what is almost as bad, why should my taxes go towards getting this disastrous government out of the cart and being used to make Brown out to be some kind of financial/economic genius after 11 years of dragging this country of ours down to the depths. Perhaps the apologists for Brown and Darling do not realise it but we will be paying for this little lot for the next 70 odd years with rising taxes and reduced public sector spending. Why should Britain weep.
i think the difference between bush action and brown economics is that bush is loaning usa banks up to 700 billion dollars, whereas gordon brown has gone in with 2 feet and taken the banks over thus ensuring that when these banks are sold off we as taxpayers get our money back plus a sizeable dividend. he and alistair cambell have shown the world how it is done. not sure if iceland can be saved but be sure if there is a way then gordon will find it.
well done new labour, no novices need apply, anyway no vacancies for 10 years, by that time messers diddy david and gorgeous george may have sufficient experience to cock up the economy again
And there I was thinking that it was only in the darkest days of the Union of Soviet Socialist Republics that Stalin and his predecessors nationalised banks, now here we have Devon Salopian telling us that the New Labourites have really started to practice what Russia preached before it saw the light. And to crown it all, the “prince of darkness” is back from his litle sojourn in the land of the sane and is now back, having given up his role as the arch propagandist, spin merchant and deceit weaver to become a “financial advisor” to Gordon Brown, hooray!, Alistair Campbell is back to work out the countries finances, we should all stand back and wait for the whole schemozzle to collapse round our ears. But then, poor old devon, he probably made a mistake and meant Darling but the end result will be just as disastrous won’t it devon.
good news ahead-
interest rates 3% by christmas, those with 120,000 mortgage saving up to £200 a month
petrol below £1 a litre by christmas
supermarkets will show big reductions in food prices by christmas
heating bills down in the next 6 months
watch this space. all of this is nothing to do with the government as they had nothing to do with it going up, pure global market forces.
let us all enjoy a cheaper winter and watch the value of our 6 banks increase
Brown and Darling are like Laurel and Hardy, but not as funny. “That’s another fine mess you’ve got us into!”
PS If you are ever in Ulverston, Cumbria, visit the Laurel and Hardy Museumn, only surpassed by the Pencil Museum in Kendal.