Over the weekend we were treated to confirmation of something we’ve know all along – namely that at the first sign of a financial crisis, the UK government wouldn’t think twice about putting the army on the streets should they be needed to ‘keep order’, because of a financial collapse. A financial collapse that Brown thought was a very, very, real possibility – something that they didn’t admit in public at the time.
In a piece by the Daily Mail titled ‘I’ll put troops on the streets’: Gordon Brown’s spin doctor reveals just how close to anarchy Britain came when the banks crashed’ (notice the usual incorrect use of the term ‘anarchy’), not much is left to the imagination about how close the financial system came to total collapse (something the UK has merely ‘delayed’ rather than permanently fix). From the Mail:
At the start of the financial crisis, before the bankruptcy of Lehman Brothers, Gordon told me to close the door to his office at No 10 and sit down. ‘Do you realise how bad this is going to get?’ he said….
…‘The whole bloody thing could collapse. I’m serious! The whole bloody thing.’
I genuinely didn’t know at that stage what ‘the whole bloody thing’ meant. I was just reeling from the idea that we were going to be in recession and how that was going to play in the press.
And then the killer punch-line, the UK government wouldn’t think twice about essentially enacting martial law and imposing ‘curfews’, using the guns of the army on the street no-less, all in the name of ‘keeping order’ of course:
On the evening before he was due to announce the part-nationalisation of UK banks, he looked ravaged. He closed his office door, sat on the couch and said in almost a whisper: ‘We’ve just got to get ourselves ready in case it goes wrong tomorrow. And I mean really wrong.
‘Even if there’s a panic in another country, people will see it on the TVs, and they’ll start panicking here. It’s got to be given a chance to work.’ I said: ‘But people will give it a chance . . .’
‘You don’t understand,’ he said sternly. ‘If the banks are shutting their doors, and the cashpoints aren’t working, and people go to Tesco and their cards aren’t being accepted, the whole thing will just explode.
‘If you can’t buy food or petrol or medicine for your kids, people will just start breaking the windows and helping themselves. And as soon as people see that on TV, that’s the end, because everyone will think that’s OK now, that’s just what we all have to do. It’ll be anarchy. That’s what could happen tomorrow. I’m serious, I’m serious . . . We’d have to think: do we have curfews, do we put the Army on the streets, how do we get order back?
But it wasn’t the histrionics by Brown et-al that caught our eye in this article – after-all, wasn’t it in the best interest of the banks to say the system would collapse unless TRILLIONS of taxpayer pounds were used to prop the system up? Brown fell for it hook, line and sinker – proving that he is a total pigmy when it comes to any matters economic (**cough** gold sales **cough). It was more the following couple of paragraphs that jumped out at us:
Subsequent to the financial crisis, we were told privately, although it’s never been confirmed publicly, that John Gieve — the old Treasury head of spending who became Deputy Governor of the Bank of England — had written an internal paper before the collapse of Northern Rock raising concerns about the balance sheets of a number of major banks.
If that’s true, the Bank never shared the paper with Treasury ministers or, as far as I know, the Financial Services Authority.
So, BEFORE the banking crisis got going in the UK, it sounds like the people at the BoE KNEW the UK banks were in trouble, serous trouble – but crucially didn’t share this information with the Treasury OR the FSA - just think of all those depositors put at risk by the BoE for failing to paint a full and truthful picture of the banking system.
And given that the UK Government ended up essentially underwriting most of the major UK banks, you would think that, at the very least, the BoE would have called an urgent meeting to discuss the findings of the paper with BOTH the Treasury and the FSA.
If true it is a shocking example of how little the BoE feels it has to talk with Government or the main UK finical regulator – it really is just a law unto itself, a very dangerous thing when they are the ones in control of the printing presses. And proves just how little the BoE cares for taxpayers and depositors at UK banks – it would rather keep material information secret in a bid to preserve the status-quo and stick ALL the risk on the backs of taxpayers – without the taxpayers being fully informed of all the ‘facts’.
So just what was in this ‘paper’ circulated for Bank of England eyes only – did it say that a finical collapse was imminent, did it say how bad it would be, and what recommendation did it make? One thing is for sure, it was so sensitive the BoE thought it best to NOT tell the Treasury of even the FSA.
We feel another FOI request coming on… And being that it is now seven years after the events in question, the Treasury and/or the BoE will be VERY hard pressed to cry ‘economic sensitive information’ to prevent its release.
Did the Bank of England write an internal paper raising concerns about UK bank’s balance sheets BEFORE the collapse of Northern rock – and didn’t share it with the Treasury or the FSA?