Britain is in a state. Our banks are bust, or near-bust. New job losses are announced every other day. And even if we can hold on to our jobs, the weak pound means we can’t even take a break in the sun to get away from it all – Iceland’s about the only bargain destination we have left open to us. We may not quite be facing national bankruptcy, but it’s hard to think of when we’ve been more vulnerable in economic terms.
So it’s a surprise to learn that Gordon Brown – the man at the helm of the British economy since 1997 – apparently saw all this coming. For the past ten years, he told us this week, he’s been proclaiming the need for “an early warning system so that international financial flows are properly monitored”. There’s a “regulatory deficit” at “a global level”, he reckons, a situation he’s been condemning as “inadequate” for years. If only we’d listened.
It’s refreshing to find that even after all this time, I can still be taken aback by the sheer audacity of the Prime Minister. The fact that he’s still trying to blame everyone else for the current problem is one thing – any politician hell-bent on saving their own neck would do exactly the same. But to try to pin the current crisis on ineffective global regulation is just unbelievable. Who put in place the current regulatory regime in Britain? You know, the one that allowed our banks to leverage themselves up to the gills with toxic assets? Why, it was Mr Brown, while he was head of the Treasury. If our own authorities couldn’t see any problems developing, then how would a global regulator have performed any better? Besides, the truth is that global bodies such as the International Monetary Fund did issue plenty of early warnings. In fact, the IMF had been explicitly warning about the massive overvaluation of British property for years before this happened. But who wants to pay attention to ‘doom-mongers’ when the good times are still in full swing?
Also, if the Prime Minister thought the global financial system was so fragile a decade ago, then why did he sell off more than half of Britain’s gold reserves at the bargain price of $250 an ounce or so? That equates to a loss now of more than £4bn – chicken feed compared to the cost of bailing out the banks, admittedly, but still enough to guarantee a few car loans. Anyway, we’re in this mess now – so what can you do about it? We’ve looked at various ways for investors to make decent, inflation-beating returns on their money without taking too much risk in this week’s cover story. But one thing I’d definitely do is hang on to gold. In fact, the only thing that would make me think of selling it now is if Mr Brown starts buying.