Gordon Brown may have saved the world economy. Whether he can save his own career is still an unknown:
Last week, Brown unveiled his plan to combat the credit crisis: a transfusion of capital into UK banks in exchange for stakeholding rights, new requirements on lending practices, and government guarantees on inter-bank loans. Watch him explain the plan here. After a month of US and European governments waffling over the correct measures to take, after an American bailout package that passed but remains unpopular and unimplemented, Brown’s plan just made sense. As of today, those same European and US leaders are signing on to follow Brown’s lead.
Given how disastrous Brown’s run as PM has been thus far, it’s hard to understand where this stroke of genius came from. Until you take the longer view. As new Nobel winner Paul Krugman reminds us today, Brown is the economic brains behind the British revival that Tony Blair so often took credit for. While Blair travelled the world winning new political allies for Britain with his charm, the man behind the New Labour economy was the old curmudgeon from the University of Edinburgh, a former Blair rival who was blind in one eye. Blair was the better politician, but his Chancellor of the Exchequer, Brown, was the policy wonk.
So when the uncharismatic Brown took over for Blair last summer, and had to face political–as well as financial–responsibilities, he self-destructed. Despite valiant attempts to rebrand himself, his poll numbers have gotten worse every month since he took office…until now. That he might turn those numbers around with a policy that effectively nationalizes the banking sector suggests the final undoing of the free-market Thatcherite proposals that Brown and Blair were elected to reverse in 1997.
The question now is whether these nationalization policies can have their real economic effect (can “trickle down,” to borrow a phrase,) in time for the next elections.
