Norman Lamont: You Ask The Questions
The Former Chancellor of the Exchequer answers your qusetions, such as 'What would you be doing differently if you were Chancellor in this crisis?'
Monday 13 October 2008
How bad is this economic meltdown going to be? Has there been anything worse since the Great Depression? TARA BELKIN, Newcastle
The financial crisis is definitely the worst since the 1930s, but I think we can avoid the wider depression of that period. I had been expecting a crunch and a slowdown, and I had thought it would perhaps be prolonged, but not as deep as either the 80s or 90s; but the odds are narrowing now that it will be deeper and longer. I think we will have a slowdown that will last several years. The fiscal consequences will be much worse than in earlier recessions.
What would you have done differently if Chancellor? RHONA MARTIN, Salford
Many things. Firstly, I would have given the Bank of England different guidelines when it became independent. I would have asked it to pay more attention to house prices, asset prices, and above all credit and money. Secondly, I would have spent less government money. Brown's splurge was unsustainable. Thirdly, I would not have abused the Private Finance Initiative so that the Government could spend money off balance sheet unaccountably. Lastly, I would never have adopted Brown's nonsensical fiscal rules, which have now broken down completely.
What is it like when you are in the middle of an economic crisis as Chancellor? KATE SMITH, Aberdeen
Every time you think this must be the end, things will stabilise, at that moment they deteriorate again and get worse than you can imagine. Sometimes it's difficult to see things as the outside world does, but on the other hand, the outside world doesn't see the reality behind the desk of either the Chancellor or the Governor of the Bank of England. It's important to see the big issues and not get mesmerized by the detail.
How many marks out of 10 would you give Alistair Darling for his performance? Do you feel any sympathy for him? HANNAH NIXON, Leicester
I don't stand in judgment on others. Whatever mistakes have been made were largely made before his arrival. Yes, I feel some sympathy for him.
Are the markets behaving in a rational way? THEO MATTHEWS, Manchester
No, markets often overshoot. At the peak the stock market was giving companies valuations that appeared cheap but weren't so if you adjusted for the cycle. Now, I think the markets are overreacting – but this always happens.
The otherwise unpopular Conservatives profited from being "a safe pair of hands" in the economic crisis at the 1992 elections. Will the Labour party get the same benefit? ED RADCLIFFE, Guildford
I think Brown has got a bit of a bounce while the financial crisis and the plans to alleviate it dominate the headlines. It's a very difficult situation for the Opposition. But I think when the markets settle and people have to live with the long-drawn-out consequences, which will be very painful, people will then start asking: how did we get in this situation? They will not give credit to the Labour party as house prices fall further, car sales plummet, and the economy stagnates.
What have been David Cameron's biggest mistakes? VICTORIA BRIDGE, Thanet
I said I wasn't going to stand in judgment on Alistair Darling, so I don't think I should on David Cameron. AndI think he's done extremely well as Leader of the Opposition.
What was Mr Cameron like as your special advisor? Was he more right-wing then? OTIS WALTON, Coventry
He was extremely good, and became a good friend. He wrote a lot of speeches for me. To be honest, I wasn't conscious whether he was left or right wing, but I am convinced that he is quite Eurosceptic.
How badly did David Cameron panic on Black Wednesday? ALEX MARNEY, Wakefield
He didn't panic at all, and nor did anyone else.
Do you agree with David Cameron's sudden attacks on bankers? DEAN HUSTON, London
Yes. There is a genuine issue about remuneration. But it is not the size of the bonuses, though I personally find them staggering; the issue is the way remuneration has been structured, so that people are rewarded for excessive risk taking, and don't share the pain when the bets go wrong. So remuneration unaligned to risk has been a destabilising factor.
Do you regret singing "Non Je Ne Regrette Rien" at a press conference in 1993? JACK THOMSON, London
I certainly didn't sing. I don't think anyone would have put up with that. Nor did I say I had no regrets about the economy. I was asked a frivolous question: which did I regret more, saying I saw green shoots of recovery (which I did, quite rightly) or singing in the bath on Black Wednesday (which I didn't do). I replied, "As the singer sang, 'je ne regrette rien' ". I own up to a weakness for humour, especially in very desperate circumstances.
Do you ever regret your support for Pinochet? CHRISTOPHER LAWSON, Romania
I reflect upon it often. Very often, in fact. I always condemned torture and murder. And I always acknowledged that some terrible things happened under the military government in Chile. But I still think it was wrong for Britain and Spain's courts to try to judge what happened. I am convinced there would have been huge instability and political unrest in Chile if General Pinochet had been put on trial in Europe. The socialist Government of Chile strongly opposed his arrest here. I don't think we would have liked it very much if a South American court had tried to arrest a current member of the Government of Northern Ireland. We would have told them it was a threat to a political agreement and stability.
You are a director of a hedge fund. Does it go in for short-selling – and do you agree with the ban on short-selling of bank stocks? JESS SILCOTT, Basingstoke
The company of which I'm a director has done a limited amount of short selling. But short selling is a red herring. It wasn't short selling that made the banks lend a 125 per cent mortgages, and it wasn't short selling that caused banks to invest in complicated securities they couldn't value.
Your remark that the Major government was "in office but not in power" after you left the Cabinet became one of the defining political judgements of the period. Do you regret saying it? PAUL MARKS, Bristol
No, I don't regret it. I was intrigued that Alan Watkins from The Independent on Sunday accused me of quoting Ramsay MacDonald without attribution, or that it was what someone said about him. But I wasn't conscious of this. When I challenged him about that he didn't reply. Maybe he will now.
How would you rate the Major premiership now? Was he a premier league PM, first division, second division or non-league? ANNA LEAMING, Bolton
I've always said that the Major government was over-vilified, particularly by the Conservative press. The main problem he faced was being Prime Minister after a long period of Conservative government. I believe the public had wanted a change for quite a while but there was no viable alternative until Blair appeared. The Major government had real achievements to its credit, not least the strong economy it bequeathed to Labour, which they eventually blew.
Are you and John Major friends now? DEREK PRICE, Wigan
We were never really as close friends as people suggested. Grass grows over the battlefield. I certainly don't bear him any ill-will. We do meet from time to time and are perfectly friendly.
Who are the best three post-war Chancellors, in order, excluding yourself? KEVIN RIDLEY, Plymouth
Geoffrey Howe, Nigel Lawson, and Derick Heathcoat-Amory.
Which do you prefer – making policy or making money? JONATHAN HARDY, Belfast
Well, all I've done in the last few weeks is lose money. Politics and making policy is far more interesting to me than the business of business. Politics is fascinating because you have to make compromises in a very imperfect world. I still believe that politics is an honourable and worthwhile profession.
Do you still sing in the bath? And what do you sing? KERRY EDWARDS, Nottingham
Only occasionally. I tend to sing hymns from school, or the Scottish version of the hundredth psalm.
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