Adrian Hamilton: Brown's new role as the 'Supermac' of global finance

The Prime Minister is pushing barren remedies for the world's woes

Share
Related Topics

Labour insiders have apparently taken to talking of the "Real Brown" and the "Real Brown Premiership" of the past month, to distinguish it from the "unreal" premiership whose star fell so ignominiously in his first year. That, of course, begs the question of just how different the new decisive, "make way-for-the man of experience" Brown is from the indecisive, endlessly inept Prime Minister of the last year. The leopard never changes its spots, nor a middle-aged man his character.

But the really intriguing thing about the new Brown is just how like Tony Blair he has become. Just as Blair seized the moment of 9/11 to cast himself as the international man of the moment, rushing to Washington to strike the note as America's friend and then jetting round the world to cement alliances in the new world of Terror, so Gordon Brown has grasped the moment of the credit crunch to run up his flag as redeemer of the global financial system and to race around the world to convert the rich and the poor to his cause.

There's no stopping the man. He flies to New York for the new UN session and uses the occasion to stamp his authority on the bankers. He gatecrashes the summit of members of the euro. He goes off around the Arab Gulf to sign up the oil rich sheiks to a new IMF bailout programme. Then it's off over the next week to another EU summit and the meeting for the G20 summoned by President Bush in Washington. Hold an international meeting and Gordon Brown is sure to be there.

Now the British PM does have a lot to congratulate himself on. The British package of guaranteeing loans between banks and taking direct shares in them has been widely copied. He genuinely cares for the deprived of the world, Africa in particular, and his attempts to boost the IMF's rescue funds is both sincere and noble. But it also has to be said that there is a lot of self-serving claims to authorship going on here, a process of opportunism that suggest that he still doesn't really understand what is happening in the world and is pushing barren remedies for its underlying woes.

His two great mantras are: first, that the present crisis has been entirely imported from the US through its sub-prime mortgage debt and, secondly, that it is a global crisis requiring a global response in reformed international institutions. It's a convenient interpretation because it absolves Brown as Chancellor from all responsibility for the current crisis in the UK, and from any direct share in regulatory failure of the banks.

But you can't blame all of Britain's present woes on American sub-prime mortgages, although they were a catalyst. The root of the problem has been the mushrooming of derivative financial instruments generally, and half of these were invented in London. Nor was the explosion in off-balance sheet financing the result of a failure of of international institutions to supervise them.

The failure of regulation was at national level, in the Bank of England and the Financial services Authority here as the regulatory authorities in the US. Brown as Chancellor allowed the growth of the new finance because it suited him (the provision of mortgages and consumer credit to the poor was fine by him) not because he lacked the instruments of control had he wished to use them.

The British Prime Minister's insistent call now for the development of global institution to regulate global finance is in many ways just a red herring. You can certainly improve the transparency of international money flows, although there is the BIS to do that. You can greatly increase the degree of co-operation and co-ordination of central banks and financial authorities.

But in the end the best and only effective way of regulation is through the supervision by authorities of the banks based and operating in their territory. Trying to make China, India, Brazil participate in a new authority in which everyone is going to be responsible for everything is not going to work. Why should they?

So much of the talk of global reform is simply a diversion from doing now what is needed with the instruments that are there. The banks do require tighter control in the future. But for the moment they need prodding in to lending more not less. The world could probably do with a new Bretton Woods agreement to better manage exchange rates and capital flows. But right now it needs more co-ordinated action to reflate the world's economies and keep the wheels of finance moving.

What it doesn't need is one more politician – be he Brown or Sarkozy or even the outgoing US President – cavorting round the international stage, claiming ownership of the future. We've been through that with Tony Blair, and look where it got us.

a.hamilton@independent.co.uk

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Solutions Architect - Permanent - London - £70k DOE

£60000 - £70000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

General Cover Teacher

£110 - £130 per day: Randstad Education Reading: Great opportunities for Cover...

Maths Teacher

£110 - £130 per day: Randstad Education Reading: QTS Maths Teachers needed for...

Maths Teacher

£110 - £130 per day: Randstad Education Reading: QTS Maths Teachers needed for...

Day In a Page

Read Next
The bustling Accident & Emergency ward at Milton Keynes Hospital  

The NHS needs the courage to adapt and survive

Nigel Edwards
 

Letter from the Sub-Editor: Canada is seen as a peaceful nation, but violent crime isn’t as rare as you might think

Jeffrey Simpson
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?