As the spiral continues downwards, are Labour's chances actually improving?
The economic crisis, which it can almost certainly now be justifiably called, has just entered a new and latest phase, quite plausibly the critical stage. After Darling's statement to the House on Monday went down in the City like a lead balloon, apparently leading to swift pleading overnight and today that something had to be done to stop the precipitous decline in the shares of HBOS, RBOS, Lloyds TSB and Barclays, even while the latter two of those organisations said they didn't need any handouts, by most accounts before the FTSE opens tomorrow morning up to £50bn will be used to take stakes in all of the mentioned institutions, with potentially more to follow if the fallout is is even more serious than now thought.
How much of this has been planned in advance and how much has been developed ad hoc is open to question, with Simon Jenkins in particular railing against the "dithering". The government's plan may well have been to deal with problems as they developed, but the biggest drop in the FTSE's history on Monday, followed by continuing to decline bank shares seems to have forced their hand fully now. However much criticism can be directed at the government for letting the banking crisis develop, through the "light touch" regulation to the promotion of easy credit, few can envy either Brown or Darling being at the very centre of a storm which is potentially far more serious than the withdrawal from the ERM was in 1992.
The mentioning of Black Wednesday is key because this could also now help further determine who the victors of the next election will be. If the "plan", such as it currently is succeeds, gets the banks lending again and restores liquidity, then it is still not too late for Labour's reputation to be if not restored, then vastly improved. For sure, there is going to be a recession, and Brown's abolition of boom and bust is going to do an awful lot of damage. If however the electorate gives the credit to the government for making the worst of a bad situation, and the recent polls have suggested that most actually have been favourable, if grudgingly of Brown and Darling's performance thus far, it could still with pushing by Labour prompt doubt in what the Tories would have done and how they would have coped. For all Cameron's claiming of being a "man with a plan", their contribution to the economic arguments has been pitiful. On Newsnight again tonight the best they could offer was Kenneth Clarke, whilst Vince Cable for the Lib Dems was again in evidence.
It might well be that the general public has had enough of Labour, end of, as the 10 to 12 point deficits in the polls even after the boost from the Labour conference suggest. While it looks increasingly bleak financially, Labour's chances will probably now depend on what happens over the next few weeks.
Labels: Alistair Darling, credit crunch, economics, fall of Gordon Brown, New Labour, recession, socialism for the rich, we're all doomed
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