NEW Business Secretary Peter Mandelson admitted yesterday that he had checked in with his old boss Tony Blair before he agreed to take up PM Brown’s job offer.
He also counselled that a lot of thought was needed and that there should be no rush to come up with instant solutions to the crisis of British capitalism, such as the Irish pledge to guarantee all deposits in Irish banks.
He told Sky News that ‘big lessons’ had to be learned about the crisis.
He did not seek to pin the blame for the crisis onto selected scapegoats such as short sellers.
He likened capitalism to a very sick patient, the cause of whose illness had to be discovered and then carefully treated.
Mandelson did not discuss whether the patient was so old that it should be put out of its misery so that humanity could go forward to a higher form of socialist society.
The quack Mandelson told Sky that the current financial situation was ‘very bad’ and recovery would have to happen in three stages.
Likening the system to a very sick patient, he said the first priority was to stabilise it, boosting ‘confidence and trust’ by increasing the liquidity available to banks.
Further steps must be taken, he said.
‘You have to treat the symptoms. Then you have to restore the patient to health and make sure what we are seeing now does not happen again.’
Meanwhile, at the Paris summit on Saturday, Brown ruled out a US-style bail-out of banks across Europe.
Liberal Democrat treasury spokesman Vince Cable commented that the economy was on the ‘edge of a cliff’ and urged Darling to put pressure on the Bank of England to lower interest rates to help businesses and consumers.
He said a ‘temporary’ change in the bank’s remit to allow it to prioritise growth over inflation may be warranted.
He warned: ‘We are on the cusp of a major economic disaster coming out of a financial disaster.’
The Bank of England is however loth to cut rates and let inflation rip arguing that such a cure could be worse than the disease.
Chancellor Darling continued to pledge that he would bail out more failing banks while, at the same time, making it clear he would keep a tight grip on public spending.
He told the BBC’s Andrew Marr Show, ‘There are two problems at the moment.
‘One is to stabilise the position in the banking sector. That’s very, very important.’
Referring to the collapse of Germany’s second biggest bank, he added that ‘what’s going on in Europe even as we speak, the situation is difficult, conditions are very febrile’.
Asked ‘Have you got a list of British banks that you are still worried about?’ Darling said, ‘You have to take action across the piece.
‘That’s why, for example, through the Bank of England we have put billions of pounds into the system to help the whole banking sector.
‘But also you do need to be ready to take specific action, as we did with Bradford & Bingley last weekend. . . as we did with Northern Rock . . .’
Pressed, he added: ‘The point I’m making is it’s important that you take generalised action as well as being ready to take particular action if you get a particular problem with an individual bank.’
