Chapter 645 Weighing the two evils

"Your Excellency, Prime Minister, I think the government's actions are too slow. If this continues, we will inevitably enter a recession much faster than other countries. This will be catastrophic not only for you, but for the entire country." of."

After meeting Brown again, Barron directly expressed his dissatisfaction with the government's slow response to the crisis.

"We need to proceed cautiously when introducing policies. Although the injection of funds is necessary, its limit will be affected by many factors. We do not want inflation to accelerate as a result."

From Brown's slightly worried expression, we can see the government's entanglements at this time.

As mentioned before, since Margaret Thatcher, the British government has been pursuing liberal economic policies, and the government has avoided excessive interference in the market.

For example, in this subprime mortgage crisis, when Northrop Bank suffered a run, the British government finally decided to rescue it after many discussions and when it finally saw that the situation was getting more and more critical. of.

In terms of the scale and intensity of aid, the British government is also very different from the American government.

The previous British version of the "Lifeline Plan", a 100 billion pound rescue plan for some mortgage loan groups, was finally introduced after the joint lobbying of British financial industry bosses including Barron.

As a result of this situation, in addition to the British government's inertia of always trying to avoid interfering with the "free market", it is also worried that large-scale bailouts will cause the currency to "water out" and aggravate British inflation.

It’s not that the British government is unaware of the dangers of this subprime mortgage crisis. For example, two months ago, current Chancellor of the Exchequer Darling admitted:

"The British economy is experiencing the most serious crisis in 60 years, and Britain is facing the most severe test since the end of World War II..."

Finance is a pillar industry in the UK, and in this subprime mortgage crisis, the banking industry has borne the brunt of the impact.

Since Northrop Bank suffered the first bank run in Britain in a century, the London stock market has been on a downward trend, with the highest declines on several occasions. Among them, bank stocks were the biggest losers, and even the share price of Standard Chartered Bank was affected. Influence.

In addition to the banking industry, the real estate industry has also been greatly affected. House prices in England have fallen by more than 15% within one year at the fastest rate since 1983. In England, where 80% of households own real estate, this decline is even greater. The impact was widespread.

Even due to falling house prices, there was a shortage of funds for the 2012 London Olympics. It was said that the shortfall was as high as 250 million pounds.

"According to the latest data I have, our inflation rate has risen to 4.5%, consumer prices have skyrocketed, one person declares bankruptcy every four minutes, and the Bank of England even predicts that the number of unemployed people in the UK will reach 2 million before Christmas this year... …”

Seeing Brown frowning and talking about the current serious situation, Barron shook his head and said:

"But if we continue to do nothing, the situation will only get worse. Prime Minister, there is a saying in China that is 'the lesser of two evils'. The 'neoliberalism' we have always regarded as the norm is not It must be suitable for all situations. Now, it is time for the government to take action..."

He looked at Brown and said firmly:

"You know, I have been shorting the British stock market from the beginning. Not only the British stock market, but also Europe, the United States, Asia, and almost all global markets are involved. If it is just personal interests, then I can stay out of it. After all, Standard Chartered The bank is in good shape and I have enough capital to ensure that the companies I invest in can survive this crisis and take advantage of the opportunity to expand, but I am British and it is time for us to step up..."

"We will have relevant responses, and I also need to respect Darling's opinion in this regard."

Darling is the current Chancellor of the Exchequer. He took over this position after Brown became Prime Minister.

"In my opinion, Darin is still too cautious. Of course, this is understandable. After all, you are too good at that position. Everyone will always compare you, but the situation is always changing. The good medicine before , may not be effective for the current disease.”

The dilemma faced by the current Chancellor of the Exchequer Darling, in the eyes of some people, is similar to that faced by Brown - when Brown was the Chancellor of the Exchequer, the UK also encountered a crisis caused by the bursting of the Internet bubble. The economic crisis, but Brown's response at the time, allowed the British economy to survive smoothly.

During this time of the subprime mortgage crisis, Darling's actions and his stabilizing effect on the British economy are naturally easy to be compared with his predecessor.

"I will have a good talk with him again, Your Highness."

"I hope the government can act faster. After all, confidence is the most important thing for the market now. Only when the situation is stabilized can it gradually improve, and banks and finance are the key..."

Barron raised his glass, clinked it with Brown, and said:

"As for the friction with Iceland, I will help you mediate."

The friction between England and Iceland that Barron mentioned was also caused by the subprime mortgage crisis...

108 local governments, including England, Wales and Scotland, had deposited 842 million pounds in Icelandic banks before this - some of them even deposited the money used to pay the salaries of municipal system employees in Icelandic banks to earn interest.

The result was that the subprime mortgage crisis came, and Iceland's financial system was on the verge of collapse due to the impact of the global financial crisis. The Icelandic government had to take over their three major banks, but did not promise to return the deposits of British local governments.

So, Britain retaliated by freezing the assets of Icelandic banks in Britain in accordance with the Anti-Terrorism Act, so that Brown and Iceland's Prime Minister Harder publicly accused each other in their respective capitals, opening the first case of the financial crisis affecting state relations.

Before this, Iceland's sovereign wealth fund also invested in funds under the DS Group, and Barron could also have some contact with the other party, so he would say words to help Brown ease the relationship between the two sides - after all, no matter what, the problem must be solved.

"I hope you can help stabilize the sentiment of the stock market, Your Highness. Although the rescue plan needs to be discussed and decided, if this can be done, then the funds of some of our related public funds can be gradually managed by the DS Group..."

Just like Barron told Brown directly before that he was shorting the global stock market including the UK, because there was nothing worth hiding, because shorting itself is not a negative word for the UK, which has a financial center like London, or for the whole of Europe and the United States. Moreover, ordinary people may not know about the shorting of funds under the DS Group, but as the prime minister, Brown can still get relevant information.

Even so, the meaning of Brown's words is very clear, that is, although shorting is Barron's freedom, he still hopes that the other party can give up continuing such actions so that the UK stock market can stabilize.

Of course, he also offered a trade-off in benefits, that is, the management rights of some public funds managed by the British government could be gradually handed over to DS Group. Of course, these assets have suffered losses due to the subprime mortgage crisis, and Brown also hopes to recover some losses through the management of DS Group. If this goal is achieved, it can be called a win-win situation.

"As you wish, Prime Minister, the effect will definitely be limited if we rely solely on our strength. The market is now waiting for the government to rescue the market, so that we can truly give everyone confidence."

At the end of the conversation between the two, Barron reiterated his expectations.