Wednesday, May 18, 2011

"The Best Person For the Job"

Chancellor not a booster for Gordon Brown's IMF bid

With former British Prime Minister Gordon Brown seeking to assume the role of Managing Director of the International Monetary Fund, there may be one key obstacle in his path:

The British government.

In April, Prime Minister David Cameron questioned Brown's suitability for the job.

“If you have someone who didn’t think we had a debt problem [running the IMF] they may not be the best person to decide whether other countries have that problem," Cameron declared.

The decision over whether or not the British government will attempt to block Brown from becoming IMF Managing Director has not been made. For his own part, Chancellor of the Exchequer George Osborne hasn't expressed any great preference regarding Brown and the IMF.

He's calling for the "best person for the job".

"If it comes to a decision about a replacement for Dominique Strauss-Kahn, what I will be motivated by and what the British Government will be motivated by is who is the best person for the job," Osborne declared. "Instead of 'Is it Buggins's turn?' or 'Should it be someone from a particular country or not', let's focus on getting the right person for the right job."

Brown hasn't yet asked Osborne for any kind of endorsement for assuming the role.

"As it happens, Gordon Brown has not asked me directly or indirectly to be considered for the job," Osborne said. "I'm at the moment focused on making sure we get the best person for the job."

So is Gordon Brown the best person for the job?

The Brown government's use of Private Finance Initiatives to conceal billions of Pounds Sterling in public debt has previously been explored here.

What has not been is Brown's "tripartite" system of Financial regulation.

When he was Chancellor of the Exchequer, Brown split regulatory powers between the Bank of England, the Financial Services Authority, and the Treasury. This led to a breakdown of surveillance powers, leading to a state of affairs where two-thirds of bank lending in Britain was to other financial institutions.

In the opinion of Dr Sushil Wadhwani, a former member of the Bank of England's Monetary Policy Committee, this led to a situation in which interest rates lagged far behind the rate required to return credit markets to equilibrium.

This led to British credit markets in which the incentives to borrow were overloaded. Eventually, Britain fell into the same credit collapse as the rest of the world.

Given the kind of havoc Gordon Brown wrought with Britain's finances and Britain's economy, the idea of giving him a surplus of power over the global economy should be a sobering thought indeed.

David Cameron is right. Gordon Brown is not the right person for the job.

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