THREAD: As the 10th anniversary of the Crash looms, it's time to revisit the courage & leadership that Gordon Brown showed in the first few days of October 2008. Whatever your politics, or view of GB, he was the right man for the moment. Here's my memory of what happened. 1/16
When Gordon Brown returned from a holiday in Suffolk, gloom in global markets was snowballing into a full-blown crisis. The Government was not in great shape: the Tories had a 19-pt poll lead, Cameron was polling impressively, & there were calls from Labour MPs for GB to go. 2/16
As October began & the crisis worsened, the international response was all over the place. The US opted for TARP, a massive scheme to buy up toxic assets. Ireland & Greece opted to guarantee bank deposits. Europe was paralysed. The markets looked on in horror. As did Gordon. 3/16
Gordon realised 2 things. 1) There urgently needed to be coordination: between governments, between Central Banks, between Central Banks & governments. 2) Recapitalisation, not purchasing toxic assets, was the only way to fight the crisis. But the EU & US were sceptical. 4/16
The EU's internal divisions were evident on October 4th at an emergency summit of the EU ‘Big Four’ in Paris. The summit’s language showed some resolve, but under the surface there was strategic disarray, & opposition to large-scale recapitalisation. theguardian.com/politics/2008/… 5/16
Monday Oct 6th saw the free-fall accelerate. News leaked that the Treasury had called in major banks to discuss next steps. The FTSE-100 had its biggest one-day fall since it began in 1984. Gordon & HMT knew intervention could no longer wait. UK banks were about to collapse. 6/16
Tues Oct 7th: After Cabinet, Gordon, Peter Mandelson & Ed Balls took up residence in GB’s office, others going in & out. It was the most stressful day among weeks of stressful days: UK bank shares were haemorrhaging, while Iceland’s banks were in meltdown (no pun intended). 7/16
It was the most precarious day for the UK economy. RBS kept feeding messages in that they needed a bailout immediately or else would go under. Gordon knew he only had one shot at winning credibility with the markets for an intervention on the scale needed. He held his nerve. 8/16
First, Gordon decided to announce a £500bn package for UK banks. But to do so at 7.30am the next day, on the grounds that a massive recapitalisation announced on Tues at 6pm suggested panic, whereas a Weds 7.30am announcement as markets open suggested strategy & control. 9/16
Second, on Tuesday afternoon Adair Turner (FSA) & Mervyn King were invited in for talks with GB and the Chancellor. They walked in through the front door, to show the world that a plan was being hatched & coordinated across the main governing institutions of the UK economy. 10/16
Weds Oct 8th: The bank package is announced. At 12pm, as PMQs began, the Bank of England, the US Fed & the ECB announce a coordinated interest rate cut. The PM & Chancellor hit the phones to persuade EU & US leaders to follow the UK’s switch to large-scale recapitalisation. 11/16
Oct 11-12: The lobbying of world leaders culminates in the G7 Finance ministers & IMF agreeing to a plan centering on massive recapitalisation. We travel with Gordon to Paris, where at a Heads of Eurozone crisis meeting he persuades EU leaders to adopt the UK approach. 12/16
Oct 13: Gordon announces £37bn emergency support for RBS, Lloyds & HBOS. The next day the EU agrees to a $1.8tn package of recapitalisation & loan guarantees. The US follows suit, & US Treasury Sec Paulson agrees to use TARP funds to buy bank shares instead of toxic assets. 13/16
The crisis was far from over, but the worst days for the UK were. Gordon had made a radical call, persuaded the EU & US to follow his lead, & begun to show world markets that coordination across govts, & across central Banks, could happen & could make a positive difference. 14/16
At the end of those two weeks, Paul Krugman asked if Gordon Brown had saved the world. A bit much, I know... But his leadership was phenomenal at the worst of times, when the threat of meltdown & chaos was all around us. nytimes.com/2008/10/13/opi…. 15/16
I was a minor player in that no.10 team. But for 3 weeks, even I either didn’t sleep well or at all. So just imagine the pressure on Gordon Brown, who had to make those calls, win those arguments, & lead by conveying confidence to the world. We were all lucky to have him. 16/16
