Gordon Brown's 10 worst financial gaffes
Discussion
AshVX220 said:
Is the problem that there are some very clever lobbyists, lobbying some very dumb politicians to bring in these kinds of legislation?
Don't get me wrong, I'm not defending the man, just trying to understand why such things can happen so many times. To the clear benefit of the already very wealthy (and generally very clever).
One of the primary complaints people trying to work with winky have made over the past decade or so, has been his almost absolute refusal to deligate to experts or even listen to expert advice. he's read the PM's handbook (1984) and is determined to follow it's examples to the letter.Don't get me wrong, I'm not defending the man, just trying to understand why such things can happen so many times. To the clear benefit of the already very wealthy (and generally very clever).
The sale of OUR gold reserves is a fairly good example, he had been advised that the price was too low to sell and was then advised on the best way to sell it if he must . . . . . he made his descisons and ignored both pieces of advice.
NoelWatson said:
NoelWatson said:
TonyToniTone said:
NoelWatson said:
How do you know in advance that it is an all time low?
by looking at an index?Zod said:
The point, Noel, is that the price was relatively low, the trade was pre-announced, and the price subsequently rose. Brown would not have lasted on a trading desk.
I don't dispute the pre-announcing of the trade, but I don't know how anyone can determine whether gold price is high or low - how do you value it?NoelWatson said:
Zod said:
The point, Noel, is that the price was relatively low, the trade was pre-announced, and the price subsequently rose. Brown would not have lasted on a trading desk.
I don't dispute the pre-announcing of the trade, but I don't know how anyone can determine whether gold price is high or low - how do you value it?FourWheelDrift said:
NoelWatson said:
NoelWatson said:
TonyToniTone said:
NoelWatson said:
How do you know in advance that it is an all time low?
by looking at an index?NoelWatson said:
Does this magic index look into the future and determine that it was indeed the low point?
And can you confirm that it was the all time low please - Bloomberg doesn't show me this
The index along with other events would have stopped me dead in my tracks from selling half the UK's gold reserve at a 20 year low.And can you confirm that it was the all time low please - Bloomberg doesn't show me this
All time means up until the current point on the index - please dont tell me you pay for Bloomberg and dont know this.
NoelWatson said:
But who had any idea in 1999 which way gold was going to go? If anyone does/did know, please PM me.
The people that were telling him not to sell as he was pushing the price down in an already depressed market.Times said:
In the room, just behind the governor’s main office, they cautioned that gold traditionally moved in decades-long cycles and that the price was likely to increase. They added that even if the sale were to go ahead, the timings and amounts should not be announced, as the gold price would plunge.
“The timing of the decision was ludicrous. We told them you are going to push the gold price down before you sell,” said Peter Fava, then head of precious metal dealing at HSBC who was present at the meeting. “We thought it was a disastrous decision; we couldn’t understand it. We brought up a lot of potential problems at the meeting.”
Martin Stokes, former vice-president at JP Morgan, who was also present, said: “I was surprised they had chosen the auction method. It indicated they did not have a real understanding of the gold market.”
According to other sources, however, Bank of England officials told those present they had “little say” about what was going to happen and that they were “doing what they were told”. This was a decision made by Brown and his inner circle, who appeared uninterested in their expert advice.
“The timing of the decision was ludicrous. We told them you are going to push the gold price down before you sell,” said Peter Fava, then head of precious metal dealing at HSBC who was present at the meeting. “We thought it was a disastrous decision; we couldn’t understand it. We brought up a lot of potential problems at the meeting.”
Martin Stokes, former vice-president at JP Morgan, who was also present, said: “I was surprised they had chosen the auction method. It indicated they did not have a real understanding of the gold market.”
According to other sources, however, Bank of England officials told those present they had “little say” about what was going to happen and that they were “doing what they were told”. This was a decision made by Brown and his inner circle, who appeared uninterested in their expert advice.
http://www.timesonline.co.uk/tol/news/politics/art...
TonyToniTone said:
NoelWatson said:
Does this magic index look into the future and determine that it was indeed the low point?
And can you confirm that it was the all time low please - Bloomberg doesn't show me this
The index along with other events would have stopped me dead in my tracks from selling half the UK's gold reserve at a 20 year low.And can you confirm that it was the all time low please - Bloomberg doesn't show me this
All time means up until the current point on the index - please dont tell me you pay for Bloomberg and dont know this.
NoelWatson said:
But who had any idea in 1999 which way gold was going to go? If anyone does/did know, please PM me.
The way the gold prices were going to go in 1999 has nothing to do with this example because he didn't need to sell, but he sold at a low rate that had been driven lower for the last few years (because gold had been double the price only a few years before), acting like a panicking new trader. Yes they might have gone lower, not much, but history and simple logic would say the price would go back up and we were in the position to hang onto it to sell when the price was higher again. Or not sell at all.NoelWatson said:
But it wasn't an all time low, that is my point. Furthermore, how do you know that the price in 1999 was twice what it was going to be in 2009? There appears to be some people that are able to travel into the future on here.
As I said all time low means the price on the index at which the last point was recorded - it has no bearing on future prices, they would have been looking at the index when they were ready to sell. Now it may have not been at the bottom of the index but it was a twenty year low and they were advised not to sell.
FourWheelDrift said:
NoelWatson said:
But who had any idea in 1999 which way gold was going to go? If anyone does/did know, please PM me.
The way the gold prices were going to go in 1999 has nothing to do with this example because he didn't need to sell, but he sold at a low rate that had been driven lower for the last few years (because gold had been double the price only a few years before), acting like a panicking new trader. Yes they might have gone lower, not much, but history and simple logic would say the price would go back up and we were in the position to hang onto it to sell when the price was higher again. Or not sell at all.NoelWatson said:
FourWheelDrift said:
NoelWatson said:
But who had any idea in 1999 which way gold was going to go? If anyone does/did know, please PM me.
The way the gold prices were going to go in 1999 has nothing to do with this example because he didn't need to sell, but he sold at a low rate that had been driven lower for the last few years (because gold had been double the price only a few years before), acting like a panicking new trader. Yes they might have gone lower, not much, but history and simple logic would say the price would go back up and we were in the position to hang onto it to sell when the price was higher again. Or not sell at all.AndrewW-G said:
AshVX220 said:
Is the problem that there are some very clever lobbyists, lobbying some very dumb politicians to bring in these kinds of legislation?
Don't get me wrong, I'm not defending the man, just trying to understand why such things can happen so many times. To the clear benefit of the already very wealthy (and generally very clever).
One of the primary complaints people trying to work with winky have made over the past decade or so, has been his almost absolute refusal to deligate to experts or even listen to expert advice. he's read the PM's handbook (1984) and is determined to follow it's examples to the letter.Don't get me wrong, I'm not defending the man, just trying to understand why such things can happen so many times. To the clear benefit of the already very wealthy (and generally very clever).
The sale of OUR gold reserves is a fairly good example, he had been advised that the price was too low to sell and was then advised on the best way to sell it if he must . . . . . he made his descisons and ignored both pieces of advice.
IMO there's nothing more dangerous than someone with such power thinking they're smarter than all those who are supposed to provide the advice and guidance.
NoelWatson said:
I am not debating the fact that announcing he was going to sell was stupid. What I don't understand is how people are determining that gold would not have gone any lower. How are you measuring its value in the absence of P/E or yield? And how do we know that the price was going to go back up? I think someone has found a risk free arbitrage and are not telling me about it.
The so called "Expert Analysts" were the ones saying it would go back up. History showed that the Gold price would come back up.But assuming it wouldn't go back up......there was no NEED to sell the gold. So if we did not need to sell it, why make the decision to sell it when it's price is very low?
It's stupidity that's what it was. It was the act of a person who doesn't understand what he's doing, or just doesn't even care!
I know what you're saying about "knowing" it was an all time low. Thats the beauty of hindsight. But, it still doesn't change the fact he made a decision to sell of stock, which didn't need to be sold, when the price was at it weakest for several years!
Who else sold off their Gold Reserves at the same time? Who else thought the price would get worse?
NoelWatson said:
IanMorewood said:
NoelWatson said:
Is #2 a fair criticism?
Yep, the old saying of buy low sell high applies, he sold at an all time low.You also don’t advise the market in advance that your effetely putting 3 months worth of gold production up for sale over the coming months or that will devalue it too.
IanMorewood said:
NoelWatson said:
IanMorewood said:
NoelWatson said:
Is #2 a fair criticism?
Yep, the old saying of buy low sell high applies, he sold at an all time low.AshVX220 said:
Do we know why he sold the Gold? Was it used to fund anything particular or just to inflate the government wallet?
A face lift, it didn't work. So used it to buy Euros instead in a possibly way to get us into a single market economy.This is the story
Telegraph 1999 said:
Telegraph
Brown to Sell Half UK Gold Reserves
By George Trefgarne and Robert Shrimsley
Saturday 8 May 1999
GORDON BROWN was accused last night of trying to take Britain into the European single currency by stealth after surprising the City with an announcement that he was selling more than half of the country's gold reserves, leaving Britain the lowest bullion holdings of any major country.
The £4 billion of gold reserves - 415 tonnes - will be converted into euros, dollars and yen over the next few years. The sale will see the proportion of reserves held in gold falling from 17 per cent to 7 per cent. The Chancellor's announcement triggered a fall in the price of gold and provoked Tories and Euro-sceptic businessmen to claim the decision was politically motivated to prepare Britain's entry into the euro.
Their suspicions were fuelled by the timing of the announcement on a Friday afternoon when most MPs were away from Westminster and news coverage was dominated by the outcome of the elections for the Scottish Parliament, Welsh Assembly and English local councils.
The Treasury issued a bland, three-paragraph statement, saying the sale was intended to achieve "better balance" in Britain's reserve portfolio by increasing the percentage held in currency rather than gold but gave no suggestion that the move was linked to preparations for the single currency. Sources in the gold market claimed that Mr Brown had acted against the advice of Eddie George, the governor of the Bank of England, but this was denied.
The City greeted the news with dismay. Haruko Fukuda, chief executive of the World Gold Council, said: "This is a political decision, in preparation for joining the euro. This move appears to be pre-empting the promised referendum. Gold has special characteristics. It has been held as a reserve for thousands of years. Its value does not rely on anybody else's promise to pay, unlike cash, and it builds public confidence."
Francis Maude, the shadow chancellor, said: "Gordon Brown is trying to drag Britain into the single currency by stealth by making it appear inevitable. This could be another step along that road. It is time Gordon Brown started running the British economy in the interests of Britain and not in the interests of Europe."
After the sale, Britain will hold just 300 tonnes of bullion - a minimal amount when compared with other major economies. Around 40 per cent of the gold will be converted into euros; the same amount into dollars and the remaining 20 per cent into yen.
The sale of the reserves was seen at Westminster as a further attempt by the Treasury to bring Britain's economy into line with those states already signed up to the single currency. The Chancellor has made no secret of his desire to get Britain into a position where it can join the single currency early in the next Parliament - probably by 2002 - with the minimum of financial upheaval.
The European Central Bank, which adminsters the euro, has been encouraging those countries in the single currency to sell some of their huge gold reserves. It believes gold is a bad investment. The price peaked at $835 an ounce in 1980, but it has been struggling along at around $300 for the last 10 years. Yesterday, the price dropped sharply from $289.25 an ounce to $282.40 (£178.70).
However, a spokesman for the Treasury said: "This has nothing whatever to do with joining the euro. It is about efficient asset allocation within the foreign exchange reserves." The sale, to start next year, will bring to an end the Bank of England's 300-year-old practice of holding gold as a significant part of Britain's foreign exchange reserves.
A spokesman for the anti-euro group Business for Sterling said: "Since we know it is a political decision and we know that the European Central Bank has said that countries that want to join the euro have to sell off their gold reserves, it looks like another part of the Government's stealth policy."
Brown to Sell Half UK Gold Reserves
By George Trefgarne and Robert Shrimsley
Saturday 8 May 1999
GORDON BROWN was accused last night of trying to take Britain into the European single currency by stealth after surprising the City with an announcement that he was selling more than half of the country's gold reserves, leaving Britain the lowest bullion holdings of any major country.
The £4 billion of gold reserves - 415 tonnes - will be converted into euros, dollars and yen over the next few years. The sale will see the proportion of reserves held in gold falling from 17 per cent to 7 per cent. The Chancellor's announcement triggered a fall in the price of gold and provoked Tories and Euro-sceptic businessmen to claim the decision was politically motivated to prepare Britain's entry into the euro.
Their suspicions were fuelled by the timing of the announcement on a Friday afternoon when most MPs were away from Westminster and news coverage was dominated by the outcome of the elections for the Scottish Parliament, Welsh Assembly and English local councils.
The Treasury issued a bland, three-paragraph statement, saying the sale was intended to achieve "better balance" in Britain's reserve portfolio by increasing the percentage held in currency rather than gold but gave no suggestion that the move was linked to preparations for the single currency. Sources in the gold market claimed that Mr Brown had acted against the advice of Eddie George, the governor of the Bank of England, but this was denied.
The City greeted the news with dismay. Haruko Fukuda, chief executive of the World Gold Council, said: "This is a political decision, in preparation for joining the euro. This move appears to be pre-empting the promised referendum. Gold has special characteristics. It has been held as a reserve for thousands of years. Its value does not rely on anybody else's promise to pay, unlike cash, and it builds public confidence."
Francis Maude, the shadow chancellor, said: "Gordon Brown is trying to drag Britain into the single currency by stealth by making it appear inevitable. This could be another step along that road. It is time Gordon Brown started running the British economy in the interests of Britain and not in the interests of Europe."
After the sale, Britain will hold just 300 tonnes of bullion - a minimal amount when compared with other major economies. Around 40 per cent of the gold will be converted into euros; the same amount into dollars and the remaining 20 per cent into yen.
The sale of the reserves was seen at Westminster as a further attempt by the Treasury to bring Britain's economy into line with those states already signed up to the single currency. The Chancellor has made no secret of his desire to get Britain into a position where it can join the single currency early in the next Parliament - probably by 2002 - with the minimum of financial upheaval.
The European Central Bank, which adminsters the euro, has been encouraging those countries in the single currency to sell some of their huge gold reserves. It believes gold is a bad investment. The price peaked at $835 an ounce in 1980, but it has been struggling along at around $300 for the last 10 years. Yesterday, the price dropped sharply from $289.25 an ounce to $282.40 (£178.70).
However, a spokesman for the Treasury said: "This has nothing whatever to do with joining the euro. It is about efficient asset allocation within the foreign exchange reserves." The sale, to start next year, will bring to an end the Bank of England's 300-year-old practice of holding gold as a significant part of Britain's foreign exchange reserves.
A spokesman for the anti-euro group Business for Sterling said: "Since we know it is a political decision and we know that the European Central Bank has said that countries that want to join the euro have to sell off their gold reserves, it looks like another part of the Government's stealth policy."
Edited by FourWheelDrift on Tuesday 11th August 15:31
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