Credit crunch was not the fault of the Labour Party is this week's letter to the editor. 

I WAS interested to read Steve Baker’s remarks in Friday’s BFP about people being rude to him on his web page.

Recently he published an, unintentionally, hilariously condescending and patronising rude reply, on that very same web page to an open letter by his Labour rival, Emma Reynolds, asking him how the damage to the NHS and its staff accomplished over the lasts 13 years could be repaired.

It’s tempting to dispute the mantra barrage, of doubtful party political health statistics he quoted, but I saw that he also mentioned the credit crunch of 2008 – the ‘appalling financial circumstances we inherited from your Party’ with the implication that the crunch was the result of Labour mismanagement.

Although people like Steve, Jacob Rees-Mogg, and other Brexiteers, like to speak of the credit crunch as if it was the result of Labour councils recklessly throwing public money at ethnic minority lesbian poetry cooperatives, it was in fact imposed on the UK, and the other G7 nations, by international forces, starting in the US.

Years of under-supervised lending there at a time of comparatively low interest rates had inflated a huge debt bubble where lenders sold ‘ninja mortgages’ to ‘sub-prime’ borrowers with No Income, No Job and No Asset (hence ‘ninja’).

The US banking sector had ‘repackaged’ the income they got from ‘ninja’ home loans into other financial products and sold them on to investors abroad – many of the investors were hedge funds and banks in the UK and other countries.

When US interest rates began to rise, and borrowers began to default on mortgage payments, US house prices started to plummet and the value of the ‘repackaged’ investments - ultimately based on ‘ninja mortgages’ - fell, resulting in huge losses as US banks did not have the capital to cover these debts.

In its January 2011 report, the US Congress Financial Crisis Inquiry Commission concluded the financial crisis was avoidable, and was caused by half-a-dozen or more factors the major ones being: ‘widespread failures in financial regulation and supervision’ and: ‘deregulation of over-the-counter derivatives’.

Steve is a great enemy of government regulation – almost the only obstacle to economic growth acknowledged in his public pronouncements are ‘red tape, or ‘bureaucracy’ (often with the initials ‘EU’ in front of them).

The acceptance of the ideas of Steve and people like him, in favour of deregulation, is one of the causes of the 2008 credit crunch which caused the ‘appalling financial circumstances we inherited … ’

This is clearly not the result of Labour irresponsibility with public funds – although the national debt increased dramatically during this global financial crisis this was the result of Prime Minister Gordon Brown introducing rescue packages to keep our banks, and the world banking system, afloat during the crisis – something he has been praised for by heads of foreign countries.

Steve cannot say Liz Truss’s minibudget last September was imposed on the UK by international forces.

Truss attempted to lower tax for the rich and social benefits for the poor at the same time, funded by borrowing on the international markets.

The Guardian described this as ‘a naked exercise in redistributing wealth upwards … it is more or less impossible to find an economist who supports the government’s approach, or an economic model able to justify it’.

The IMF, not usually considered a nest of wokery, also criticised the plans and, when a replacement plan was being produced two months later, last November, it said the new plan gave the government an opportunity to ‘re-evaluate’ the mini-budget tax measures, ‘especially those that benefit high income earners’.

The redistribution of wealth upwards and the fundamentally unsound logic of the mini-budget seem to have been missed completely by Steve who wrote an admiring letter to the BFP stating his approval of the mini-budget as a ‘return to fundamentally conservative policies.’

I hope Steve doesn’t think this letter is rude.

Lawrence Linehan, Wooburn Green, Buckinghamshire