Lawson condemns markets for being ‘superficial’
Former chancellor says markets ‘get it wrong all the time’ over eurozone crisis
It was also partly David Cameron’s fault. He made it a three-line whip, which made the revolt seem much more important
Lord Lawson on parliamentary motion for an EU referendum
Former chancellor Lord Lawson today condemns the financial markets for making a series of superficial assessments of the eurozone crisis and “getting it wrong”.
In an interview with Exaro, Lawson said that the markets keep making knee-jerk reactions to superficial media reporting of developments in the crisis over European debts. He argues that this has made the financial crisis even more volatile than it would otherwise be.
Nigel Lawson, as he was known before becoming a member of the House of Lords, was the UK chancellor to prime minister Margaret Thatcher between 1983 and 1989. As a key member of Thatcher’s Conservative governments, he was one of the architects of the ‘big bang’ banking reforms of the 1980’s.
Speaking about media coverage of recent attempts to resolve the crisis in confidence in Greece and Italy – and the market reaction to it – he said: “It was very unintelligent and very superficial.”
“You see the euro’s retreat, then they have a meeting and produce a communiqué, but the communiqué is completely meaningless. Nothing had been agreed.”
“Nevertheless, because of the headlines in the Press, the markets believed that they had reached agreement, so the markets went up. Two days later, it was obvious that there was not an agreement at all, so the markets went down.”
“I was struck by the fact that, not only was the Press incredibly short term, going from one story to the next – from good to bad news stories, but mainly bad stories – it was all very superficial, but the stock market was equally superficial.”
“I am absolutely convinced that the free market is the best thing available, but they get it wrong all the time. When I say the market, it is not just the stock market, it is the financial markets as a whole – banking, and so on.
“But they believed what the politicians told them about the eurozone. They did not realise that this was entirely a political venture and did not make economic sense. They believed what authorities were saying.
“They believed that the Greek debt was just as good as German debt because it was all euros. So they loaded up with these debts, and now they are left with all this rubbish on their balance sheets, which is causing problems for all sorts of people.”
Lawson also said that David Cameron, the present prime minister and Conservative leader, made a mistake by insisting on a three-line whip in the vote in the House of Commons last month on a motion calling for a referendum on the UK’s membership of the European Union (EU).
The three-line whip meant Conservative MPs were compelled to vote against the motion, but 81 MPs defied Cameron. On the rebellion, Lawson said: “I do not want to say anything particularly. It was also partly David Cameron’s fault. He made it a three-line whip, which made the revolt seem much more important.
“It was just an expression of opinion, which is all it was, and people could have had a free vote. I do not think then it would have been so important, and would not have been made into such a big deal by the media.”
On the euro, Lawson said that the main complaint that he made against it in 1989 still stands today. Asked by Exaro whether the euro will survive, Lawson said: “Well, I hope not.”
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