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Steve Chiotakis: We’re continuing our occasional series, “What’s the Fix?” this morning, a look at possible solutions to the economic crisis. And today, we jump the big pond and look at British Prime Minister Gordon Brown’s plans for the U.K. Earlier this summer, his approval rating had taken a nosedive, but he launched a bank rescue plan and things are looking better for him politically. In our series “What’s the Fix?” Stephen Beard reports on the Brown Solution, and whether it will save the British economy.
Stephen Beard: When Prime Minister Gordon Brown unveiled his plan to fix Britain’s financial crisis, he was hailed a “global savior.” There was a wave of hero worship. Even cool Scandinavians, like former Danish premier Poul Rasmussen, succumbed:
Poul Rasmussen: He is a hero. Because Gordon Brown actually made the package which all of us have now tried to do. So Gordon Brown knew how to do in a very, very critical moment.
Brown was the first to use taxpayer’s cash to buy shares in troubled banks. That plus a slew of loans were aimed at bolstering the banks’ solvency. Three weeks and $800 billion later, the banks look comfortable, but ordinary business people don’t feel anymore secure.
Stephen Alambritis: Small businesses are still finding it difficult to get money, to tide them over, to increase their overdraft, to pay the wages just to get through these very difficult times.
Stephen Alambritis of the federation of small businesses:
Alambritis: We are seeing bankruptcies, closures going up, currently running at 40 small businesses a day collapsing — that’s 280 a week.
And here’s a company that almost went bust. It makes electrical accessories. The company is profitable, but when its bank lost billions in mortgage-backed securities, it suddenly called in its loans. The boss, Roger Piepenstock, just doesn’t believe the Brown bailout will fix the British economy.
Roger Piepenstock: Banks still aren’t lending. They’re becoming in the U.K. more aggressive about home repossessions and taking loans off companies. I don’t see the money that we’ve given them is going to help the real economy. I think it’s going to shore up their balance sheets and probably pay their bonuses.
Brown says he’ll crack down on bonuses and insist on the banks lending at the same levels as last year. But his critics say that’s unrealistic — banks lend less in a downturn. And with less lending, a downturn is where Britain heading.
In London, this is Stephen Beard for Marketplace.
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