The Power of Proposal

The Power of Proposal

Gordon Brown is benefitting from being the proposer of the bail out solution which has become the framework for others to follow. It is a very good example of how a realistic proposal will dominate, especially in a multi lateral environment when a solution is needed very quickly.

The problem with the idea behind the initial US option was that the White House had not proposed a “realistic” proposition in the political sense, which is why it did not have the support or momentum from Congress. By the time the UK had finished its “behind closed doors” discussions between the Bank of England and the FSA (along with other private discussions), the World was desperate for an idea that could be clung to as alternative to disaster. The UK proposal worked politically and financially as a start.

The slight hiccoughs from Germany, and the problems in Iceland and the difficult Irish suggestion (dangerously expensive and unilateral for others to follow) helped the UK proposal be the “only game in town”.

The proposal was powerful because it was conditional, addressed the immediate issues on most sides, provided safeguards and had the pressure of urgency on its side. It was deemed to be essential to stabilise the markets.

The alternative would have been an unsightly public competition between western leaders over who would be the “one” to save the world. The arguments would have been partisan and divisive.

Having established this workable proposal, we now watch the modifying and packaging of the core elements into variations which better suit the different national markets. The next serious problem will be how disciplined parties will be in honouring these agreements.