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Mervyn King Is Our Best Hope

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Liam Halligan's column jumps to King's defence. Halligan has often been critical of King and the bank in the past (for example, he was ahead of the rest of the chattering classes in saying no to QE).

Halligan's central thesis: King is just about the only senior policymaker who is still trying to get banking reform. The fat cats want his scalp because he's the only one standing in the way of their gravy train getting back to full speed. Hence they're driving a campaign of anti-King stories (some of them lapped up here on HPC) designed to discredit him.

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Never mind that, isn't it time the borrowers took responsibility for their actions? :rolleyes:

I mean, Banking reform, it's not necessary is it? Quick!! Look, over there a man with three arms...

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Liam Halligan's column jumps to King's defence. Halligan has often been critical of King and the bank in the past (for example, he was ahead of the rest of the chattering classes in saying no to QE).

Halligan's central thesis: King is just about the only senior policymaker who is still trying to get banking reform. The fat cats want his scalp because he's the only one standing in the way of their gravy train getting back to full speed. Hence they're driving a campaign of anti-King stories (some of them lapped up here on HPC) designed to discredit him.

I'd totally agree with this. I believe King is not very capable, however it is clear that much of the outcry against him is from vested interests. It's going to be very tempting for the Tories to say "****** it, let's go for another credit bubble" over the next 12 months as the UK starts to fall apart.

I'd rather have an unelected official (chosen by elected officials) wield power over the banks than have the banks rule the roost over government.

What I would like to see this time is King actually resign and spill his guts if the government go down the same path as Labour. Instead of sitting back and taking the considerable pay with periodic mumblings of discontent. I know that's hard on King but if ever we needed men of principal it's now.

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I can scarcely believe this: King is the one who cut interest rates in 2005 when he should have been increasing them, he is also the one who cut rates to half one basis point

Now he is Saint Mervyn King, all of a sudden?

I don't see him as anything other than the man who kept the bubble inflated

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I can scarcely believe this: King is the one who cut interest rates in 2005 when he should have been increasing them, he is also the one who cut rates to half one basis point

From the article referenced:

In August 2005, lest we forget, King was out-voted when he tried, amid signs credit was over-heating, to prevent interest rates being cut.

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King's recent comments about failing to have raise rates to prevent HPI are now going to be used as justification for keeping rates low. With the housing market in decline he'll argue that rates must be kept low to prevent a crash.

The MPs' sabre rattling is simply that many of them are seeing their property portfolios stagnating and believe that at this point in time a new head of the BOE can somehow restore HPI with a magic wand. It'd be interesting to see how many of these MPs' are property VIs?

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King's recent comments about failing to have raise rates to prevent HPI are now going to be used as justification for keeping rates low. With the housing market in decline he'll argue that rates must be kept low to prevent a crash.

The MPs' sabre rattling is simply that many of them are seeing their property portfolios stagnating and believe that at this point in time a new head of the BOE can somehow restore HPI with a magic wand. It'd be interesting to see how many of these MPs' are property VIs?

http://www.housepricecrash.co.uk/forum/index.php?showtopic=153979

King was deputy governor from 1998 until be became governor in 2003 if he is our best hope given what has happened during his time then god help us.

He is currently doing the decent thing and taking some flak from his vested interest chums, so they can argue for a banker to be put in charge. With King you watch what he does not what he says. He warns of fire while at the same time throwing fuel on it.

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http://www.housepricecrash.co.uk/forum/index.php?showtopic=153979

King was deputy governor from 1998 until be became governor in 2003 if he is our best hope given what has happened during his time then god help us.

He is currently doing the decent thing and taking some flak from his vested interest chums, so they can argue for a banker to be put in charge. With King you watch what he does not what he says. He warns of fire while at the same time throwing fuel on it.

+1

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It was the fact he stated "there was no chance of foreseeing a bust because there was no discernible boom" has really destroyed his reputation as far as I am concerned.

In fact he still can't see it....which is why he has to go with his reputation in complete tatters.

EDIT: He has plainly over estimated the productive capacity of the economy both in managing growth but also by the fact he always foresees well above target inflation falling back below target 2 years out because of the "output gap".

i think thats a bit harsh considering his narcolepsy

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This is a joke? He is completely useless.

He is to blame for the crisis and for the lack of growth/recovery for the last 5 years!!!!!!

If he had raised IR either before or after we would have been over the recession...

So please no more PR from the BoE here...

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This is a joke? He is completely useless.

He is to blame for the crisis and for the lack of growth/recovery for the last 5 years!!!!!!

If he had raised IR either before or after we would have been over the recession...

So please no more PR from the BoE here...

I'm no supporter of King. He is a problem, but I think in the rush to kick him we shouldn't allow the banking industry to seize the agenda or smuggle in ideas that stop reform.

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Whoever takes over from King the one thing we can be sure of is that the economy will continue to be run for the benefit of the select few. :angry:

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I'm no supporter of King. He is a problem, but I think in the rush to kick him we shouldn't allow the banking industry to seize the agenda or smuggle in ideas that stop reform.

I think support for banking reform is King's "redeeming feature". I agree the performance of the MPC has been dire under his stewardship, but to get rid of him now when there could finally be some payback would be a bit daft.

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I think support for banking reform is King's "redeeming feature". I agree the performance of the MPC has been dire under his stewardship, but to get rid of him now when there could finally be some payback would be a bit daft.

Yes, I think that's the best way of putting it. He didn't have enough backbone to push back on inflationary policy but seems to now have some balls about banking reform. As I said earlier he needs to get this done or if the politicians want to take the short-term fix he needs to resign and "shout from the rooftops" even if it means not getting invited back to wimbledon.

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I can scarcely believe this: King is the one who cut interest rates in 2005 when he should have been increasing them, he is also the one who cut rates to half one basis point

Now he is Saint Mervyn King, all of a sudden?

I don't see him as anything other than the man who kept the bubble inflated

Output is still below 2008. This is a longer depression that 1930s.

If you thing 0.5% would even have mattered in the slightest you're living in a different universe.

You think that would have halted securitisation? AIG? The FED? China? Altered boomer demographics?

You're nuts.

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This is a joke? He is completely useless.

Yes, I thought Halligan's account had been hacked when I read it

I'm no supporter of King. He is a problem, but I think in the rush to kick him we shouldn't allow the banking industry to seize the agenda or smuggle in ideas that stop reform.

Some truth in that no doubt

I think support for banking reform is King's "redeeming feature". I agree the performance of the MPC has been dire under his stewardship, but to get rid of him now when there could finally be some payback would be a bit daft.

Finally? Been a long time coming if it's indeed here at last

Output is still below 2008. This is a longer depression that 1930s.

If you thing 0.5% would even have mattered in the slightest you're living in a different universe.

You think that would have halted securitisation? AIG? The FED? China? Altered boomer demographics?

You're nuts.

Not going to bother getting sidetracked by your troll post, but I will say that 0.5% has allowed EAs and property VIs to play very favourable mood-music and keep HPI going. And that's what this site, housepricecrash, primarily addresses as an issue. If you can't see the wood for the trees, it's you who's the spherical object that can cause allergic reactions

Edited by inflating

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If you thing 0.5% would even have mattered in the slightest you're living in a different universe.

You think that would have halted securitisation? AIG? The FED? China? Altered boomer demographics?

+1

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I blame the 2001 interest rate cuts after 9/11

That was the most idiotic thing to have happened, both here and state side.

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+1

-1

It was the raising of rates in 2006-2007 that made the system go pop. If it had been done earlier, the scale of the problem would have been considerably smaller. The two cuts from 4% to 3.5% should have gone in the other direction and continued upwards.

As for the argument that the Bank of England were powerless due to the global situation, what an indictment of the BoE's influence. As the governor of the BoE, Mervyn King didn't have to rely merely on his ability to persuade. He also had the power to materially affect the global situation in a way that would force others to take notice.

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Obviously King is a divisive figure but the OP is not suggesting that he was a good Governor in the past, rather that he is the only person making any noise about banking reform.

As to the relevance of banking reform, I think about it this way - given that we don't have capital controls to stop money flooding into the country chasing yield at present we are faced with either accepting boom/bust cycles in the mortgage market or doing something about the inevitable "money flood" that will turn up sooner or later as a consequence of the globalisation of capital.

I take is as given that boom/bust cycles in housing are a bad thing and that anything that reduces their scale and duration is a good thing.

As no-one is talking about international capital controls it seems that the next best thing is controls on where UK mortgage lenders can get their capital from. This is what I take to mean as "banking reform" though I have to admit that I haven't read Vickers (yet).

What the market can provide is a mechanism to make sure that the people who lend to the banks have an enlightened self interest in assessing the credit risk associated with the loans that the UK banks intend to make with the money that they borrow from the money markets.

Whilst the 2009 Banking Act means that a large bank can be resolved, the banks are so big and so opaque that people in the market probably still believe that they are "underwritten" by the UK government and will not be allowed to fail.

We need to change that perception and in order to do that we need banking reform.

IMO as King is the only member of the elite still talking about that then if you agree that banking reform is a good thing then you have to acknowledge that regardless of his complicity and culpability in making the mess he is presently our best hope for meaningful banking reform following as a consequence from the attempt to clean up the mess.

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-1

It was the raising of rates in 2006-2007 that made the system go pop. If it had been done earlier, the scale of the problem would have been considerably smaller. The two cuts from 4% to 3.5% should have gone in the other direction and continued upwards.

I'm not going to disagree with you as it is my impression that you know rather more about rate changes and their effects than I do, however I would raise the related matter that it was events in the US which revealed that all was not well in the mortgage securitisation chain and it was this change in market perception rather that any rate change that led to the evaporation the of large volume of cheap mortgages that was sustaining the boom.

As the system is so complex and interrelated it's more like a disclosure of my innate storytelling bias than an argument, but it seems to me that it was the rise and fall of the high-LTV interest only self-cert mortgage that was the final chapter in the saga. When, because of the cessation of the securitisation chain, the supply of these toxic mortgages dried up demand for houses and hence prices suddenly ran off the edge of the cliff.

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