Monday, Dec 22, 2008
The MPC stooges are the real culprits
Times: Bank failed to spot crisis despite 'crazy borrowing'
Sir John Gieve tells the BBC that the Bank was aware that a bubble was developing in the housing market, as well as in the price of other assets, and that it was being fuelled by “crazy borrowing”. Sir John also raised questions over whether taxpayers would get back all of the money the government has now invested in the banking sector.
Posted by paul @ 12:48 PM (872 views) Add Comment
13 Comments
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1. will said...
A fair few of us said it was reckless on this site three years ago.
2. tyrellcorporation said...
And to think we're not drawing £140k a year each for a few meetings (Or at least I'm not). If HPI was included in the basket of goods none of this would have happened. It's absurd to suggest this bubble wasn't spotted because of a simple oversight on the part of the regulators, etc. The bubble was deliberate and the assumption by the ruling elite was that any ensuing bust could be inflated away ad-infinitum. Gordon really did believe that he'd banished boom & bust. Arrogant fool IMO.
3. paul said...
I think there should be a public inquiry into the Bank of England's conduct over the last few years.
Didn't Kate Barker suggest that the MPC meets less frequently because their job had become so easy? And didn't she also say in early 2007 that low long-term interest rates have been a key reason behind dramatic gains in U.K. house prices?
Just to underline - if you want to find out the real culprits for the credit boom, look no further.
4. Enoughalready said...
@ 3. I agree wholeheartedly. There should be an inquiry. If 'ordinary' people were so concerned that they started up a website such as this to discuss the crazy house price rises, why weren't the banks?
5. little professor said...
Wow. Like the new site. Looking good!
6. little professor said...
Hmm, but you don't get the real news article title on the news blog any more.
7. paul said...
WOOW!
Nice one drewster.
Hmm. Agreed prof. Its good to have the real article title - but it was being abused a little, and was always voluntary for posters.
8. phdinbubbles said...
Is the Halifax index in the top-right corner really telling me that the average house is now worth £199,770! Help!!!!!!!!!!
9. Chris said...
Absolute rubbish by Gieve. Of course they knew what was going on, remember Aug 2005 when they reinflated the bubble with interest rate cuts when house prices were starting to cool? House price inflation was DELIBERATELY kept out of the inflation figures because if it had been included then rates would have had to have been raised and the bubble would never have inflated. The bubble was a deliberate creation in order to provide Brown with a decade of false economic growth based on cheap credit. Deliberate creation of the housing bubble has been admitted by Brown to a Commons Select Committee in 2004. Now they hope to get out of it by printing money and risking hyperinflation.
10. paul said...
You do get the article title on this page.
11. wealthyvagrant said...
From the link also on the subject http://www.bbc.co.uk/blogs/thereporters/robertpeston/ Gieve said;
"If we'd used interest rates to try and address this asset-price credit growth, we would have been holding down the level of activity elsewhere in the economy, in manufacturing, in other services, holding down the level of employment at a time when consumer price inflation and earnings were stable and reasonably low. And people would have said, you know, 'this is a wilful reduction in the prosperity of the country'."
That's like saying if you use your brakes in the car you'll slow down so just keep your foot on the accelerator!
Consumer price inflation was only low because it doesn't include the cost of housing, so to continue the analogy that makes it like a speedometer that only show's 60% of your true speed.
So in short they drove the economy at 60 Mph in a 30 zone and vowed not to use the brakes.
12. voiceofreason said...
This is rather frustrating, as people on HPC did understand this...
"...... the Bank's Monetary Policy Committee believed mistakenly that the lending binge and asset-price surge were semi-independent from activity in the real economy, and that they would eventually moderate without wreaking devastating damage to prospects for households and businesses."
Hey ho !
And a new look for Xmas :)
13. iguana said...
Oooohhh for heavens sake !
Just refer back to the gobsmacking revelations of 'fast Eddie' (George) to the Treasury Sub-Commitee. They all knew, they all understood, they all sat back and said well it won't be me who has to sort it all out.
Memo to Sir John: If you are going to deny knowledge of something, make sure that it is not in the public domain that you do know all about it.