Tuesday, Sep 15, 2009
The Governors latest thoughts.....
BBC: UK economic growth 'has resumed'
There are signs that the UK economy is growing again, the Governor of the Bank of England, Mervyn King, has said. But he added that the "strength and sustainability" of the recovery are still "highly uncertain", in comments made to the Treasury Select Committee. Mr King said the state of the banking system, levels of debt, and the global economy were all drags on growth. He was speaking after figures showed a key measure of inflation has fallen to its lowest level since February 2005.
Posted by jack c @ 12:24 PM (1328 views) Add Comment
18 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. hpwatcher said...
Now please tell me, why anyone would listen to Mervyn King?
2. paul said...
Indeed, hpwatcher.
After getting it so spectacularly wrong by inflating credit availability for a decade, the Bank of England's credibility should be shot by now save for a pliant and fawning media not questioning the drunken captain of the downed plane.
3. waitingfor hpc said...
Great- so stop printing money and return interest rates to normal levels then! QED?
4. waitingfor hpc said...
this guy lost all credability when he choose his job over the greater good of the UK economy.
5. jack c said...
I'd be interested in precisely what is meant by - Mr King said inflation "is likely to be volatile" over the next year
6. flashman said...
jack c: He knows that VAT will soon return to 17.5% and then probably go on to 20%. That is a potent amount of volatility right there. He is also terrified of commodity prices because they are outside his control. His low interest rate policy could be left in tatters by the whim of a few commodity traders. The world has changed and his institution has become laughably impotent. Time to abolish the rate setting committee, for starters
Who can forget his quixotic attempts to control inflation with a few quarter point interest rate increases? How was that going to control the price the world paid for universal commodities?
7. Mr Plumbase said...
Which economy is he talking about? The real economy that most of us live in with rising prices and high unemployment, or the bulls... economy of the City and all it's spivs and speculators making "profit out of thin air?
8. mrflibble said...
@6. flashman
He is also terrified of commodity prices because they are outside his control.
Isn't stopping him laying the boot into our currency time after time though making matters worse.
9. jack c said...
flash thanks for your input - you are quite right (IMO) they effectively have a single blunt instrument and the world has moved on. I suspect the other fear is in respect of QE in so much as it is a very fine balancing act - if they get it wrong (and there is a fair chance IMO of that happening) it will be very difficult to reign in inflation if it starts rising sharply.
10. bellwether said...
Flash I hope there is a part of government/BOE that truly cares about the relative value of our currency, but I fear that we are too short termist for that.
For all that rising house prices were not seen as inflationary (an absurd perspective) , falling house prices in this country are def seen as deflationary and terrifyingly so.
If keeping prices elevated is a paramount strategy (and I would suggest it is, having run ecomomic growth predicated almost wholly on growing a property bubble, we have now stepped in and bailed out banks whose apparent worth (and ours) is predicated on largely on sustanining a house price bubble) then it will trump everything else.
11. alan said...
bellwether,
" I hope there is a part of government/BOE that truly cares about the relative value of our currency".
Sorry, there is an election coming. Every single decision is aimed at making the government look good. Have a look at the papers today...people want anyone to lead NuLab, except Gordon.
12. flashman said...
bellwether: I have always wondered to what extent house prices influence the mpc. Part of me thinks that they are so up themselves ‘academic’ that they regard manipulating house prices as beneath them. These guys seriously enjoy complex economic theory and they give it so much credence that they actually think they are in some sort of control. One day we’ll find out to what extent house prices was their driving force (if at all). Their releases over the last 10 years suggest that they pay very little attention to currency. It's fugging incredible when you think about it but officially it’s none of their business.
All this Blanchflower guff about “ I was the only one who wanted to lower rates earlier ” is such bolloc*s. Any fool could tell that a recession was coming and they all wanted to lower rates. The problem was that they also knew that inflation and credit was out of control and lowering rates would fuel the fire. If any of them had an ounce of responsibility and integrity they would have publicly asked the government to put a sensible legal limit on credit and leverage, so that they could safely lower rates to head off the recession. The government hires them so they are not remotely independent. That is why they fiddled about with interest rates and shied away from publicly asking the government for a coordinating policy. We need to either disband the mpc or give them far more power. If we give them far more power then they effectively become an un-elected government
13. uncle tom said...
- Some cruel comments guys..
Our Merv has to work within the remit given to him by the government. He seems a modest, decent sort of bloke.
We know interest rates were kept too low, but that was because he was told to chase an index of inflation that didn't give the whole picture. He's going along with QE because the government has run up a budget deficit that can only be covered by printing the cash.
What he really thinks will probably come out after he retires, but for now he is a public servant, tasked to make the best of the government's incompetance.
I wouldn't want his job, and I can't think of anyone better qualified to do it.
Interesting to watch his statement - pretty obvious from his choice of words that he doesn't believe that there will be a sustained recovery.
14. flashman said...
On bellwethers point about whether the government "truly cares about the relative value of our currency". Over the years we have got out of several tight spots by devaluing our currency. In the currency world, it's considered a UK party piece. This time there are several countries wanting to pull the same trick and some suspicious creditors looking on, so it’s hard to get a bead on it
15. 51ck-6-51x said...
jack c said, "they effectively have a single blunt instrument "
- This is true, but however fine grained you get it will never be enough.
The problem is not the tool, but the system.
The clue is in the name 'Central Banking'
- some would argue that it's the 'Banking' part ( i.e. capitalism itself ), but I believe it's the 'Central' part.
My opinion is that we should move to a free banking system in which any body may issue their own currency whereupon these competing currencies become a market in trust itself.
16. 51ck-6-51x said...
( oh and before anyone comments - I know there is the implicit trust of the central bank [ err state ] and that there is a market on the international scale, but there is still not intra-national market in currency; within a countries borders* there is a monopoly and not market in trust other than selling out one's own state. * I don't like borders either - I believe in complete freedom! )
17. jack c said...
This from todays FT - Mervyn King is speaking rubbish, analyst says
Story by: Emma Ann Hughes Magazine: FTAdviser Published Tuesday , September 15, 2009
A recession is easy to stop and Mervyn King’s pessimism about the prospects for recovery is difficult to understand, according to Tim Congdon, monetary analyst.
Delivering a keynote speech at FT Fund Links Forum, Mr Congdon said quantative easing was helping boost the economy and he could not grasp why Mr King, governor of the Bank of England, was stating a recovery would be “slow and protracted.”
The former member of the Treasury panel, which advised the government, said: “I do not understand what he (Mr King) is talking about. It is rubbish. They are in control of mechanisms that can sort this thing out in a matter of minutes.
“King has underestimated the power of the weapons in the state’s macroeconomic armoury.
“I am sorry if it sounds incredibly arrogant, but I know what I am talking about.”
18. titaniccaptain said...
Yes Merv got a mention in the news http://www.economicvoice.com/speakers-post.php?post=307 lol