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My Mauling At The Hands Of Mervyn King


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http://blogs.telegraph.co.uk/edmund_conway...WRlIHB1YmxpYyE=

It's been an open secret in the City for years that Mervyn King has something of a short fuse. The Bank of England Governor is indisputably one of the country's finest economists and monetary policymakers. In fact, to my mind, he is one of the smartest men in public office. But he can get a little tetchy, and now, with the recession starting to bear down on the UK, one can see this more and more when he is challenged on his views.

So one probably shouldn't be surprised that when I asked an admittedly mildly aggressive question at the Inflation Report press conference today he responded in kind. I asked the Governor whether, in view of the severity of the recession, he would consider it appropriate to apologise to the British public. After all, we are now facing not only the worst recession in most of our lifetimes but a sharp increase in unemployment and a fall in house prices - and not only did the Bank allow the mountain of debt to build up in the first place, it was too slow to start cutting interest rates last year.

You might think this is an academic point, but it most certainly is not. Barmy as it may sound now, the Bank was still arguing last summer that despite the impending recession, there was a good chance that employees would receive bumper pay rises come the turn of the year. As we've learnt since, this could hardly have been more wrong, with hundreds of thousands of employees accepting pay cuts in an attempt to hang onto their jobs. Likewise, although we can more or less date the start of the recession to early summer last year, the Bank in its Inflation Report last August refused even to use the r-word in its text. It merely forecast a very mild contraction in the economy.

Only six months have now passed, but the projections turned out by the Bank today are unrecognisable, pointing towards the worst post-war recession, a slide towards zero interest rates and the threat of deflation. The fact stands that had the Bank acted earlier (and lest we forget MPC member Danny Blanchflower was voting for lower borrowing costs all the way through 2008) it would have at least made the recession that little bit less painful than it would otherwise have been. Even if it only meant a few hundred thousand fewer redundancies surely it would have been worth it?

Given the Bank's responsibility is not merely to control inflation but to ensure the UK avoids either overheating or sliding into recession, it did let us down here, and it is disappointing that King neither apologised or even acknowledged that it was too slow to act initially.

It was against this backgrop that I asked whether he would consider apologising. You can watch the exchange for yourself on the webcast from the BoE site here. You need to click on the link to the webcast. It's about 13 minutes in.

As you'll see, not only does King deny that the MPC failed to spot the downturn earlier, he maintains that no-one foresaw the severity of the slide until after Lehman's collapsed in November. I would say this is disingenuous in the extreme, given that members of his own committee, as well as plenty of economic commentators and analysts, realised that Britain was heading for a housing crash and nasty recession. Yes, the collapse of Lehman Brothers was unpredictable, but it was a manifestation of the economic troubles and the credit crunch, rather than a cause for it. And the sudden collapse in world trade in November was likely to have happened with or without the Lehman's implosion.

Anyway, watch the vid yourself and judge whether I held my own against the rather intimidating Governor. All the same, I am in pretty good company. He also laid into Larry Elliott, the Guardian's economics editor and co-author of the excellent The Gods That Failed a little later in the press conference when he reprised the same point.

Mystic Merv is about as much use as his more esteem colleague Mystic Meg.

The BoE and especially the MPC is not fit for purpose.

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http://blogs.telegraph.co.uk/edmund_conway...WRlIHB1YmxpYyE=

Mystic Merv is about as much use as his more esteem colleague Mystic Meg.

The BoE and especially the MPC is not fit for purpose.

"This is the man who said house prices where a matter of opinion but the debt is real and then did nothing to address the debt problem."

How could he? He was merely sticking to the target than Brown gave him.

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"This is the man who said house prices where a matter of opinion but the debt is real and then did nothing to address the debt problem."

How could he? He was merely sticking to the target than Brown gave him.

Only obeyink orderz?

If he didn't like it he could have got a job in McDonalds.

He chose. ****** him.

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Only obeyink orderz?

If he didn't like it he could have got a job in McDonalds.

He chose. ****** him.

Do you think the people carrying out an experiment on your brain may decide that enough is enough, and there is only so much mind altering substances the brain can be exposed to before it short circuits?

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Do you think the people carrying out an experiment on your brain may decide that enough is enough, and there is only so much mind altering substances the brain can be exposed to before it short circuits?

And here is me thinking I had escaped.

Cheers, Noel.

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I think Mervyn had a pretty good idea of what was going on.. the problem is that the bank of England like the government have to be very careful what they say in public. If Mervyn had said in late 2007 / early 2008 that TS was going to hit the fan big style it would have paniced the markets and the public (more than they were doing already).

I would be surprised to ever see Mervyn making firm predictions for the future that were not based on results already available.. it is an important part of his job not to.

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"This is the man who said house prices where a matter of opinion but the debt is real and then did nothing to address the debt problem."

How could he? He was merely sticking to the target than Brown gave him.

+0.5

he could have looked further forward to the deflationary consequences of such a big bubble expanding and then bursting - and that IS in the MPC's remit

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im sorry, how can the collapse of Lehman have been unpredictable, when, earlier in the year, the reason they bailed ANY banks was that the cascade of failures after one crash was the very thing they were afraid of....ie a systemic collapse.

so a reasonable person, given only the facts above, could easily surmise that ANY bank could fail at ANY time.

To assume that NONE of the big ones would, can only mean that the central bankers EXPECTED, indeed, DEMANDED, that any large bank in a position to fail, would be saved by an outside force, either with taxpayers money or a cash injection.

Thats why he's touchy...... their secret is out.

BAILOUTS WERE INEVITABLE.

Edited by Bloo Loo
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Mr King said: "It isn't easy for us to understand why house prices relative to conventional earnings are as high as they are."

Take a loook at your own debt pushing and moral hazard inducing monetsry policy. It induced moral hazard in the banks, encouraged speculation by the banks and the public and scared some of the public witless thinking they'd never have a roof over their thead. Only a self important, deluded moron could not see that.

Edited by OnlyMe
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Mr King said: "It isn't easy for us to understand why house prices relative to conventional earnings are as high as they are."

Take a loook at your own debt pushing and moral hazard inducing monetsry policy. It induced moral hazard in the banks, encouraged speculation by the banks and the public and scared some of the public witless thinking they'd never have a roof over their thead. Only a self importnant, deluded moron could not see that.

Kings job is to look plausible when things go badly, find the cash for wars and lie to the public.

He's really good at it.

Tony Blair good.

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Oh sure, Edmund, cutting interest rates has really been a super idea, works a treat - in enslaving more debtors, crucifying savers, devaluing the currency, going Japanese.

So, not surprised he snapped if you asked him why he didn't cut before. He didn't cut before because even he knows it should be avoided at all costs, but when the big beardy Yank's gob shot off at him and everyone ganged up on him like petulant schoolchildren, not to mention Brown, like the weak man he really is he caved in.

Result - added complications and consequences to the mess, for no good reason, other than because he gave into economic bullying from the loud empty heads who read one chapter in a book and think they know the whole story, and cause nothing but trouble. Ever heard the saying "A little knowledge can be a dangerous thing"? Well now you know where it comes from.

IRs should be up, back to 5% now, and 7% by the autumn. That too is a low figure. There was never any other way to counter the mess, there always has to be pain, but you can have good pain or bad pain - King's caved in and extended the trouble and added additional problems to the mix by being weak.

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"This is the man who said house prices where a matter of opinion but the debt is real and then did nothing to address the debt problem."

How could he? He was merely sticking to the target than Brown gave him.

If debt is real, how come financial assets based solely on debtors are worthless?

perhaps the debt wasnt real all along?

Injin may care to comment?

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Kings job is to look plausible when things go badly, find the cash for wars and lie to the public.

He's really good at it.

Tony Blair good.

Yes, that really is pretty much 100% right, except he tries to big up his part by appearing to take some decisions seemingly as "the man in charge".

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Yes, that really is pretty much 100% right, except he tries to big up his part by appearing to take some decisions seemingly as "the man in charge".

Well yeah. What sort of carrogant ocksmoker do you have to be to think you can make interest rate decisions for 60 million other people?

Vain, narcissitic lunatic.

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http://blogs.telegraph.co.uk/edmund_conway...WRlIHB1YmxpYyE=

Mystic Merv is about as much use as his more esteem colleague Mystic Meg.

The BoE and especially the MPC is not fit for purpose.

Um, no.

If interest rates had come down too early, what price another delay to HPC, and an even bigger bubble waiting to burst?

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If debt is real, how come financial assets based solely on debtors are worthless?

Debt is very real, as is default and bankruptcy. The asset prices seem to be reflecting this reality.

I'm not in favour of Mervyn-bashing... I don't consider him infallible or perfect, but I consider him - personally - to be honest and, to the extent to which an insider at a central bank can be, open.

With Mervyn, there is at least as much in what he does say as what he doesn't. If Mervyn was to be blunt, given that inflation and economic expansion are influenced so greatly by sentiment, he would be in dereliction of duty. With this in mind, one must look at what he says carefully - read between the lines. I consider the man stunningly able, courageous and ethical - surrounded by a sea of self-serving incompetents who preside over dysfunctional institutionally corrupt organisations. I'd rather have Mervyn King in the top role at the Bank of England than anyone else.

I think serious questions have to be asked about the FSA, the Treasury and the management of commercial and investment banks - and that these questions should extend to the shadow banking system, private equity and other leveraged speculation by corporates and individuals alike. I think we need to ask about the extent to which our politicians have abused their position of trust - preferring to act recklessly with respect to regulation while it appeared to result in a political advantage.

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http://blogs.telegraph.co.uk/edmund_conway...WRlIHB1YmxpYyE=

Mystic Merv is about as much use as his more esteem colleague Mystic Meg.

The BoE and especially the MPC is not fit for purpose.

I don't remember you calling for rates to be slashed 12 months ago. In fact, pretty much everyone on here has been calling for rates to be increased, not cut, and outraged every time Blanchflower voted/called for cuts.

You can argue about the merits/effectiveness of monetary policy but when inflation was hitting 5% pretty much the only voices on here were the hyperinflationists.

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  • 439 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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