Jump to content
House Price Crash Forum
Sign in to follow this  
Debbiebegood

Carney Urged By Former Chancellor To Ditch Qe

Recommended Posts

I hadn't read this story before, thanks.

The new Governor of the Bank of England has been urged to hold back from printing more money and instead tell the people the "hard truths" about the economic mess as he starts work today.

Fat chance of that I'd have thought.

Writing in today's Daily Telegraph, former Tory Chancellor Lord Lamont said everyone hoped he would be "as successful" as he was at the Bank of Canada.

HPI do you mean, Norm?

Share this post


Link to post
Share on other sites

Political figures usually find it easier to see the obvious once they have escaped the pressure cooker of power. It is a rare breed who can see and follow through the necessary but difficult course of action when they hold the reins in their hands. Were Lamont still in no.11 today I doubt he would be so sanguine.

Share this post


Link to post
Share on other sites

Political figures usually find it easier to see the obvious once they have escaped the pressure cooker of power. It is a rare breed who can see and follow through the necessary but difficult course of action when they hold the reins in their hands. Were Lamont still in no.11 today I doubt he would be so sanguine.

You're being rather unfair to the man who presided over the cheapest house prices relative to incomes that we've ever seen without any of the ludicrous schemes we have today.

Edited by thecrashingisles

Share this post


Link to post
Share on other sites

You're being rather unfair to the man who presided over the cheapest house prices relative to incomes that we've ever seen without any of the ludicrous schemes we have today.

+1

However I'd describe them as correctly priced rather than cheapest.

Share this post


Link to post
Share on other sites

You're being rather unfair to the man who presided over the cheapest house prices relative to incomes that we've ever seen without any of the ludicrous schemes we have today.

The man who triggered a credit boom with deregulation, interest rate and tax cuts which led to the biggest HPI boom seen since the 1970s, which led to the inevitable bust, at which point houses became affordable? A fiendishly clever way to bring prices down.

Post-bust Lamont also leant on lenders to forebear in various ways including a ludicrous scheme whereby housing associations and lenders would buy or part-buy houses from those unable to meet mortgage payments, so that the borrower could remain in occupation as a tenant or part-owner/part-tenant. Or the even whackier scheme where money saved (£1bn) from delaying the abolition of stamp duty on certain stocks was used to fund an eight month housing stamp duty holiday? (And you though George came up with that one by himself).

In Lamont's own words at the time:

"The measures that I have announced today and the schemes that the lending institutions are putting together [edit: prompted by the Government] will contribute to a decisive fall in the level of mortgage repossessions. They will also help to stimulate activity in the housing market more generally, benefiting home buyers and home owners throughout the country. I hope that they will be warmly welcome by the House."

Plus ca change.

Share this post


Link to post
Share on other sites
The Bank of England has printed £375 billion since 2009 in a bid to kick-start the recovery, equal to 25 per cent of our entire national economic output. Lord Lamont said there was little "visible" evidence of a boost to the wider economy, that QE had pushed up inflation and it had been disastrous for the savings of pensioners across the country. The hard truth, he added, was that British households had borrowed too much during the years before the credit crisis and how had to pay it off.

He said: "QE is an attempt to avoid the necessary adjustment. "(Mark Carney's) role is not to find a monetary silver bullet but to deliver some hard message that a debt work out is exactly that - tough, unremitting, but the only way to get the economy back into better shape."

http://uk.finance.yahoo.com/news/governor-carney-urged-former-chancellor-220031529.html

Yesss. Exactly that.

The new Governor is widely tipped to break with conventional Bank of England policy to get Britain's economy going. He is expected to rip up the Bank of England's primary goal of keeping inflation at 2 per cent and instead say it's more important to focus on growth.

The new Governor gets down to work in Threadneedle Street today before dinner with the Chancellor at No.11 Downing Street tonight. On Wednesday Mr Carney and his fellow Monetary Policy Committee members begin their monthly, two-day interest rate meeting.

Mark Carney is coming over to the UK from Ottawa with his wife, Diana and four children. Diana, who he met at Oxford University, told followers of her eco product blog that postings would be few and far between until the autumn as the family "make the move".

Growth can be achieved on after letting all those in over-leveraged positions, to allow the good money in. QE isn't eco either. It's surely anti-eco. Eco BoE Governor... it's promising. Let's hope he's anti-lavish, anti-greed, anti-supporting of reckless over extended speculators. QE has polluted opportunity for the good sound patient money, instead of uncertainty with QE measures and so many people who chose to over-extend themselves, with their actions allowing them to acquire assets they should not have and price out sound money.

Share this post


Link to post
Share on other sites
The new Governor of the Bank of England has been urged to hold back from printing more money and instead tell the people the "hard truths" about the economic mess as he starts work today.

Here is the truth of it.

Politicians from 2007 onwards are in the business of trying to manage our insolvency. They are trying to walk out of the woods without being eaten by wolves. There is no place for ideology, except as a means of telling a stories about things they were actually forced to do for pragmatic reasons, regardless of any ideology that they profess.

That is why incomes will remain under attack for decades, because the decades when our houses made us rich were really just decades when we racked up debts by pretending that our houses were making us rich, and now that fantasy is dead and the reality that we need to pay off those debts is manifest. Everyone who can pay will be made to pay, to the extent that the state can make them pay. And it will work, the politicians, in their quiet behind the scenes meetings, have an attention span and a plan that the media can't match, so whilst the clowns who edit the papers chatter about Byron burgers, the debts are coming home.

Share this post


Link to post
Share on other sites

The man who triggered a credit boom with deregulation, interest rate and tax cuts which led to the biggest HPI boom seen since the 1970s, which led to the inevitable bust, at which point houses became affordable? A fiendishly clever way to bring prices down.

Wasnt that the 'lawson boom', not the 'lamont boom'?

To be fair to Lamont, he inherited a crappy situation from Major and left a good one for Clarke. Just as Brown got lucky with timing as chancellor, Lamont got unlucky.

Share this post


Link to post
Share on other sites

Lamont got a lesson from the markets/Soros, when Government was trying to keep an over-valued pound in the ERM. Remember the cold pale looks the 2nd time they came out later in the day, announcing interest rates had to go up to 15%. Someone had dropped a serious sum at the table. Even after that pain, £ was still trading at $1.75.

On the upside it helped further liquidate fragile over-extended market positions in the real economy / house prices, opportunities for new entrants and solid long term growth, had Labour decided upon that path when they were voted in. Instead they chose way too much credit and HPI and landlordism.

However, the U-turn was tacit recognition of the awesome risks of precipitating a slump by inflicting base rates of 15 per cent or higher on an economy that is already deep in recession.

http://www.guardian..../17/emu.theeuro

Share this post


Link to post
Share on other sites

Political figures usually find it easier to see the obvious once they have escaped the pressure cooker of power. It is a rare breed who can see and follow through the necessary but difficult course of action when they hold the reins in their hands. Were Lamont still in no.11 today I doubt he would be so sanguine.

Yep intelligence comes back once out of power, whilst pursing it they just don't care.

Share this post


Link to post
Share on other sites

Lamont got a lesson from the markets/Soros, when Government was trying to keep an over-valued pound in the ERM. Remember the cold pale looks the 2nd time they came out later in the day, announcing interest rates had to go up to 15%. Someone had dropped a serious sum at the table. Even after that pain, £ was still trading at $1.75.

On the upside it helped further liquidate fragile over-extended market positions in the real economy / house prices, opportunities for new entrants and solid long term growth, had Labour decided upon that path when they were voted in. Instead they chose way too much credit and HPI and landlordism.

http://www.guardian..../17/emu.theeuro

Is that why they gave "independence" to the BofE, so that the next time interest rates rise they don't have to take the blame? Although they take the kudos when IRs fall. Shocking to think they have mismanaged things to such a degree now that a rise to 1% (yes one per cent) would allegedly have such serious consequences. They can be real proud of themselves

Share this post


Link to post
Share on other sites

Is that why they gave "independence" to the BofE, so that the next time interest rates rise they don't have to take the blame? Although they take the kudos when IRs fall. Shocking to think they have mismanaged things to such a degree now that a rise to 1% (yes one per cent) would allegedly have such serious consequences. They can be real proud of themselves

Will we blame them? Many in the last recession didn't blame them. It gave them opportunity to buy a home, and/or upsize. Break up Serpico's 3 separate dealerships, to split to other new owners, one a piece I hope, and allow a young neurosurgeon to afford to buy his nice home.

Lamont and Major were tough, and did do what was necessary. They didn't shy away from it. During and post-Labour, politics has been subverted to smiley smiley, try and please everyone. Let's hope those days, with politicians shying away from problems, are coming to an end. Can you ever ever ever imagine a Labour politician saying and following through these policies? And Major stuck by that 'if it isn't hurting it isn't working' repeating it over again through the thick of difficult times.

Lamont: On 16 May 1991, he stated in parliament that "Rising unemployment and the recession have been the price that we have had to pay to get inflation down. That price is well worth paying."

http://www.johnmajor.co.uk/page4352.html' rel="external nofollow">
: Many think a little inflation does no harm. I do not share that view. For some people, inflation may seem a cosy companion. But for others it can be disastrous. Those on fixed incomes see savings eaten away, and security destroyed. For those without savings and on low incomes there is the nagging insecurity of falling behind and losing the dignity of self-sufficiency. These fears were real for millions when inflation took over in the 1970s. We must not let this happen again.
And for businesses inflation is the same unpleasant brew. It destroys competitiveness, damages industrial relations, undermines investment, and savages profits. So inflation must go. Ending it cannot be painless. The harsh truth is that
if the policy isn’t hurting, it isn’t working.
I set out these truths to make one central point. All aspects of policy will be directed to bringing inflation down. Reducing it is never easy, but it is absolutely necessary. I know that there is a difficult period ahead. But the important thing is that we cannot and must not fudge the determination to stop inflation in its tracks. I won’t fudge it. The economy is not regulated by interest rates alone. Government income is many billions of pounds greater than expenditure. We are repaying our debts. And this is underpinned by firm control of public expenditure. So the Government’s financial position is very sound.
Political figures usually find it easier to see the obvious once they have escaped the pressure cooker of power. It is a rare breed who can see and follow through the necessary but difficult course of action when they hold the reins in their hands. Were Lamont still in no.11 today I doubt he would be so sanguine.

Yet Conservatives did exactly that back then.

Share this post


Link to post
Share on other sites

Will we blame them? Many in the last recession didn't blame them. It gave them opportunity to buy a home, and/or upsize. Break up Serpico's 3 separate dealerships, to split to other new owners, one a piece I hope, and allow a young neurosurgeon to afford to buy his nice home.

Lamont and Major were tough, and did do what was necessary. They didn't shy away from it. During and post-Labour, politics has been subverted to smiley smiley, try and please everyone. Let's hope those days, with politicians shying away from problems, are coming to an end. Can you ever ever ever imagine a Labour politician saying and following through these policies? And Major stuck by that 'if it isn't hurting it isn't working' repeating it over again through the thick of difficult times.

Yet Conservatives did exactly that back then.

Neither Volcker or Healey are/were political conservatives. Both were far tougher than Lamont, largely because they had to be. Volcker was fired by Reagan for resisting the stampede to financialisation which has ultimately been our undoing.

Share this post


Link to post
Share on other sites

Is that why they gave "independence" to the BofE, so that the next time interest rates rise they don't have to take the blame? Although they take the kudos when IRs fall. Shocking to think they have mismanaged things to such a degree now that a rise to 1% (yes one per cent) would allegedly have such serious consequences. They can be real proud of themselves

+1

They also claimed that they wanted the UK economy to be more like the low inflation German economy as aiming for low inflation was the only responsible way forward for an economy (at that time they didn't use farcical expressions like "global race" - in those days they didn't have to fit everything into the theme of globalisation. It was farcical stuff like "the enterprise economy". As for "prudence").

Looking back (and they way they just dumped the inflation target almost as soon as the BoE took over and manipulated the inflation indices and their constituents as well as allowed massive inflation in essentials such as housing, food and energy) it's clear that the "independence" of the BoE for interest rates and inflation was just a blame shifting manoeuvre - and of course the BoE went along with it.

Edited by billybong

Share this post


Link to post
Share on other sites

I don't QE is the correct solution but I disagree with those who think we need to be "tough".

By being tough they seem to mean embracing a downward spiral in living standards for all (well almost all, the richest seem to be just fine).

This seems to be combined with a corporatist agenda of low/no taxation for businesses and free movement of people to allow the rich to live in tax havens and the poor to pick up the bills. The cycle then continues with the tax revenues falling whilst the costs go up.

What the government should be doing is looking for a solution that improves the lives of people in this country. Be it a citizens income, new tax arrangements (so that people like me don't pay more corporation tax than multinationals with special arrangements) or whatever.

Share this post


Link to post
Share on other sites

I don't QE is the correct solution but I disagree with those who think we need to be "tough".

By being tough they seem to mean embracing a downward spiral in living standards for all (well almost all, the richest seem to be just fine).

Downward spiral in living standards? Younger people today hoping to buy a 2-3 bed small home with a little garden. Such as a terrace. They're now even losing sight of that basic hope. Living standards could barely get any worse for them. Paying high rents and little prospect of owning a small home, despite being talented rising career professional in demanding jobs.

Worried their landlord might increase rent, or the small unsuitable home they're making do with. The low to mid end homes, and the mid-to-upper end homes, valued at £300K+, such as basic semi-detached homes the postman used to be able to afford to buy, all over the UK; they don't even dream of owing such a home. Oh but we have to be all worried about people in their 40s who over-borrowed with huge mortgages.

They need to get tough and force house prices down, and bring pain upon the BTLers. That can't be done without also teaching lessons to other over-indebted homeowners, for whatever excuses, if they took on way too much debt. They have to go about it with the same ruthless purpose the Conservatives went about bringing down inflation in the late 80s and early 90s.

Also it was Labour who handed independence over to the BoE, and set up the tripartite system.

Share this post


Link to post
Share on other sites

Wasnt that the 'lawson boom', not the 'lamont boom'?

To be fair to Lamont, he inherited a crappy situation from Major and left a good one for Clarke. Just as Brown got lucky with timing as chancellor, Lamont got unlucky.

Which Clarke in turn chose not to squander, unlike his follower who rode on the dream legacy and got the longest period of expansion in GDP on the back of it, until it became over-inflated.

It kind of beggars belief that some try and compare the 1997 dream inheritance with the 2010 disaster left by Labour.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

I don't QE is the correct solution but I disagree with those who think we need to be "tough".

By being tough they seem to mean embracing a downward spiral in living standards for all (well almost all, the richest seem to be just fine).

This seems to be combined with a corporatist agenda of low/no taxation for businesses and free movement of people to allow the rich to live in tax havens and the poor to pick up the bills. The cycle then continues with the tax revenues falling whilst the costs go up.

What the government should be doing is looking for a solution that improves the lives of people in this country. Be it a citizens income, new tax arrangements (so that people like me don't pay more corporation tax than multinationals with special arrangements) or whatever.

The problem is that much of what would be the best solution in the national interest means that quite a lot of people will get very poor, very quickly, as their poor decisions will no longer be socialised. The situation we are in now must make people realise that a problem shared is a problem doubled. We are no closer to the end of this crisis as a result of the Wyle E. Coyote clifftop approach to policymaking. It's getting to the stage that had we taken an alternative path we could be plausibly doing much better by now. Bad debts recognised and cleared out with a wave of bankruptcies and repossessions, bad companies forced to do likewise, residential and commercial property trading at levels which might make it worthwhile opening a new business etc. Instead we get this frog in a saucepan salami slicing of standards to pay for all the socialisation of losses, losses which noone should be forced to bear except those that signed the papers, subject to the limits set by bankruptcy legislation.

Share this post


Link to post
Share on other sites

Which Clarke in turn chose not to squander, unlike his follower who rode on the dream legacy and got the longest period of expansion in GDP on the back of it, until it became over-inflated.

And you think Clarke was responsible for squandering it, not Brown?

Share this post


Link to post
Share on other sites

Also it was Labour who handed independence over to the BoE, and set up the tripartite system

It's true to say that Labour handed over to the BoE officially in 1997 immediately after the 1997 general election - and it was confirmed by Act of Parliament soon after.

The Conservatives were reported to have given the BoE the job of setting interest rates in an unofficial/informal way at least since the early 90s. A sort of trial run.

The LibDems went along with the policy as well.

Edited by billybong

Share this post


Link to post
Share on other sites

It's true to say that Labour handed over to the BoE officially in 1997 immediately after the 1997 general election - and it was confirmed by Act of Parliament soon after.

It was one of the first things Labour did on "taking over" but the Conservatives were reported to have given the BoE the job of setting interest rates in an unofficial/informal way since the early 90s. A sort of trial run.

The LibDems went along with the policy as well.

Don't we all seek second opinions from informed authorities on major issues?

Asking for their view is fair enough. Different to actually saying they gave practically gave BoE independence on the quiet. The political consequences for anything bad still fell on those in the Treasury, and couldn't be passed off on the BoE.

Without BoE having some input, they would have been just sitting around, not doing much except reports for their high pay, and mopping up things like BCCI.

Not that BoE did any better with 'independence' and less responsibility on the Treasury, with BoE powers hobbled and split with some controls passed to FSA. Also with them perhaps seduced by the credit expansion, given older people in such positions reap the most from such polices, when they own homes at the higher end of the market.

http://www.dailymail.co.uk/news/article-502590/Bank-England-governor-warned-Northern-Rock-collapse-years-ago.html' rel="external nofollow">
By SIMON WALTERS
Last updated at 23:29 15 December 2007
A series of senior Tories, including Baroness Shephard and former Chancellor Norman Lamont, challenged Mr King about the soaring level of personal debt. They argued that many families owed vast sums and that the authorities had a responsibility to take action before the problem became worse.

Mr King said the situation was being monitored by the Bank of England and was under control.

"The vast majority of the debt is secured against a property and it would be of concern only if that was not the case," he argued.

Share this post


Link to post
Share on other sites

Is that why they gave "independence" to the BofE, so that the next time interest rates rise they don't have to take the blame? Although they take the kudos when IRs fall. Shocking to think they have mismanaged things to such a degree now that a rise to 1% (yes one per cent) would allegedly have such serious consequences. They can be real proud of themselves

Yes. It's an increasing tendency to try to obscurify the problem and allow finger pointing exercises to end up at unelected civil servants rather than politicians. It's really quite bad. Didn't I hear something on the news the other day about the NAO having the say on welfare benefit spending or something like that, no doubt so if the tories cap it to thunderous boos and hisses they can point the blame squarely somewhere else.

The bottom line is, whatever the bank of englands "independence" remit, Carney knows that behind the curtains there is a puppet master who is going to be pretty pissed off if trouble is caused. These guys must know in advance that they are being set up, hence their large required pay packets for taking the job.

I think though that the markets and voters pretty much ignore the facade of the bank of england independence, or are completely unaware/don't care about it. The bottom line is that if the voting public is pissed off with the way the country is being run then they vote out the party in power, because that is all they can do to register their dissatisfaction. Finger pointing exercises are pretty much lost on them.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 238 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.