Tuesday, December 28, 2010

Mervyn King ‘apologises’ for stoking a credit boom all those years

Families warned by Bank of England of even more painful year ahead

That August 2005 interest rate cut to re-stoke the housing market (when inflation was rising) looks really foolish now. Really, really stupid.

Posted by paul @ 12:15 PM (2850 views)
Please complete the required fields.



14 thoughts on “Mervyn King ‘apologises’ for stoking a credit boom all those years

  • lets face it that cut in 2005 shows the bank of england is not independent but politically motivated.

    These scumbags are liars,cheats and fraudsters using money taxed from the workers,whilst prosecuting single mums for not telling their boyfriend moved in.

    shame the ants aren’t more organised,but then all opinions have been crushed out of them over the last 10 years

    Reply
    Please complete the required fields.



  • shame the ants aren’t more organised,but then all opinions have been crushed out of them over the last 10 years

    I disagree – what about Anne Windicombe and Vagner?

    Reply
    Please complete the required fields.



  • Why anyone thinks having a central cabal of bureaucrats and/or politicians setting the price of money is a good thing is beyond me. We wouldn’t think of it for any other commodity so why is it any different with money?

    Reply
    Please complete the required fields.



  • the number cruncher says:

    If we just abolished the cabal of bureaucrats they would be only replaced by a cabal of plutocrats – probably the same interests pulling the strings.

    Free markets can only be achieved by law, human nature is always to create monopoly

    Reply
    Please complete the required fields.



  • Some good comments after the article.

    In the article though readers are told to expect 10% house price falls.

    Which is good news for us, the interesting thing will be how quickly that fall is realised. Assuming they’re correct of course.

    Just to aid things along one of the commentators is talking about unemployment rising from 2.5 – 3 million. Comfortably through flashmans 2.8 million tipping point.

    So assuming they don’t start an enormous printing operation (and I’ll hold that in reserve whatever any of you say) we could be in for quite an interesting year HPCwise.

    Reply
    Please complete the required fields.



  • People seem to forget that Merv is not solely responsible for setting interest rates, the Monetary Policy Committee is. As I recall it was financial geniuses such as David Blanchflower on the MPC who consistently voted down interest rate rises which would have lessened the boom (and subsequent bust). In fact I think that Merv voted AGAINST the August 2005 rate cut that partially set us on our current trajectory.

    Whilst his credibility has been dented by his inflation predictions, I think he is getting a lot of flak for things that he was powerless to control. And given some of his comments about the banking system recently I’m not sure this is a coincidence. He is a powerful and credible voice for change in the banking system so expect to see a hatchet job in the near future or at least major attempts to discredit him.

    Reply
    Please complete the required fields.



  • With (official) RPI at 4% they should specify whether the forecast price falls are real or nominal.

    Reply
    Please complete the required fields.



  • King eats humble pie early. That’s a very smart move. 2011, what a year.

    “They like odd numbers.”

    Reply
    Please complete the required fields.



  • Icarus

    Very true, but shouldn’t they be judged against wage inflation ?

    Reply
    Please complete the required fields.



  • From the article: “The economy is set for fresh pain in 2011, with economists predicting further declines in house prices and a rise in unemployment.”

    Notwithstanding that losing your job is quite horrible, even if you are one of the millions of superfluous taxpayer funded jobs (whether officially public sector or nominally private sector is irrelevant), high house prices are bad for the economy*. Falling house prices are bad as well, which is why it is better to get it over with in a six month crash.

    From 1993 to 1996, things picked up quite nicely.

    Reply
    Please complete the required fields.



  • Agreed Mark
    I’ve said this all along.
    Also, given that the sooner they got the HPC going the easier it would be to blame Liebour and the more likely there would be a recovery underway come the next election.

    In addition, you only have to read the comments after a Newspapers article about house price falls to see the majority of people seem to be in favour.
    The boomers have now all got kids trying to buy and don’t really want to hand over £50k deposits, no matter how well they’ve done out of it.

    Reply
    Please complete the required fields.



  • From the article: “The economy is set for fresh pain in 2011, with economists predicting further declines in house prices and a rise in unemployment.”

    I love this line. Let’s try it again with ‘house’ substituted with some other essential item:

    From the article: “The economy is set for fresh pain in 2011, with economists predicting further declines in milk prices and a rise in unemployment.”

    Que?!!!

    Reply
    Please complete the required fields.



  • saw a news article the other day that the government plan to review in parliament any idea on gov poll website that gets a set number of votes from the public. Anyone know any more detail? Cant we get a poll going and advertise it to get as many votes as possible?

    Reply
    Please complete the required fields.



  • lets face it that cut in 2005 shows the bank of england is not independent but politically motivated.

    That was Gordon Brown keeping the party going long enough, so he would have his chance at becoming Prime Minister.

    It’s amazing that one ignorant and ambitious man significantly helped to create such a mess.

    Reply
    Please complete the required fields.



Add a comment

  • 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

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>