R.F.Wilson writes from London: It’s always a relief to find out that your central banker, this time it’s the Governor of the Bank of England, knows nothing. Yep, that’s what transpired when Sir Mervyn King went in front of the Treasury Select Committee to give his take on the Libor rigging scandal that is rocking the banking world at the moment. You might even say that it’s the number one hit in the chart of banking scandals, holding on to the top notch for the fifth consecutive week running.
Sir Merv, as he is lovingly known among bankers who can’t get enough of him, has been asked by the inquisitive MPs about his knowledge of the Libor scam and with a straight face answered that he only found out about it when it was reported in the news about two weeks ago. Had no idea it was happening, it seems. Was kept in the dark about it, the poor man, just as he had no idea that a financial crash was coming in 2008 and only learnt about it from the news bulletins on the box one morning after a hearty breakfast.
The only thing is that Sir Merv, as it transpired, had been discussing the Libor irregularities way back in 2008 with the then New York Federal Reserve boss, Tim Geithner, the current US Treasury Secretary. But when asked how that played out with his statement that he knew nothing about the fiddle, the boss of the Governor of BoE said that it was just a general discussion, as in: what do you think could happen if it turns out that banks are rigging the Libor rate?
Oh, so that’s how it happened, the MPs said. Thank you for clearing that one for us.
Sir Merv is stepping down soon, after a distinguished career as Governor of the BoE, with such highlights as sleepwalking into the financial crash, presiding over the biggest transfer of taxpayers money to banks under the guise of quantitative easing, failing to predict a single calamity in the financial world and producing some of the most ridiculous stats on inflation ever imaginable while keeping the base rate of interest at 0.5 per cent for, like, an eternity, without failing to notice that banks and other lenders paid no attention to it and charged their customers extortionate rates of interest.
That trick with the inflation rate should earn Sir Merv a Nobel Prize in economics, or an Oscar for the best presentation of financial bollocks ever, while keeping a straight face when plugging figures that have no connection to the real world. At the moment, having flooded the markets with £375 billion of electronically created new money, to buy up government IOUs from banks and other financial institutions so that they can plug their black holes with it, Sir Merv has now produced a drop in the inflation rate to the level of 2.4 per cent. That is some Harry Potter type of finances, if there is such thing as Harry Potter finances.
It is expected that Sir Mervyn will be writing his memoirs once he steps down and is expected to receive an advance of around $1 billion for it. And as some people are saying, he is worth every penny of it.