Thomas Mathew writes from London: You have to admire Sir Mervyn King who’s been dabbling as Governor of the Bank of England since 2003 and has successfully survived during all that time despite the mess he presided over. Yes, together with other top dogs in the BoE Sir Merv sleepwalked into the biggest banking crisis in Britain’s history, wasted a fortune on the dubious quantitative easing scheme that produced nothing apart from propping up the banks and kept interest rates low to accommodate the supposed ‘economic boom’ that helped Labour cling to power. To add to all of this, Sir Merv has developed a talent for keeping a perfectly straight face while talking nonsense. (Incidentally, he got a knighthood for services to the banking industry which is ironic in itself.)
Last week Sir Mervyn excelled himself by delivering some pretty fancy opinions, basically acknowledging that he got everything wrong, yet presenting it in such a way that was supposed to convince everyone that he couldn’t have done anything differently as things had simply gotten out of control all over the world. It was as if it wasn’t his decision to pump £375 billion of new money into the markets that never found its way to the real economy. Was it all that difficult to figure out that the money men would not prop up the economy? No, it was perfectly clear that they were going to protect themselves rather than help out others.
Sir Merv did add a touch of drama to his assessment, telling everyone that Britain will have zero growth in 2012. ‘We are navigating rough waters and storm clouds continue to roll in from the Euro area,’ he said. ‘Unlike the Olympians who have thrilled us over the past fortnight, our economy has not yet reached full fitness.’ He then added that the future was unpredictable, since no one could predict what would happen in the euro zone crises which would have an impact on the UK.
Nothing to do with the idiotic quantitative easing, you see, that the BoE had launched. And nothing to do with bailing out the banks to the tune of hundreds of billions when they should have been allowed to go down, as is supposed to happen in a free market economy.
Yes, Sir Merv, who is stepping down next year, must be looking at a wonderful retirement plan. Bankers tend to be very grateful to people who help them out while letting down everyone else.
The funniest thing of all is that the Bank of England was supposedly independent in its decisions on setting the rate of interest and battling inflation. Even though it was a joke right from the start when that incompetent fool Gordon Brown announced in 1997 that he was granting the BoE independence. The only problem was that the Bank of England was and continues to be a wholly owned subsidiary of the Treasury since it was nationalised by Clement Attlee’s Labour Government in 1946. But in their determination to use spin to cover up their incompetence Labour were using every trick in the book to look competent and professional, even if it amounted to pretty much nothing in practical terms.
And one more thing that Sir Merv has really blown during his shift: failing to ensure that banks and lenders generally did not go over the top with their interest rates on loans and overdrafts. Yes, the central bank in any country can easily pressure banks into submission by attaching stringent conditions to the loans that are given to financial institutions. But the BoE seemed to be helpless in persuading the money men to abide by the rules, allowing them to slap astronomical rates on their loans, even though the base rate has been at the level of 0.5 per cent for years now. This is not a good sign. This is the sort of stuff that should have been looked into by the relevant authorities.
Amazing really how Sir Merv has been getting away with it for so long. Still, he has another year to go at his job so there’s a chance that someone may yet see through him. Although it’s a very slim chance.