Mervin King a Cambridge trained economist, has been in charge of the Bank of England for 10 years (after a distinguished spell as it’s Deputy and before their Chief Economist over a period of 12 years). He leaves today unfortunately to become a Lord. Of course personally in his job he rightly made a lot of money (not compared though to the other disgusting senior bankers in this country of course), but how well did he do the job?
Well he was steady, but certainly not a complete success. He was passed the sole responsibility by the then Government’s Chancellor of the day George Brown in 1997 for controlling the rate of inflation – a good move because before then politicians fiddled about with the Country’s finances to enhance their re-election chances just before a general election.
Whatever else he did, he failed year in year out to keep the inflation rate to the government target of 2.5% then 2%! Why was that? Was he not trying? Well, his power was restricted really to only controlling the Bank’s interest rates; in reality that can’t really control inflation! For a start we have seen in recent years a Bank Rate of 0.5%, (since March 2009) so our High Street Banks can get the money cheaply. But what do they do? They lend it out again at say 10% or 20% or more, or don’t lend this money at all!
Mervin King and the Bank of England has had no say over that at all! The cost of inflation is driven up for example by the governments increase in VAT charges – Mervin has no say in that! Food prices have escalated badly, and energy prices have gone through the roof. Lack of house building has pushed up house prices. The Governor has got no influence on any such matters. So he failed.
He also was unable and unwilling to control the dreadful behaviour of the High Street Banks, which saw them bring the UK’s economy to its knees – and despite the ongoing Tory propaganda blaming the Labour government for these ills, it was the bankers that done it! He catastrophically failed to tackle the bubble in the UK housing market (as did the Americans in theirs) when the crisis hit. More significantly he stepped out of line by commenting that he supported the government’s austerity plan (despite it being under widespread attack and the economy continuing to teeter on the brink of recession with the danger of unemployment towering) – this was him getting involved in politics which is a no no for the Bank of England Governor.
George Osborn the Conservative Chancellor based his austerity plans on the success of Canada in switching State jobs into Private Sector jobs. What our wayward Chancellor failed to take into account was the circumstances under which this happened. Canada had a nearby receptive market place – the United States. Osborn made a gaff by not realising that the UK didn’t have such a luxury – our only real market was Europe through the EU and that market was in the mire to say the least. So the plan failed and our economy stinks, with growth choked off and flat lining for the past 3 years.
What is this failed idiot Chancellor’s answer? To appoint the Canadian Central Bank Governor Mark Carney (ex Goldman Sachs) to the post as Governor of the Bank of England – the first foreigner to run our national organisation since its inception over 300 years ago! What kind of madness is this? (An unexpected appointment first announced in November last year).
Handing over our national destiny to a foreign national who has no real commitment to this country? By all accounts he is a decent bloke, though arrogant, and ‘possibly’ competent – but we don’t know! Whatever he is, he is no saviour – he doesn’t walk on water. He is though an educated economist, who also studied at Oxford, but he doesn’t really have a substantial Canadian reputation as a great performer, though internationally it is higher for some obscure reason –certainly he is an accomplished speech maker all over the place, and courted the media. He is however only an average talent, who got lucky; that is not enough (despite the quote that Napoleon said give me ‘lucky generals’ not good ones!) He is criticised for not reacting quick enough to the financial crisis in 2008-9 and failed to cut interest rates soon enough; also it is said he was never able to deal with the over-valued dollar, with a bad impact on Canada’s export trade. He was helped of course by Canadian’s ramp up of government spending (the opposite approach to Osborn’s UK strategy!) to pilot the Canadian economy through it’s bad time. The Jury is still out though regarding his success in Canada and will be for some time. The other problem he faces here is that he will be seen as ‘Osborn’s man’ – how are the City and the financial markets going to react to that? These are bad times to be introducing such worrying parameters.
He won’t last. He won’t make a significant impact here and will be gone in a couple of years (not the 5 years of his appointment). A new government of whatever hue will revert to a British guy or guyess – just wait and see!
What can any of us do. Absolutely nothing. We have no power. This is supposed to be a democracy to be the envy of the world – yet we are being screwed-up by two little rich boys! Enjoy.