On Mervyn King's Apology That Central Banks Are Destroying The Middle Class' Standard Of Living

Tyler Durden's picture

Recently, BOE head Mervyn King came out with a very surprising warning to his compatriots, accompanied with an apology that our own Ben Bernanke will never offer, namely: "I sympathise completely with savers and those who behaved prudently
now find themselves among the biggest losers from this crisis.
" Of course, the US central bank believes it has completed its third mandate job now that the US stock market, not to mention commodities, are starting to be reminiscent of the parabolic phase of the Harare stock market. But back in Europe, even as the EURUSD is surging (killing the dollar, and the primary driver behind US stocks) now that it is accepted that the continent will proceed with its latest full on ponzi scheme and have the EFSF acquire insolvent bonds, even as the ECB proceeds to raise rates, things are getting worse. This is precisely what King warned about in a speech that not surprisingly got absolutely no coverage in the US. Luckily, here is Simon Black's take on the very surprising speech by King which confirmed that the only beneficiaries of Bernanke's policies continue to be the top 1% that make up the financial oligarchy.... as always.

A stern warning from a central banker, by Sovereign Man

Mervyn King is Britain’s chief central banker and a key figure in the
global financial system. Last week, after surprising reports surfaced
that the British economy had once again contracted in the 4th quarter of
last year, King delivered a stern, sobering message to his country:

- “In 2011, real wages are likely to be no higher than they were in
2005… One has to go back to the 1920s to find a time when real wages
fell over a period of six years.”

- “The Bank of England cannot prevent the squeeze on real take-home
pay that so many families are now beginning to realise is the legacy of
the banking crisis and the need to rebalance our economy.”

- “The squeeze on living standards is the inevitable price to pay for
the financial crisis and subsequent rebalancing of the world and UK

- Furthermore, inflation may rise “to somewhere between four per cent and five per cent over the next few months.”

- “The idea that the MPC could have preserved living standards, by
preventing the rise in inflation without also pushing down earnings
growth further, is wishful thinking.”

- “[U]npleasant though it is, the Monetary Policy Committee neither
can, nor should try to, prevent the squeeze in living standards, half of
which is coming in the form of higher prices and half in earnings
rising at a rate lower than normal.”

- “I sympathise completely with savers and those who behaved
prudently now find themselves among the biggest losers from this

To summarize, one of the world’s leading central bankers has looked
his country in the eye and admitted that he is completely powerless to
prevent the inevitable decline in living standards that will result from
years of reckless behavior.

It’s amazing that someone in his position would be so terse, so
direct in his appraisal of the situation; by nature of their positions,
central bankers are serial liars who must continually deceive the public
in order to set expectations and carry out their agenda.

King’s statement may be a sign that England is finally on its last
leg. Fiscally, the country is in a similar situation as the US and
Europe– in debt up to its eyeballs, hemorrhaging cash, and quickly
losing the confidence of the international community.

Unlike Europe, the US, and even Japan to a degree, England lacks
reserve currency status in any measure that matters… so without a line
of foreigners to buy its debt regardless of the fundamentals, the UK has
been forced into its day of reckoning before the others.

Meanwhile, Europe and the US continue to spin unjustified confidence;
Angela Merkel and Nicolas Sarkozy have pinkie-sworn that they will not
let the euro fail, and Barack Obama’s State of the Union address
provided a temporary ‘feel-good’ blip that the government is going to
fix everything.

People should not be fooled, however, into thinking that the US,
Europe, Japan (and those nations which depend heavily upon them) will
fare any better than England.

Because of its place in the global pecking order, England has less
control over its financial destiny and has had to face the music first,
but it will not be the only member of the Western hierarchy to fall.

Europe is in a desperate situation to continue bailing out bankrupt
members of the eurozone even though the price tag will soon become
larger than the monetary union can possibly bear, all while stimulus
pressures and strained pension programs create challenges even for the
‘healthy’ euro nations.

Meanwhile in the US, the government plans to continue running
trillion dollar deficits for the next several years with no end in sight
to runaway spending, not even considering the upcoming carnage that
will occur when cities and states start to go bust, or social security
runs out of money.

Japan is probably in the worst shape of all, simultaneously suffering
both a fiscal and demographic crisis. Japan’s debt, well over 100% of
its GDP, has already been downgraded by the rating agency monkeys, and
its population is slowly disappearing due to low birth rates and
inhospitable immigration policy.

The best case that these countries can hope for is to suffer the same
fate as England: a significant reduction in standard of living.

There is an opportunity now, however, for everyone to assess their
basic vulnerabilities and take steps to mitigate what may lie ahead.
This may include seeking work overseas, expanding a business to broader
services in new markets, moving assets to safer jurisdictions, reducing
system dependency, etc.

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HUGE_Gamma's picture

umm weekly Obama bucks for beer

I think I need to buy a gun's picture

of course u won't hear it in the US the "Fast money guys" just told me to short gold.


The Dow keeps going up everyday the dollar is weaker. Maybe we can see dow 50000 and the dollar index negative 200.


the system is broken lets get a new one.

thepigman's picture

In the US, Bernanke and the banksters

just lie about it.

thepigman's picture

Look at our fraud market going straight

up every day.

thepigman's picture

Obviously, no real people are involved.

Just banksters and hedge funds along

for the ride.

redpill's picture

Up 150 points as the Middle East melts down. Can't make this stuff up.

thepigman's picture

You'd think they'd be smart enough

to make it a less obvious fraud.

redpill's picture

Bernanke, Bold As Love

Bastiat's picture

Yeah and a limp dick attempt at an after hours pullback in metals.  Rumbling on the launch pad.

Sudden Debt's picture

Looks like you got yourself here a real conversation going he?


Dr. Sandi's picture

Crap. I invested the family fortune in fraud because it was doing so well. It had almost more than tripled when we decided to cash in.

Unfortunately, we haven't seen the check yet, and the guy that sold it to us is on Vacation.

Since Thanksgiving.

Devout Republican's picture

Getting long here on USD/MXN on the retest of the lows.  Between the commodity (food) squeeze and Export Land Model cross, our southern neighbor may look like Egypt in a short time.

G'luck and bye y'all

ETA: Long @ 11.9948

ConfusedIdiot's picture

DR, please elaborate on the Xport Land Model cross. I too am long the dollar on this break below 12.00. My only argument for this was watching the Mexico Bolsa and Mex corporate  uptick directly in consequence of the US stimulus programs buying Mex. This stim effect is over and therefor I am in the dollar over the MXN. Any insight would be appreciated.


Devout Republican's picture

Thank you for asking.  Look at http://www.theoildrum.com/node/7425 also google Chris Martinson's crash course.  There is a vid describing the ELM in detail. 

I feel pretty confident about this trade in particular because if I'm wrong then the USD would be worthless and billions of people around the will be starving and rioting.

I don't think "the powers that be" will let it get to that.  (If they value their heads)

Of course your species has run itself out of cheap energy.  So the inevitable may be happening as I type, in which case its all moot but potatoes, beans and water.

I am not devout nor a republicon.

Captain Kink's picture

it's the 1st of the month! The market must make it's prescribed move!  all is well! (sarc)

Mr Lennon Hendrix's picture
Platinum takes Off

Platinum had been still above $1800 like a spider on prey.  Something may have just tripped the wire, and that something is time.  The other levels were set and the trap sprung.  Platinum will lead out ahead of gold, silver, oil, ahead of the dollar and all fiat for the last lap of the race to the bottom.

Platinum's production plateaued in '09.  That is a long time when demand continues to surge.  It is not used as bullion as much as it is an industrial.  It is hard to mine, it only grows with sister metals, and is more rare than silver.  Platinum, like silver and gold, is indestructible and lasts for basically ever.  It too is the perfect wealth preserver.

How many races until the masses catch on and the average Joe owns precious metal?  Well, the time may have dawned on the silver market.  Demand for silver is higher than ever.  Gold is the popular one when it comes to using it as monie, but platinum may have its time next.

PS, WTI is about to pop one dollar...

Flakmeister's picture

Good Day Mr. Hendrix...

  My favorite factoid about Pt, is that annual world production is approximately a 6 ft cube.

  I agree that Pd and Pt are under appreciated, to this end I have been accumalating a number of PGM miners and explorers. So far, so good.


Dr. No's picture

FYI, Pt is used by the medical device industry since it is one of the few biocomaptible metals.  I do not know the volume of use, but it consumption, not recycled.

DosZap's picture


(I may be off here), but I believe that Platinum is 82x's more rare than Gold.

Flakmeister's picture

  Production ratio is about 82.... Pt is as rare as gold but mineable ores are extremely rare


SWC is the best way to play the PGM complex. A wonderful unique deposit in the good ol' USA


trav7777's picture

all platinum ever is like a 20' cube.

a 6" cube of this shit weighs like 165lbs.  I wear a Noble around my neck as a tribute to this metal. 

Only denser shit out there are iridium and osmium.

Pt rightly should be priced probably 5-10x POG, but the Russians have been selling stockpiles into the market.  I think that Pd being less than gold is a true mispricing.  If you click a few links you see that Pd and Pt have roughly equivalent production stats and given their similar industrial usage profile, I can't find much of a reason for the pricing mismatches.  Either Gold is overpriced or Pt and especially Pd are underpriced.

trav7777's picture

Pt goes apeshit when Russia works through its stockpiles that it has been selling.

There are like 2 significant sources of Pt in the world, Bushveld and some Russian production at Norilsk.  <6Mtoz annually, a fraction of gold.  Pd has similar production stats, IIRC; dunno why it's so undervalued vis a vis.

Here's a random google link on annual production of PGMs thru 08


whatz that smell's picture

pinkie-swear, bitchez!

PeterSchump's picture

The best evidence that al-Qaeda is paid for by the banksters is the lack of banksters eliminated on 9/11.  This is but a diversion.

redpill's picture

I don't think people want his sympathy so much as his head on a pike. While Egypt is trying to come out of the middle ages politically, maybe it's time for the West to take a brief vacation back in time.

downrodeo's picture

+1 , exactly right. This is probably why he is trying to create the sense of some sort of understanding or solidarity between himself and the masses. He likes his head where it is. "I sympathise completely..." with that.

redpill's picture

And right before the end it will be the worst. As the curtain falls on the current crowd of central bankers, they'll give some last desperate wads of cash to their cronies in hopes they can steal every last penny from the populace as they can before finally being dragged away from the printing machine. Unfortunately for this SOB and fortunately for the UK citizenry, the British printing machine has a lot less ink than those at the Fed and ECB.

cossack55's picture

Brief vacation, my ass.  The question is:

Should the blade be made of gold/platinum/silver or should the blade be counterweighted by bags of FRNs, thus making it quicker to reset for the next banksta scum?

dick cheneys ghost's picture

the chairman has no clothes.


all eyes on pakistan

Jason T's picture

OT: 1st of the month.. I just remembered.  That's why stocks are soaring.

Commander Cody's picture

Just keep borrowing til you can't, live large for the moment, and default when it suits you.  That's the new normal.  Isn't it?  The responsible people will pay, and ain't that a bitch, eh Mervyn, bankster scum.

Henry Chinaski's picture

mea culpa, bitchez!

AccreditedEYE's picture

Gotta applaud the man for speaking the truth.. Take heart Mr. King. What the Keynesian fools have yet to realize is First In / First Out. Hope you can become an example of good behavior in a world full of mediocrity. (and that's being generous)

redpill's picture

It's not admirable to capitulate when you're already beaten. If he had said this 2 1/2 years ago it would have been worthy of applause. Now it's just pleading guilty.

AccreditedEYE's picture

What is admirable is standing against the Bernanke mandate when so many others bow down to it. (I've got news redpill, EVERYBODY is beaten, they just haven't woken up to that fact yet)For once, speaking the truth and trusting that people can take it rather than simply try to spin. That's admirable.

redpill's picture

I think you're missing the point. He's not standing up to the Bernanke mandate, he's been following it. The only difference is he is running out of track, and sees that the end is finally coming for the UK.  He's not "admirably" speaking the truth, he's trying to save his own ass and pretend he is not completely culpable for what will be happening.  In the scheme of things, it's probably better for the Brits that they are forced to face reality sooner than the US and the rest of Europe, since the longer the charade continues the more painful the withdrawal will be. We're not so lucky in the US, we still have some time to go before our financial bender finally comes to a sobering end. For those of us who know it will, it's a sickening thing to watch, like seeing an alcoholic slam cheap vodka out of a plastic jug before being dragged away to rehab.

The closer to the end we get, the grosser it becomes, until it's "just one drink left, make it counnttt!" and we have to pray it doesn't finally kill us.

AccreditedEYE's picture

Red, I'm not condoning the man's/UK's past monetary behavior. Yes, he has been following right along. But at last, finally, someone speaks truth. That's all I'm admiring.

The sooner nations stop playing games and address their issues (either by choice or by force) the sooner we can get the multi-year process of moving forward again. There is a lot of pain ahead and admitting the truth and accepting it for what it is will move us through it all that much faster.

redpill's picture

It's no more admirable than Jeffry Dahmer apologizing that he prefers the taste of human flesh from his jail cell in hopes of getting out of prison early.

mirac's picture

You nailed it...psychopaths never admit guilt.  It is always someone elses mistake.  Any comment of sympathy for the middle class came from a script writer.  Don't imagine he'll take a 25% cut in wages to help out his fellow Brit or cutail his wonderful governemnt pension...nope

UglyPatheticPauper's picture

Remarkable!!  Looks like someone found their conscience.

bunkermeatheadprogeny's picture

Just a clip, we didn't see the whole speech. Perhaps it was a prelude to the need that commoners need to just chin up.

The Limerick King's picture

Not all Central Bankers are liars

First lighting then putting out fires

But for those unlike Merv

Klepto lies they still serve

May their gonads meet dull locking pliers. 


Wynn's picture

In some previous incarnation Mervyn must have worked the rack in the tower of London, calmly telling the victim to grin and bear it, as he tightened the ropes.

thepigman's picture

Contrast this with the US where the

bankers and the street are hell bent on

stealing anything you have left.

Cdad's picture

It’s amazing that someone in his position would be so terse, so direct in his appraisal of the situation

Not if you knew an Englishman...one over the age or forty.  It is not surprising at all. 

As for a comparable American...I'm afraid they are all but dead.  They die each day with the WWII generation...leaving us with what we call the Baby Boomers...who are the originators of arbitraging everything around them to death.  Never has the world known as more selfish generation of folk than these.

You can still catch a whiff of old America in some of the gen X crowd, those that grew up humble enough to know that their education system had let them down.  However, even most of that crowd is clueless now and searching for the white Iphone 4.

Just bring on the zombie apocalypse already, please.  Or the fire hoses, please.  Anything but the status quo during the biggest financial crime in the history of the world.  Anything but the 100% sure Ben Bernanke.

thepigman's picture

The coup de grace is lying

about the economy and sucking them

into this market.