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Mervyn King: More Common Sense
Bank of Finland, Helsinki. 24th May 2013. What have we learned from the crisis?
Mervyn King gave a speech in Helsinki Finland today just before he takes retirement from the Bank of England in which he said that both austerity and growth were at fault of grossly exaggerated statements to purely political ends: "This debate has been vastly exaggerated by people who want to make political arguments”. He went on to add that it was a time for common sense.
It comes only a few days after the International Monetary Fund urged the UK to concentrate on growth and stop playing about with austerity measures. So, who is right? King v’s Lagarde!
It’s unlikely that the UK Chancellor of the Exchequer, George Osborne would have accepted the advice anyhow from Christine Lagarde. The IMF advised the UK to increase spending, while Osborne is dead set on steering the country through austerity plans and cutting costs. A change of tack was strongly suggested by the IMF. Now it seems as if Mervyn King is criticizing both the IMF and George Osborne. Neither austerity nor growth measures are doing any good according to King.
It would seem however, that Mervyn King has forgotten the common sense that was failing only a few months ago when he pushed for more money to be printed to inject that into the UK economy. Not so long ago in February, he wanted to pump some £25 billion into the British economy through quantitative easing methods. The struggling UK economy suffered from a considerable hammering yet again when the pound took a plummet after that announcement. The February split at the BoE brought about a severe blow to the pound on international currency markets back then. It lost 1% against the euro then and 1.5 cents against the dollar. Was that common sense? One might well ask. What is it we say about living in glass houses and throwing stones?
But, King is not all wrong. Of course, talk of austerity and growth are politically-loaded. Of course, they have a political backdrop. Politics and economics are so intrinsically linked that you can’t separate one from the other. But, if politicians were advocates of common sense, then we would have heard about that before, surely. It’s amazing that when people are in positions of power, they believe that they are acting in the interest of the nation and the people in society. When they step down from that position, when they become citizens once again, when they return at (relative) anonymity, they suddenly become lucidly clairvoyant. Common sense, isn’t it?
Originally posted http://www.tothetick.com/mervyn-king-more-common-sense
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Well said,an accurate representation of the capitulation of the government to welfare cuts,the welfare state is now totally out of control,and their only choice left now is default by devaluation,if Brits think the inflation and devaluation of sterling to date has been bad,just wait until MArk Carney gets his feet under the table - you ain't seen nothin' yet.
SIR Mervyn King, having spent the past four years pumping £375 billion of thin-air QE money into the economy, voting for even more and runnng Zirp to impoverish savers/depositors - to solve a debt and banking crises which he helped create by excessive cheap money for seven years and without a shred of evidence that it has done anything useful - now attempts to bury his sins and redeem himself before he retires on a fat taxpayer-funded, index-linked pension. He's taking the p1ss, surely.
Very brave of King to come out and say these things now, pity he was just the usual lickspittle bankster puppet doing their dirty work when in charge of the Bank of England.
Where was King's "common sense" during the last housing bubble 1992-2006,that's nearly 15 years of silence during which the Bank of England conveniently went along with an out of control housing bubble,saying nothing and doing nothing, whilst conveniently hiding behind the doctored government inflation statisitics that oh coincidently excluded housing from its inflation calculation. Result?Economy that appeared to be booming,but in reality was only a mirage of demand based on a housing market out of control,bank lending to the housing market out of control and consumer cerdit out of control based on peoples false perception of wealth as a result of the increase in house prices
But King would say inflation was never over 2% in this period,but general inflation at 2% and house price inflation at 15% p.a would tell a complete moron that something was not right,but economists and central bankers are far more intelligent than the man in the street aren't they?
As a result the UK government had to bail the banks out for the hundreds of billions of losses due to speculation on credit derivatives,QE then had to underpin the overinflated house prices caused by interest rates being set too low and lax lending standards,the result is that the UK banking setor is now massively exposed to a housing market that has not being allowed to correct to pre bubble levels,and those prices are only being held up by government intervention,should the necessary correction take place in the UK housing market as it has done in most other countries,the UK banks would be shown to be totally insolvent, and this time the UK government could not afford the second bailout.
What a pity Merv didn't mention these inconvenient truths on his way out of the door - probably for the same reason he changed the pensions for Bank of England employees to INFLATION LINKED just before the bank started its QE programme,and the UK government dropped inflation linked savings bonds for savers at the same time, namely that he is a hypocritical, unprincipled, lying scumbag.
Good riddance Merv you Villa tosser.
Actually
For once King is close to the mark, but muddling the truth in central bank speak. The reality for the UK is that there has been no austerity. The welfare state is out of control and even ian Duncan Smith (work and pensions minister) admits it stating they have given up trying to reign it in, and are now trying to manage the rate at which the welfare bill increases.
most of the cuts in government waste and red tape promised by the current administration have not been persued let alone delivered. They continue to spend like drunks during happy hour.
Growth, good one !! Adjust the reported (barely measurable) alleged growth for inflation and a falling GBP and you will see a severely shrinking economy.
Any UK govt that reduces welfare to an affordable level will be out of office for at least a generation. And the Labour Party never thinks in terms of reducing welfare, only of expanding it and increasing taxes/borrowing ever more to fund it.
That is the truth of how deep socialism has become embedded in Britain over the last 50 odd years. Even many of those who claim not to vote Labour, still support excessive welfare programmes and redistribution of wealth.
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The North of England gets (very basic) welfare because they are not allowed any of the spoils of war.
People on welfare or low pay are not the principal driving function of the UKs real good trade deficit.
The free banks don't use them for basic work (and therefore they don't push much resources through these human conduits) because they can make more money from global labour arbitrage.
The North of England needs a proper fiat king and not a Merve King
http://en.wikipedia.org/wiki/Richard_III_of_England
The south won't like it though as they know no other life other then feeding off inflated bank assets sourced from external pillaging.
This guy is an idiot.
... and a total waste of time.
Avoid.