Mervyn King has officially emerged as the credit crunch’s great – and perhaps only – winner, even though his policy of keeping interest rates excessively low was the single most important domestic driver of the bubble (something which for some reason, unlike in the US, nobody wants to talk about in this country). Of course, the real culprit was Gordon Brown and Ed Balls, who forced King to follow a narrow and deeply destructive mandate, focusing exclusively on targeting the consumer price index and largely ignoring asset prices, the soaring money supply and the rest.So here's the new structure, courtesy of the Wall Street Journal. Let's see how it works in practice; once bitten, I am disinclined to believe that politicians are serious about relinquishing their right to manipulate the one factor that most impinges on their re-electability.
17 June 2010
The restructure of financial authority
I recall feeling that Gordon Brown's 'freeing' of the Bank of England was a good thing. Not by a long way for the first time, and certainly not the last, I had failed to read the details and so failed to perceive the amount of political control over fiscal policy retained by the government. Alastair Heath at City A.M. is likewise after the event: