Apropos Mark Carney and politics

Mark Carney seems to have glossed over his remarks prior to the the referendum which attempted to scare the electorate into backing remain - furthermore, he has persistently refused to be held accountable for his comments or to explain them in the subsequent light of the facts

The real disgrace is that at the time he used his 'trusted' position in order to influence those undecided voters to his way of thinking

Friday 13 May 2016 - Bank of England Governor Mark Carney delivering the quarterly Inflation report in London

'.. Brexit, to my mind, would have a material impact on growth and inflation. It would be likely to have a negative impact in the short term ..'

'.. I certainly think that would increase the risk of recession ..'

In short Mark Carney has never to this day provided a satisfactory response to his interference in the referendum or the following charges over his comments on the referendum

He was accused of '.. being "politically involved" and of bargaining with Chancellor George Osborne on warnings over the economic impact of Brexit ..' and furthermore, '.. he refused to publicly release notes of his private conversations with Mr Osborne, stating that MPs could see them if they wished ..'

With all this in mind his latest outburst about political interference is really rather peculiar

There has been a lot in the press lately about Mark Carney and the Bank of England railing against political interference by politicians

‘.. We are not going to take instruction on our policies from the political side ..’ 

Independent - Bank of England Governor Mark Carney Theresa May

However, Mr Carney seems to have forgotten that he was rather a political appointment in the first place by George Osborne the then Chancellor, so perhaps he should reflect on this before ‘shouting the odds’ – furthermore, if he had been half competent at his job the issue would not have arisen in the first place – and today we hear that he intends to bail-out by possibly resigning

‘Good effort’ – if only the rest of us could bailout of his legacy so easily on the same (pension / historical remuneration) terms as he will undoubtedly receive

Mark Carney may not want advice from politicians but looking back at the performance over his tenure to date, he certainly needs advice from someone because his term in office has not proved to be a resounding success and in fact has only made the whole economic climate infinitely worse than when he took office

Central Bankers as a group, apart from one notable exception Elvira Nabiullina  - Nabiullina named Euromoney Central Bank Governor of the Year 2015 - from the Russian Central Bank, have proved to be THE PROBLEM AND NOT THE SOLUTION

They have made incredibly bad decisions and persistently interfered with the global economy in one form or another over the past 8 years (and before). As a result of the actions of these Central Bankers we have been brought to the brink of a potential global systemic collapse

Throughout, Mark Carney has run with the herd of other Central Bankers by constantly cutting interest rates and printing money, instead of thinking for himself and recognising the potential future problems associated with the BoE decisions – as the saying in the past went ‘nobody was ever blamed for buying IBM’;  although, look at how they were overtaken by others as a salutary lesson for Mr Carney

In fact, for all the performance of this indecisive individual (‘unreliable boyfriend’), with rumours of interest rate cuts which never came to fruition, Mr Carney has been an unmitigated disaster – but then again so has his peer group, but blame is never allocated provided one is part of the herd when there is a collective ‘foul up’

All these failures by Central Bankers, and more, have been outlined in the Bank of International Settlements report - Bank of International Settlements (BIS)

 

Bank of International Settlements:

“Rising debt, lower productivity growth and diminishing room for policy manoeuvre have contributed to a build-up of vulnerabilities that give rise to three threats: macroeconomic instability; the adverse effects of persistently low interest rates; and a loss of confidence in policymaking”

 

All in all, not a pretty scenario and all brought about by the abject failure of Central Bankers of which Mark Carney is one.

By now interest rates should have returned to their ‘norm’ and not sunk ever lower, punishing savers, crippling pension funds and building up huge issues for future generations. The fault of the Central Bankers, those ‘wonders of the universe’, who are not really affected themselves because of huge salaries and very impressive pensions courtesy of the populations they are in the process of bankrupting!

Unfortunately Central Bankers / Governments / SEC / etc. never seem to learn from history and whereas they should have long ago broken up the big banks (too big to fail – requiring bail outs) and banned derivatives (baskets of goodness know what rubbish); instead of introducing more transparency they allowed greater leverage, destroyed the Chinese wall between commercial / investment banks (Glass-Steagall) - Glass-Steagall: aftermath of repeal - and continued with a whole raft of other mistakes 

Therefore instead of shutting down the problems before they became out of hand, everyone (SEC / Governments / Central Bankers et al) just relaxed the rules and joined the party with less regulation, banks became hedge funds, more derivatives, greater exposure, crazy bank capital rules introducing greater risk … and so on … with nobody taking any heed of warnings

Furthermore, the ratings agencies have also played their part and it is remarkable that they still retain the credibility that they do - Questionable Credibility Of the Ratings Agencies- In Aftermath of 2008 Crisis

Now we are at a point where there are only two ways out of the global debt – either actual default or default by inflation. This is why today’s solution is encouraging inflation to try and reduce the debt by once again manipulating the system. It is almost getting to the farcical situation where they should try the Governments Epiphany Over Perpetual Bonds approach - because we are now in the realms of fantasy with global debt, which under normal circumstance can never be repaid

Which is where we are today – global debt has ballooned from the last financial crisis - and when the next meltdown arrives the Central Bankers will have already expended their armoury after being totally incompetent over the past few years by adopting reckless policies and never learning

The only difference next time around will be size of the problem, which will be far greater than in the past and reflect the magnitude of the oversight of Central Bankers / Governments / etc. in failing to address all these issues long ago when they had the opportunity

And what of the bankers / hedgies / politicians that brought about the problems – they will be long gone – but even if they are still here NOTHING WILL THEIR FAULT and they will once again be underwritten by the rest of us

 

Reference

Bank of International Settlements

 

Tags: | Categories: Bank of England | Economics
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