We wrote about Mervyn King's Press Conference (Sept 8th ) when he released his statement for the House of Commons Treasury Committee which he appears before today. ...
It took a shrewd American lady scribbler from Bloomberg to remind my Lord King with a sharp question ..
"Hello, Jennifer Ryan from Bloomberg News. I wondered if you could elaborate a bit on the extent to which the volatility in financial markets is complicating your forecasts. And also if you could discuss what kinds of concerns you have about the availability of credit going forward, both to businesses for investment purposes and to households?"So Mervyn slaps the bitch down with some firmly worded clear observations that make it clear that they have 3 jobs to do ..
1 "The first is that monetary policy is set to meet the inflation target."
2."...interest rates are not a policy instrument for protecting unwise lenders from the consequences of their past decisions." ( Evidently not having read (or ignored)Walter Bagehot's views onthe topic in Lombard Street pub. 1862)
3." .....a central bank, obviously always monitors all the time and regularly whether or not there are risks to the stability of the financial system as a whole and whether there are any systemic risks posed by problems arising in particular institutions or markets."
Here we go again , monitoring something over which they have neither influence nor control, and there is even more of this bland wisdom of the elderly ... for Miss Ryan.
"we cannot be sure, no one can be sure at this stage whether what we're seeing so far foreshadows a more disruptive movement in financial markets or whether it's the sign of a gradual easing of pressure that allows credit spreads to return to more normal and sensible levels. That remains to be seen. I don't pretend to be able to know what will happen but we'll be ready to respond to it."
Ho.Ho.Ho. "I don't pretend to be able to know what will happen but we'll be ready to respond to it."
It is now evident that Mervyn was not jesting when he said he didn't know what will happen to the sharp minded Ms. Ryan. (It does occur to us that it took a lousy Yank to expose the Court of King King - the UK scribblers having long since settled down to hoovering up and correcting the Government's Press releases.)
Readers are directed to what we said on Thursday last week September 13, 2007 Bank of England is out of control... ... in the sense that the BOE is not IN control.
"Prudent savers will be moving their deposit accounts out of Northern Rock in the morning... where to ? Try Santander AKA Abbey"
Which is precisely what happened..... now many Billions later, the Directors of Northern Rock are still unsuccessfully hawking their bag of ordure round the golden pavements of the City.
It is now evident there is almost no price that is acceptable to potential buyers - and the BOE cannot offer their undiluted support to any private company. The consequences for ;
1. Mortgage Holders in the Northern Rock
2. Shareholders in Northern Rock
3. Employees of Northern Rock
The Housing market and its many suppliers has been forced in to turmoil by the dishonest, deceitful and illegal attempts to shore up the crooks who ran Northern Rock into the ground.
On the 7th it looked like Mervyn was going to hold out ... now he has evidently caved in to political pressure. His premature de-fenestration will of course solve nothing although it may feed the frenzy and a few baying scribblers.
"I don't pretend to be able to know what will happen but we'll be ready to respond to it." is what he said on the 7th the response is there for all to see, mervyn has stood on his head, done a U turn , swept aside all his prudent and cautious policy statements - Miss Ryan exposed his nonsense and the rank dishonesty that is at the heart of the City and it's Golden Square Mile.
We all now have to live with the consequences of his failure. For a long time.
PS it is interesting to see ..."Freshfields Bruckhaus Deringer has grabbed a high-profile role advising Northern Rock on the crisis that has engulfed the embattled UK mortgage lender" - the hyenas and vultures gather to pick over the corpse. - "Freshfields cashes in on Northern Rock crisis "- Author: firstname.lastname@example.org in legalweek.com
Adam and his co-conspirators are going to need all the legal help they can get.