Lord King. Speech at the Mansion House 16th June 2004
"Over the past year,the Bank has been able to reflect on the changes stemming from the Bank of England Act 1998 and the associated Memorandum of Understanding between the Bank, Treasury and FSA on financial stability. That legislation inevitably changed the Bank’s relationship with the City and the financial sector more generally. Freed from the responsibilities of day-to-day regulation,the Bank has been able to focus on two principal objectives: maintaining monetary stability and maintaining financial stability."
Lord King. Speech at the Mansion House 16th June 2007
"Your decision to grant independence to the Bank of England ten years ago is widely and rightly regarded as a fundamental improvement to the conduct of economic policy in this country, and we in the Bank are grateful to you for giving us the opportunity to demonstrate the benefits of an independent central bank."
Mervyn King, the Governor of the Bank of England, was interviewed by Robert Peston, BBC Business editor, for a File on 4 special on Northern Rock 6th November 2007
MK: "Well it’s its true that in some countries there is a system in which it’s possible to intervene pre-emptively and take the retail depositors out of the bank and transfer their accounts to another bank. And its very attractive to have that facility because if we’d have had that power that is something that I’m sure we would have exercised or the FSA would have exercised at the point when we gave the lender of last resort support to Northern Rock, because that would have prevented a retail run on the bank.
We don’t have that power in Britain. We need it."
Isn't it odd the first time the system is tested it fails and now after 3 years when "the Bank has been able to focus on two principal objectives: maintaining monetary stability and maintaining financial stability." the King discovers he hasn't the powers he needs when the going gets tough ?
Incidentally on June 16th he also said ..
"Our central view remains that inflation will fall back this year as the rises in domestic gas and electricity prices last year drop out of the annual comparison, and the recent cuts in prices feed through to household bills."
Which displayed not only a blindness to what is going on in the energy markets but an evident disconnect with the market... and risible to anyone involved in the energy market anywhere in the world and especially the EU ..... in 2004 at the Mansion House he said ..."The risks to financial stability now come at least as much from lack of liquidity in markets as in individual institutions. So the eyes and ears of the Bank need to be sharper than ever. That is why the Bank remains, to quote Governor Cobbold in 1958, ‘a bank and not a study group’, and I have encouraged staff in the Bank to learn as much as they can from outside Threadneedle Street and not just from the files or computers inside."
Sharp fucking eyes and ears indeed .....
Bloomberg December 14th
"U.K. gas for next winter traded at 58.75 pence ($1.19) a therm today, after yesterday reaching its highest in 15 months, following gains in the cost of crude oil, a price benchmark for gas in much of Europe. Power contracts in Britain tend to follow the price of gas because it fuels about 40 percent of the U.K.'s electricity generation."
On that Date Npower said : "Since April this year the increase in forward wholesale energy costs has been 75% for gas and 78% electricity, as measured by the well-respected Heren Energy Index."
The Independent on Saturday reported in a story "British Gas warns of big price rises in the pipeline"
"Npower followed Centrica's lead last week by raising its tracker rates for gas by 17% and electricity by 13 %."
"Last winter, wholesale gas was trading at about an average of 37p per therm. That compares with 53p per therm now."
Which surpises no-one who keeps their eye on the energy markets worldwide ...say by simply reading The Oil Drum. for example this report on the European Gas Market by Euan Mearns whch amongst many other worrying conclusions has message for the BOE and the myopic Lord King. (Not to mention the wholeGubment and House of Commons / Lords)
"OECD Europe gas imports are forecast to grow from current 197 BCM per annum to 442 BCM per annum by 2020 - if we see business as usual growth in demand and consumption. Where will this additional 245 BCM come from? Some may come from N Africa and some from West Africa and Qatar. It seems unlikely that an increase in imports on this scale will be possible and that high price and shortage will ration supply. This market driven outcome may hit the poorer nations hardest and one may suspect this may have a destabilising effect."
Click to enlarge.
Lord King is about to be grilled by the House of Commons Treasury Select Committee(TSC). Don't expect much wit ...and there will be very precious wisdom displayed by either him or his interlocutors.
UPDATE the Daily Torygraph examine the propsects for Lord King who meets the committee today at 10.30...no mention of his Mansion House speeches. "the TSC is after vital information on what went wrong with the tripartite system of regulation between the Bank, the FSA and the Treasury. On that issue, Mr King will almost certainly be reminded of one telling exchange from his last appearance.
Then, TSC deputy chairman Michael Fallon asked: "Who is actually in charge?" To which Mr King replied: "What do you mean by 'in charge'? Would you like to define that?"What a fucking intellect.