King's blame game

John

LOL @ "pubic deficit"

PayDirt

This seems to be what Tim Congdon in FT today is arguing for, ie quantitative easing where cash is put into the economy by Govt borrowing from banks (though I thought all the news was about Govt giving to the banks). Whatever the works in mysterious ways are going on, Congdon’s point about business paying off debts before they are realistically going to spend again makes sense if the recession is to end sooner rather than later.

Ian C

Where else can they put our money? No, that is the right place for them to be investing for the time being. Anatole Kaletsky has redeemed himself somewhat in today's Times and his article rightly says lending to the Gov't by the banks is required at this depressing time. The alternative is full nationalisation of them.

Johnathan Pearce

Fraser, the more I think about it, the more I think that the advocates of the gold standard, frequently dismissed as romantic old fools, have a point.

The BoE's inflation-targeting approach to setting interest rates has been discredited. The Bank should have taken account of the ratio of debt in the UK to assets; it should have looked at the sources of funding for that debt, its maturity, and so on. Setting monetary policy by reference to headline inflation and a few macro-economic indicators is useless if you don't give due weight to volume of lending, debt and asset prices.

C Powell

Public deficit, I think, Fraser, not "pubic".....

Very enjoyable watching all these ferrets in a sack. Now I'm off to decide where I put my savings.....

bmc3186

Well sticking to the gold standard - if it existed - would mean absolutely zero room for policy.

It would certainly bring about fiscal and monetary responsibility. It would probably also destroy the British economy (interest rates would be sky high in order to defend the currency).

cuffleyburgers

Surely the fundamental error was not to set money supply targets?

And to overlook the fact that the banks wouldn't allowed to go bust, therefore the government was tacitly accruing a massive liability and therefore its failure to regulate adequately amounts to criminal misuse of public funds.

Denis Cooper

Well, setting interest rates to target inflation target started under the last Tory government, post ERM, and became a legal duty imposed on the Bank of England through the Bank of England Act 1998; so it's not exactly "The BoE's inflation-targetting approach".

I think we've discovered that a) it needs to target the right measure of inflation, and the EU's CPI is not appropriate for the UK economy because it takes no account of house prices; and b) retail inflation can't be the only economic parameter targetted, and interest rates can't be the only economic lever available to the Bank; and c) legal responsibility for the "prudential supervision" of banks should never have been passed to the FSA (same 1998 Act), and should be returned to the Bank.

griff

See this:

http://www.creditwritedowns.com/2009/02/did-sweden-really-nationalize-its-banks.html

yellowbelly

John
February 26th, 2009 4:32pm

LOL @ "pubic deficit"

===

No balls, you see!

Bocephus

So let me see. King blames Brown today. Turner blamed Brown yesterday. But all the BBC and Sky are interested in are the mysteriously leaked pension details of Fred Goodwin.

What a lucky break for our great leader!

Charles

At this rate we'll all be bartering root vegetables by the end of the year. Any (legal)recommendations as to what would get me a fast crop?

mckenzie

Dude, one day your name is Frazer, then the next day it is Fraser. Not that it matters too much, but it just seems schizo to me that a man uses different spelling on a daily basis.

TrevorsDen

"lending to the Gov't by the banks"

by the banks?

We are shovelling money their way.

Lets get this right we are borrowing money from somewhere (Mars?) so we can lend it to the banks at 12% so they can lend it back to us at 4% so we can afford to lend it to them in the first place?

PayDirt

TrevorsDen: What you describe is the science of economics. The trick is of course is to be like Sir Fred and get in early and borrow when rates are low. In the speeded-up modern world payback time comes double quick and the defrauded lenders are left with the only remedy to shoot the Sir Freds (they won’t need their pensions then will they?)

hadrian

and here was I thinking our fundamental error was that too many of us had been living way beyond our means, egged on by greedy bankers and insatiable politicians. Now it's all come home to roost we're still being urged to get spending!! Can anyone explain this basic contradiction, please?!