After Lord Lawson (whom I interviewed last week – answers to your questions will be posted soon) the next ‘expert witness’ for The Spectator’s wiki-inquiry into the recession is William White. His name is spoken with reverential tones by those who know of him, because he was for years warning about precisely this kind of blow-up.
When he was chief economist at the Bank of International Settlements from 1995 to 2008, it was his job to advise the world’s central banks. He was warning for years about the precise nature of this bubble, and wrote various papers – arguing, for example, that inflation targeting was dangerous because it rendered policymakers blind to the asset bubble which he felt was about to explode. He was right, and from a very early stage.
While there are other economists who got it right, few had such access to the world’s central bankers. This leaves White in an ideal position to tell us what he thought went wrong. Does he think that his own warnings were clear enough? What did he see that that made him convinced him that the system was about to go pop? Were there any others like him? (It must have been fairly lonely to have been a party-spoiler in the boom years – so I suspect people who saw the bubble knew of each other). What does he think of proposals to make the IMF into an early warning system? Does he think Britain’s policy decisions made it more or less prone to an asset bubble and, if so, how?Australia’s household debt is larger than Britain’s, so why have its banks not gone pop? Spain’s housing crash is even more hideous than ours, why do its banks now own half of ours? Is the architecture of the Western monetary management (which the BIS supervised) simply wired up wrongly? And if so, how?
These are a few of the questions I’d like to ask White. Let’s have yours.