'May you live in exciting times', is supposed to be a Chinese malediction but current times are so interesting it's hard not to read goodwill into the words.
The downgrading of the Bank of England's powers in 1997 under the guise of making it independent, so long sung as a paean to the Leader's financial savvy, is at the bottom of the simmering , smelly mess that is polluting the United Kingdom's reputation in financial and banking competence and regulation.
After the Governor's explanation of Northern Rock's descent into not one but, effectively, two runs - the first more discreetly in August when its borrowings were not renewed, the second on the public street - it is clear that none of this specifically nor systemically would have happened but for Gordon Brown trying to cleave power to his horrid bosom.
And still there is no legislation in place, as there is all over Europe, to protect retail depositors, nor a proper reconciliation of the control structures and the reinstatement of a unitary authority where bucks might stop, to deal with the further unrolling of bad risk pricing.
It isn't just Northern Rock, and rockalike other banks; it is to be hoped they are just iffy mortgages. We're onwards and upwards to municipal bonds and their insurance. Mr Draghi, more properly and correctly empowered than Mr King, has acted against those banks he doesn't care to leave to their own devices in these matters - but then he has supervisory powers over the behaviour of financial institutions, and unlike the FSA, arms' length relations with the Treasury.
And if municipal bonds and their insurance don't seem particularly important in the UK context, consider that troubles reported in the US (Evans-Pritchard in the Telegraph) 'could force pension funds, mutual funds, and institutions to liquidate holdings on a vast scale, causing the credit crisis to spread into areas that have remained unscathed until now.'
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6 comments:
Will it get so bad that we dispense with fiat currency?
I like "rockalike".
Most unlikely. 12.45. The remonetisation of commodities requires the demonetisation of fiat money through hyperinflation universally regarded after Cagan as a monthly inflation rate of over 50%. Until then there's no point grinding your axes.
Angels doesn't do what you and ND do S, it's really interested in the institutions and their perversion by the regime and, in this case the perversion of the course of banking and finance.
Who would buy a second-hand Fiat from Gordon Brown?
"Most unlikely. 12.45. The remonetisation of commodities requires the demonetisation of fiat money through hyperinflation universally regarded after Cagan as a monthly inflation rate of over 50%. Until then there's no point grinding your axes."
Elby says "What she says." :-)
Whoops, L, wrong voice. Still at least it was on Angels and not at someone else's dinner table.
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